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Edited Transcript of IDFC.NSE earnings conference call or presentation 15-Nov-19 10:00am GMT

Q2 2020 IDFC Ltd Earnings Call

Chennai Dec 2, 2019 (Thomson StreetEvents) -- Edited Transcript of IDFC Ltd earnings conference call or presentation Friday, November 15, 2019 at 10:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Bimal Giri

IDFC Limited - Senior Director of Strategy, Corporate Planning and IR

* Bipin Gemani

IDFC Limited - CFO

* Sunil Kakar

IDFC Limited - MD & CEO

* Vishal Kapoor

IDFC Asset Management Company Limited - CEO

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Conference Call Participants

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* Anish Jobalia

Banyan Capital Advisors Private Limited - Senior Research Analyst

* Ankit Singh;Indus Valley Partners;Senior Analyst

* Naresh Katariya;MoneyCurves;Analyst

* Sarvesh Gupta

Maximal Capital - Founder

* Sneha Ganatra

Subhkam Ventures - Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and a very warm welcome to the IDFC Limited Q2 FY '20 Earnings Conference Call.

(Operator Instructions)

Please note that this conference is being recorded. I now hand the conference over to Mr. Bimal Giri from IDFC Limited. Thank you, and over to you, sir.

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Bimal Giri, IDFC Limited - Senior Director of Strategy, Corporate Planning and IR [2]

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Good afternoon, everyone. I welcome you to this call organized to discuss our results for Q2 fiscal '20. I have with me Sunil, Bipin, Mahendra and Vishal. Vishal is the CEO of our mutual fund business. I would like to state that some of the statements today would be forward-looking in nature and will involve risks and uncertainties. Documents have been e-mailed to all of you, and they will be posted on our website.

I now invite Sunil to provide key highlights and the way forward.

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Sunil Kakar, IDFC Limited - MD & CEO [3]

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Good afternoon and thank you. Thank you, Bimal.

As Bimal said, we have the pleasure of having Vishal with us today. So I will give him more airtime so that he can share with you all the good development we have and efforts we are making on the AMC front. But having said that, let me just walk you through -- quickly through some of the key highlights for the IDFC and IDFC as a group. Effectively, one of the key things is to -- from a total consolidated purposes, although we made a loss of about INR 285 crores is what you see, INR 300 crores of our negative debit came from the DTA being remeasured at the new tax rate. So this is because of the tax. So on a PBT basis and on a consolidated basis and bank itself has started -- has turned profitable, that's the key highlights for the whole quarter. But if you take off the DTA, which is change in the rate of taxation from 34-odd to 25-point-something, you have to remeasure the deferred tax asset, and that is worth INR 300 crores. So that's a one-off entry -- INR 300 crores for us. I mean, the total number is INR 750 crores, which is there in the next slide when we talk about the bank.

Coming to the next major point, I hope we are all aware that we -- yesterday, the Board declared INR 0.65 dividend, as a second interim dividend. We made -- paid one more earlier, INR 2.50. Basically, the message out there for everybody is, as and when we get money in the hands of IDFC limited, we will continue to pay it off to the shareholders. So -- and we have evidenced the same by giving to dividends. One payment happened in October, one will happen in this month, sometime, maybe the process we need to follow in another 10 days time or so the cash would be...

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Unidentified Company Representative, [4]

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By 25 November.

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Sunil Kakar, IDFC Limited - MD & CEO [5]

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Yes, there is a process which we need to follow. Now I think if you look at this, we have delivered, as we had earlier said, about 50% of what we had indicated. And so what next on this dividend play out is in the next slide. You see we have -- it would be possible there's about INR 300-odd crores total, which is there in various entities, financial holding company, the bulk of it. And we are expecting about INR 300 crores, INR 340 crores coming from the sale of the 2 subsidiaries or rather 2 companies -- yes, they are both subsidiaries but not IDFC. I mean, IDF is now -- we own 31%, or 30% to be exact. So that Tranche 2 of IDF is about INR 250-odd crores, that should happen anytime soon. We are expecting a rather large part of all the conditions, precedents have been fulfilled. NIIF needs an approval of RBI, which we are expecting to happen soon, I mean, hopefully within this month. We then find for capital reduction and then the money moves up and once the money moves up, we'll be in a position to give out the dividend. So that's the second half of the balance what we want to pay out as dividends.

It's kind of a bit difficult, but I would still hazard a guess that we hope to achieve the capital reduction, hopefully, by next quarter, sometime before the end of this fiscal. But forecasting time lines in courts and regulatory approvals is a bit of a challenge, but I just want to say that we are making all efforts to see that the capital reduction process completes before the end of the fiscal. So that's on the balance of the surplus money available, which needs to be given back to the shareholders. Other than that, if we move onto the bank, good progress in bank. I'm sure you would have seen the bank results and good thing to watch Mr. Vaidyanathan shared on the television media. But the bottom line, I've already shared that it takes the one-offs on the tax front, the bank has turned positive. But let's see, from a strategic perspective, which we spoke that the idea was to retailize and granularize the banking aspect of it.

Now on the asset side, the retail assets are now 45%, as compared to -- when the merger had happened, it was about 35%. So that's the asset side mix, which was 65% wholesale and 35% retail. We are now 55% and 45%. So that's good progress. The other good progress with which we're really happy with is the CASA ratio. The CASA ratio was December and around December '18 about 8.7-odd percent. Today, it is 18.7%. So you can see significant movement in the direction of growth. We have 351 branches. And at the same time, the NIMs, the NIM, which was on premerger were around 1.6%. As of September end, it was 3.4%. So you can see, it more than doubled NIMs out there. So the change in mix of asset mix from wholesale-oriented to retail is also resulting in better NIMs. And it's a fact that CASA ratio is improving is also adding to the same. We have discussed on the income statement, nothing specific to talk here.

As I said, I will now hand it over to Vishal to speak a little bit more on the AMC, and then we'll get on with the Q&A.

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [6]

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Thank you, Sunil. So what I plan to do over the next few minutes or so is, firstly, provide an overview of how last quarter was for both the mutual fund industry as well as more specifically for IDFC AMC. And secondly, to share some of how we see the next few quarters as well as how we are positioning for growth. So as far as the industry flows are concerned, net equity inflows have been slowing down a bit, but the SIP growth has really been keeping the industry quite well prepared and robust. Overall flows for Q2 were marginally higher than the previous quarter, and -- while large and mid-multi-cap categories within equities have sustained some of these flows, we are now beginning to see some more interest developing in the mid- and small-cap equity categories. So that is as far as the equity flows are concerned.

Within fixed income, we've seen the trend of customers choosing the shorter-end, high-quality portfolios being sustained for some time now, and that seems to be continuing really at the cost of credit strategies where we are seeing outflows -- where the industry has seen outflows. Now short-term direction aside, the long-term drivers of the asset management industry, in our view, remain firmly in place. The financialization of savings continues, where investors are moving ahead away from real estate and gold. The awareness and popularity of mutual funds continue, regulatory environment continues to be robust and ease of investing also enabled by technology makes this a popular choice. So we think that the industry is quite well poised.

Coming to IDFC AMC, I think the recent credit events have really validated some of our conscious choices earlier where, while you see, we're taking approach that we had made that we implemented higher quality portfolios in the fixed income space. And now that trade concerns are more widely recognized, the fixed income flows have diverted to higher quality, safer products, which has benefited our funds.

Just to give you a perspective, on the noncash side, the market share for us jumped by 2.5% over the last 12 months to reach 6.9%, so just to give you the shape and size of this movement. Equity flows have been reasonably subdued like I mentioned. But overall, our portfolio is quite well diversified, and therefore, combined with our distribution capabilities, we feel we are well positioned to capture the uptick in equity over the next few quarters.

In terms of our Q2 results, firstly, I'm very happy to share that for the first time ever, we crossed the INR 1 lakh crore milestone in September. And then since then, in October and November, we've been averaging higher than that milestone. So that's a good milestone for us as an organization to have -- to be able to share.

In terms of growth over last quarter, in Q2, we grew at 14.4% versus the industry growth of 0.9%., and that made us the fastest-growing AMC among the largest AMCs in the industry. With this, our AUM averaged over INR 94,000 crores in Q2. Our overall market share expanded to 3.7% from 3.2% in the previous quarter. And more importantly, our noncash market share increased to 4% from 3.5% in the previous quarter. Driving our growth was really our fixed income franchise, where we grew 15.6% quarter-over-quarter, significantly outperforming the industry, which had a growth of 1.7%.

In fixed income, our overall market share expanded to 5% from 4.4%, which excludes cash products. And in equities, despite the general slowdown in overall net flows, we increased the market share to 2.2% from 2% in the previous quarter.

In terms of other aspects of our operations, we continue to invest in strengthening our core capabilities, especially our distribution and customer servicing. We launched a brand-new website, as an example, which will give our customers a more secure and a far better experience when they go online. Our investor base, our live FRPs as well as other aspects of our interest continues to be invested into robustly. So overall, we think we had a very good quarter, and it really illustrates the strength of our strategy as well as our focus on good quality execution.

In terms of profitability, our overall margins expanded by 2 basis points quarter-over-quarter. So this, along with a 14.4% AUM growth, is giving us operating leverage to help our business model, and that resulted in a revenue increase of 19%, and our core operating profits grew 25% last quarter over the previous quarter.

In the coming months, even if equity flows continue to remain slightly under pressure, as we've seen, we think that our product suite as well as our capabilities around distribution and marketing should allow us to be steady and grow our market share. Within fixed income, we expect that we will continue to gain market share. We have a full range of products, and we are quite well positioned in that area.

And we shared with you earlier, we continue to diversify our revenue streams by broadening our product set as well as both in the mutual fund as well as in the alternative space, where we now have 2 hedge funds as well as a PMS running quite successfully. We also will continue to expand into new markets and deepen our distribution capabilities wherever we are seeing opportunities for growth we think, as well as customer demand, we are investing heavily behind that.

So overall, we do think that we're on the right path. We have the strategy as well as the execution strength to benefit from the secular tailwinds in the asset management industry over the next coming quarters.

With that, Sunil, I will hand it over to you. Or if there are any questions, I think the numbers for Q2 have been posted. But just to share with you, like I highlighted, our AUM went up 14.4%. Our operating -- our income went up 19% to INR 77.2 crores. Our operating PBT went up 25% to reach INR 30.4 crores. The reported PBT after some one-off adjustments we had to do, largely due to mark-to-market changes on our book, was about -- was INR 23.9 crores. Our margin expanded from 29 basis points to 31 basis points.

So that's a quick summary of our financial results for Q2.

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Sunil Kakar, IDFC Limited - MD & CEO [7]

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I think we will open the floor now for Q&A.

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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 Sneha Ganatra from Subhkam Ventures.

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Sneha Ganatra, Subhkam Ventures - Analyst [2]

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Sir, my first question is considering the recent valuations of the AMC, what is the trigger we are seeing for our AMC? Any plans to list our AMC?

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Sunil Kakar, IDFC Limited - MD & CEO [3]

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Yes. I said it earlier and as we said it that at an appropriate time, we will -- you can do listing the AMC at the right time once -- see, it just started taking off, as you can see from the various numbers Vishal just spoke of. Directionally at the right time, at an appropriate size and profitability, we will look it at listing the AMC.

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Sneha Ganatra, Subhkam Ventures - Analyst [4]

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But any particular internal target you must have set for the size as well as the profitability? Could you like to share with us?

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Sunil Kakar, IDFC Limited - MD & CEO [5]

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No, no. These are -- but I can say that we -- at some point in time, it will happen, but I can't give -- there are no specific directions -- numbers to be shared at this point in time.

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Sneha Ganatra, Subhkam Ventures - Analyst [6]

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But sir, at some point of time how can I assume is it in this fourth quarter or this fiscal year or next fiscal year? What will be the goal -- road map on this?

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Sunil Kakar, IDFC Limited - MD & CEO [7]

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It depends on various factors. Definitely, not this fiscal. I can assure you of that.

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Sneha Ganatra, Subhkam Ventures - Analyst [8]

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Okay. My second question is considering the 20% of the IDFC Bank will get free in October 2020, how would you like to reward the existing shareholders? And we want some clear indication on that front, if possible?

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Sunil Kakar, IDFC Limited - MD & CEO [9]

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Yes. So between the last quarter and this quarter, we have done our homework. We have a Plan A, Plan B, Plan C. I don't want to get into these granular details, but the -- one critical input -- there is one critical input, which is clarity we're expecting from the Central Bank -- Reserve Bank of India. So let me just share it for everybody else's information also because this question is something, I'm sure, everybody is interested in. See, there is an Income Tax Act, there is a Companies Act and we have regulators, which is primarily the Reserve Bank of India. We have done all our research. We have met the tax official -- consultants. We have met the Companies Act experts. And we do have a broad framework in our mind, but a critical input is still something which we are looking forward from the Reserve Bank of India. And once that input comes in, we will be in a position to then start executing on that.

Now -- obviously, now, in this case, I can say what cannot happen before, is before October 1, 2020, it can't happen, right? You know the rules. It's not going to happen before October 1, 2020. But we are seeking clarity from Reserve Bank of India with respect to what we are willing and what is their position going to be and we don't have an answer there. So therefore, I don't have a very clear plan, but we have got all the options if done. And we are ready to implement the same -- actually, the framework is ready if once we get some clarity from Reserve Bank of India. But let me take your question in a hypothetical sense, the data point, which is clear right now, so there are no doubts at least from whatever interactions we are having, that, in the bank, the 15%, not even 20%, 15% is a gap. It is a ceiling, that is what we expect from the -- after October 1, 2020. Now as far as the flow moves, we are silent on that. Now this is where we are seeking some clarification from Reserve Bank of India. Once that clarification comes, we shall be in a position to execute it in a manner which is compliant with the Companies Act, in a manner which is compliant with the Income Tax Act.

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Sneha Ganatra, Subhkam Ventures - Analyst [10]

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Okay. Got it, sir. Sir, my third question is on the -- what is the total operating cost in the IDFC? And what would be the recurring one?

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Sunil Kakar, IDFC Limited - MD & CEO [11]

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I think we should -- I'm not carrying it right now, but I think it's about -- see, we have a windmill out there which gives some revenue. So I'll answer that, but I'm -- my rough expecting is about INR 10 crores to INR 15 crores, not more than, and our intent would be to keep it in single digits as we move along. But some of the operating cost is not pertaining to the management of IDFC Limited; it is more of a operating cost, which flows through because of that windmill, and we will -- we are going to get -- dispose it off at an appropriate value very fast as we go forward, and therefore, that level of cost will come down. So -- and during this call itself, I will just get -- somebody to get me the exact number of what is the operating cost for IDFC Limited, excluding the cost of the windmill.

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Sneha Ganatra, Subhkam Ventures - Analyst [12]

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Okay, okay. And sir, question to the Vishal, sir, and just now you mentioned that you started on the distribution fund. Then what are the areas that's in the B30s-ish? How is that marketing process on the mutual fund, which we are targeting, networking distribution? Could you share something on that front?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [13]

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See, we are still expanding our distribution, ma'am, as being a core part of our strategy for the last several quarters. And there's a slew of initiatives that the AMC is taking to try and do that. One, of course, has been that we've expanded our sales force. So there's been investment on a continuing basis on expanding our face-to-face presence with our partners, which are distribution partners. It's -- and that's across the spectrum, whether it is independent financial advisers or distribution agents. Banks and other large entities that distribute funds, but also now the new emerging ways in which funds are getting distributed, which is online and through apps, et cetera. So we do want to be present, as we are today, with all leading distributors of mutual funds and significant investments in the infrastructure has been committed to that space.

We also had a fairly successful model on expanding our distribution virtually and remotely, so using technology, again, to reach out to our partners and get our participation there. That's an ongoing effort, and we track that quite closely in terms of seeing what our success rates are across these initiatives. And of course, like I mentioned, the macro opportunity in asset management to our mind is very attractive. And we want to make sure that we are participating fully in each of these areas of growth.

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Sneha Ganatra, Subhkam Ventures - Analyst [14]

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Okay, okay. Got it.

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Sunil Kakar, IDFC Limited - MD & CEO [15]

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Just to close the data point, but the annual cost is close to around INR 20 crores excluding the windmill.

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Sneha Ganatra, Subhkam Ventures - Analyst [16]

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And one more question -- last question...

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Operator [17]

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Ma'am, sorry to interrupt. May we request you to come back in queue for follow-up questions. Thank you.

The next question is from the line of Sarvesh Gupta from Maximal Capital.

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Sarvesh Gupta, Maximal Capital - Founder [18]

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And thank you for executing on the broad strategic direction that you have been talking about in the previous quarter. I think by that tax removal -- tax proposal did help us in more quickly executing that part as well for that growth. Sir, just 2 questions: one, I missed the initial commentary on this remaining cash that you have illustrated. So this INR 40 crores, I understood, is probably going to come in the Q4 or Q1 of coming financial year. Is that understanding right, sir?

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Sunil Kakar, IDFC Limited - MD & CEO [19]

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Yes. The INR 340 crores, which we spoke of, which is from the sale of IDF Tranche 2 and IDFC Securities should happen by the end of Q4 of this fiscal. What I mentioned, and if you did miss it to clarify, as the process of moving the money up, which is a capital reduction process will go through NCLT process, that time line is where there is a little bit of flexibility, but our objective, internal objective, is to see that we get the capital reduction approval from NCLT before the end of fiscal. That is what our objective is.

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Sarvesh Gupta, Maximal Capital - Founder [20]

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Understood. And the A part, which is INR 300 crore, when is the expected time line for this INR 300 crore, sir?

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Sunil Kakar, IDFC Limited - MD & CEO [21]

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Same. I mean, if you will see the breakdown of the INR 300 crores, bulk of it is lying in the financial holding company. It can't move up because we do not have, what is called, profit reserves. It can only move up to the capital reduction process. So that way it is a capital reduction.

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Sarvesh Gupta, Maximal Capital - Founder [22]

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Okay, okay. Understood, understood, understood. That's helpful. And secondly, on the AMC side, sir, one thing which I noticed is while we grew our revenues quite smartly, our costs also grew. So the fundamental thesis of any asset management signals is that cost should not grow in the same proportion as income. So any comments there? Are there any one-offs? Or are there some strategic costs that we have undertaken this quarter, which led to 16% increase here?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [23]

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Yes. So if I can -- this is Vishal. If I can try and answer that. So yes, you're absolutely right. We did make some strategic increases in our costs. These are largely in the -- in 3 areas, which we think are very good areas to invest behind. The first is people. As you know, this is a people's business, so we've been expanding on the people side. The second is around marketing and distribution. And some of these, like I mentioned, are very, very strategic initiatives like having a brand-new refreshed website, like I mentioned. Some of these, of course, flows through depreciation, but the initiatives around technology and strengthening our core infrastructure, which has been taken in the first half. And the third is some establishing expenses, which is also around refreshed offices, et cetera, which allows us to prepare better for the next phase of growth. So you're absolutely right, we have stepped up some of the investments for the first half.

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Sunil Kakar, IDFC Limited - MD & CEO [24]

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So in one sense, these are stepped costs, not a linearly -- so we do not expect this to continue forever. So this is a step up to get better operating efficiencies in the future.

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Sarvesh Gupta, Maximal Capital - Founder [25]

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Understood, sir. And sir, finally, since you've met some tax consultants, as you mentioned, on the bank side, what can be the tax liability in case if you go for a demerger or a sale of the banks here?

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Sunil Kakar, IDFC Limited - MD & CEO [26]

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See, it's vague, but I will just say on an average the tax will be around 20- to 22-odd percent on an average, but it all depends on what path is followed. So that's an indication to you, and that's it. But again, it is dependent upon what steps or actions we will take. This is -- this approximately 20-odd percent is assuming a cash sale of those transactions.

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Sarvesh Gupta, Maximal Capital - Founder [27]

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Yes. So if they go on sale (inaudible) is 20% and then you will have some capital gains also, right, sir, around...?

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Sunil Kakar, IDFC Limited - MD & CEO [28]

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No, no. no. How do I put it. Our holding cost is about INR 40. And of course, you are right, if I sell it at INR 80, we'll have capital gains, and I have a very -- and we'll be very happy to pay the capital gain. So it depends on -- at what level you assume the sale will happen. If you remember that this is whatever the January 31, 2018, listed company share, that time the cost was -- of the bank was INR 56. So our understanding is up to INR 56.

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Sarvesh Gupta, Maximal Capital - Founder [29]

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Okay. So basically, only the dividend distribution tax in case you go for sale?

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Sunil Kakar, IDFC Limited - MD & CEO [30]

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Yes, yes, yes.

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Sarvesh Gupta, Maximal Capital - Founder [31]

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And the other day, sometimes tax guys also consider when you have a demerger that it can be construed as a dividend. In that case also, sir, the dividend is distributed?

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Sunil Kakar, IDFC Limited - MD & CEO [32]

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Yes, yes, yes. If it is not tax -- see, we do not want to get into a corporate structuring debate here, but what is principally to be established. We will be doing a tax compliant as well as tax -- sorry, as well as Companies Act compliant transfer of value in a very approximate form. We can assume that should this transaction happen through the cash flow or a demerger/merger route, which may or may not be treated as a tax compliant, then -- but broadly, in both cases, the taxes will be around 20-odd percent.

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Sarvesh Gupta, Maximal Capital - Founder [33]

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Understood, sir. And now I think the only point which you said is remaining is you want to inquire to which level you can sell. So you can certainly sell 25%, but how much more can you sell is the indication that you require from the RBI?

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Sunil Kakar, IDFC Limited - MD & CEO [34]

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That is correct. And let me also say that so that there is no misapprehension. It is not our preferred option to make any sale in the market.

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Sarvesh Gupta, Maximal Capital - Founder [35]

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Yes, of course, sir. You can't do it via the market such a large stock of shares.

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Sunil Kakar, IDFC Limited - MD & CEO [36]

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Yes.

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Sarvesh Gupta, Maximal Capital - Founder [37]

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Understood, sir. Thanks a lot. And I think I must congratulate you on the past -- whatever you've said you have been able to deliver, sir. So that is a big achievement.

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Operator [38]

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The next question is from the line of [Anil Agarwal from AAA Investments.]

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Unidentified Analyst, [39]

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And thank you for all the dividend payouts that have finally been coming through to us. My questions were largely centered around the AMC business. So over the last 4, 5 quarters, you've got some massive flows and the AUM has gone up substantially. Wanted to understand, is this largely from retail flows, corporate flows? How is that played out for us?

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Sunil Kakar, IDFC Limited - MD & CEO [40]

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So it's a good mix. And I think we've been broadly in line with the way the industry has moved. As you can well appreciate, the industry is a good mix of both institutional and retail, largely 50-50. We've traditionally been slightly stronger on the institutional side, about 55%, and retail has about 45%. And our growth, again, reflects that sort of proportion. It is quite well diversified. We've been able to also make inroads within the retail community as well as the fixed income market, both retail, online, et cetera. So like I mentioned, one of our strategic focus has been diversification, and we continue to work on that path.

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Unidentified Analyst, [41]

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Right. And what will be the share of direct plans for our AMC area?

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Sunil Kakar, IDFC Limited - MD & CEO [42]

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So again, it is broadly in line with industry in terms of the delta. In terms of the stock, we are slightly behind the industry because keep in mind, traditionally, we've been more fixed income, which has been largely HNI-institution-type of markets. So in terms of flow, we are in line with industry for direct versus industry. About 12% to 14% overall comes from direct for us.

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Unidentified Analyst, [43]

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Okay. And sir, considering this growth, then what is your outlook on the profitability target for the AMC this year? Earlier, we used to talk about INR 75 crores, INR 80 crores, but -- I mean, don't you think it should be higher considering the supernormal growth that we've been seeing?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [44]

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So our forecast would still be broadly in that line. We have to be cognizant that the markets have been very, very dynamic. So we don't want to get ahead of ourselves in looking at the last quarter growth and just forecasting it on a straight-line basis. Having said that, I think our focus is really to make sure that we are moving faster than the market. And the mix is good, and margins is something that we're optimizing all the time. So like I mentioned, despite the fact that a large part of our growth came from fixed income, which is traditionally seen as a lower volume -- or lower margin product, sorry, our overall margin was expanded, which shows some amount of both pricing power as well as prudence in terms of the product mix, et cetera. So difficult to predict, but I think that ballpark number that you have in mind should be something we should be able to deliver.

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Sunil Kakar, IDFC Limited - MD & CEO [45]

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If I may just add, what we're trying to build out here and I'm successfully trying to add here is a sustainable, profitable growth. So we don't want spikes, we don't want sixes, we would hit fours all the time, I hope. And the point being that the keyword being sustainable, profitable growth. So if you be on the sustaining -- and see, as the operating leverage starts kicking in, quarter-on-quarter, you should see -- and of course, as we all know, a large part of -- some part of the revenues is also dependent on how the markets move. This does not -- if the markets improve significantly, obviously, the revenue, and therefore, the profitability will improve. But if you see quarter-on-quarter, the way the whole profit, as you see, the numbers are out there, we should be improving every quarter. That's the outlook.

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Unidentified Analyst, [46]

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Right, sir. And considering that you have a normal growth next year, but what kind of margin improvement do you see because in my view the cost base should not continue to increase at the pace, right, though we're making strategic investments, say, this year? Next year onwards, what could be the outlook of profits?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [47]

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So again -- see what we'll be really focused on is recognizing that there are the 2 large asset classes. It's almost like asking you, unfortunately, that what's your outlook on equity last year and I'll give you the answer, and as we all understand, that's a difficult question to answer. So the way we're approaching it is that we are present in all parts of the market, recognize humbly that you can't really predict whether mid-cap will do better or large-cap will do better or cash will do better or loan/bonds will do better, et cetera. Therefore, being present across all of these and expecting a certain amount of industry growth, which the market, by and large projects has been very healthy. We think that gives us the confidence that all the investments we are making now will support that growth in the future.

The operating leverage is coming through as we speak. This is evident from the current quarter results as well. We do hope that as we've been seeing more recently, some amount of bounce back in equity will definitely help us both on earnings as well as some of the way the portfolios are positioned. On the fixed income side, I think the credit concerns continue in the market, and therefore, to that extent, the preference for safer houses like us seems to continue in the market. Having said that, we do also have a fairly strong credit team. So when we see the right opportunity, we think we are well positioned to offer products more aggressively on that side as well. So really, the strategy is that we should be able to offer value-added products to our customers and the customer pool is expanding, and therefore, we should be able to expand.

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Unidentified Analyst, [48]

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Right. Okay. Great. And one question on the equity side. So what's really helped us grow our equity flows, which were pretty stagnant before that in this quarter, they have grown? And do you see that growth really continuing in the coming quarters? We're through with half of Q3 also. So how do you see that?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [49]

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So equity flows, I think, 2, 3 things that we want to point out. Firstly, of course, the bulk of the growth in the industry, we must recognize is SIP-led. So the investments we made in the SIP book is helping, as it is for the entire industry. Keep in mind that if you look at the recent numbers, ballpark SIP inflows is about INR 8,200 crores for the industry. Yet; the net inflows in equity is about INR 6,000-odd crores for the industry. So actually, net of SIP, the industry is actually shrunk. So lump sum investors may have taken a bit of profit or they are not coming in as much as SIP grows. So anyone with higher SIP book benefits in this market. And some of the investments we made in 2017/'18 is helping on that side.

The second is, we have a fairly strong arbitraged product, and we have a full range of hybrid products. So if someone wants a slightly more conservative equity portfolio, we have most of those in place. So these have also helped us buffer some of the outflows that the industry has seen, net of SIP that is.

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Unidentified Analyst, [50]

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Right. And what would be...

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Operator [51]

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Anirudh, I'm sorry to interrupt, maybe request you to come back in queue for follow-up questions. Thank you.

The next question is from the line of Naresh Katariya from MoneyCurves.

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Naresh Katariya;MoneyCurves;Analyst, [52]

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Hello?

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Sunil Kakar, IDFC Limited - MD & CEO [53]

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Yes.

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Naresh Katariya;MoneyCurves;Analyst, [54]

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My first thing is, I appreciate that you provided the numbers for AMC first time, financial numbers. So that's very helpful because I believe we derive a lot of value from the AMC business. So I wanted to understand how our AMC is working closely with the banks -- with our bank IDFC First Bank? Because most of the other integrated houses derive a lot of distribution support from the bank. So are we closely working with the -- with our IDFC First Bank because they have a good reach of 350-branch network? How does that work?

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Sunil Kakar, IDFC Limited - MD & CEO [55]

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Yes. So first of all, you see the bank itself is still in focusing on getting the liabilities and the growth. Normally, all of this goes through and then Vishal can add from the other banks. It is -- these are independent of each other, in the sense that they have a separate entity. Of the 350, the urban centers are different. If I remember correctly, maybe almost 150-odd are in the rural space. I don't believe (inaudible) that a significant portion of our winning AMC's sales is happening through currently through the bank network channel, but that is an opportunity which we have, which we can tap in as the bank expands and builds its franchise in the urban areas. But currently, I don't think the large number is coming through the branch.

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Naresh Katariya;MoneyCurves;Analyst, [56]

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Sure. That's helpful. And my second question is on the overall our marketplace. I see that AMCs are fairly, what should I say, dominant businesses. It's very difficult to dislodge someone who's in top 3 or top 5, and the top 5 guys have remained in top 5. We are around the 10 space, and a lot of mind share goes towards the top 5, 7-or-so players. Of course, IDFC, we have got a very good name due to our exceptionally good work on the debt side, but what's our plan to get into the top 7 or top 8 in the next 3, 4 years? I understand it's going to be difficult because performance will have to kick in; distribution, we will have to be lucky with some things, but do you people -- is the team -- management team working towards a goal to get into the top 7, top 8 bracket in the next, maybe 3, 5 years?

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Sunil Kakar, IDFC Limited - MD & CEO [57]

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Definitely, definitely, but I'll leave it to the management. All incentives are aligned towards that direction again speaking from a strategic point of view. And not a month or not a week passes by when we reinforce our desire to grow steadily, sustainably, but I will ask Vishal to see how does he takes it down to the ground level.

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [58]

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Right. So that's a great question. But I think embedded between within the point you made is really 2 things, which is, if you have asked the question, why is the top 5 so important, and really, it is about operating leverage at some level, which is, like I mentioned, what we're very, very sharply focused on. And operating leverage comes because you are gaining market share, and therefore, revenue and pricing power without having to increase costs by that much. And I think we are well on our path to that.

So if you look at just the AMC over the last 6 months, we've been able to improve our rank from 12 to 10. And therefore, given the right set of factors, which includes market conditions, our own performance as well as the distribution as well as the good work the team is doing, do we have the ability to continue to grow like this? The answer would be yes. But the other point I want to make is that even if the -- the rank is an outcome. What we are very sharply focused on is market share. And therefore, if the market were to grow at a certain level and we were to able to grow faster than that, then as an investor, I think the profitability increase would be, in my mind, extremely attractive. But of course, the base of that would be what are the AUM growth in the industry and how does regulation and environmental factors change the margin in this business? So in summary, we are very focused on growing market share, and that presupposes that the market is growing at a very healthy rate. We're very focused on maintaining costs very tightly so that operating leverage kicks in having made some good investments over the last couple of years. Our margin is in line with the industry, and therefore, incrementally, we think we are very competitive. And the outcome for the shareholder, therefore, should be very attractive given that investments have been made and operating leverage now starts to definitely kick in.

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Sunil Kakar, IDFC Limited - MD & CEO [59]

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So let me just share one of the KRAs or KPIs, whatever you call, we -- I mean, I am quite sure, right down to the salesperson, the focus is not on the AUM per savings measure, very clearly noncash AUM because I can increase the AUM just like going into the cash paid. The focus is on revenue. The focus is on the market share, of the revenue. So P&L focus is very sharp out here. So I don't exactly know because these data points they are on a P&L basis, whether we are #10 or maybe slightly better than that also. So the measurement internally is more focused on our, if I may use the word, PBT or the bottom line. And you know, every meeting, we keep focusing on that bottom line is the only reality.

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Naresh Katariya;MoneyCurves;Analyst, [60]

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Sure. And just want to pass on appreciation for the very good work on the debt side in the AMC. I think we are probably the only AMC without any of those bad papers, which have haunted the industry. So congratulations on that. Thank you.

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Sunil Kakar, IDFC Limited - MD & CEO [61]

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Thank you, sir, and we'll pass the compliments to the fixed income team.

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Operator [62]

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Our next question is from the line of Ankit Singh from Value Partners (sic) [Indus Valley Partners].

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Ankit Singh;Indus Valley Partners;Senior Analyst, [63]

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Yes, I had some housekeeping questions regarding the annual report. On the annual report, you're carrying almost INR 200 crores of venture capital units and INR 30 crores invested in alternative funds. Could you just give some background on what exactly these are and how liquid they are? And they -- are they a part of the INR 1,250 crores that has been distributed?

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Bipin Gemani, IDFC Limited - CFO [64]

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Okay. So INR 30 crores of alternative funds have been sold out now. And venture capital funds are the -- our investment is GP into the funds, which were launched by IDFC Alternatives, the businesses which are sold off. But the close ended funds with maturity, which are not so much in near future, we are trying to see how and when we can exit from that. It's currently...

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Sunil Kakar, IDFC Limited - MD & CEO [65]

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No, the VCF is not liquid. Anybody who has been in this case, knows about it. Our desire or our statement to give back the INR 1,200-odd crores excludes -- that takes into account that VCF is at least liquid. So we haven't included the VCF.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [66]

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Okay. And when do they mature?

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Bipin Gemani, IDFC Limited - CFO [67]

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Somewhere, maybe [23, 24].

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Sunil Kakar, IDFC Limited - MD & CEO [68]

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But there is a secondary market also...

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Bipin Gemani, IDFC Limited - CFO [69]

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Yes, we'll figure out as to how do we get out of them.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [70]

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Okay. Because I mean, together, along with the windmill, these are almost INR 300 crores, right?

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Bipin Gemani, IDFC Limited - CFO [71]

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Yes. Could be close. It's a cost price.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [72]

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Okay, okay. And I have one question on the securities business. The amount mentioned last quarter was INR 150 crores, and this quarter, it's only INR 90 crores. So has there been a change in the price?

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Sunil Kakar, IDFC Limited - MD & CEO [73]

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No. If you will notice that there has been a dividend, so the answer is the INR 60-odd crores, or INR 57 crores to be more exact, was taken out as dividends.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [74]

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Okay. So that's already been paid out, INR 60 crores, and INR 90 crores is left.

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Sunil Kakar, IDFC Limited - MD & CEO [75]

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Yes.

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Bipin Gemani, IDFC Limited - CFO [76]

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Yes. Correct.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [77]

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Okay. And on the AMC, the average NAV for October, I think, was INR 103 lakh crore as per your finding, INR 103 lakh crore. What is the AUM as on date?

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [78]

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I'm not sure it's public information, but I can assure you it's higher.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [79]

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Okay, okay.

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Vishal Kapoor, IDFC Asset Management Company Limited - CEO [80]

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Than the last numbers that you have from October.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [81]

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Okay. Because that's the average number for October, so you're saying it's higher than that?

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Sunil Kakar, IDFC Limited - MD & CEO [82]

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Right. So we continue to grow.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [83]

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Okay. Perfect. And on the -- Sunil, on the bank shares, I think last quarter when we had the call, you had mentioned that you would be putting out the various options we had with the bank shares and the tax implications of each of those options, whether it's a demerger, whether it's a sale or whether something else. So I mean, there is nothing in the presentation this quarter. So I mean, is there some way...?

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Sunil Kakar, IDFC Limited - MD & CEO [84]

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The first, we've answered that question -- somebody, the first person who asked the same question, and we've answered it. I don't know.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [85]

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No. So see, it's not very clear. There's a lot of confusion. As per the regulations, your lock-in ends on October 1. So once the lock-in ends, the only question as per RBI is, I think whether the promoter needs to stay or exit. But I don't think there's a question on whether we can sell all the bank sales, right? We can -- we should -- once the lock-in ends, we can sell 40%?

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Sunil Kakar, IDFC Limited - MD & CEO [86]

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No. So let me -- I think that's where -- your first question was right, whether the promoter needs to stay or can exit. Whether, you use the word exit, exit means exit completely, right? So there is -- so let me repeat what we know as of now with all our research. We can come down up to 15%, there is no doubt on that, okay?

Now the exit, which is the question, which you have said that is a philosophical answer or a policy decision we are awaiting from Reserve Bank of India that if -- will you allow us completely exit or not. And based on that, that number, I mean -- so if you -- I think it's almost binary in my mind, it's either 15% or 0%. I mean -- but again, I don't know whether below 15% what is the thought process of the Reserve Bank of India. And that is why we have -- I've already answered this question. And then how to sell, how to get out, I mean, all those have to be thought through. But the input, and therefore, the action steps will vary depending on whether there the Reserve Bank of India says that the promoter can exit.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [87]

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No, but -- that's fine. But can't you actually share those on the presentation, depending -- you don't have to say that, okay, RBI -- you don't have to wait for the RBI's decision. Can't you actually put it on a presentation so that all investors can see, "Okay, the RBI gives us this, then we follow this step. Otherwise, these are the steps we're going to take and these are the tax implications for each." Because the market discount is there because there's a lot of unknowns. So if you actually put it on a presentation that this is best case, worst case, these are the options, I think that would make the market...

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Sunil Kakar, IDFC Limited - MD & CEO [88]

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Yes. Okay. Your point is taken. Let's look into that and see what best we can communicate. As of now...

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Ankit Singh;Indus Valley Partners;Senior Analyst, [89]

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No, but -- actually, we already discussed that, and you had said that you'll put out something by this quarter. So I mean, if you can set a hard date for it, say, within a month or so. I mean, I'm sure if you've spoken to tax council, it shouldn't take that long.

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Sunil Kakar, IDFC Limited - MD & CEO [90]

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So therefore -- okay. So again, I think I'm repeating, but I'll still do it for the benefit of everybody. The answer, if we were to -- so that if we were to -- from a tax perspective, I have already answered. On an average, we should be looking at -- see, I cannot give a number. I can only give a range because I don't know at what price will it be sold. Okay? So this question has already been explained in an answer to the first person who asked that question, and therefore, I don't want to repeat everybody's time, but approximately, just to close this item, the tax liability could be in the range of 20% to 22%.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [91]

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Okay. No, no, that's on the bank side, what about the AMC? See the banks, we have this question mark with the RBI. With the AMC, why can't we just follow the same process we have done with the bank. Regulatory, we need to be sponsored and hold 40%, but we can get -- we can distribute to 60% of the shares to shareholders, demerge the AMC into a listed company and unlock value that way because at the current market price of IDFC, the AMC is being valued basically at 0. So I mean, you already told the lady earlier that you don't have a time line, but I don't think that's good enough. With the discount being where it is today, why are you not exploring options like demerging the AMC into a listed company and distributing 60% of the shares to shareholders?

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Sunil Kakar, IDFC Limited - MD & CEO [92]

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That is part of our work in progress with respect to, as I mentioned, clearly that there is a Company's Act, there is an Income Tax Act and then there is a regulatory clearance. If you demerge -- and again, this -- I'm more than welcome, if you can have a separate call on our meetings. There are many sections under various acts, which are not yet resolved clearly, and hence, I don't want to put up something in the public domain, which subsequently we find out that we are unable to execute the same.

Today, there are -- all -- relevant options stage. We are reviewing. We are reviewing the risks. We have not been able to come up with a foolproof answer to executable options as of now. And all the challenges and options, we are more than happy to discuss on a one-on-one basis or anybody else, but the rationale of the reason we are not out there with a clear path is because at every option which we are considering has some level of execution risk associated with it, which may result in a complete, if I might say -- we have to -- it's like going into an alley and then finding it is locked and then coming back all the way and then trying another option. We want to be reasonably clear that the hurdles, which we are foreseeing, we have thought through it, and we know what -- how to overcome that. And hence, that is the reason it's -- we are -- we don't have a clear plan as of now. But I can explain to anybody who has the time and effort to what are the challenges, which section, where it is coming through as a challenge. And this is not about IDFC Limited, which has been researched and reviewed with various senior legal counsel people, so we know what we are trying to do.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [93]

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Yes -- no, but like if we did for the bank, what stops us for doing that for AMC, for example?

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Sunil Kakar, IDFC Limited - MD & CEO [94]

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What stops us with -- sorry, what are we doing for the bank? We are...

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Ankit Singh;Indus Valley Partners;Senior Analyst, [95]

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No. As and -- see, when we demerge the bank and we ended up with a listed entity holding 53%...

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Sunil Kakar, IDFC Limited - MD & CEO [96]

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It's the same answer that for you that, that demerger was tagged compliant under Section 2(19AA) of Income Tax Act that we are trying to do the same for AMC, which is -- the thing is not compatible with that. There are views which indicate as this will not be treated as tax compliant demerger and then the tax liability is...

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Ankit Singh;Indus Valley Partners;Senior Analyst, [97]

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Yes, sorry, let me just interrupt. If it's not tax compliant and shareholders have to bear a 20% or whatever tax liability, I don't mind having that tax liability. Because right now, I'm getting 0 value for the AMC at my current price. See, please appreciate that long-term shareholders have lost 50% of value in IDFC Limited within the last 2 years. So if -- for you to come on a call and not have a clear plan for the next 1 year -- for the bank, okay, RBI, we are waiting for some -- whatever clarifications. But for the AMC, it is within our control, and there is a clear path to value-unlocking where we can distribute shares to shareholders. So if I have to pay a tax of 20%, 25%, maybe that's fine with the shareholders. Right now, at the moment, that's...

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Sunil Kakar, IDFC Limited - MD & CEO [98]

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Yes, it's fine. I admit. So again, that is only one part of the story, which is a tax aspect of it. Okay. It is a second part of the story, which is called SEBI, a regulator with respect to sponsor. Okay? So to that extent, when you demerge, let's assume that we are walking that path and the timing of what the tax liability could be and that -- and we can't share with you why that is still uncertain or unknown because it is not known as of now. There is this issue with respect to the new company which is going to be formed. Okay? Because if you are demerging, you're forming a new company. The new company from a SEBI perspective is a new company, whether -- I mean -- whether we have -- whether we will get the sponsorship, eligibility is another advent which needs to be sorted out and getting answered from a regulator is not something which happens so. Again, I'm saying there's an option A, B, C. We know where the challenges are, and we'll be more than happy. Once we know that there is a realistic option, which means that this can be executed, we will be more than happy to share it with all concerned.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [99]

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No. So when -- what is the time line for that?

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Sunil Kakar, IDFC Limited - MD & CEO [100]

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So the time line is...

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Ankit Singh;Indus Valley Partners;Senior Analyst, [101]

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And what is -- yes, sorry.

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Sunil Kakar, IDFC Limited - MD & CEO [102]

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See, the answer there is, the clarity -- getting a clarity from a regulatory authority is not as simple as one may believe that you ask a question and you get an answer.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [103]

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No. of course, but have we contacted -- have we reached out to SEBI? Have we written a letter to them? Have we reached out and asked other regulators, I mean, because all these things take time. Even if you start it today, it will take 1 year from today.

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Sunil Kakar, IDFC Limited - MD & CEO [104]

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Yes, yes, yes. So we will -- we are in the -- we have -- we are started -- we have started talking in the background. We have started talking.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [105]

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Okay. To SEBI about AMC and options there?

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Sunil Kakar, IDFC Limited - MD & CEO [106]

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To consultants who are experienced in the SEBI world.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [107]

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Okay. But I mean, Sunil, I don't think that's good enough because 3 months ago this was exactly what you've told us, and it's exactly -- you had told us that time also that you are in touch with tax consultants and you will clear up and you'll have more info to share with us?

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Sunil Kakar, IDFC Limited - MD & CEO [108]

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Yes. So 3 months later, a firm information which we have to share with you is that the total tax liability is going to be in the range of 20% to 22%, which was not there last time. The other clarity we have is...

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Ankit Singh;Indus Valley Partners;Senior Analyst, [109]

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This was for the AMC or for the bank?

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Sunil Kakar, IDFC Limited - MD & CEO [110]

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It can be any asset, any asset, any asset. And the number would vary depending on the capital gains tax. In the bank, I explained that there may not be a capital gains tax because we don't have any -- I mean, the cost price is higher than what we expect the sale to be. But in AMC, there is no sale price available, and hence, or other -- the price at which one will have to pay tax is unknown because it's an unlisted company, so that is the second aspect. So given that -- so that -- so these are the 2, 3 clarity which we -- since has emerged.

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Ankit Singh;Indus Valley Partners;Senior Analyst, [111]

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No, but you may...

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Operator [112]

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Ankit, I'm sorry to interrupt. Maybe request you to come back in queue for follow-up questions. Thank you.

(Operator Instructions)

The next question is from the line of Anish Jobalia from Banyan Capital.

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Anish Jobalia, Banyan Capital Advisors Private Limited - Senior Research Analyst [113]

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Sir, just a couple of simple questions. So one is, sir, you mentioned about this INR 640 crores wherein you are trying to achieve this capital reduction, which is there in a subsidiary. So my first question is, sir, then, can we basically expect the next set of dividends to start coming only in the next financial year, like most probably from Q1 of FY '21?

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Sunil Kakar, IDFC Limited - MD & CEO [114]

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As I had mentioned earlier, our objective is to see if we can do it in Q4. So depending on how -- what is the outcome of the NCLT, it can be either Q4 or Q1?

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Anish Jobalia, Banyan Capital Advisors Private Limited - Senior Research Analyst [115]

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Okay. And -- all right. So -- and the second question is, as I understand, regarding the bank you are trying for either the sale, like, in the form of cash or through the demerger, so should one now not think about the collapse of the holding company structure? Or is there any update around that too, if you can just provide, sir?

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Sunil Kakar, IDFC Limited - MD & CEO [116]

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So that, again, just to repeat, unless RBI is willing or is in a position to give us clarity that promoter is not required that is not possible.

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Anish Jobalia, Banyan Capital Advisors Private Limited - Senior Research Analyst [117]

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Okay. So no update around that, right? Is that right, sir?

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Sunil Kakar, IDFC Limited - MD & CEO [118]

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Yes. No update on the fact that the need for promoter or not is a higher-level positive decision at RBI, and it will take time. The only update is that up to 15%, there should not be any challenge on that.

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Anish Jobalia, Banyan Capital Advisors Private Limited - Senior Research Analyst [119]

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So this 15%, it means that you can -- see -- you are like basically trying to contemplate the thing whether you can -- will be, like, sell of the entire 40% or whether 25%, that's the right way to think about it, right? That's why you're waiting for the, like, your communication with the RBI?

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Sunil Kakar, IDFC Limited - MD & CEO [120]

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No. The whole methodology is -- at one level, we answered it yes, and again, I had mentioned, we are not -- it is not our preferred option to sell because it's not a preferred option to sell 40% or 15%. If and also I think -- if the RBI's decision is that a promoter is not required, then the route to achieve that 0 is different compared to if you have to hold 15%. That's all.

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Operator [121]

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We will take the last question from the line of Sarvesh Gupta from Maximal Capital.

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Sarvesh Gupta, Maximal Capital - Founder [122]

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Sir, one doubt I had, should the RBI allow you to go below 15% on the bank, would you prefer to go to 0 or would you want to remain at 15%? Do you have some thought around that?

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Sunil Kakar, IDFC Limited - MD & CEO [123]

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No. I think the most -- most shareholders want us to go to 0. So I will be a abided, guided by -- so the answer is 0.

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Sarvesh Gupta, Maximal Capital - Founder [124]

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Okay. Sir, on the AMC value unlocking, sir, now there are 2 methodologies, which you're talking about. One is, of course, the demerger. In which case -- the one is demerger. The other is, of course, you do the IPO by selling your shares without distributing to the shareholders, something like what ICICI did for ICICI Prudential. So have we -- do we have a preference between the 2, because if we are choosing the latter, then, of course, we'll also have to see that what scale, as you're mentioning, we have to do the IPO. Firstly, if it is a whole demerger of the 60% we have, then you can do it anytime because then it will cause the shareholders to keep it for how long they want?

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Sunil Kakar, IDFC Limited - MD & CEO [125]

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Yes, the preference will always be to give the existing shareholders the maximum value out there. The preference is if we had an option of it, it will remain in the -- the bias would be to give it to the existing shareholders.

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Sarvesh Gupta, Maximal Capital - Founder [126]

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Okay. And you were currently exploring all the angles which one is allowed and what is not allowed. So that is where you're right now?

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Sunil Kakar, IDFC Limited - MD & CEO [127]

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Yes. There is -- this angle of -- see that even -- so let me be clear so that it's clear for everybody. Even for existing shareholders, we have to give a listed stock. We can't give you unlisted stock. Okay? And because I have to give you a listed stock, the listing of AMC becomes a necessity whether we -- I don't want to list it for an IPO or (inaudible), et cetera, et cetera. So then the question comes is, when do we go for listing? Because, I mean, if you are mature enough, you will realize that listing can be premature because this is still a young and growing company. It can have its own volatility, which can impact the growth of that business. So one has to measure those risks and then take an appropriate action as to -- because there is no way I can give my existing shareholders on this big shares. So whichever route we follow, A or B, as we just said, the listing of AMC is a kind of preconditions out there. And one route of demerger, it will automatically -- I mean, we'll have to list it and the market will discover the price. So whichever -- in the other route, we will go list some portion and when transfer it. So it just 2 ways, but the listing will be a definite necessity of whether it is directly of AMC or the company which holds AMC.

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Operator [128]

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That was the last question. I now hand the conference over to the management for their closing comments.

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Sunil Kakar, IDFC Limited - MD & CEO [129]

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Thank you very much, and we will hold the next conference when we have something substantial to share with you. Thank you.

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Operator [130]

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Thank you. Ladies and gentlemen, on behalf of IDFC Limited, that concludes this conference call for today. Thank you for joining us, and you may now disconnect your lines.