Yes. So my question is the MSME AUM presented includes small business loan and Micro LAP. Could you provide a detailed breakdown of the same? Additionally, why has the MSME loan book not grown at the same pace as other segment? What measures are being planned to enhance its growth? Yes, this is my question.

So as regards to our MSME, which comprises of MSME secured by collateral, small business loan and also Micro LAP. So Micro LAP is only INR157 crores, small business loan is about INR42 crores, and MSME is about INR4,769 crores. This segment will start showing better growth in next year because we'll be adding more branches here. And our Micro LAP, which is now 70 branches, will also start adding the numbers. So, a combination of both addition of the branches and more focus on Micro LAP now going forward in terms of the growth. And the growth will be back in MSME segment also. We will start showing the growth next year onwards.

The next question comes from the line of Kushagra Goel from CLSA.

Yes. So congrats on a good set of numbers. So I have 2 questions. One is just around your Gold Loan portfolio. So I'm seeing that the LTV is quite high around 71%, 72%. So I just wanted your thoughts regarding this. Is that a concern area? And what happens in case Gold Loan prices drop, right? So if you could just give some color regarding that?

So, gold loan portfolio, if you see, the maximum permissible LTV is around 75%, and the competition alsohave LTV in the range to 71% to 75% only. Gold being very liquid, I think these are very healthy levels of the LTV levels. And even with the auctions and the NPA cases, we are able to recover fully. So these are very safe LTV levels, and across industry, everybody operates in this range.

Okay. Sure. And my second question is regarding your borrowings. So can you just tell us what is the mix of fixed and floating rate borrowings? Also, if you could share your expectations as to how cost of funds will move in the next 3, 4 quarters and if there are any plans to diversify our borrowing? That's all.

All the borrowings, except less than 5%, are on the floating basis. Similarly, we are able to pass on any floating rate increase also to our customers. So our borrowings are by and large, in floating basis.

We expect now interest rate cycle should remain here and not go up. In the best, it might remain here for some time before it starts falling down again, but we don't expect the interest rate to go up.

The next question comes from the line of Akshat Maniyar from Anand Rathi.

So my first question was on the lines of co-lending AUM. So, what are your expectations going forward, especially it seeing very good growth momentum? And what are the current structure arrangements of the co-lending that you have with the banks?

So, we have co-lending partnership with all our three products, MSME, affordable housing and the gold loan. And we are working with almost nine banks where different products are partnered with them. Currently, about 18% AUM is under co-lending, and we should be able to maintain at that level. So , co-lending will be in the range of about 18 %-20% kind of going forward as well. And banks are quite comfortable. So I think these limits will keep getting. We will see whether we can increase a slight bit. But even though these are very healthy level, if we can maintain it, conserve our capital and our ROE is very, very high in the co-lending.

Okay, sir. And my second question will be on the Micro LAP segment that you just entered. So what are your key takeaways from this segment? And how do you plan to use it to basically broaden it into the rural areas?

So there are two aspects of it. One, we launched 70 branches to start the Micro LAP because we were always doing MSME. The next level of expansion , our existing MSME branches, which are in the range of about 150 -plus. Within that, we'll identify which are the branches we can start the lending this Micro LAP also. So those branches, we just need to put the team, and we'll save the cost there. So next April onwards, we are going to make a plan to start Micro LAP those branches besides other expansion in the Micro LAP. The advantage here is, the yield is good. And within our ecosystem of overall supervisory-level technology in place, on cost basis, cost-income ratio will be much better. Costs will be lower when we combine it with our existing MSME branches. So overall, it will fit into our scheme of things of the collateral lending to those customers who are not serviced by the bank. So , we believe that for the next 4 to 5 years, this will give us a good growth and also it is a high-yield product along with the security.

So if we see competition -wise, I think retail lending business will always have a competition. There was competition yesterday and there will be competition going forward also. But this will drive on operational efficiency, coupled with the backing by technology and data science capabilities. And that is where we are investing. Only way to create the difference is how we are able to achieve a better turnaround time, how we are able to predict the better asset quality, how do we automate a lot of processes so we reduce the dependence on manpower. And also , the requirement of the people has gone down and productivity is higher. So with all these measures, I think within the competition also, we should be able to do well. If you see our trend, our growth is coming, and now quarter-after-quarter, if our cost-income ratio goes down, you will see significant uptick in the ROE as well.

The next question comes from the line of Sohail from ULJK Group Financial Services.

I wanted to ask a question about what's happening at the ground level with the loan collection officers, like perhaps you could give some light on the attrition rate over there. ]

So, your question is related to the attrition in the team member of the collection team. So , our collection team is quite stable in the sense on the ground because we had a good collection efficiency, good technology and also the incentive plan. So, it is less than 20%.

20%. I see, I see. And I had another question regarding the construction finance book. So lately, we have seen a huge growth in this segment. But previously, we had faced a lot of defaults in this segment. And any particular steps you are taking to see this from happening again?

First of all, our construction finance is also done in a retail way. Our average ticket size is INR13 crores on a portfolio basis. And if you see, our INR3,700 crores portfolio is spread across 275- plus projects. It is not that we are giving INR200 crores, INR300 crores sanction. Most of the sanctions are less than INR25 crore. So these are smaller projects. Plus, in any case, real estate sector is doing well. The demand of housing is doing well. So we are seeing that sales are happening, and this segment is offering a low operating cost, a good profitability model. Now it's more than 12 years, we are doing it . And even including the few write-offs, our yield is high, even though we account those losses. And hardly, we have seen any delinquency. And collectively in last 10, 12 years, we haven’t seen the NPAs more than INR250 crores when we would have lend more than INR12,000 crores. So it is a very strong, stable team that we have and a very deep ground understanding which we have.

The next question comes from the line of Shalin Kapadia from IIFL.

So I only have one question. So we have heard from some of the competitors that they have started offering gold loans as EMI-based product with monthly EMIs. So is this something that you have also heard from regulators and is mandatory to offer? And also, if it is so, then how does it impact your growth or asset quality?

So gold loan always have various schemes, including monthly repayments. So that is not something new. Neither there is any direction from regulator . Regulator never say what should be a product. Regulator always say, your compliance requirement are A, B, C, D, you can do it. How you design your product, they don't guide us, but there's no instruction or circular on that as such.

The next question comes from the line of Rohit Shinde from Market Memories Wealth Advisors Private Limited.

So sir, my first question is with a target of INR30,000 crores AUM by FY '27, what strategic initiatives are being prioritized to achieve this milestone? Can you share your guidance for asset quality and profitability as well? And which segment or geographies do you expect to drive growth in the near term?

So we are not focusing on growth without being mindful about the asset quality. Asset quality, we intend to keep net NPA not more than 1%, and that's the philosophy we will continue to do. As regards the growth from where it will come , the growth will continue to come from our existing segment of gold loan, MSME, micro LAP, construction finance affordable housing. Now for the further growth, we'll add a few more branches. And with that, I think to reach from INR20,000 crores to INR30,000 crores, it should not take us a longer time. You can guess that from the kind of growth we are seeing, it should be achievable before. More than that, market offers that opportunity. There's a huge gap still there, and there's a big addressable target market which exists in these segments.

Yes. Sir, the second question is, as you transition towards becoming a technology-driven NBFC, can you share some recent advancements or digital initiatives aimed at improving customer experience and streamlining operations? How is technology being utilize d to expand our reach into rural and underserved markets, sir?

So I wanted to say that we are indeed a technology-led NBFC. While we operate in the segment, which are in an informal segment, but our all processes are digitized and automated. So even in the gold loan, I just want to take two minutes. When the customer walk s in, in our branch, he has to just bring the gold ornaments, and no paper is required. He is onboarded with his Aadhaar OTP or face recognition. His PAN is verified. And once he offers the ornament, we weigh the ornament and check the purity. Ask the customer to download our app and customer is given their colored photograph through the app of its ornament along with the weight and the most important terms and conditions including rate upfront, etcetera. Once he says he's agreeing with whatever scheme he wanted to choose, we send him the OTP- based agreement, which is signed through OTP. And then amount is disbursed in his bank account or the payment wallet. So there's zero paperwork involved even in the INR30,000 loan taken by a person who doesn’t know how to sign. So that way, we have gone very deep with technology. And because of this automation across affordable housing, MSME and everything, our growth is doing better. We are doing better than the competition plus our data analytics team is able to now predict the customer behavior not only for the repayment, but also what kind of customer target and which category we should service. So definitely, technology is the way forward. This is not a one -time. This is for ongoing basis. We have set up a tech center, which is in Gurgaon. We have 125 -plus engineers and 25 data scientists. Our data scientists are across Bangalore, Pune, Mumbai and Delhi. So, we are building that up, and it's going to be a regular feature. This is not one -time. So we keep enhancing our offering for our team and our customers. And going forward, our turnaround time, which has come down in all the segments, will continue to be better , outperform the competition as well as it will improve the productivity, thereby bringing our cost-to-income ratio much lower. It is a sign of better productivity.

And sir, in your goal to develop a INR1,000 crores loan book in Rooftop Solar financing, could you elaborate on your collaboration with Credit Fair, which we did previously, sir? And how will this partnership enhance the speed of loan approvals and disbursements within the solar financing sector?

So INR1,000 crores AUM is not the target for 1 year. INR1,000 crores target will be in the period of next 4 years or so, and it will be governed by the government subsidy scheme. So, so far, government subsidy scheme will remain , there will be a strong demand for this product. Having government focus on the renewable energy where the subsidy is up to 75%, I think there's a great demand here. We have now launched the pilot product. And now we will scale this in the coming year. And we will see how fast this grows. This is a part of MSME in any case.

And sir, finally, a small question is regarding your advertising and marketing expenses. So what was the budget you had for this fiscal year? And how much is it remaining? And is there any -- going ahead for the next few months or next year, any basically color you can throw on the advertising and marketing expenses?

So we have a budget of about INR15 crores for marketing, which comprises of radio, which comprises of hoarding, which comprises of newspaper, which comprises of the media. So combination of this INR15 crores is our budget. And till 9 months, we have already spent about close to INR10 crores.

The next question comes from the line of Dr. Pradeep Kaushal from Royal Global University.

Yes. So, in the beginning of the presentation, you told that you are going to fo cus less on the opening the branches. Rather, you will focus more on the business. So can you elaborate this particular point you made in the beginning?

So now we have 1,066 branches. Our branch expansion will happen across MSME, affordable housing, gold loan and micro LAP. And when you want to grow, the growth will come, from the growth of existing branches and also entering the newer market. For next year plan, we will plan by March. And then from June onwards, we'll start adding the branches. So far, we have not firmed up how many exact branches we'll be opening. But definitely, about 100 to 150 branches we intend to open. But that plan is yet to be firmed up in exact numbers.

So what I suppose, sir, from the voice spoken by you just now that you are going to open maybe 100 to 200 branches per year in the coming years?

So next year, yes. Next year, we are going to open anything between 100 to, 200, but we make our budget in the month of February and till mid-March we finalize, when we keep our meeting with all the business heads internally and go to the Board for that. So that exercise is still pending to arrive at the exact number. But yes, every year, if you see the past track record, we have kept adding branches year after year.

Okay. That sounds great. And I want to know what is the reason behind such a kind of a strategy? And how it is going to impact the profitability in the future?

So branches, when we open, we have to grow them, then we have to add more branches in terms of newer markets. And the branches, depending on product to product, initially, they take some time to break even. Some MSME branches take 3 to 6 months, and gold loan take about 12 to 15 months. And after that, they start contributing, and start adding to the profit.

So as we look ahead, we see significant market potential across all our business segments, MSME, micro LAP, housing, gold loan, construction finance and see us continue to deliver industry-outperforming growth while expanding our spreads. We will keep investing in artificial intelligence and data science capabilities and empower our sales staff with the latest digital app, which will help them serve our customers faster and with better cost efficiency. Given all our book is secured and granular, we feel quite comfortable of keeping our credit costs and asset quality under control. On the liability front, we continue to deepen our lender relationship and feel comfortable of securing additional credit lines with a better pricing. We remain confident of achieving our earlier guidance of INR30,000 crores AUM by FY '27 and delivering mid-teen ROE by then. Thank you, and we look forward to seeing you all again in fourth quarter FY '25 results call. Thank you.

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