U.S. Markets open in 6 hrs 37 mins

Edited Transcript of REPCOHOME.NSE earnings conference call or presentation 16-Aug-19 10:30am GMT

Q1 2020 Repco Home Finance Ltd Earnings Call

Sep 19, 2019 (Thomson StreetEvents) -- Edited Transcript of Repco Home Finance Ltd earnings conference call or presentation Friday, August 16, 2019 at 10:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Bala S

Repco Home Finance Limited - IR Officer

* Subramanian Balaganapathy

Repco Home Finance Limited - Assistant General Manager

* Yashpal Gupta

Repco Home Finance Limited - CEO, MD & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Aakash Dattani

HDFC Securities Limited, Research Division - Research Analyst

* Bunty Chawla

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

* Darpin Shah

HDFC Securities Limited, Research Division - Equity Analyst

* Dipanjan Ghosh

Kotak Securities (Institutional Equities) - Research Analyst

* Jay Modi;Emkay Investments;Equity Analyst

* Kunal Shah

Edelweiss Securities Ltd., Research Division - Associate Director

* Piran Engineer

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Pranavi Shirodkar-Kulkarni

Edelweiss Securities Ltd., Research Division - Fixed Income Credit Analyst

* Pranay Rajani

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

* Shubhranshu Mishra

BOB Capital Markets Limited, Research Division - Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, good day, and welcome to the Repco Home Finance Limited Q1 FY '20 Earnings Conference Call hosted by Batlivala & Karani Securities Private Limited. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Bunty Chawla, from Batlivala & Karani Securities. Thank you, and over to you.

--------------------------------------------------------------------------------

Bunty Chawla, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

Good afternoon. On behalf of B&K Securities, I welcome you all to Q1 FY '20 Earnings Call of Repco Home Finance. We have the management today represented by Mr. Yashpal Gupta, MD and CEO; Mr. Arun Mishra, CDO; Mr. T. Karunakaran, CFO; Ms. Poonam Sen, GM; and Mr. Subramanian Balaganapathy, AGM.

I would now like to hand over the call to Mr. Yashpal Gupta for opening remarks, post which, we can open the floor for Q&A. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [3]

--------------------------------------------------------------------------------

Okay. Good afternoon. Just a small addition, Mr. Pal Panil, who's our General Manager is also present today. So good afternoon, everyone, and a warm welcome to Repco Home Finance Limited Earnings Conference Call for the Quarter Ended June 30, 2019.

The operating environment continue to be challenging in Q1 during the ongoing election, (inaudible) manufacturing especially in Tamil Nadu, which is home to a number of automobile manufacturer and auto parts maker in addition to textile industry. The consumer (inaudible) global manufacturer and the like (inaudible) all this added direct impact on our borrower who are engaged in the consumption value chain. It was a combination of neutral demand and unavailability of working capital for business owners owing to the ongoing Repco (inaudible) Repco Home Finance try to capitalize on the opportunity offered, but the liquidity crisis will cherry pick some quality small (inaudible) proposals in Tamil Nadu, Karnataka and Andhra Pradesh. We registered about 13% growth in loan book even as business trends registered a slight degrowth owing to the ongoing election and muted demand in April and May 2019. The impact of these factors are also seen in terms of very low takeover loan by other entities. The repayment rates moderated to a multiyear low of about 13%. Both repayment rate and disbursements are expected to pick up in the interim quarter. In any case, our guidance for FY '20 loan book growth remains 13% to 15%.

During the quarter, we earned a spread of 3.1% and a margin of 4.5%. Thanks to the productivity ratio revision in our benchmark lending rates, overall yield on the book increased to -- increased by 0.2% sequentially to 11.4%.

Also, as mentioned in our previous call, we have been increasing the spread of our MLR, which is a benchmark rate for certain type of customers. This is an ongoing process to ensure that our pricing reflects the volume risk. Having already demonstrated our ability to protect profitability even in difficult times, we remain confident of protecting the 3% watermark spread in the possible future as long as the macro environment doesn't deteriorate further.

We kept our operating costs in check this quarter to deliver a lower cost-to-income ratio of 18.5%. Owing to adoption of Ind AS standard 116 leases from Constable 2019, we have seen some reclassification of expenses. Other expenses pertaining to range have been reclassified to precision and finance cost. We continued to expose all account-specific cost and amortize account-specific income and expect income cost-to-income ratio to be below 20% going forward.

GNPA had a seasonal curve and grow sequentially, the rise was disproportionately to what would have been as the macro factor I touched upon earlier has not played out. I'm happy that despite all the challenges, we were able to contain the GNPA of 4.2%. The year-on-year increase in GNPA from 4% last June compared favorably to the sharp increase reported by other industry participants.

The balance between our exposure to this self (inaudible) segment and the talent class stood at about 54.2% and 45.8%, respectively. The share of nonhousing loan that is last in the loan book increased marginally to 18.5%, up from 18.2% reported last year.

Capital adequacy ratio continues to be comfortable at 24.5% of (inaudible) provision for this -- comprising entirely of payroll capital. Our retail network comprises of 147 branches and 27 satellite centers. We entered Rajasthan in the last quarter. Our employees then stood at 941. Liquidity continues to remain extremely comfortable for our company. As we speak, we are over INR 1,300 crores. I repeat, over INR 1,300 crores of unutilized lines of credit from banks. I expect this number to remain steady on a rolling basis given that we are in advanced discussion with few more institutions to secure new lines of credit. Furthermore, there is balance sheet liquidity of about INR 200 crores in the form of cash and cash equivalents. We are basically (inaudible) with the bank. Needless to say, that we are very well prepared to meet any liquidity requirements.

Now I will summarize the key financial highlights for the quarter ended June 30, 2019, before opening the floor for Q&A. Total income stood at INR 328.1 crore, which is 14% up from the quarter 1 of last year. Our net structure interest income was INR 127.1 crores, which was marginal -- resulting in margin of 4.5%. Our profit after tax has gone 2% at quarter 2 exactly as year-to-year, 2 -- is INR 2.3 crores. Our loan books increased to INR 11,342.1 crore, registering a growth of over 13% year-on-year. Our GNPA stood at 4.2%. Our [ret exposure] as you are aware, we're all on Ind AS from last year, so it add 1.5%, and (inaudible) coverage effect 31%, which is one of the highest in the industry.

If (inaudible) improvement in overall credit and economy over the next 2 quarters for the economic activity to pick up and the consumer confidence to return. In the meantime, our focus on stability and maintaining the quality of the balance sheet. We will target the loan book growth of 13% to 15% this year.

Thank you all for joining the call. We'll now take any questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) The first question is from the line of Aakash Dattani from HDFC Securities.

--------------------------------------------------------------------------------

Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

So my first question is on the ECL provisioning for the quarter. Now if I look at the pattern of quarterly provisions for the last year, in 2 alternative quarters, the company has seen write-backs and provision to the other 2 quarters. And I understand that this move or has some degree of correlation with the quarterly asset quality movement. So is that fair to assume?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [3]

--------------------------------------------------------------------------------

It's not fair to assume that, I'll tell you why. Because the last year was the first financial year where we're shifting from the Indian GAAP provision to Ind AS provision. In Indian GAAP, our provision was significantly higher. So it's the size about INR 200-odd crores as of March 2018. Nonetheless, [you've got] easier provisioning because of the goodwill of security. The loss during the quarter [1] will be [added to the] existing quarters to write [exit] provision, the exit provision that we have made. But we were reluctant. That's why on quarter-on-quarter, there were calculation of the model also evolving, so just basically those adjustments which are there. Now as on March '19, we fully transferred (inaudible) shifted to the Ind AS, and what did we do to not revise the provision that we had already made. We identified some specific accounts which [we're expecting maybe] overall NPAs. And there, we made 100% provision. That is why all of these adjustments happened after March '19. Now from this year onwards, we are fully into Ind AS. And now onwards, we'll not be mentioning these. I wonder if it's based on asset quality.

--------------------------------------------------------------------------------

Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [4]

--------------------------------------------------------------------------------

Okay. So now it will be unlikely that you would see the same kind of volatility quarterly in provision?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [5]

--------------------------------------------------------------------------------

You're right. You're absolutely right. Yes.

--------------------------------------------------------------------------------

Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [6]

--------------------------------------------------------------------------------

Okay. And sir, my second question, so last quarter, I believe there was some sort of income reversal of about INR 14 crores. So is there anything of that sort this quarter?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [7]

--------------------------------------------------------------------------------

No, no, that was again because of Ind AS. It's basically what we have done was the income like fee for [same thing all that] was booked upfront as per Indian GAAP. But under Ind AS, we assume a portion over a period of time. So whatever booked also had to be reversed. So that was the reversal. Now as (inaudible) as on March, all these are accounting recurring entries. They were not a real effect on our business. This year, only change that have been made which was allowed is Ind AS one-off rate. Whereby all our lease (inaudible) are also capitalized down (inaudible) rental, now they're being [mentioned] as capital asset in our book, and there is a corresponding liability. And we're putting depreciation on the capital asset which is a pressure, you can say, and interest cost on the future liability. That is in relation...

--------------------------------------------------------------------------------

Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [8]

--------------------------------------------------------------------------------

Okay. Yes. So and how are you seeing the recoveries under SARFAESI this quarter?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [9]

--------------------------------------------------------------------------------

The provision of SARFAESI have been very good. They are then, I mean, 40 crores, 40 crores we are recovering.

--------------------------------------------------------------------------------

Aakash Dattani, HDFC Securities Limited, Research Division - Research Analyst [10]

--------------------------------------------------------------------------------

In 1Q?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [11]

--------------------------------------------------------------------------------

Yes. About INR 30 crores, INR 40 crores. Yes. The challenge that we have is because the NPA depreciation, whatever depreciation 90 days, so the customer is saying some are 60- to 90-day default, 120-day default, they may come to 90 days categories, then again, they'll pay, they'll come back. But otherwise, we are trying to adjust to volatility by focusing not only NPAs but also on what we call SMA 1, SMA 2 cases but not in default.

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [13]

--------------------------------------------------------------------------------

I just wanted to understand that you increased quite a few branches on a Q-o-Q basis, but the number of employees haven't increased on a commensurate manner. So that was my first question. How do I look at the employee increase versus the branch increase? And if we are likely to see any employee expense increase over this particular fiscal?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [14]

--------------------------------------------------------------------------------

Okay. 3, well, for the new brand, it is open only with 3 employees. So it is not like a commercial bank where we need 12, 15 employees per branch. There are hardly 2, 3 employees. At some branches, we open with 2 also because in the first year we give some of target of only INR 10 crores, and they're required to do only, as you know, our branches do only the simple loan product based on deposits and all that. So that's why in some other places, employees are casual, also some resigns on clients. So we don't see a significant increase in the employee comp.

--------------------------------------------------------------------------------

Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [15]

--------------------------------------------------------------------------------

Okay. So through the year, how did we look at the employee expense in fiscal '20, sir? How much are the increase there?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [16]

--------------------------------------------------------------------------------

See, our overall target is to maintain the same ratio, maybe 1%, 2% increase here and there. But yes, some employee expense are fixed. And then we give an increment also (inaudible) because we follow the PSA structure to a large extent. So we could -- we also, we are not allowed to sell the (inaudible). So there'll be some increase year-on-year, but we expect that increase will be recovered by the increase in the net interest income. So on percentage basis, our target is to have overall cost-income ratio of less than 40% maybe as I told some (inaudible) may happen here and there. But overall, we want to maintain 40%, which is (inaudible) maximum that is.

--------------------------------------------------------------------------------

Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [17]

--------------------------------------------------------------------------------

Right, sir. Second, sir, I wanted to understand your core book of Tamil Nadu. It's still not growing at a tepid -- at a huge pace. How do we look at the Tamil Nadu home loan market? And when do we see the growth picking up from there? Are the sand mining issue still an issue in Tamil Nadu as well, sir?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [18]

--------------------------------------------------------------------------------

Mining issue is still an issue, of course, but not we will of course used to that land issue, a technical issue. Unfortunately, things happened whether in Q1. As you know, there were lots of receiver doubt in the managed district of Tamil Nadu. And because we are in the particular wind business, so we will (inaudible) Overall, because Tamil Nadu market has been slower than other states, and this has started picking up, we expect nowadays the overall economic situation, firstly, I would say, difficult. So it will be difficult to say when it will improve. But probably, if the overall situation improves and we expect government to take some action on that front, then Tamil Nadu market will also grow. Because, still, today, we are not sure about how our market will pan out in the next 6 months or 1 year time. Because as you know, jobs are being lost in the automotive sector. Then the real estate sector is in problem. And we have faced many of the problem. For us, fortunately, we are not being affected because we have 100% retail book. But still the challenges are there. So it is difficult to predict. That's why we are keeping our growth target moderate at 13% to 15%. If this growth is higher, we will be, of course, be putting higher growth.

--------------------------------------------------------------------------------

Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [19]

--------------------------------------------------------------------------------

Right. Sir, just to understand the anatomy of the growth, this 13% to 15% that you're saying, how much of it -- so Tamil Nadu book will grow by how much in this particular year, sir?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [20]

--------------------------------------------------------------------------------

In the quarter 1, they grew by 8%. And rest of India grew by 19%, [by average] was 13%. When we made our prediction for the year, we took Tamil Nadu growth below 10%, maybe 8%, 9%, 10%, within that range. (inaudible) What we are projecting today, if this grow higher, that will be better for us. But as of now, today, that is our estimate.

--------------------------------------------------------------------------------

Shubhranshu Mishra, BOB Capital Markets Limited, Research Division - Analyst [21]

--------------------------------------------------------------------------------

Right. Sir, and just one last question, any specific issue with Kerala? Your Kerala books simply hasn't been growing for the last 3, 4 quarters. It's just where it is. So any specific issue with that particular state in terms of disbursements or any other issue?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [22]

--------------------------------------------------------------------------------

Basically, the issues are common to all players that last year was flat. This year also, we are flat. And then as you know, Kerala economy was largely dependent on (inaudible) they started coming back. So the margin is not there that much. And later in the quarter, also higher in Kerala. But still, we have not taken any conscious decision on growth level. It is such that that demand is not there.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

The next question is from the line of (inaudible) of [HG] India.

--------------------------------------------------------------------------------

Unidentified Analyst, [24]

--------------------------------------------------------------------------------

I wanted to ask as to what is the 180 plus vis-à-vis size of asset while you report the (inaudible) like 180 plus?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [25]

--------------------------------------------------------------------------------

We guide (inaudible) but we don't give, but we can share -- I mean whatever we publish, we only share that because the -- and then the guidelines, we're required to share the NPA data, that we don't share.

--------------------------------------------------------------------------------

Unidentified Analyst, [26]

--------------------------------------------------------------------------------

Okay. But is there a huge stickiness in terms of your NPAs? Because what we've seen in the trend is in Q4 the NPA, gross NPA (inaudible) assets dropped, and then they suddenly come back again in Q1. So of course, there's a seasonality factor, and there are certain targets which probably the branch managers will have to reach in terms of their gross NPAs. But how do you see the stickiness of core NPAs if one would look at it that way?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [27]

--------------------------------------------------------------------------------

Okay. So I'll say that out of the NPAs that we have 4.2%, in my view and based on our quarter data and the measure that we've done, less than 2% NPA are overall NPAs, which we call core NPAs. And they are already almost [73%] from January to May. Other NPAs, I would like to understand that the rupee, but maybe they pay because when you have a smart data or a smart businessman because of demonetization, they're still being affected by now (inaudible) but still, they're cash flows are affected, so they pay. They pay but (inaudible) then they are not able to pay. We aim to provide for NPA (inaudible) 90 days. So say, for example, in March customers, customer pay for 3, 4 months. Then we say, "Okay, start NPA in March." But next 3 months, they're not able to pay. Again, we pay NPA in June. Again, we pay in September, then it is our NPA. So this volatility continues, which we're trying to address, that we're also trying to tell our customers -- I mean, this one example of one customer, that is what -- see the number of NPAs to see are only 2,200 so they are not very large number of NPA accounts. So we are now trying to tell all our customers that it is in your interest that you continue to pay because if you pay, the highest 12,000, it is easier for you to pay 12,000 every month rather than pay 36,000 every 3 months. So it is more of a behavioral issue rather than a sort of credit quality issue. And then to sort of hold them or question them, we are offering other methods like we are going very aggressively. (inaudible) historical. But now we're also taking action, so they are coming forward. So yes, it's a behavioral issue of the customer.

--------------------------------------------------------------------------------

Unidentified Analyst, [28]

--------------------------------------------------------------------------------

Okay. Sir, related question. Sir, have you -- given the quality of book and the slowdown that we're seeing in the economy, how do you see the [dollar] impact the credit cost or the provision in credit write-offs that you account for on a full year basis? Obviously, it is subject to markets not (inaudible) from you. But do you see -- could there be any spike in provisioning or NPAs thereof?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [29]

--------------------------------------------------------------------------------

I don't see it all. In the first quarter, we made for certain provisions that started over INR 30 crores for the entire year -- remaining same, which I don't think it will come down. But we don't see more than INR 30 crores. And now, the (inaudible) starting book size of 11,300 -- INR 11,000 crores, INR 100 crores, and we are targeting about, say, INR 12,500 crores or INR 1,600 crores at year-end. So depending on which percentage you take, it will definitely be less than 0.3%, maybe 0.25%. So I don't see any (inaudible) the advantage we have. That's why ECL is actually a bit better for us that these security values are very high for us. They're still in recovery, but we don't see a cost. In fact, in our history, we are probably (inaudible) 19 years. We have written INR 25 crores for our schedule (inaudible) still done. But actually, our principal return only INR 25 crores. Today, now the case is, well, the customer (inaudible) which is a 3-year, 5-year overall customer (inaudible) 3-year, 5-year NPA also and they purchase only for part of the -- partner of interest. So (inaudible) institution, there's the family, in some cases, we have both husband and wife are required, down to their children are going to pay, those can be considered. That's why in our 20 years only, we have done only INR 25 crores of principal (inaudible)

--------------------------------------------------------------------------------

Unidentified Analyst, [30]

--------------------------------------------------------------------------------

And sir, my last question, you mentioned Repco capitalizing on the ongoing liquidity crisis and significant asset. So at the same time, you've seen repayment being at multiyear growth, 13%. So has -- obviously, the competition has substantially abated, but how are you underwriting now? Are you able to underwrite on your own terms, carry more yield for the same asset because there is less competition?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [31]

--------------------------------------------------------------------------------

There are 2 steps, 2 parts to that. One is that from the (inaudible) side, definitely, competition has decreased and that's why we are able to distribute our (inaudible) pricing. But at the same time, the second part is that banks are becoming aggressive. And you see or too much cautious. And if we start charging too high yields, then probably customers still go to the bank. So it has to be a balancing act. But compared to last year, this year, we're able to analyze on better term and with higher rate of interest, but not fully on our account.

--------------------------------------------------------------------------------

Unidentified Analyst, [32]

--------------------------------------------------------------------------------

Okay. And are you seeing a spike in your cost of fund?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [33]

--------------------------------------------------------------------------------

No, cost of fund we feel have peaked out. For this quarter, it was 8.6%. As you know that over 74% of borrowing is from bank, and bank loans are linked to MCLR. Many of them have started decreasing. Some overall decreased. But it will take time to pass on because (inaudible) will happen gradually. Second is that we are also allowed now prices depending to the FFC (inaudible) loan, now it is 20 lakhs, so 90% of our housing loan book is [underwrited] et cetera. So banks will get prices (inaudible) we can negotiate (inaudible) from there also. So if anything, I expect the rates to go down. But for us, the cost of fund has peaked out.

--------------------------------------------------------------------------------

Unidentified Analyst, [34]

--------------------------------------------------------------------------------

So very interesting. And one more thought, going down the securitization route on (inaudible) would you be able, are they able to get much more lower cost of funds because that will directly qualify as ESL and what we've heard is they could just -- able to sell those assets at a marginal rate of just about MCLR?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [35]

--------------------------------------------------------------------------------

(inaudible) what we have year-on-year, they were able to sell at a very low rate. But nowadays because the bank clearly invests in money. So for portfolio, they are -- like, we discuss with few banks. They were taking 9.5%, 10%. Obviously, for us, that was -- came up very costly. So we are not running as of now or anything like that.

--------------------------------------------------------------------------------

Operator [36]

--------------------------------------------------------------------------------

The next question is from the line of Piran Engineer from Motilal Oswal Securities Limited.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [37]

--------------------------------------------------------------------------------

Couple of questions. Firstly, can you state your stage 2 loan?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [38]

--------------------------------------------------------------------------------

Unfortunately not.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [39]

--------------------------------------------------------------------------------

I'm sorry?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [40]

--------------------------------------------------------------------------------

Unfortunately, we don't share with the market.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [41]

--------------------------------------------------------------------------------

Oh, okay. Okay. Fine. Sir, secondly...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [42]

--------------------------------------------------------------------------------

(inaudible) earlier.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [43]

--------------------------------------------------------------------------------

Fair point. But has it gone up on a Y-o-Y basis?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [44]

--------------------------------------------------------------------------------

I don't know on that. We cannot talk to anything on that.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [45]

--------------------------------------------------------------------------------

Fair point. Okay. Secondly, what is our incremental yield on home loans and LAP now after the price increases?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [46]

--------------------------------------------------------------------------------

(inaudible) what is incremental yield on homes and loans. (inaudible) number (inaudible) will give just one second.

--------------------------------------------------------------------------------

Unidentified Company Representative, [47]

--------------------------------------------------------------------------------

On home loan, it's 10.6, 13.3.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

And this is annualized?

--------------------------------------------------------------------------------

Unidentified Company Representative, [49]

--------------------------------------------------------------------------------

Yes. Then it is 11.2 for this quarter.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Okay. 11.2. Fine. And what is our share of the DSA sourcing now?

--------------------------------------------------------------------------------

Unidentified Company Representative, [51]

--------------------------------------------------------------------------------

For the last financial, it was 15%. In the [4 quarters ago] about 15% will be there, yes.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

15%. Okay. And sir, lastly, just one question. Generally, we still have only INR 30 crores, INR 40 crores, INR 50 crores of liquidity on the balance sheet. But this time, we've increased it to INR 200 crores. Any particular reason for that? Or why such a sudden change in stance?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [53]

--------------------------------------------------------------------------------

There were 2, 3 reasons. One is that the banks, because to boost their balance sheet they requested us that please (inaudible) and we're to deploy it. Second, also, some of the banks, just to give comfort in (inaudible) holders, while we convinced them that we have enough liquidity, but they almost have models where they want to seek cash on the balance sheet. We thought, okay, we'll keep for some time.

--------------------------------------------------------------------------------

Unidentified Analyst, [54]

--------------------------------------------------------------------------------

Right. So this is going to be recurring, I presume? This level of cash balance?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [55]

--------------------------------------------------------------------------------

No, it will not be recurring. But then, as you are aware that now, RBI is supposed to be regulated housing finance company also. And RBI had not financial [writing] in the beginning of this financial year. They've come out with a guideline for maintaining liquidity coverage ratio by all (inaudible) rates. This is not covered (inaudible) and as we said that, only deposit taking should maintain rates, so it was not affecting us. But now, with the RBI regulation, we don't know. Maybe (inaudible) regulation directly has to maintain also LCR. So we're also, in essence, waiting also for that.

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [56]

--------------------------------------------------------------------------------

Okay. But what would our LCR be today, like back-of-the-envelope calculation?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [57]

--------------------------------------------------------------------------------

Back-of-the-envelope calculation, are you asking percentage or amount?

--------------------------------------------------------------------------------

Piran Engineer, Motilal Oswal Securities Limited, Research Division - Research Analyst [58]

--------------------------------------------------------------------------------

No, no, percentage.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [59]

--------------------------------------------------------------------------------

Percentage? No, no, no. One minute, (inaudible) calculation. See, our -- the difference that you're mentioning, asset or maturing liabilities is about...

--------------------------------------------------------------------------------

Unidentified Company Representative, [60]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [61]

--------------------------------------------------------------------------------

One month, 30 days.

--------------------------------------------------------------------------------

Unidentified Company Representative, [62]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [63]

--------------------------------------------------------------------------------

Actually, our LCR is more than 200%. Because our CFO is saying, these are, one, (inaudible) LCR, as you know, is different. Usually, liabilities maturing 1 month, minus asset maturing 1 month. That is about INR 70 crores. And then the cash we are maintaining is about INR 200 crores. In some months or in some months like (inaudible) schedule of payment on quarterly basis. For some months, the cash outflow is higher. So but -- about this INR 200 crores will be more than enough for 1 month. In some months, it will be INR 300 crores, INR 400 crores. That is what we see, what are better.

--------------------------------------------------------------------------------

Operator [64]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Pranay Rajani from B&K Securities.

--------------------------------------------------------------------------------

Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [65]

--------------------------------------------------------------------------------

Congratulations on a strong set of numbers. Sir, just wanted to ask, as we have seen in this first quarter, there is an increase in the gross NPA and there's a significant increase in the gross NPA numbers. Where do we see these numbers going ahead? And what actions are we taking on this new NPAs that we have witnessed in the first quarter, sir?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [66]

--------------------------------------------------------------------------------

First is that I'll tell you that for NPA, it is better to compare the year-on-year. It is not a significant increase. It's from 4%. It is 4.2%. But yes, it's not that we are happy about it. We are also concerned about it. We are doing lot of steps as I told you. But rather than testing only NPAs, we are taking now -- as you're trying to change the payment behavior of the customers and trying to tell them that don't allow them when -- installment default. Because while we -- NPA becomes only after 91 days. But then, if you default (inaudible) tomorrow you will have problem. That, we are going through all our branches, number one. Number two is that the core NPAs, which are there for long time, say, 1 year or more, thereby, growing aggressively in the SARFAESI. We are selling (inaudible) the property as there is a lot of them are coming forward to settle the accounts. That is second part.

--------------------------------------------------------------------------------

Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [67]

--------------------------------------------------------------------------------

Sir, can you please specify the amount which we have under SARFAESI currently?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [68]

--------------------------------------------------------------------------------

Under SARFAESI currently? The total (inaudible) out of this amount, I think there's about INR 250 crores are under differentiated (inaudible) crores. But about 17% of the NPA -- SARFAESI has initiative. As you know there are different stage. (inaudible) given time and even respond and all that, then take position, issue option notice and conduct auction. But as far as (inaudible) initiative, I guess, more 70% of our NPA accounts.

--------------------------------------------------------------------------------

Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [69]

--------------------------------------------------------------------------------

All right, sir. So where do we see the gross NPA numbers, like the guidance for FY '20?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [70]

--------------------------------------------------------------------------------

Yes. (inaudible) difficult to give guidance as you know because so many things happen. But obviously, our target is that FY '20 should be, because we compare year-to-year, should be with FY '19.

--------------------------------------------------------------------------------

Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [71]

--------------------------------------------------------------------------------

Okay. All right. Sir, just one last question. As we have seen that there is not a significant growth in the Tamil Nadu book and we are targeting the growth from the rest of the India, so where -- what is the plan for the road map going ahead? Are we going to increase our branches going ahead? And if yes, then in which states or which cities are going to target?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [72]

--------------------------------------------------------------------------------

Okay. So one is that Tamil Nadu will not give growth. In fact, as I told you in last quarter, they gave 8% growth. 8% is on there, we remind you. So out of the total incremental book, Tamil Nadu is still contributing about 50%. Tamil Nadu will continue to remain significant player. But yes, the new branches we opened already. We have expanded. Few branches in Rajasthan, we opened newly. Plus in Maharashtra, we opened new branches. In Madhya Pradesh, we have opened new branches. Generally, our policy is to grow incrementally in the sense we directly don't go from Tamil Nadu to like, say, Haryana. Maybe after we open branches in Rajasthan, we see their performance. If that is what they really want to know NPA regions, which is touching Rajasthan or maybe in eastern part of terminal (inaudible) branches.

--------------------------------------------------------------------------------

Pranay Rajani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [73]

--------------------------------------------------------------------------------

All right. So one just last data keeping point, if you can provide the net NPA number for the quarter.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [74]

--------------------------------------------------------------------------------

Gross NPAs 4.52%. The provision coverage is around 1.5 and 2.7.

--------------------------------------------------------------------------------

Operator [75]

--------------------------------------------------------------------------------

The next question is from the line of Darpin Shah from HDFC Securities.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [76]

--------------------------------------------------------------------------------

Just one question. Can you tell us what proportion of your NPAs are over INR 1 crore? So you mentioned some 2, 200 accounts are there. So how much of them (inaudible) above INR 1 crore?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [77]

--------------------------------------------------------------------------------

Yes, yes. I'll tell you over INR 1 crore should be about (inaudible), less than 25% of it.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [78]

--------------------------------------------------------------------------------

Can you provide exact number -- less than 25%?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [79]

--------------------------------------------------------------------------------

(inaudible) right now we don't have (inaudible)

--------------------------------------------------------------------------------

Subramanian Balaganapathy, Repco Home Finance Limited - Assistant General Manager [80]

--------------------------------------------------------------------------------

I'll get right to it.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [81]

--------------------------------------------------------------------------------

But about 25% is what I know.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [82]

--------------------------------------------------------------------------------

And this should be largely in Tamil Nadu.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [83]

--------------------------------------------------------------------------------

Tamil Nadu (inaudible) somewhere in Bangalore also at Karnataka. And 1 or 2 are somewhere in (inaudible) also. Because largely, doing mostly in southern states, so mostly in Tamil Nadu, but somewhere in Bangalore and somewhere in (inaudible) also.

--------------------------------------------------------------------------------

Darpin Shah, HDFC Securities Limited, Research Division - Equity Analyst [84]

--------------------------------------------------------------------------------

Okay. But incrementally, can you provide some color, sir? What I'm trying to understand is are there new branches giving you the similar pain?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [85]

--------------------------------------------------------------------------------

No. I mean, (inaudible) difficult to answer. But let me try to understand your question. I think probably what you are saying is that real NPA found in mature old branches, and the new branches when we open, do they contribute to the NPA besides the book growth, correct? You are asking that way. Yes. So I will say no, they don't, because new branches, generally, what we find is that the branches which are less than 5 years old, their NPA percentage of the book size, they'll be less than 1%.

--------------------------------------------------------------------------------

Operator [86]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [87]

--------------------------------------------------------------------------------

Yes. My question is on asset quality particularly in the LAP portfolio. So you mentioned that there has been some headwind due to which there has been deterioration in asset quality, so just wanted to understand how much of this rise in the NPAs can we attributed to the macro environment? And what is the outlook on the same? How are you planning to manage it going forward? And secondly, how much would be the contribution from Tamil Nadu? Or is it deterioration seen for other states as well?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [88]

--------------------------------------------------------------------------------

Okay. State-wise NPAs Tamil Nadu, Bala will give. Your first question coming to that, that how much NPA do we attribute to the macroeconomic factors. I will say most 90%. Because the fact is that most of the customers or our customers (inaudible) as you know, generated by the business people. Their business have been affected. It's only that. What we are trying to now focus is that, as you know, as businessperson, when he or she incurs some losses or there's not going to be enough cash, they try to prioritize (inaudible) first and those who hitting on their heads, they pay them first. But now we have started doing that. But otherwise, I would say that more than 90% of our cases, but I will say maybe 100% of our cases, I don't think there's a customer which is having a money and don't want to pay. That will be very, very, very rare. (inaudible) been affected? Different degrees, yes. And that is why we are telling them, and they -- obviously, very few customers in India have the sort of simpleness to say, "Yes, I have been default. Take my home and (inaudible) my money." They're not likely -- their home. They will say, "Please give me some time, I'll pay you," and all that. But about how many of them have been affected by economic condition? I will say almost all. Now Tamil Nadu, yes?

--------------------------------------------------------------------------------

Bala S, Repco Home Finance Limited - IR Officer [89]

--------------------------------------------------------------------------------

Yes. Tamil Nadu increased about 4.4% out of total amount. Okay. It's about INR 285 crores.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [90]

--------------------------------------------------------------------------------

Percentage-wise? Percentage-wise? (inaudible) So Tamil Nadu book size is 56%, but Tamil Nadu NPA contribution is about 70% because most of our overall book is on Tamil Nadu.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [91]

--------------------------------------------------------------------------------

Okay. And just wanted to know how are you exactly planning to manage it for the rest of the year? Are there any special steps that we are taking?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [92]

--------------------------------------------------------------------------------

Yes. We are taking several steps. And like one is that of course, we are trying to (inaudible) the builder. Because now I think builders are not there pushing the stake. We'll not still finance them, but maybe we'll find their customer or their purchase, number one. Number two, we've already diversified our geographical reach. I told you, there, we expect some business to come. The third is that our DSAs will increase that might, again, lead to further growth. The other HFCs, I'll not name them, but many of their customers we find their loan but not (inaudible) result partially. So maybe if they're good customers, maybe we can ask them to come to our [pole], so it's a multiple range of activities that we'll be doing.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [93]

--------------------------------------------------------------------------------

Okay. And just one last thing. For the NPAs which are more than INR 1 crore in size, so have we sold any properties and then some recovery? I mean (inaudible)...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [94]

--------------------------------------------------------------------------------

Yes. Many of them, many of them.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [95]

--------------------------------------------------------------------------------

If you could just quantify the number.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [96]

--------------------------------------------------------------------------------

You're talking last quarter or for the last 1 year date? I will say last 1 year, we have recorded about INR 45 crores by sale of properties. They are not about INR 1 crore for all. Some are below INR 1. Some are above INR 1 crore. INR 45 crores were recorded by sale of properties in last 1 year. Then about INR 150 crores were recovered (inaudible) because the kind of settlement . That would be (inaudible) -- more than INR 200 crores we have recovered after (inaudible). Only thing is that the value add to why your still NPAs are higher? As I told you, this is not a corporate loan. So there are customers who are (inaudible) And if situation become (inaudible), they become NPA, but SARFAESI has been very flexible to us.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [97]

--------------------------------------------------------------------------------

Okay. So INR 45 crores will be amount for FY '19. And if there has been anything in the last quarter.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [98]

--------------------------------------------------------------------------------

Last quarter, how much was that?

--------------------------------------------------------------------------------

Unidentified Company Representative, [99]

--------------------------------------------------------------------------------

(inaudible) below INR 10.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [100]

--------------------------------------------------------------------------------

Below -- about INR 8 crores to INR 10 crores in quarter 1.

--------------------------------------------------------------------------------

Operator [101]

--------------------------------------------------------------------------------

The next question is from the line of [Ojasvi Khicha] from Axis Capital.

--------------------------------------------------------------------------------

Unidentified Analyst, [102]

--------------------------------------------------------------------------------

While most of my questions are answered, just 2 clarifications. Number one is you mentioned NPA...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [103]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Unidentified Analyst, [104]

--------------------------------------------------------------------------------

Yes, so you mentioned NPA about INR 1 crore forms 25%. So that is -- I mean in terms of volume or value did you mention.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [105]

--------------------------------------------------------------------------------

No, no. What I mean is that out of the 4.2% NPAs that we have, about 25% or 4.2%, that is about -- that is about the exact number what I will tell you perfectly, about 1% of the NPA are above INR 1 crore.

--------------------------------------------------------------------------------

Unidentified Analyst, [106]

--------------------------------------------------------------------------------

Okay, sure. And secondly thing is could you just mention this DSA mix again?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [107]

--------------------------------------------------------------------------------

15%, 1-5.

--------------------------------------------------------------------------------

Operator [108]

--------------------------------------------------------------------------------

The next question is from the line of on [PG Jain], an individual investor.

--------------------------------------------------------------------------------

Unidentified Participant, [109]

--------------------------------------------------------------------------------

Sir, just a small data keeping question. If you can share the breakup of provision towards standard assets as well as to NPA for 1Q FY '20? If we were to calculate it with respect to the NHP numbers?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [110]

--------------------------------------------------------------------------------

No, see, (inaudible) we announced that we are not (inaudible). We have also said that you'll tell that question only to us.

--------------------------------------------------------------------------------

Operator [111]

--------------------------------------------------------------------------------

(Operator Instructions) The next question is from the line of Jay Modi from Emkay investment.

--------------------------------------------------------------------------------

Jay Modi;Emkay Investments;Equity Analyst, [112]

--------------------------------------------------------------------------------

Sir, most of my questions have been answered. I just wanted state-wise disbursement breakup if it was possible.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [113]

--------------------------------------------------------------------------------

Yes, yes. (inaudible) The statewide disbursement is 100%, INR 39 crores; Telungana, INR 28 crores; Gujarat, INR 37; Karnataka, INR 104, Kerala, INR 18; Maharashtra, INR 71; Odisha, INR 2; Paducherry, INR 4; Tamil Nadu, INR 355, (inaudible) still contributed to more than 50%; West Bengal, INR 6; Madhya Pradesh, INR 1; Jharkhand, INR 1.

--------------------------------------------------------------------------------

Jay Modi;Emkay Investments;Equity Analyst, [114]

--------------------------------------------------------------------------------

Okay. Just to confirm, Maharashtra, INR 71 crores, right?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [115]

--------------------------------------------------------------------------------

Maharashtra, INR 71 crores. Yes.

--------------------------------------------------------------------------------

Operator [116]

--------------------------------------------------------------------------------

The next question is from the line of Pranavi Kulkarni from Edelweiss.

--------------------------------------------------------------------------------

Pranavi Shirodkar-Kulkarni, Edelweiss Securities Ltd., Research Division - Fixed Income Credit Analyst [117]

--------------------------------------------------------------------------------

Most of my questions have been asked...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [118]

--------------------------------------------------------------------------------

Speak a little louder.

--------------------------------------------------------------------------------

Pranavi Shirodkar-Kulkarni, Edelweiss Securities Ltd., Research Division - Fixed Income Credit Analyst [119]

--------------------------------------------------------------------------------

Yes. Most of my questions have been answered, but just 1 extension I wanted to know. This 25% of the growth NPAs more than INR 1 crore, correct? What was the percentage in the last quarter or last year the same quarter -- in the same quarter?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [120]

--------------------------------------------------------------------------------

That data I think will not help, though it would be almost similar. But right now, we don't have that data. But based on experience, I can tell you that that's more or less the same.

--------------------------------------------------------------------------------

Pranavi Shirodkar-Kulkarni, Edelweiss Securities Ltd., Research Division - Fixed Income Credit Analyst [121]

--------------------------------------------------------------------------------

And out of the total books, what is the percentage?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [122]

--------------------------------------------------------------------------------

Pardon?

--------------------------------------------------------------------------------

Pranavi Shirodkar-Kulkarni, Edelweiss Securities Ltd., Research Division - Fixed Income Credit Analyst [123]

--------------------------------------------------------------------------------

In the total book, what will this percentage be, more than INR 1 crore or ticket size volume of INR 11,000 crores?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [124]

--------------------------------------------------------------------------------

Yes. I'll tell you that should be about, say, 8% to 10%. So if we're looking at this question as to whether (inaudible) core loans resulting to higher NPAs, then, yes, we did some LAP loans to run 2013, '14 that is higher NPAs. But overall (inaudible) that's the beauty of our company that we see the average ticket sizes 14 lakhs, 15 lakhs. NPA is also 20 lakhs. So the -- what is the percentage of the INR 1 crore overall in the book size? Almost same percentage in the NPAV. It is not large ticket sizes leading to higher NPAs and all that. They have put them in LAP loan, but that will stop doing.

--------------------------------------------------------------------------------

Operator [125]

--------------------------------------------------------------------------------

The next question is from the line of Dipanjan Ghosh from Kotak Securities.

--------------------------------------------------------------------------------

Dipanjan Ghosh, Kotak Securities (Institutional Equities) - Research Analyst [126]

--------------------------------------------------------------------------------

Sir, just a small data keeping question. Can you give the disbursement mix between home loans and LAP for the quarter?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [127]

--------------------------------------------------------------------------------

Yes, correct. Disbursement of (inaudible) -- just one moment. Yes. The housing loan of INR 520 crores, and home equity (inaudible) and LAP loan is INR 148 crores. It's rounded up to a total INR 657 crores.

--------------------------------------------------------------------------------

Dipanjan Ghosh, Kotak Securities (Institutional Equities) - Research Analyst [128]

--------------------------------------------------------------------------------

Sure. Just one question, so incrementally, like what will be your bank borrowing rate compared like to, let's say, around October last year, like incrementally how much?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [129]

--------------------------------------------------------------------------------

What will be your…

--------------------------------------------------------------------------------

Dipanjan Ghosh, Kotak Securities (Institutional Equities) - Research Analyst [130]

--------------------------------------------------------------------------------

Bank borrowing, sir, term loan, bank borrowing rate.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [131]

--------------------------------------------------------------------------------

Just one moment. For this quarter -- as on June 30, 2019, our bank borrowing cost is [8.8%].

--------------------------------------------------------------------------------

Dipanjan Ghosh, Kotak Securities (Institutional Equities) - Research Analyst [132]

--------------------------------------------------------------------------------

Okay. And how would it have fared...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [133]

--------------------------------------------------------------------------------

And on June 18, it was around [8.2%.]

--------------------------------------------------------------------------------

Dipanjan Ghosh, Kotak Securities (Institutional Equities) - Research Analyst [134]

--------------------------------------------------------------------------------

Okay, okay. And also I see that your ELC has kind of increased on a quarter-on-quarter basis also on a Y-o-Y basis. So have you increased lending rates over the last...

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [135]

--------------------------------------------------------------------------------

Yes. (inaudible) tell you in the beginning that we have introduced the benchmark called MLR minimum lending rate in this 2018 March. And now we are changing it every month based on our cost of (inaudible) opportunities. After that was introduced, our cost of funds have only gone up. So the MLR also when we introduced it, it was 8.3%. Today, it's 9.35%. So it has gone up by about 1% in last 1 year and 4 months.

--------------------------------------------------------------------------------

Operator [136]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [137]

--------------------------------------------------------------------------------

A couple of questions. First is on this how much of has been (inaudible) -- have you done in the (inaudible), if you could give the number?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [138]

--------------------------------------------------------------------------------

0. 0.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [139]

--------------------------------------------------------------------------------

So you have not done anything on that?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [140]

--------------------------------------------------------------------------------

We have not done -- we don't propose to do outside case in the near future.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [141]

--------------------------------------------------------------------------------

Sir, why is the reason to and if you could give reason?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [142]

--------------------------------------------------------------------------------

See, the reason is that one is the cost is higher than our average borrowing cost, so why should we do? Second, liquidity then is not an issue. That is (inaudible) and (inaudible) here to pay commission for government guarantees. And then that was a positive (inaudible) only for the first year, whereas the housing loan is [47 years] Maturity minimum (inaudible) also. So all these do not add up.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [143]

--------------------------------------------------------------------------------

Okay. And sir, in terms of your borrowings. This time we had borrowed CPs? And in terms of margin size, (inaudible)

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [144]

--------------------------------------------------------------------------------

The second question, what is (inaudible)?

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [145]

--------------------------------------------------------------------------------

The question in terms of borrowing from CPs. What was the rate at which we have borrowed from CP market this time?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [146]

--------------------------------------------------------------------------------

You could see the exact rate, we cannot tell, but I can tell you today's rates are much lower than what they were in March. Today, we're able to borrow at around 7%. But of course, there are different term like if we go as customers crossing CP then it'll be higher. If we go below (inaudible) it's lower, so below customers crossing, we're able to do it below 7%.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [147]

--------------------------------------------------------------------------------

So current, it's around -- below 7%, that's what we are able to get?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [148]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [149]

--------------------------------------------------------------------------------

Sir, in terms of -- lastly, in terms of margins, so there was an increase in margins despite some limited activities that we saw. It's largely to do with 20 basis points of rate hike that we have seen or because essentially borrowing cost would have -- have also gone up? So what would have been our incremental spread in Q1? And what is that we're seeing right now?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [150]

--------------------------------------------------------------------------------

Yes, so one moment.

--------------------------------------------------------------------------------

Unidentified Company Representative, [151]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [152]

--------------------------------------------------------------------------------

Incremental spread was 2.63%.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [153]

--------------------------------------------------------------------------------

2 point?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [154]

--------------------------------------------------------------------------------

6-3.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [155]

--------------------------------------------------------------------------------

6-3. And then, sir, currently, if I look at current position, how incremental spend be as of now?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [156]

--------------------------------------------------------------------------------

Yes, around that. Because the incremental is a function of lots of things, (inaudible) because we have MLR, but then we have a lot of risk spread, risk premium, which depends on the type of loan, depends on the amount of loan, depends on the (inaudible), depends on the LTV and so many other factors. So if we do more (inaudible) loans, we'll expect we have. But if we look at (inaudible), it is around 2.753 in that range.

--------------------------------------------------------------------------------

Kunal Shah, Edelweiss Securities Ltd., Research Division - Associate Director [157]

--------------------------------------------------------------------------------

Okay. So sir, just one follow-up on that. So because of the fact that we have a book size of around 3% and incremental spread being lower, do we see some pressure on margins going forward?

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [158]

--------------------------------------------------------------------------------

This question I think I have answered many times. Because see we have lots of tools in mind, in our hand. When we see -- mathematically what you're saying look like, but then (inaudible) because we have many tools like we can always increase the composition of the LAP loan, number one. Number two is that for incremental also we can also start doing more slightly (inaudible) I will not use your (inaudible) because that will give you around (inaudible). But loans (inaudible) high premium, maybe still larger ticket loans, maybe also higher LTV loan. I mean, what we do? Then we plan for a re-apply our strategies, still plan for it spread about 3% plus (inaudible) we see here and there and then the size (inaudible) accordingly. And that is why we keep on reiterating. And we feel that even if it keep [2.65%] incrementally, for next quarter, we'll still be able to maintain 3% spread for the next quarter in place, then we'll decide.

--------------------------------------------------------------------------------

Operator [159]

--------------------------------------------------------------------------------

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

--------------------------------------------------------------------------------

Yashpal Gupta, Repco Home Finance Limited - CEO, MD & Executive Director [160]

--------------------------------------------------------------------------------

So thank you for then being present in the annual conference for the quarter review. Of course, we are (inaudible) in general and economy, also overall economy is going through different times. But what I can tell you is that within the system, we are (inaudible) in terms of the fact that we are -- I just take 2 minutes to explain you how we are different than other (inaudible) because I was expecting some more asset questions. So that's why I did not tell him my initial remarks, but now I'm telling him my ending remark. That one is that 100% book is retail book, so because the advantage of having a retail book is that customers don't have the restructuring, they don't have additional funding just to repay the loan (inaudible) paid. Yes, they are for rate of interest, but they are (inaudible) because they're a good customer. So while NPAs become a big topic for banking sector, but I can tell you from my experience that for our company, it is not a big factor. But yes, it's not that we are not concerned, we are concerned. But still, it is not a big concern. Request you to focus on other parameters like ROE, ROA, those will give you better idea. And then, the spread, the margin, those are the more important parameters, number one.

Number two is that, even today, we are funding some of the largest banks in India, that is the SBI, GST Bank, Axis Bank, Union Bank, so many banks. They all -- when I met the boss of most of the banks. (inaudible) very comfortable with reform finance. They have no problem with reform finance. But they are concerned about the state of the industry that (inaudible) industry in general. Even today, we get -- somebody asked a question, I answered, even today, our average borrowing cost is 8.6%. Our cost of borrowing from is 8.8% in today's market. Just imagine what is standing there in the market. So -- and then third is that our management. Most of the top management are in the company for more than 10 years. I have joined only 1.5 years back. That is also after previous (inaudible) retired. So it is not to (inaudible) leaving. So all these factors should give you comfort. So I request you that while we focus too much on NPA, but look into these parameters also. And I am quite confident that for the next 2, 3 quarters, a case going forward, we will continue to deliver good results in terms of the book growth, in terms of the ROE, in terms ROA, in terms of NIM, in terms of spreads. That is all. Thank you.

--------------------------------------------------------------------------------

Operator [161]

--------------------------------------------------------------------------------

Thank you. Ladies and gentlemen, on behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.