Thank you, sir. We will now begin the question-and-answer session. We have the first question from the line of Avinash Singh from Emkay Global. Please go ahead.

So, the first question would be from where I left last quarter, I asked Arvind about the provision buffer that was created last year and of course, I mean, we got answer from your other colleagues. So, nearly ₹700-odd crores of our provision on this STPL that you have created and then last year, when Poonawalla has received money from that housing book divestment about ₹1,200- odd crores of that prudential buffer was created. So , what has happened to that? Where is that buffer utilization today? Because with that kind of a buffer and again, this kind provisioning to be done, this raises the sort of very serious quality over the kind of a book that was underwritten over the last 12- 18 months and in terms of what your confidence as far as provisioning on the entire book is concerned, that book is almost that you have inherited. How comfortable are you in the kind of asset quality and will this provisioning be sufficient for that? So , my question is two-fold, okay, of course, your confidence going forward in the existing book and the updates on what happened to that buffer that was created, how will you utilize what and where it is now? That's for the first. Second one would be more on, of course, as you sort of rightly highlighted the team that you have now hired to build a franchise for the future next many years. The question is, how are you finding at the ground, branch and all levels of how they are responding to this entire change in style, change in the top management. For the top management, sort of how you see that the longevity within the organization because, this kind of a transformation at times could be very frustrating because results take time and your incentive sometimes linked to share price, again, that will again take time before your share price start to reflect this. So, somehow the team also start to get frustrated. So, how sort of do you see this transition playing out? And how confident that okay this team is going to stay?

Okay, a quick one. I got two of your questions. Let me quickly cover the two parts and then hand it over to Sanjay to give you a perspective on a certain area. First, we've done risk calibration check on the entire portfolio. So, while you may see provisioning on the STPL book, which I thought was relevant and appropriate to take it to adequate provisioning, which is why we have done that. But the checks have been done on the entire portfolio by our risk team, by internal and external assessments. So, we are done with our provisioning. I want to be very clear on that. There's no ambiguity there. Yes, it is a little bit of, you might call it more precise upfront call, but it's important that we create and strengthen the financial resilience. You can't talk about risk management and then not have the courage to do it where it has to be done. Tough c alls are important to make the company stronger and ready for its long-term growth and you can see that we are ready now. The balance sheet is all ready, our multiple plans and courage to launch 6 businesses. In those additional 6 businesses, first of all, there are no people. So, we are building those entire teams, franchise and everything, which will be direct value to the company that we're creating. For the existing businesses, I shared with you a mongst the four businesses, STPL, we are recalibrating it, that's predominantly very biased to digital. On the feet on the street ground, there is business loans and LAP . The teams have really adapted well. There's no frustration , by the way, there's an excitement. When you challenge people , I've shared with you the growth rates are around well over 50% in both those businesses and it's not like the entire team joined on 10th June when I joined. Over the last 4 ½ months, we've been joining over at different points of time and it's a team that managed to click really well with the existing team. I think they are a fine bunch of guys. They've already picked up fantastic speed and adapted well. I think we had some good people that we've hired and would love to share the confidence that we have very, very aggressive plans and challenges when you throw at people, people get excited and motivated. I mean a good example i.e. our own Indian armed forces at the border. It's not that they're the paid the best, but when they're faced with fantastic challenges, the excitement is of a different order. You can well compare that with the way we run things here. When you create exciting challenges, I can see the energy levels are only going up. I think sky is the limit when it comes to business. We are excited about it. I'll be honest with you. When I told you, we will look at the first portfolio in 40 days, I was very frank with you. Now, when I'm excited about the road ahead, I'm equally in the same spirit, sharing with you. That's what it is. As far as the specific provision of the past, maybe we are more conservative for now. Sanjay will give you a sense of it.

So, out of the exceptional provision, which we've created in FY 2023-24, we are still getting ₹259 crores of provision in our books. So , as Arvind rightly said, books are well provisioned . Just to add to the point on top management and how it is transforming the entire landscape. The way our core products, as of now business loan, loan against property, pre-owned cars, the way they have picked up speed with better yields, you will see the results in next quarters and years to come.

And even these 6 businesses have a fair amount of work happening, out of that PL Prime, I think we've already started reaching levels of ₹50-70 crores a month, to give you a sense. It's probably be interesting to see quarter-on-quarter, we are moving quite sequentially rapidly on those. So, if we go into micro detail, we may have recalibrated some of the high -risk businesses, but the ones which we are growing, we're growing fairly fast and rapidly.

Okay. So, you said that you are carrying a ₹200 crores provision from last year?

₹259 crores.

₹259 crores. Okay, Thank you.

We have the next question from the line of Shreyas Pimple from JM Financial.

So, I wanted to ask two questions. First, on PL book, what is the actual size of the PL book and of that, the STPL book specifically, which is throwing up issues?

Yes. Sanjay, can you throw some light of the first question?

Yes, the total STPL book is to the tune of ₹6,800 crores , out of which, the book which is belonging to the period prior to this calibration is about ₹5,400 crores and the entire book of ₹5,400 crores is well-calibrated. As Arvind articulated, the disbursement which were to the tune of ₹1,000-1,200 crores monthly, have been brought down post this risk calibration to ₹200 crores in September and only after gaining confidence both on any kind of future flow rates in terms of the overall performance, basis the customer segment, basis the average ticket size, in the measured way we will grow that book.

I think we've got a handle on the calibration but the scaling up, I might take 60 -90 days on that particular book because it's important we get it absolutely bang on right, and then I think it will open up a new opportunity for us.

While at the same time, it would be important to add that the growth is not dependent on STPL. We have well-settled products which are giving the growth.

Understood, sir . Thank you for the detailed answer. The second question was on the capital requirement, both in terms of debt and equity to fund the feet on street or tech investments that would be required for growth ambitions?

So, I think, I've already stuck my neck out and shared some figures of around ballpark ₹50 crores for these 6 businesses over the next 6 quarters. To give you an indicator, that this ₹300-odd crores in 1 ½ years will set the ball rolling for us for a certain growth rate. Remember, one thing I've also said, 400 new branches which can actually between digital and physical substantially increase productivity. While we invest in digital, very important to get the ground level armies also in India , in Tier -2, Tier -3 cities. We come with a very strong experience. I see great opportunities of fantastic ROA products there. So, if you combine your ground level forces with digital forces, the productivity goes up and business focus is priority for us. You can check my background on digital. We produce one of the best products in the world. So that effort is going to go on. As a matter of fact, for me as a CEO, I'm going to bet big on AI but I'm going to focus on business. If I can do two big projects, which are game changers in the next 4 to 6 months on AI, you'll hear of it. There are already two projects that are commissioned. I haven't spoken about it. Let some results come in that before we speak about that to you in the next earnings call and it might be more appropriate. Most of the stuff that I've detailed out for you all right now is so that everybody with that note gets a ground level feel what's happening on the ground because a fair amount of work is happening. You will see a more exponential kind of a flavour as we start moving quarter-to-quarter because the experiences of our distribution is very, very strong.

To your point on the debt or equity capital requirements, we are a very low leverage company with our debt to equity at 2.26x. So, there is enough headroom to increase our leverage. So, we don't see that as a challenge for our projections that we are looking at. Equity, again, it's very high capital adequacy. So, we don't see a requirement to raise equity in near future.

Yes. I think hereon should be very strong, exciting times from a business building block perspective.

We have the next question from the line of Parag Thakkar from Fort Capital.

I really appreciate the long-term vision and the execution foundation which you have laid down and I really appreciate that you have hired very good people to take the business from here. The only thing is that, unfortunately, when you take this tough decision of providing in one quarter, I hope that this shocker, which comes to market and which unsettles market, I hope that shocker thing is over now, with this quarter?

Yes. First of all, I think, Parag, it's not a shock. It's something which is prudent risk management and as a matter of fact, absorbing shock. I'm making sure that we have a clear runway ahead , markets can see more clearly, and I can see more clearly the road again instead of playing wishy- washy over and try to postpone. When you have this quality and credibility, I have also pressure to hold the ground and walk the talk. So, I'm very, very clear. If you see my plans, I've gone out of the way to go into very high detail with everybody. A lot of this is not theory. This is getting executed at the ground level. You can well imagine how many companies in the last 10 years you've seen who have got the courage to say we've got 4 b usinesses, we'll put 6 businesses on the table. I've said that in the first 40 days. Do you see me wavering on that? No. I have not wavered on it. Within the first 40 days of coming in I could see the problem, I specified it to you, called it out. Then the 4 businesses to be launched. We have gone ahead and stuck our neck out on another two businesses. It's 4 ½ months. You can well imagine the seasoned experience we have been putting it on the table. We've got Serum India behind us. We've got a AAA rating. We've got solid pedigree. We've created a management team, which is probably the best in class in my limited view and between existing and new people, we've got a fantastic team. I'm excited for the road ahead. I think the market should be fully excited that this is the company which is worth its metal. That's what I would look at it. On the stock market, I told you last time also, I don't understand stock market at all. So that's treated as a disclosure. I understand businesses and that you will see we'll create one of its class. I have no doubts.

Arvind, really appreciate your response. Just that I think Avinash also asked the same question on the STPL book, where you have provided so much of the amount and after seeing the entire book, you have done this. So, I hope that this amount or this thing will not be repeated, right? It is one-off and we have decided to write-it-off in one quarter itself, right?

Absolutely. If I can calibrate my business to 1/5 of monthly disbursement, it takes courage to bring it down. Obviously, it's fully recalibrated and I'm accelerating other businesses . In 4 ½ months LAP and business loan are growing 50%-70% quarter-on-quarter, and you can estimate the growth in the coming 1-2 quarters. Obviously, it's all well planned. It’s well risk calibrated. I can assure you and we have some very serious strengths which will play out in quarter -on- quarter. This was an important decision. It marks actually a game changer, positive move for the company. We want to work on various projects like I mentioned in this, and once probably your respective fund managers goes through the details of my conversation, you will realize that I'm investing a lot in AI and a lot of projects. With our experience, we'll create something very exciting within 6 months and that kind of optimism I'm sharing with you when I see it. So, I'm kind of a guy, I'll tell you well in advance how I see the future. If I see the future bright, you will hear it from me.

Yes, sure, sure. Really respect your...

Let me be honest there. I don't understand stock market. Sorry, over to you. Sorry, to interrupt you.

No, Sorry. So really appreciate your comments and really appreciate your honesty, and I would say modesty also and the way you have gathered so many people from very, very highly respectable institutions. So, really looking forward to excellent growth and asset quality also. The only thing which ultimately, I would like to ask, for this is for all of us to know that whatever hit you had to take, you have taken, right? Just answer this question and that's all.

Yes, across the book, taken, done, over and we are accelerating on our pedals now.

Okay. So, now there will be no extraordinaries. The business is as usual now, and it will grow with a very, I would say, prudent risk management as you were running in HDFC Bank, right?

See, that's the DNA that cannot be changed. Our risk management will be little better, we cannot do anything. We can't change that. It's going to be a better DNA and that I can't move it out because we work for an NBFC now. As I said, the growth will be massive. We enjoy great credibility with the existing distribution. Our understanding on creating new distributions is very strong. This is business time now. So, business time is our forte and this management team, by the way, is not just one level below me. We've got guys who are two levels below, now three levels below. This is expanding at a very good rate. We used to have difficulty getting that quality of talent at that pace. Now, I think we have a pipeline of guys who want to join us. I mean I'm not exuding extra confidence on what I see on the ground. People have been kind, and I'm very grateful that people are showing interest in joining us and we are very obliged. But we'll obviously be prudent in all levels because we were brought up being cost conscious. We've been brought up being sensible spenders. We've been brought up being risk prudent. In finance business, risk prudence goes hand in hand. It's being extra prudent. It's part of life. You cannot be compromising that area. That's all I'm trying to say. We know how to do business, that's why the word seasoned. Thank you, sir.

Perfect. So basically, the one-offs have been over. Now, it will be business as usual. The growth will be as usual. You'll be always prudent in terms of providing, which was a DNA of yours when you were at HDFC Bank. So , we'll continue to see that and growing new 6 businesses, scaling it up. Those kinds of investments are absolutely okay with investors. But the one -off thing, which was a one-off thing which you said on the last call that you are seeing with STPL book and now you have provided for it, right? So , it's a one-time thing, which we have already taken.

Yes. We've just created financial resilience, sir. That's all we've done and where it was required, I've taken. Rest of the book, we have calibrated, checked. Everything is within the range that we can manage, and there's nothing. I'm excited from hereon.

We have the next question from the line of Kaitav Shah from Anand Rathi.

So, two questions, number one was LAP seems to be the new gold in terms of financing. It's in a pretty good space. Where do you think , in which ticket sizes or markets would you want to create your niche in the first 2 to 3 years for us to kind of look up to or measure you? How should we look at it, number one? Number two, bookkeeping question, what are the outstanding provisions on the book now, buffer that had been created earlier?

You're talking about provisions or the new provisions we have created, or which one are you talking about?

No, the old buffer. We had a buffer of about ₹1,000-odd crores prior to this. So , is it still outstanding? What quantum is it?

Let me give you a more holistic answer. LAP right now is going to be one of this 10 businesses for us. We're going to be focusing on a lot of secured businesses, including for gold, by the way, it will also be gold for us, just for your idea , that's a good ROA business. So, we still believe gold has a lot of shine left and the size we are at, it's going to be a great opportunity for us. We are going to cater to all possible segments that we can take advantage of, which is why on the business side, commercial vehicles, education loans , household names, consumer durable to create a company. When you create solid ROAs from here on, you've got to create customer franchise running faster than the growth rates of companies. So, while our growth rates might be extremely on a positive trajectory, I would still want customer franchise to run faster so that through AI, through cohort groups, through cross-sells strengths that we have management depth of, you can create some serious advantages not just for LAP, for various b asket of products. Even if, let's say, I want to have competitive advantage on the website, for example, which should be irrespective of your balance sheet size. But for that, you need multiple products and businesses on the table to be successful. That's the reason we're launching 6 additional businesses, so that both on the consumer side, commercial side, we should be on a solid platform to offer products right through term loans, overdrafts , various needs of customers. Every customer sees a need to be our second customer and third customer. That's important to understand. That's what we're going to do. If you see, we're very clear. We're marking our niche as very strong consumer finance players and that's important to understand. On that provision, Sanjay, you want to throw some light on a specific...

So, our closing provision as on September 30, 2024 at an entity level is ₹1,406 crores, and we already talked about the incremental provision, which we made of ₹666 crores and ₹259 crores of exceptional provision which was created earlier is still there in the balance sheet.

Sorry, can you repeat the last number?

₹259 crores of provision out of the exceptional provision which we had created earlier is still there in the books. We are carrying the provision in the balance sheet.

Okay. Right. Got it , and sir, just an additional question , multi-focused consumer NBFC, when we try and move to a consumer financing multi-product player, generally, there are certain costs associated initially that you have to do, and it could be a 2 -3-year process if I'm not mistaken. So, are we going to see some heavier costs initially? Will there be some heavy lifting over the course of next 1 year in terms of cost after the benefits will then flow -in, just from an understanding perspective?

See, let's look at it on common sense basis. Any CEO comes. You've got a balance sheet. You take over. Profits will come out of that balance sheet. It's not going to come out of anywhere else. I want to invest ₹50 crores a quarter into the 6 new businesses along with the expenses of rapidly growing the existing ones. The ones we are growing, existing ones are fairly good margin businesses. The ones we are growing existing , and the next 6 also are going to be very good. What is the granular tenor? They are not 10-year loans. They're 3-year loans. So, in 1 ½ years, if you start scaling up, where do you think your calibration goes between your existing and new? Your profits technically, while last time I gave a guidance, should be higher of the percentage of the two, it should ideally get recalibrated much higher. Now , let me be conservative there because what will really happen in 4 -6 quarters, we will be a substantial lifter in terms of the recalibration of profit as well. That's the plan and that's why it's important in the first 4 quarters, we do basic amount of investing and investment will lead to wealth creation. That's important right now. Remember, what I understand of the markets, my limited understanding is it should be more sustainable and predictable. So, as you see us build business, we keep sharing with you the growth rates, how we're building blocks, how we're building it, how we're cross selling it. We'll give you enough feel as we go along, and that's important so that y ou all will know that we are actually creating a fantastic franchise at a fairly fast pace and that's going to be the strong foundation for us. So, I'm looking at robustness every 2 quarters, 3 quarters on a different scale. It will get recalibrated and then at some point, you'll actually find it will get recalibrated to a high level very soon. Thank you.

That was the last question. On behalf of Poonawalla Fincorp Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.