Given the fact that we have moved from the cash disbursement totally, and we are doing mostly disbursement via RTGS or NEFT , now this data becomes available to the bank as well to whom we are doing the disbursement. So, we are opening up those customer profiles to the banks as well. So could you think that there could be some attrition because of this. This is one. Second is when we look at the non-online gold customers, the ticket size is fairly increasing so maybe online gold customers who are basically repeat customers where we are seeing the ticket size increase. But if we split that and we look at the average ticket size of non-online gold customers, the ticket size is hovering at INR141,000 ballpark. So these are my two questions. There are a couple of data questions which I'll come back after these ones are answered.
Manappuram Finance Limited analyst Q&A
So, your questions are all about cas h disbursals stopping at INR20,000. So we are fully compliant about that from the 8th of this month and we are disbursing loans of INR20,000 and above that only into the bank account or through online gold loan mode. We don't see any business impact because of that because , most of the customers have their bank accounts now, Jan-Dhan account or other accounts. And 80% of the customers who are regular, we have intimated them that for availing the loan, they should bring bank account details and they are comp lying with that. So , after that, we have seen an increase in the online gold loan. Now it stands at 63% and it is increasing daily.
And with that, will we not open up data to the banks? Can we see customer attrition because the banks will be able to see these transactions?
We have been offering online gold loan for a long time and we don't see customer poaching by the banks. Becaus e there is a high degree of customer loyalty. So we see a reasonably good growth even after implementation of this.
See the non -online gold loans are be low INR20,000. So, for such customers, we can disburse cash.
No sir, what I meant is that the ticket size is not increasing over the last couple of quarters, I think that is around INR41,000. So, what is the reason for that?
See, the customers borrow money if they are confident of repayments. The customers have in mind while taking a loan that they have to repay the loan within a period of maximum of 100 days. So , with increase in price, we can't expect growth in the ticket size. So gradually, every year, we will see increase in ticket size by around INR10,000, INR15,000 average ticket size. So that will continue.
And towards the data point. One is what is the accrued interest as of fourth quarter and last quarter gone by and what is the AUM split of less than INR1 lakh to INR5 lakh and more than INR5 lakh?
Interest accrued is 5.3 percentage as on 31st of March.
Upto INR1 lakh 44 percentage and from INR1 lakh to INR3 lakh is 3 4 percentage, balance above INR3 lakh is 22 percentage.
What was the accrued interest last quarter?
It was 4.5%.
And auction this quarter?
Sure. Thank you. I will come back in the queue.
Thank you. Our next question is from the line of Rajiv Mehta with Yes Securities. Please go ahead.
Hi, good evening. Congrats on good quarter. Sir, firstly on this impact on restrictions on cash disbursements while you spoke about not seeing any long business impact, but since when the restriction has come , what has been the impact on a daily disbursement run rate? How much our daily disbursement run rate has fallen by? And in the longer term wouldn't we see any structural customer loss customers going back to informal players if some of the customers are not willing to share the bank details?
So, suddenly we see the growth improving after the introduction of these chan ges. The reason could be , we assume, many other players in the NBFC industry , particularly the small ones, may not be ready with this online gold loan whereas during the last five years we have made that route very robust and around 60% of the customers even before that have become online gold loan customers. So, maybe because of that , after the implementation, the growth has only improved. And long term, I don't see any challenge because of that because this is applicable to all the regulated entities. So, we don't lose any level playing field because of that . So , we don't expect any negative fallout because of implementation of the new regulation with regard to cash disbursement.
Got it. And now sir, the impact of higher gold price. So gold prices have gone up significantly. So how do you see this benefiting our growth in the next two quarters. See if you look at our LTV, the LTVs have fallen to 58%. So , if you can tell us your expectation, where would the LTV settle in the next one, two quarters? Would it go back to 65%, 63% because of customers availing the benefit of higher gold prices. Can you comment on the positive effect of higher gold prices in your growth?
So, I consider that to be more or less benign and there will be a slight growth there. Because as I mentioned earlier , the customer who pledges has always thought about this cash flow. The average life as I mentioned remains around 100 days. In spite of the gold price going up, going down , this remains like that. So they will not simply avail because of the gold price has gone up . Normally a customer comes with multiple ornaments. If they want a smaller amount, they come with one bangle. If they want more , they bring two bangles or some other smaller ornaments. So, when the gold price goes up, they bring lesser quantity of gold. They don’t simply avail a bigger amount simply because of that. That is why when the gold price goes up, the average LTV goes down, but only around 10% of the customers avail that full duration of one year. For them , sometimes for renewal that also for around 5%, 6% temporarily they may take the advantage of higher LTV because of the gold price growth. So, the impact is very minimal.
Okay. And just one last question on the employee expenses. Sir, in the standalone financials your employee expenses has been trending flat over the last four quarters, five quarters while we see strong growth being reported in the non -gold business side . So can you explain this ? Has there been a reduction in employee count and if yes in which business the employee count is going down. And how should we look at employee number growing from here on and the employee cost growth in FY '25?
Why it is increasing in the non-gold business? See, non- gold business is co -located with the gold loan business. Various opportunities are there, but we extended non -gold business to the extent of around 20% only. So, our expansion of distribution of non -gold products through th e gold loan branches is very high, but we are taking a very careful step in expanding that, understanding the asset quality, etc in t hese places. As I said, we are expanding the non-gold business across the gold loan branches. That is the reason why the headcount is increasing in non-gold business. In gold loan business, there had been some rationalization , wherever we have seen number of employees hire , etc. Employee rationalization is also because of more online gold loan activity. So the employee count in gold loan segment has come down while in non-gold, we are slowly expanding our footprints.
Got it sir. Thank you and best of luck.
Thank you. Our next question is from the line of Shreepal Doshi with Equirus. Please go ahead.
Hi, sir. Good evening and thank you for giving me the opportunity. Sir my question was pertaining to one of the key players in the landscape being impacted by the regulator ’s action. But can you quantify the benefit to us in terms of customer addition and tonnage, because optically, it seems like there has not been any significant benefit on both these fronts?
Yes, one of the gold loan players and their business is impacted but we haven’t much benefited out of that but we are getting a reasonable growth even before they were impacted, and that continues. So , we expect a robust growth in gold loan also in the coming quarters.
Second question was if you could give us some color on the online customer split with respect to below INR1 lakh...
Online customers, the profile is the same. Profile is the same because the advantage of gold loan is that they have to visit the branch only once . Then they can transact this account, more or less like an out of branch facility. But if they have some amount, they can remit to that and whenever they require money, they can take it back from anywhere in the world, 24 hours. So, on seeing this facility, for example, INR10,000 gold loan, somebody takes INR10,000. Then after 20 days, he can remit INR2,000. Then whenever he has the requirement, he can avail whatever is the gap there as per the LTV on that day. So this advantage is there. Because of this advantage more and more people are using that. It is not because the profile of the customer is changing. It is because of the advantage of the product. We have also introduced another scheme. If some customer is unable to come to the branch because of any reason, whereas he is in need of money, we deliver that service at their doorstep. We go there, do all the KYC process, all the processes with regard to onboarding. Then the disbursals are done online. All these are done. So , it has become a very attractive product. So, the popularity is increasing and that is working seamless as far as we are concerned.
Got it sir, but my question was, like how we gave the split for below INR1 lakh, INR1 lakh to INR3 lakh and above INR3 lakh for the overall gold loan book. Could we provide the same for this online gold loan book?
Yes. It is irrespective of the amount. Whatever is the amount, even for INR10,000. Many customers are availing online even though the cash disbursals are possible. Because it is like a credit card. Only when they avail, which can be done from anywhere, even for merchandise, it's very convenient. So, whatever amount they want, that's immaterial here.
Okay. I'll take that number maybe offline. So just the last question on the MFI front. what is the PAR zero for this particular business that we are seeing over the last two, three, quarters has been trending, the PAR zero number for the MFI business? And just one more observation here, the credit cost continues to be elevated here, even the GNP As are elevated. So could you just throw some light on this?
We have some problems in some states like Punjab, Rajasthan, etc. So , there we have reinforced collection machinery. And we hope the collections will improve going forward.
Okay. So the PAR number are elevated because of these 2 states particularly or across states for our MFI exposure?
PAR number is slightly elevated, that's why there was some impact on the profitability. But we have strengthened the collection machinery and it has started working. And hopefully, going forward it will improve.
Our next question is from the line Pratik Chheda with Guardian Capital Partners.
I just want to continue on the asset quality point. Even if I see the MSME segment, the GNPAs have risen from around 1.5% in last year to around 2.8% despite the more than 50% AUM increase. And you've mentioned that most of it is looking like it is coming from a digital PL. First of all, could you just help us quantify what the GNPAs are there in the digital personal loan segment? Secondly, is there any strategy -- is there any change in strategy that you're looking at, given that this segment is looking fairly volatile. And with a yield of around 26% in the unsecured PL, is the segment currently profitable?
See the unsecured PL or the digital pure personal loan, that the disbursals have been brought down by tightening the underwriting process there. So , the disbursals are low. So , it is coming from the old accounts. In MSME, there was some delay in collection on account of these elections happening, etc. But last quarter...
Yes, it was 1.5%, increased to 1.7%. And if you see the digital personal loan in the overall ratio mix, it has come down to 9 percentage. Because of the higher delinquency , we have tightened the underwriting. So, the proportion also has come down in the digital PL.
So if I just include that 9% in the base and take that 1.1% differential GNPA your digital personal loan GNPA is around 12%. Is the math around looks fine?
Yes.
The digital personal loan is very less
It is very small only. In the total AUM, it is only 1 percentage of even in the stand-alone book. In the consol book, it is 0.7%.
Our next question is from the line of Bunty Chawla with IDBI.
My questions have been answered just fine. So you have achieved around 18.7% AUM growth on a consolidation basis. What will be the cost FY '25 basis between AUM for gold loan and for the overall?
Well, what we have been talking about is a CAGR of 20% and ROE of 20%. We delivered at around nearly 19% in the recent consol ROE. So we hope it would continue. So, from what it appears now , the share of our gold loan will improve.
So, in overall basis you are saying gold loan percentage will improve.
At least that is the trend we see and talking about the standby, it's a similar, CAGR of 20%.
And sir, secondly, we have seen on a stand-alone basis, there has been an increase in the cost of borrowing . How is one to see now for the FY '25 and significant margins?
Yes, after this risk weight increase , every rollover we are increasing our b orrowing. And to have diversification and better liability profile, we did the Dollar Bond, but it comes at a slightly higher cost. So, there will be an increase in the cost of it, but at the same time, it is going on gold loan at 22% yield, and that is the reason it will not impact the profitability.
Okay. So, can we say the margins should sustain at this level for next year as well?
There could be a slight dip in the net interest margin, but it will be overcome because of better growth.
I'm sorry to interrupt you. We have lost the line of the management. Please stay connected. Ladies and gentlemen, we have the management line connected with us. Bunty, if you could please ask your question once again.
Sir, lastly, as you said there, there could be an inch up in the gold loan. So any specific guidance for the gold loan AUM growth, are we revising it?
Marginal decline can be expected. But we expect that to be compensated with a better growth so our objective of reporting ROE of 20% will not be affected with this. We are hopeful of maintaining the same ROE during the current year also.
Our next question is from the line of D haval from Mumbai DSP.
Sir, just one question on growth that I think I missed your combination on growth expecting for next year, did you mention that next year, you expect gold loan growth to be higher than overall loan growth and overall growth is 20% is that? I just want to confirm that.
So, there’s a follow -up question of the previous question on price. Because the audibility is a little weak. Is it the same?
Is my voice clear now, sir?
See what I said is, there is a slight shrinkage as far as revenue is concerned. But that is not a cause of concern for us because we expect that will be compensated with a better growth. So we are expecting to report an ROE of 20% next year also.
Okay. So basically, growth will be higher than 20% in gold loan. Is that what you're trying to understand?
You see judging from the current trends, we expect robust growth in roll -on. That could be better than last year. The other segments are also expected to grow healthy.
Okay. And sir, just one last thing in terms of credit cost for the MFI business and overall on a consolidated basis, could you give some perspective of credit cost that you expect in the MFI business sense for buyback?
So, the collection has been strengthened and we have see an improvement in collection, yes, week-on-week. So, we expect the credit cost going down in the coming quarters.
From four to 11. From clear basis.
So, it is going down already. It is improving on a regular basis.
Our next question is from the line of Pratik Kothari with Unique PMS. Please go ahead.
First question. Given this change below 20,000, no more cash disbursement. Any change in behavio ur from customers? I mean, they were talking between that they may go back to money lenders? Anything that you can highlight?
So see, please see the growth is not affected. In fact, the growth has only improved, we believe that it will pass and the NBFC space is not being impacted . We don't see the new customers or total disburs als coming down. It has only improved.
Correct. And sir, how much was the turnaround time changed now from earlier?
See even before this, 60% of loan dis bursals were through online gold loan. So , it is improving regularly. And we don't see much of a change.
Correct. So the auction surplus which we wanted to bring down and expansion of branch network?
So, the Rs 48 crore was the accrual over the last 15 years. So we have employed many other measures including different agencies etc., for repayment and that is the end result. It has been brought down now to around INR14 crores from INR48 crores and we have informed RBI about that and we hope that we'll get permission to open more branches with this. We continue our efforts and we are able to reduce by around INR2 crores every quarter.
And my last question on MFI. Can you highlight what are the issues that we are seeing in Punjab and Rajasthan is affecting our profitability. And I believe this is also affecting our growth because at the beginning of the year, we had expected much faster growth, which is not coming. So is it specific to Punjab and Rajasthan Or is this something else?
And so now you'll see a considerable improvement in the business in the coming quarters as well as improvement in the collection efficiency. We are seeing that now.
Thank you. Our next question is from the line of Rohit Shah with Ladderup Wealth Management. Please go ahead.
Hi, Thank you for the opportunity. I think all my questions have been answered. Thank you.
Thank you. Our next question comes from the line of Gaurav from Capital Farming Consultants. Please go ahead.
I have 2 questions. First is in terms of our capital allocation strategy. Manappuram Finance is a parent entity. Now since we are in a way, bringing the IPO of Ashirvad Microfinance. So capital department of Ashirvad Microfinance will be funded so the money that you raise by the IPO and whatever way in that Ashirvad will require? So now c onsidering in Manappuram Finance on a quarterly basis, earnings were around on the back, INR400 crores to INR425 crores, which has been the trend for the last 3, 4 quarters. That translates into somewhere around INR1,600 crores to INR1,700 crores annually right? And our capital adequacy is currently approximately 30%, 31%. So to improve our return on equity, what would be the capital allocation strategy of management? Is it in terms of giving more money back to shareholders, doing buybacks because growth I don't think so we are targeting around 20% to 25% annual growth in the stand-alone Manappuram Finance. That is the first question on the capital allocation strategy. Second thing, Looking at the shareholding pattern of Asirvad Microfinance, which has been disclosed via the papers, which have been filed with CD, it has been noticed that the promoters of Manappuram Finance got an opportunity to get shares in Asirvad Microfinance in their own names, with the names of the Manappuram Finance. So in terms of co rporate governance practices that retail shareholders or the institutional shareholders haven't got any opportunity to participate in having shares of Ashirvad Microfinance, whereas the existing promoter of Manappuram Finance got an opportunity to get shar e at a dirt cheap price in Asirvad Microfinance, which will get valued at a much higher price than the company at least. These are my 2 questions for which I would expect an answer from the management.
So, the capital allocation strategy policy is designed in favour of secured lending. So for us, the only unsecured lending is microfinance. So for unsecured lending, our total capital allocation plan is around 10%. So, we have done that. And the company has a capital adequacy of around 24% now. See, then we are preparing ourselves for the IPO and with that IPO the company will be able to carry out its operations. The second thing is the promoters of Manappuram Finance are not participating in any pre -IPO capit al investment. Regarding institutional investors, the decisions will be taken at appropriate time.
Sorry, sir, but I think the shareholding pattern, which has been disclosed as part of the DRHP. In that, it is clearly seen that at the time when the Manappuram Finance acquired the shares of Asirvad Microfinance in various rounds. At that point of time, the promoters of Manappuram Finance also acquired the shares of Asirvad Microfinance. I'm not saying right now in the pre-IPO round, but in erstwhile rounds. Manappuram Finance was acquiring the shares of Asirvad family, promoters of Manappuram also acquired shares of Asirvad that was the question. And in terms of the capital allocation, I was talking about at the parent level because at parent level, you will be getting a lot of positive cash flow, I would say, in terms of profitability at the Manappuram level. At that point of time, how you are planning to invest that money judicially so that the return on equity is improved, which is hovering at 15% to 16% now. Any plan to take it to 20% or more than 20% kind of levels? Those ones were specifically the questions.
See, the promoters of Manappuram Finance parent company acquired out of the shares abdicated by the original shareholders. So whatever is the shortfall at the time of this rights issue has been acquired by Manappuram promoters. The second thing, it's a higher capital adequacy. And as you see, as a shortage of effectively using the capital, so we would leverage the success etc. So, what is most important for the shareholder is good ROE, 20% ROE on a sustainable basis, is it not a good ROE ? Then how to use the capital? We are expanding to non-gold secured lending also, MSME, vehicle etc. As I said, these businesses are alloca ted where we have around 40,000 customers visiting our office, 40,000 to 50,000 customers visiting our office. So, distributing these l oan products also is an advantage for us as our branches are visited by a large number of customers. And because of thei r needs only, we have expanded this business laterally. So , as of now, our 20% of the gold loan branches are only utilized for the distribution of these non - gold secured products. So, we are expanding our footprint to other branches also slowly. So , we hope we will be able to improve upon the capital utilizers. Going forward at the same time, as you said, we are giving back also by improving the dividend quarter-on-quarter.
Thank you. Ladies and gentlemen, we take our next question from the line of Jigar Jani with B&K Securities. Please go ahead.
One data-based question. In the Vehicle Finance, what would be your collection efficiency?
The GNPA there is around 2.9% and we will be able to maintain that below 3% going f orward also. The collection efficiency is 100 percentage in certain regions. And for us, we have given a lot of emphasis for CRM. And around 77% of these are collected through the NACH. And balance 23% only we need to employ the field staff for collection. We have strengthened that also now. So, we hope we can improve upon the asset quality. That is what we are trying to do. Even now if we look at our asset quality is better than the peers.
The other income in the quarter was sig nificantly lower, almost 24 million, if you look at Q3 it was about 176 million and even last year it was 130 million. The one -offs captured in this other line on the consolidated numbers?
So, the bad debt recovered is what we have included in that. So, depending on the write -off, immediate quarters we will get a higher amount of collection. That is what we are saying.
Okay. And lastly, just circling on the credit consolidated basis. Any guidance on that one?
Not for th is quarter, like all of higher credit cost , micro- finance business it is almost 1.8 million but once we improve the collections because the majority of the credit cost is coming from microfinance only in the standalone it is only INR28 crores. So once we i mprove the microfinance collection, this will come down where we were talking about in 1.5% is credit cost once we im prove the collection efficiency, this will be in similar range.
Thank you. Ladies and gentlemen, we have reached the end of the question-and-answer session. I now hand the conference over to the management for the closing remarks. Please go ahead.
Thank you all the participants. If there are further queries or any clarification of our statements, so we are always available. We welcome you for any queries on this result. Thank you.
Moderator: Thank you. The conference of Manappuram Finance has now
concluded. Thank you for your participation. You may now disconnect your lines.