Aditya Birla Capital Ltd (ABCAPITAL) Q4 FY23 Earnings Concall Transcript

Aditya Birla Capital Ltd (NSE:ABCAPITAL) Q4 FY23 Earnings Concall dated May. 11, 2023.

Corporate Participants:

Vishakha Mulye — Chief Executive Officer

Vijay Deshwal — Chief Strategy Officer and Head of Investor Relations

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

Kamlesh Rao — Managing Director and Chief Executive Officer, Aditya Birla Sun Life Insurance

Mayank Bathwal — Chief Executive Officer, ABHICL

Analysts:

Renish Bhuva — ICICI Securities — Analyst

Avinash Singh — Emkay Global — Analyst

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Kunal Shah — Citigroup — Analyst

Lalitabh Srivastava — Anvil Wealth Management — Analyst

Gaurav Sharma — HSBC Securities — Analyst

Chintan Shah — ICICI Securities — Analyst

Nischint Chawathe — Kotak Securities — Analyst

Deepak Shinde — HDFC Securities — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY ’23 Earnings Conference Call of Aditya Birla Capital Limited. [Operator Instructions]

I now hand the conference over to Ms. Vishakha Mulye, CEO, Aditya Birla Capital Limited. Thank you and over to you ma’am.

Vishakha Mulye — Chief Executive Officer

Thank you so much. Good evening, everyone, and welcome to the earnings call of Aditya Birla Capital for Q4 of FY 2023. Joining me today are our senior members of my team, Bala, Rakesh, Tushar, Pankaj, Kamlesh, Mayank, Pinky, Vijay and Sanchita Miami.

I will cover our strategy and approach across businesses and VIjay will cover key financial highlights, followed by a discussion on performance of our key businesses by the respective CEOs. The Indian economy continues to remain resilient amidst the volatile global macroeconomic environment. The growth momentum is visible and increasing industrial output and capacity utilization, strong improvement in services and manufacturing PMI and rising GST collections.

Indian financial sector remains healthy and stable. Though inflation remains elevated, it has moderated from its peak. We expect these positive trends in the industry to continue and Indian economy to perform well in FY 2024. At Aditya Birla Capital, we follow one ABC one P&L approach to focus on quality and profitable growth, by leveraging data, digital and technology, the three pillars of our approach and one customer, one experience and one team.

We have a strong presence across protecting, investing, financing and advising that is PIFA offering. We have adopted a one customer approach to build deep understanding of our customer profile and provide them best-in-class solutions across PIFA.Oour endeavor is to provide one experience across channels and enhance seamless delivery of our products. We follow an omnichannel channel architecture for distribution and provides complete flexibility to our customers to choose the channel through which they wish to interact with us. We focus on working together as one team, by leveraging synergies to drive cross sell and deliver complete and comprehensive solutions to our customers.

We have also aligned the incentive structure of our senior management team to reflect this approach. This approach has helped us to accelerate our growth trajectory, this scale and increase market-share across our businesses. We continue to expand our branch network. We added 75 branches during the quarter and our total branches count was 1,295 as on March end. We have 584 co-located branches across 155, one ABC location, where customers receive assistance to achieve their financial goal.

We will continue to increase our presence on one ABC locations. We follow a digital first approach for product innovation, customer selection and seamless onboarding, and improving service delivery. In our AMC business, about 75% of our customers were on-boarded digitally in FY ’23. In our Life business, 77% of renewables were done digitally. In our Health Insurance business, 87% of the business is delivered by auto underwriting.

We leverage our data, digital and technology across our businesses and have taken various initiatives to further strengthen our proposition. We have recently formed a wholly owned subsidiary, Aditya Birla Capital Digital, which will develop an omni-channel D2C platform. This platform will serve existing customers, new customers and act as one stop solution to deliver PIFA solutions to all our customer, the virtual engagement channel of this platform has already gone live in March.

We are collaborating with NCCI to develop and promote digital payments, which will enhance our customer transaction experience. We have recently launched in finance our innovative engagement program to partner with start ups and co-create solutions, for enhancing customer journeys, and increasing the operational efficiencies across our businesses.

Our comprehensive digital platform for MSME ecosystem, Udyog Plus went live in March. It offers a paperless digital journey for business loans and loan disbursement up to INR10 lakh. Udyog Plus has been integrated with the government and private e-commerce websites to provide credit facilities to the sellers on these platforms. We have seen more than 2,500 registration on Udyog Plus within a month of its launch.

We see a favorable prospect for the Indian economy in the near and medium term. We expect India’s domestic consumption and investment drivers to continue to support healthy GDP growth. Our strong parenthesis provide a seamless access to capital, both equity and debt and extended ABG and ABCL ecosystem, gives us multiple opportunity to accelerate our growth. Going forward, we will follow our one ABC, one P&L approach, to continue to grow and to scale in each of our businesses.

In our NBFC business, we will focus on building a granular portfolio, by growing our personal and consumer loans, and secured and unsecured businesses. We will build differentiated offerings for MSME and scale up our Udyog Plus to acquire new customers and tap into ABG ecosystem. In our HFC business, we will grow growth, prime and affordable business segments with the focus on quality organization origination.

We will continue to deliver sustainable growth and ROA in the medium term in both our lending businesses. In the AMC business, we will work towards increasing equity market share. We will aim to increase our presence in passive and alternate business. In life insurance business, we will grow the traditional Health segment with a focus on diversifying our distribution mix, increasing our productivity and improving the cost intensity across cohorts.

We will continue to deliver sustainable growth in embedded value and VNB in the medium term. In Health Insurance business we will leverage our differentiated health first model for better risk selection and risk pool management, diversify our distribution mix and utilize our digital capabilities for hyper personalization at scale. We intend to make investment with primary objective of supporting growth in our lending and insurance businesses, and to strengthen our digital offerings.

Our Board of Directors have approved today, raising funds of an amount up to INR3,000 crore, subject to their requisite approval. Now, I request Vijay, to cover the financial performance for Q4 and financial year 2023.

Over to you Vijay.

Vijay Deshwal — Chief Strategy Officer and Head of Investor Relations

Thank you Vishakha, and good evening everyone. We delivered a strong performance for FY ’23, with accelerated growth momentum across our businesses. The total revenue grew by 31% year-on-year to INR9,146 crores in Q4 and 27% year-on-year to INR29,999 crores in FY ’23. Consolidated profit after tax grew by 35% year-on-year to INR609 crore in Q4 and 33% year-on-year to INR2,057 crore in FY ’23. The consolidated profit after tax in FY ’23 excludes the fair value gain related to investment in Aditya Birla Health Insurance.

In our NBFC business, we continued with a strong momentum of disbursements and granularization of our book. Disbursements for the quarter grew by 19% sequentially and 58% year-on-year to INR15,598 crores in Q4 of FY ’23. This helped the loan book to grow 46% year-on-year and 10% sequentially to INR80,556 crores as of March end.

Loans to retail, MSME, SME and HNI segment now constitute 67% of our portfolio. ROA of our NBFC business was 2.45% and ROE was 14.8% in FY ’23. In our housing finance business, disbursements increased by 29% sequentially and 36% year-on-year to INR1,790 crore during Q4 of FY ’23. The loan portfolio grew by 6% sequentially and 14% year-on-year to INR13,808 crore as of March end, ROA was 1.94% and ROE stood at 13.6% in FY ’23.

Coming to our AMC business, the average AUM was INR275,204 crore of which equity AUM was about 42% in the current quarter, these are continued focus of growing passive and alternate asset segments, passive AUM was about INR28,200 crore at March end, which is about 2.8 times that passive AUM as of March end last year.

The growth momentum in our life insurance business continues with 37% year-on-year growth in retail first year segments which was significantly ahead of the industry growth of 19% year-on-year in FY ’23. Group new business premium grew by 30% year-on-year in FY ’23. We achieved a net VNB of about INR800 crore rupees, in FY ’23, which was more than two times the net VNB in FY ’22.

Our net VNB margin increased by 801 basis points year-on-year to 23% in FY ’23, and present value was INR9,014 crore as of March end. In our Health Insurance business, our unique and differentiated Health First model helped us deliver industry-leading growth of over 57% year-on-year in FY ’23 among standalone health insurers. The market share of ABHI among standalone health insurance increased by 210 basis points to 10.4% in FY ’23 combined ratio improved from 127% in FY ’22 to 110% in FY ’23.

With that, I will now hand over the call to Rakesh to take us through the NBFC business performance in detail.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Thanks, Vijay, and good evening everyone. In our NBFC business, we saw strong momentum across all segments in quarter four, contributing to 10% quarter-on-quarter and 46% year-on-year growth in our AUM, taking it to INR80,556 crores.

Our retail and SME segment AUM grew 57% year-on-year and our active customer base grew to 5.7 million, compared to 3.6 million last year. In quarter four, we disbursed INR15,598 crores, which is the highest for a quarter so far. Our disbursement for the full year was double of that what we did in FY ’22. Also 72% of it is towards retail and SME customer segments. Business loans comprised nearly 43% of our disbursement mix and was the highest contributor across product segments, followed by personal and consumer loans at 31%. 58% of our personal loans was sourced digitally.

With this momentum and focus on granular product segments, we ended this year with the retail and SME segment AUM mix of 67%. Also we were able to deliver a 60 basis point year-on-year improvement in our NIM, taking it to 6.84% for the year. We also significantly augmented our frontline capacity by doubling our branch footprint this year. We added 164 new branches in FY ’23, taking our branch footprint to 323 branches. Again, in line with our target for March ’23. Despite this expansion in frontline capacity, we managed to maintain quarter four cost-to-income ratio at a similar level as last year. And this I attribute to our continued investment in technology, to digitize processes, to grow sustainably.

We closed FY ’23 with a profit before tax of INR2,090 crores for the full year, delivering a 41% growth year-on-year. In fact, profit before tax for quarter was at an all time high of INR604 crores, growing 51% year-on-year and 12% quarter-on-quarter. The ROE for the quarter was 16.5f% compared to 12.4% in quarter four last year, over 400 basis — 400 — 4% expansion in a year which is clearly noteworthy.

I had mentioned in my last quarter earnings call, the next leg of growth will be driven by our enhanced frontline distribution capacity and investment in digital and direct sourcing channels, which we will continue to invest in FY ’24, as well. In business vertical, we launched the differentiated Udyog Plus, our unique and differentiated unified platform for MSME customers, to enable digitally for credit as well as value added services for MSMEs to transact seamlessly.

The asset quality has shown a consistent improvement over last year, with a Stage 2 and Stage 3 coming down from 8.98% in quarter four last year to 5.84% in quarter four of FY ’23. Gross credit fee has reduced to 3.12% compared to 3.58% in quarter four last year. We’ve maintained our Stage 3 PCR at a healthy rate of 46.2%, up from 43% last quarter.

Credit cost for the quarter was 1.49%, which was 25 basis points lower than previous quarter, which you may recall, I had mentioned in my last call was elevated owing to the implementation of new ECL policy. Now to conclude and reiterate the quarter four performance, not only did we have a strong quarter in terms of AUM growth, but also in terms of progressively driving increase in retail and SME portfolio mix. As a result, our quarter four NIM expanded to 6.88% over last year and with the efficient control on cost, despite investment in building scale, we delivered a quarter four PAT growth of 51% and return on equity of 16.55%.

With this, I will now hand over to on Pankaj Gadgil for our Housing Finance business.

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

Thank you, Rakesh, and good evening everyone. I will now cover the performance of ABHFL. Here we’ve experienced continued momentum in disbursals and book growth with a robust financial performance and focus on portfolio quality, which has resulted in consistent improvement across all data matrices.

Let me talk you through some of the [Technical Issues] disbursements of INR5,300 crores in FY ’23, which is our highest ever, which is an increase of 42% Y-o-Y. Loan book as of March ’23 is INR13,808 crores, an increase of 14% Y-o-Y. NIM is 5.28%, an increase of 75 basis points Y-o-Y. And our PBT for FY ’23 is INR309 crores, which is an increase of 22% Y-o-Y. Portfolio health has improved consistently and Stage 2 plus Stage 3 has reduced by 271 basis points Q-o-Q and 377 bps Y-o-Y.

Gross Stage 3 loans have reduced to 3.23% in March ’23 from 3.66% in December ’22. You can see that we have demonstrated consistent improvement across various key performance indicators for the third consecutive quarter, encompassing aspects of book growth, asset quality and good profitability. We witnessed accelerated growth in disbursements across all product segments. The customer base now is about 54,500 and has grown by 22% Y-o-Y. We continue to focus on granularity, with a ticket size of INR25 lakhs to INR30 lakhs.

ABHFL now has the Pan India presence with 128 branches located across 20 states, and a well-diversified portfolio. We continue to invest in talent, technology and analytics to increase capacity and enhance productivity. The cost-to-income ratio for FY ’23 is 42%, reflecting accelerated investments in technology and franchise.

Now coming to portfolio quality. The moratorium on all the COVID registered cases has ended at December ’22. All the numbers which you’re seeing on Slide 32 of the investor presentation are including the performance of registered cases and 100% of the cases are now being presented for collections.

Like I mentioned earlier, our gross Stage 3 has reduced from 3.66% in December ’22 to 3.23% in March ’23. We are maintaining our Stage PCR of 33% and additionally carrying a management overlay of INR56 crores. This robust debt service framework and pre-delinquency management, the collection efficiency is consistent at 99%. And most importantly, with a focus on quality of originations, 96% of our disbursements in Q4 FY ’23 are with 700 plus CIBIL, all new to credit. You can see the detailed breakup of the same on Slide 31 of the investor presentation.

Moving on to financial performance and liquidity management, in terms of ALM, ABHFL is operating in compliance with the regulations seeded by ABHFL Board. We have maintained positive ALM, ensuring that the Company is well prepared to meet its liquidity requirements which can be further referenced on Slide 33 of the investor presentation.

We are related consistently AAA for the last six years by ICRA, India ratings. And as you can see on Slide 34 of the investor presentation, we’ve been able to maintain a healthy spread at 3.79%. With continued focus on diversified long-term borrowings, the contribution of NHB to total borrowing outstanding has increased from 14% in March ’22 to 18% in March ’23.

Now coming to the financial highlights. The PPOP is highest ever at INR381 crores in FY ’23 with a growth of 16%, the PAT for FY ’23 is INR241 crores, an increase of 22%. The ROA for FY ’23 is 1.94% and ROE is at 13.16%. You can refer the detailed financials on Slide 38 of the investor presentation.

Lastly, on Slide 35, our organizational roadmap is anchored around growth. Service excellence and digital reinvention and distribution network. And let me cover that briefly. Firstly, we expect to accelerate growth in both the prime and affordable segments, so geographically focused micro market penetration strategy and fully leveraging the ABG ecosystem.

Secondly, like Vishakha earlier mentioned, we are accelerating our digital reinvention efforts across the entire customer journey, and we have launched a seamless loan origination system in April ’23, which enables higher face time of our teams with customers.

Lastly, we are very actively focusing and enhancing our analytics capabilities across areas of data engineering, data science and digital science.

In summary, we are committed to sustain our profitability and maintain our quality portfolio while simultaneously investing in long-term growth.

With this, I’d now hand over the call to Bala, MD and CEO of our asset management company.

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

Thank you, Pankaj and good evening to everyone. As present in the AMC on call, the total average assets under management, including alternate assets for Q4 FY ’23 stood at INR286,000 crores. For the quarter ending March ’23 our mutual fund AUM was at INR275,000 cores. It remained more or less flattish as compared to Q3 of FY ’23.

Our equity mutual fund assets under management was at INR116,000 crores for the quarter ending March ’23. The equity mix to that is 42%. Though we have very larger several initiatives aimed at increasing the size of residual book value. In fact our effort has resulted in our residual book costing INR1,000 crores for March ending 2023.

As part of the strategy to build the customer competition, we added close to about 7 lakh new folios, which has resulted in our overall folio account, increasing and going above 80 lakhs as of March ’23. On the passive front, our product offering grew by three times to INR29,000 crores as of March ’23.

Our existing PAT sales were booked as a result of sales, has grown from seven products to 41 products. And overall number of folios added based on our network at 493,000. On the alternate asset building [indecipherable] commitment of INR734 crores to India Equity Service Fund which category [indecipherable] by leveraging our multi-channel of the distribution footprint that we’ve established over a period of time.

With respect to the offshore operation, we have received a principal approval from GIFT City launching India ESG Engagement Fund very strong domiciled in GIFT City. Additionally, we’re also currently in the process of launching two more global funds under the GIFT City umbrella. On real estate front, though we have been trying to building the incremental assets, but the current focus has been, creating like S3 and other credit opportunities fund, maybe we’ll make an announcement that investment is currently in progress now.

With respect to the financial numbers on a full year, for the full year March ’23 revenue from operation was about INR1,227 crores compared to INR1,200 crores for the FY ’22. Operating profit before tax was at INR67 crores as compared to INR1023 crores FY ’23. FY ’23 profit before tax was at INR794 crores versus INR895 crores on the same period last year.

I’m also happy to announce that part of our shareholders’ approval, we declared a INR5.25 per share, as a final dividend, that takes it to INR10.25 per share on a full ear basis then.

With this I’ll hand it over to Kamlesh Rao, MD and CEO of Aditya Birla Sun Life Insurance.

Kamlesh Rao — Managing Director and Chief Executive Officer, Aditya Birla Sun Life Insurance

Thank you, Bala and good evening to all of you. The consistent growth journey of ABSLI in both the individual and group life insurance business continued in the financial year ended 2023. We outperformed both the overall industry as well as private industry.

Individual life insurance grew by 37% compared to the private industry growth of 24%. This growth was achieved through increased productivity and capacity investments made last year. Our success in launching new products was key to our growth. We launched an industry-first immediate income guarantee product under the Nishchit brand, we sold 5,000 policies in just 17 days.

The success of our new products, combined with our PASA contribution of 25% will be hallmark of our business in financial year ’23. The individual business had a very healthy product mix with traditional business accounting for 81% ULIP business now at an all time low of 17%. This has resulted in strong gross margins for the firm. And the fact that 25% of our business came from upselling to existing customers, helped productivity growth in both our proprietary, as well as our partnership channels.

In the Group Life Insurance segment, the private industry saw a growth of 17% last year, while ABSLI registered a growth rate of 30%. We continue to focus on the credit life business which is growing at more than 100% over the last year’s base. Our total premium of INR15,070 crores has registered a growth rate of 24% over last year, with a two year CAGR of 22% demonstrating the consistency of our business growth. This growth came from new business growth, as well as renewal premiums growing at 14%. Like Vishakha mentioned, our digital collections now account for 77% of our renewal premium, and this growth is seen across all persistency buckets, on the 13th month to the 61st month with the 13th month persistency now at 87% and 61st at 54%. We continue to maintain an upward bias in our forward guidance for these persistency numbers.

Our AUM under management now stands at close to INR70,051 crores with a Y-o-Y growth of 15%. A two year CAGR year of 17% is demonstration of the consistency of our growth. 24% of this CAGR was in equity and the balance 74% in debt. Our investment performance has been better than the respective benchmarks, across all three categories of equity, debt or even balance fund, either from a one year four or a five year perspective.

Our digital adoption across various areas is demonstrated in Slide 54. 99% of our new business customers are on-boarded digitally. 83% of all our services are now available digitally, covering 60% of our customer transactions and our customer self-service ratio now stands at 88%. We continue to manage the net margin story well, as seen in Slide 55. Last year, we managed a net VNB of 15% and for last year financial year ’23, we closed the year at a 23% net VNB margin. We have shown a growth of 800 basis points in our net margins compared to last year. And the absolute value of net VNB moved from INR369 crores to INR800 crores in financial year ’23.

ROE has grown to 22.6% in financial year ’23 from 15.4% level for financial year ’22. We will continue to focus on quality of our book to make it better across the 13th till the 61st month persistency from current level and also focus on diversified mix of both the proprietary and partnership channels within our business.

We believe that the new AUM guidelines introduced by the regulator will have a positive impact on the life insurance industry in the long run. These guidelines will ensure directionally that life insurance companies will improve cost efficiency in their business operations, and eventually these efficiencies will get passed on to customers in the form of better benefits and products as for the spirit of the new guidelines.

With this I will now hand over to Mayank, MD and CEO of our health insurance.

Mayank Bathwal — Chief Executive Officer, ABHICL

Thank you, Kamlesh and I’m very happy now given the performance of our health insurance business. We had a very successful year with an industry-leading growth of 57% Y-o-Y in FY ’23, making us not only the fastest-growing health insurer in the country, but in fact, the faster-growing in insurer across all lines of GI industry. We are well ahead of industry growth at 21% and SAHI growth at 26%. And the growth was powered by our retail franchise expanding at an impressive 23% Y-o-Y.

In FY ’23, we’ve acquired 3 million net new customers, bringing our total customers to 21 million, 11% Y-o-Y growth. As a result of this growth, our market share in SAHI company stands at 10.4% an increase of 210 basis points for last year. Our corporate business experience in outstanding growth of 104% in FY ’23 driven by our strong emphasis on cross selling and upselling and the introduction of a new category of corporate OPD offerings which is collectively accounted for 41% of our business in the last year.

Our corporate business is modeled on right risk selection, design to capture market opportunity, targeting new age companies, and has delivered a positive combined ratio. We believe that we have set up one of the most profitable corporate businesses in the industry. In terms of overall profitability, in FY ’23, we absorbed an escalated level of retail claims, which is consistent with the industry trend. The claims are largely driven by factors such as, non-COVID linked illnesses and provide us inflationary pressures. To mitigate the impact of these claims we have implemented various interventions, including underwriting, sourcing and provider wider management strategies.

Additionally, we have increased the price of our flagship products already. if We’ve further strengthened our FWA which is fraud, waste and abuse model and we are also collaborating with the industry, in fact to help identify and prevent any potential for fraudulent activity using the data provided by IIB.

But in spite of the above, our combined ratio has actually come down to 110% in FY ’23, a reduction from 127% in the previous year. The full year loss stood at INR220 crores, well below the loss of INR311 crores in the same period last year. As we progress achieving a larger scale will enable us to generate greater operating efficiencies.

We believe our superior performance is made possible by the robust foundation we’ve established through our unique health first model over the last six years. The part of the proposition lies in its ability to leverage the fundamental principles of prioritizing the health of consumers which has resonated strongly with our stakeholders, as was reflected by the success of our brand campaign, which was the story of our actual consumers sharing the experience with the market.

In order to build upon our differentiated model, we are continuously introducing new offerings to the market. Our recently launched product, ActivFit which was an industry-first comprehensive plan for young consumers is in line with the strategy of innovative and segmented product offerings. This included our industry-first feature of in the product of face scan based good hand declaration and which has been received very well by the market so far.

Our industry leading claim settlement ratio of 96% in revenues is a reflection of our commitment to prioritizing key moments of growth for our consumers. On the digital front, our digitally enabled distribution mix is the most diversified distribution in the industry with proprietary channel contributing to 27% of our retail business as of now. We now have 85,000 plus advisers across 200 plus branches. We — as I mentioned earlier in the previous communication, we leverage the One ABC branch strategy to nearly double our branch network at a low cost last year, and are also synergizing in other views and areas like common advisers.

In addition, we now work with 17 plus banks, including the recently added two new private sector banks — sorry, public sector banks Punjab & Sind Bank and UCO Bank. Our business, including traditional alliance partners grew 71% Y-o-Y becoming a sizable 15% of our total retail mix. We continue to invest extensively in our technology and digital capabilities, superior customer experience, and more importantly scale hyper personalized engagement for our health plus module.

We’re already in phase 2 of our tech and digital investment to further lead in this space to leverage the emerging new opportunities, fueled by the changes in regulations over the past one year.

In addition, we are continuously enhancing our data and analytics model, to make our entire customer life cycle management more efficient and personalized, includes personalized product offerings leverage of PASA, targeted health and wellness interventions and personalized service approach to enhance overall customer experience.

Furthermore, our predictive analytics model help us to detect fraudulent claims and machine learning algorithms helps, analyze customer data to predict future claims, and ensure accurate pricing and coverage.

Moving forward, we aim to aggressively expand our franchise, while maintaining best-in-class unit economics. We would like to open up chosen wide spaces to increase revenue pools, and also improve profit pool. Thank you and I’ll now pass it back to Vishakha for her closing remarks.

Vishakha Mulye — Chief Executive Officer

Thank you, Mayank. This concludes our comments on the Q4 FY 2023 performance. And now, we’d be very happy to take if there are any questions.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Renish Bhuva from ICICI Securities. Please go ahead.

Renish Bhuva — ICICI Securities — Analyst

Yeah, hi, congrats on a good set of numbers. Two questions from my side. So one is on this fresh capital raising. So if you can help us through the capital allocation of this likely fund raise?

Vishakha Mulye — Chief Executive Officer

So, as you know that, it is expected that the Indian economy will grow at a very healthy pace, I think in the last year one has seen very robust credit growth in the system at around over 15%. All the other parameters and the drivers of the growth in the economy has really worked in the last 12 to 15 months. And one expects that momentum to continue. We believe that the capital that we plan to raise we aim to make investments with the primary objective of supporting the growth in our lending and insurance businesses and also to strengthen our digital offerings. And that is what it is basically for the growth in the franchise across our platform.

Renish Bhuva — ICICI Securities — Analyst

Okay. Any split you would like to highlight, let’s say, how much of this would be towards lending business and how much of it would be towards digital and insurance?

Vishakha Mulye — Chief Executive Officer

That will be very difficult to articulate. But as I said, one were to look at the growth that we have seen across our businesses it has been very robust. And therefore, we believe that taking into consideration the growth that one expects in the Indian economy, we will definitely require capital for the growth and therefore, we will ensure that the capital is available for all our businesses, to have the robust growth.

Renish Bhuva — ICICI Securities — Analyst

Got it ma’am. And so, my next question is on the NBFC side, so. As on March ’23 our book mix is roughly 70% secured, 30% unsecured.

But when we look at the FY ’22 [indecipherable] it is more skewed towards the unsecured piece. So maybe now medium term perspective, what could be the ideal mix in terms of secured, unsecured for us?

Vishakha Mulye — Chief Executive Officer

Rakesh, would you like to take?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yes, so we will continue to really see and look at the opportunity in terms of the different customer segments for clearly personal and consumer space, we are looking at opportunity and also on the MSME business. And as Vishakha had mentioned, we have launched Udyog Plus, so. I think we’ll continue to focus on these segments. And depending on what the customer needs are and the product segmentation is, we continue to build a balance of both secured and unsecured. And we will continue.

Renish Bhuva — ICICI Securities — Analyst

So broadly it should remain at 70-30 mix or unsecured should outpace the secured mix?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

As I said I think it will depend in the customer segments what are the opportunities and we will continue to really leverage on that opportunity, both on consumer side, and on the MSME side. And lot of our MSME business is secured in nature.

Renish Bhuva — ICICI Securities — Analyst

Got it, got it, sir. This is helpful sir. Thank you.

Operator

Thank you. The next question is from the line of Avinash Singh from Emkay Global. Please go ahead.

Avinash Singh — Emkay Global — Analyst

Yeah. Good evening. Good set of numbers. Couple of questions. The first one is again broader on your strategy, you have articulated — I mean a nice U.S. strategy. But so far one concern that remains with the overall ABC business is, that in majority of the cases, the businesses are still kind of a B2 D2C or B2 D2C. Where this — your reach to the customer from your entity to the customer are kind of a very, very powerful third party distributor entities and that is where a question comes around your sustainability of customer franchisee or growth. I mean whether I look at the lending business where you are sort of partnering with a lot of fintechs DSAs and eventually reaching out to customers or in insurance, it’s like the bank and all.

So how — I mean of course you have the plan for B2C in place, but how do you see this I mean sort of evolving your business has sort of a direct connected with the customers because that is a big differentiator there I mean for your peers. So again some bit of more color around how it is going to change over, say, one-two years how your approach or reach to customer at the time of sort of reducing the intermediation is? That’s one.

And second is on the lending piece on the — like NBH side that, a lot of different growth at this point, I mean, is coming in this personal unsecured, of course, the previous question you address there. But do you have sort of a sort of a segment in mind which you’d like to add because some of the segment where you operate, probably the competition would it be sort of are increasing and also kind of a growth would be already peaking out if I can say.

So is there sort of a product segment you have in mind that we sort of augment, you would like to augment to in your future growth? These are the two questions. Thank you.

Vishakha Mulye — Chief Executive Officer

Okay. So let me take the first one because it is across the platform. So first of all if you look at it even the partners, yes, we do work with the partners, particularly the digital partners in our NBFC business. We do work in our insurance businesses, the agents, as well as the bancassurance partners.

We get these partnerships as more as a channel to reach at our customer. When we reach our customers it is most of the time our people are involved. The customer get to experience our product directly and not serviced directly. And therefore, we have a direct contact with the customer. Also the data of the customer and the customer ownership in most of the channels is with the Aditya Birla Capital, and therefore we can leverage this customer data, as well as the customer, the contact for our other products as well.

In few channels of course there would be a cost implication, because we may have to pay some amount to the channels that we would have used initially, but I would say that in all channels we have a direct contact with the customer and the customer gets to experience our products and services directly.

As you rightly said, yes, we are working in each of our businesses to also create now. In many businesses, we already have that. But also we are creating now a specifically dedicated digital channel which we call it as One ABC we incorporated what we call it as Aditya Birla Capital Digital, which is going to be an omni-channel platform which will have — which we will leverage our existing branches. We will have a VRM. We have a web platform, we will also have our app.

As I said in my opening remarks, we have already launched VRM, and it has gone live in the month of March. We had said in our last conference call that we would be launching our web, as well as the app in the very near future this year. So with that of course, we will look at acquiring, we will of course look at servicing our existing customer of ABC as well as ABG Group. We will also look at acquiring the customers digitally through this channel. So I hope I have answered that question.

And the second question I’m going to request Rakesh —

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

On the first one if I can just add. I just wanted to clarify that it’s not all business and I’ll talk about the lending business. If you look at 62% of our business is direct. Yet, we depend on the partners, but that is only on the consumer side of the business, and some bit of personal loans of the business. But beyond that the SME business, which we do, it’s a relationship and direct acquisition model, which we have and obviously on the corporate side also it’s direct acquisition.

Also on the partner, the entire ownership though the sourcing is done by the partner with the entire ownership of the customer is with us. The entire contract is with the customer, the repayment happens from the customer’s account we made disbursement to 18 customers accounts. So clearly the owners is with us, the entire data, the performance of that customer is with us. So clearly, I think yes, we do depend on some part of our business and some segment to acquire through the third-party but. I think the ownership of the customer, and as I said 62% of the customers which we acquired are on the business, which we have is through direct.

And the second question was on NBFC, in terms of the new product segments and all. So clearly I have discussed this, we believe there is a big opportunity in the consumer, the personal space and the MSME space, and that is the reason why we have built this platform, B2B platform, which is a Udyog Plus. And clearly we want to capture the large scale micro SMEs who are looking for a small ticket loans. And as we build the credit history of these customers, we will be able to really do business with them in a long-term. So I think that’s a clear new segment and new acquisition engine, which we have built. And we believe there is a big opportunity and we need to really do justice to this before we really start looking at newer product segments.

Operator

Thank you.

Avinash Singh — Emkay Global — Analyst

Rakesh if you can just —

Operator

Sorry to interrupt sir, I will request you to please come back in the queue. The next question is from the line of Abhijit Tibrewal from Motilal Oswal Financial Services. Please go ahead.

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Yes, thank you for taking my question. Am I audible?

Operator

Yes, you are.

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Yes, thank you. So I mean, again, my questions are on the lending business. I just want to understand with regards to the NBFC, definitely very, very strong momentum that we’re seeing across product segments, in the last question you were kind of trying to explain about the digital partners that you work with, predominantly in the consumer and the personal loan side of things.

What I wanted to understand here is, while the going is very strong now, just wanted to understand, how are we looking at things moving forward. What I’m trying to understand more specifically is somewhere, are you I mean anxious about the kind of growth that is coming in, particularly in unsecured side of things, not just personal and consumer loans, but also the unsecured business loans?

Why I ask this is, when we engage with a lot of your channel partners or let’s say DSAs what they clearly highlight is, while the engagement is very, very good, at the same time we are also very very aggressive in terms of decisioning. So while it’s a good thing that they appreciate, I mean, how are you looking at things, if you can answer this? And then maybe I’ll ask my second.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Sure. If you look at 70% of our NBFC book is secured. Our unsecured portfolio comprises of personal loans to salaried professionals with a focus on emerging income segment, and checkout financing. And if you look at that total book of INR15,000 crores, out of INR80,000 crores of business. About 87% of our personal and consumer loan portfolio is to customers with credit bureau score of more than 700. So we clearly — and we have built an underwriting model the scorecards are in build over a period of time with our learning and it’s completely agile in terms of the scorecard, which we use, the credit bureau score and our own performance.

The asset quality as you mentioned in our NBFC business through the cycle has been quite stable, and it continues to remain healthy. Also if you look at the gross Stage 2 and Stage 3, that has declined by 315 basis points year-on-year and 114 basis points sequentially to 5.84% So clearly we are focused on, we — all these customers which we on board are acquired through the scorecards, which we have built over a period of time and we track the performance on not only monthly basis in certain — on a weekly basis we review the performance in terms of which cohorts are performing and how are they really coming on our benchmark.

So we are completely on it and we will continue to be on it.

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Thank you for that. Just a follow up question. If you look at your Dupont [Phonetic] our ROA tree in the NBFC business, can you help us understand what are those levers going to be going forward, which will maybe help you achieve further expansion in ROA from [Technical Issues]

And just one last question for Vishakha. So this Aditya Birla Capital Digital that we have incubated now and wherein you also talked about, having that app interface. Again, two sub-questions here, one is, I mean, what are our plans going forward? Is this subsidiary going to house the so called let’s say super app of Aditya Birla Capital?

And going forward, in addition to loan offerings, what are the other things that you maybe plan to provide on this side? Thank you so much.

Vishakha Mulye — Chief Executive Officer

So, yes, you know the app will be housed in Aditya Birla Capital Digital. In addition to, of course, our endeavor, there would be to have a completely customer- centric approach. We will try to be positioned our Aditya Birla Capital Digital as a one shop solution for all the financial needs of our customer across its life cycle. And therefore, in addition to the products that we have are manufactured by us, across our lending, insurance and investment, what we call it PIFA, there are value added services that we will also give it to our customers in the short to medium term.

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Got it. And if you can address that question on the ROA in the NBFC business.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yeah, so as we have been mentioning and we have been driving the granularity of business in terms of focused on personal and consumer and the MSME, I think that will change that product mix will drive improvement in margins and that should drive the overall ROA.

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

In addition to that answer that Vishakha gave on the first question on the services and the products into scope — this is Pankaj here. I think we’ve also shared that in our [indecipherable] interface payments is something that we have spoken off and we didn’t that’s putting an NPCI, which was also announced, whatever digital solutions on payments. That also is going to be a very important hook. You have time to offer our entire bouquet of solutions. So we always say PIFA. So it ‘s protect, invest, finance, advise, and also we are adding the sales, which is payments that’s what we are getting to.

Abhijit Tibrewal — Motilal Oswal Financial Services — Analyst

Thank you so much. Congratulations team on a very-very good quarter.

Vishakha Mulye — Chief Executive Officer

Thank you.

Operator

Thank you. The next question is from the line of Kunal Shah from Citigroup. Please go ahead.

Kunal Shah — Citigroup — Analyst

Yeah. Hi, Vishakha, and the entire team. So, firstly with respect to in terms of leveraging the Group ecosystem and the kind of business momentum, which we are seeing, how is the proportion of incremental lending to the group customer base and what do we see it as a proportion of the incremental lending over a period over the medium term?

Vishakha Mulye — Chief Executive Officer

We have not that number as yet. But just to talk about the various customer segments. What we see is, there is a huge potential to leverage the entire group ecosystem. Whether you look at on the individual side, we have a large number of employees within the Group. We also, as Rakesh said, have recently launched our MSME platform, which is Udyog Plus, which will work with the entire ecosystem of the ABG. We have large industrial companies within our Group, which have their own dealers, vendors, also their own partners, who are linked to them. We will work with each one of them to ensure that we provide finance that really meet the needs of these customers, which are the small and medium enterprises.

We also, as a Group have made foray into the consumption, and therefore really providing various of the solution, including the payment solution that Pankaj spoke about. We would be able to now made those available to the retail franchise that we’re building at a Group level. So we look at synergies across the businesses that we have in the Group, including our own employees at a Group level.

Kunal Shah — Citigroup — Analyst

Okay. But there wouldn’t be any specific targets, which would have been internally aligned to that?

Vishakha Mulye — Chief Executive Officer

So internally of course Kunal, we have taken very ambitious targets and — but as I said, we’ve not yet articulated it in terms of the number. But yes, each of our businesses have taken a very ambitious target internally, which we will work through.

Kunal Shah — Citigroup — Analyst

Sure. And in terms of the digital lending, what would be that as a proportion of the overall disbursements?

Vishakha Mulye — Chief Executive Officer

Rakesh?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Overall disbursements, so Kunal, we have given this, if you look at on the personal and consumer segment, out of that how which will be digital.

Kunal Shah — Citigroup — Analyst

So these INR4,700 crores what — out of that how much could be digital within this?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So 90 odd percent out of this will be digital.

Kunal Shah — Citigroup — Analyst

Okay, 19 odd percent out of this.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

19.

Kunal Shah — Citigroup — Analyst

19%. Okay, okay. Got that. And what would be the tenure of unsecured business loans?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Kunal 15 to 18 months on the consumer side, and on B2B side, 18 to 24 months.

Kunal Shah — Citigroup — Analyst

No the only reason to ask the question was, when you look at it in terms of the repayment, it’s hardly 2% in this particular quarter, and even on a full-year, it’s hardly 20 odd percent. So when we look at it in terms of the unsecured business, disbursements are INR1,300 crores, whereas there is almost like INR1,200 crores kind of increase in AUM as well. So hardly like 150 bps kind of a rundown and even on a full year basis, it seems to be hardly INR1,100 odd crores kind of run down. So is it like a very — because tenure should be one to two years, so was not getting that as to why —

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So that’s exactly, there are different — in this the short term, the checkout financing is even lesser than that. I’ll give the average of 15 to 18 months. But if the checkout financing is there, it will be six to nine months. So clearly that’s where — and yes it’s a churn business. So you are right there.

Kunal Shah — Citigroup — Analyst

No, in fact, it has to be higher. So here there is hardly 2% prepayment, run rate for a quarter which seems to be quite low. So I don’t know.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So let me just — I don’t know what — which numbers you are looking at. We will take it offline on this. I will — we will — [Speech Overlap]

Kunal Shah — Citigroup — Analyst

Sure. And just last thing in terms of the capital distribution, did you highlight in between the lending and the non-lending if you have to look at it, INR3,000 odd crores, how will it get distributed between lending and the non-lending businesses?

Vishakha Mulye — Chief Executive Officer

So Kunal, as I said that, the capital, we see a robust growth in the segments that we are present today. And we see that growth opportunities across our segment. So depending upon the growth opportunities, we will allocate at capital to our respective businesses. But out of all the businesses of course the AMC doesn’t require capital, both the lending businesses and the insurance business is what assumed, yeah.

Kunal Shah — Citigroup — Analyst

But would it be fair that largely it would be towards lending business because insurance still we have 173% solvency.

Vishakha Mulye — Chief Executive Officer

I think looking at the opportunities in the market I think it would be fair to assume.

Kunal Shah — Citigroup — Analyst

Okay, okay. Thank you. Thanks and all the best, yeah.

Operator

Thank you. The next question is from the line of Lalitabh Srivastava [Phonetic] from Anvil Wealth Management. Please go ahead.

Lalitabh Srivastava — Anvil Wealth Management — Analyst

Hello. Am I audible?

Operator

Yes, you are.

Lalitabh Srivastava — Anvil Wealth Management — Analyst

Yes, thank you, ma’am and congratulations to the whole team for a great performance this quarter. So most of the questions have been answered. Just wanted to have a sense on the business growth outlook. We are leveraging our own network, as well as partner channels and digital means as well. So if you can just help us understand what will be the repeat business run rate on the unsecured and the retail business, where see desirable customer credit behavior? So what is the repeat business right there? That’s my first question.

And secondly, on the asset quality side across the industry, we are seeing very encouraging terms and especially also we are seeing on both Stage 2 and Stage 3 very encouraging performance. But if you can give some sense as to first of all more color on the additional checks, the credit filters that you’re employing in addition to the bureau scores based credit assessment.

And if you take pre-COVID-19 credit filters as a threshold, where do you think we are as of now and going forward what will be our strategy on that? These are the two questions and one, third question I would like to add is, what will be the sustainable credit cost outlook that we see for FY ’24 and beyond? Yeah, thanks.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So your first question on repeat customer, it’s 40% plus is our repeat customers in our unsecured business. So clearly, the strategy is that on board customers on a smaller ticket size shorter tenure and increases the performance of these customers, then we give them our slightly higher ticket size and a slightly longer tenure. So that’s 40% plus will be a repeat customer.

What was your second question?

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

In terms of the — how are doing underwriting —

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yeah, so credit filters, and I think, Pankaj, can add for home loans. But I covered this in my earlier I think in the script as well that 87% of our customers which we on board on the consumer and personal side, they have credit bureau score of more than 700. And we track their performance in terms of on a monthly basis in certain cases, on a weekly basis. And we see which are the cohorts, which are doing well, which is not doing well and community on top of this.

So clearly we have built great engines, we have the entire alternate data we use in built decisioning. So clearly a lot of work has happened there, and wherever we see some — anything which is not in line with our thresholds, which we have defined, we clearly stop and or control it.

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

So I think to add to Rakesh, Pankaj here. I think same goes for housing as well. So we have covered in our slides as well. So for us also 88% of our sourcing Is to customers who have a bureau score of more than 700. And very interestingly, customers who are new to it also, who are really at the top of the funnel there as well, the contribution is 48%, so all inclusive 96% of our sourcing today is 700 and NTC plus.

To your question on pre-COVID, I think the world, the credit culture in other countries, bureaus which has come up from 2008 today, that has matured, people have become very conscious, regarding their own credit history. And then, Rakesh mentioned I think there is a very consistent focus A, in making sure the quality originations have to scale and that they’re talking about the bureau. And I think on portfolio management, on early warning signals we also have — I also spoke about the pre-adequacy management which is using advanced analytics to predict, which other customers were likely to not honor that cheques we’ve been looking proactively.

I think also it makes a lot of difference. I think that’s consistently been our focus, in both the lending businesses.

Lalitabh Srivastava — Anvil Wealth Management — Analyst

Yeah. And some sense on what will be the sustainable credit cost, you would see for FY ’24, if you can share?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So I again mentioned this that, our — through the cycle our credit performance has been very, very stable. It’s Stage 2 and Stage 3 has come down by almost 315 basis points. And in terms of year-on-year and 114 basis points quarter-on-quarter. So I think we are completely focused on it and we believe that license to grow comes from the quality of the portfolio, and we will continue to really very vigilant on our portfolio quality.

Kunal Shah — Citigroup — Analyst

Yes, thank you. Thanks a lot.

Operator

Thank you. The next question is from the line of Gaurav Sharma from HSBC Securities. Please go ahead.

Gaurav Sharma — HSBC Securities — Analyst

Yeah. Hello. Am I audible?

Vishakha Mulye — Chief Executive Officer

Yes.

Gaurav Sharma — HSBC Securities — Analyst

Thank you for the opportunity. Couple of data point questions. So if I can see that the position of bank borrowings is 53% in both the lending businesses. Can you just provide a further breakup of how much this is linked to the approved MCLR and some other benchmarks, that is one for both the lending business?

And second question is that, when you are going for incremental borrowings so what are the benchmarks you are choosing or focusing on? These two questions.

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

So, yeah, thanks for the question. I think as you rightly said the term loans that we take from banks are always typically benchmarked. And of course the endeavor is at all points of time to make sure that solvency is maintained. And we are optimizing cost at the same time we are not compromising on VNB and that’s broadly the focus there.

Of course, there is a combination of some banks who will lend you at MCLR plus there will be nice new lending [indecipherable] I think that is the continuous process from our end. And as I had spoken earlier in my transcript this is about the housing business. The focus clearly is also leveraging NHB because we are in the affordable segment. And we also spoke about the 49% contribution that is coming in today from the affordable and also in the CF business. So leveraging NHB for refinance becomes very critical and we’ve spoken about our mix, it has gone up from 14% in March ’22 NB 20%, so there has been a significant movement there. So this is a continuous process at our end to look at ALM on the other side and also reduce costs so that’s the [indecipherable] actually for the lending business, that’s where we are.

Operator

Gaurav, do you have any further questions?

Gaurav Sharma — HSBC Securities — Analyst

On question number one [Technical Issues]

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

We have not explicitly disclosed the breakups, but it’s always going to be — some banks will be in MCLR [indecipherable] Repo rates, normally on — that’s not what is the indicative typically when banks have enablers, it will be these two.

Operator

Thank you. The next question is from the line of Chintan Shah from ICICI Securities. Please go ahead.

Chintan Shah — ICICI Securities — Analyst

Yes. Hello. Congratulations on good set of numbers. Thank you for the opportunity. So I had one question on the housing finance business. So currently like we are generating around 2% ROA, but so — and like this is well above our guidance of FY ’23, so any — or of FY ’24, so any revised guidance, which we are looking at since. If we look now affordable housing is roughly 42 percentage of the AUM, and given that the affordable housing players which are listed, they are generating ROE of more than 3 percentage.

So are we on are aiming on near to that mark?

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

I think the way we’ve been seeing that we would want to always sustain the performance. I know it is fully across the growth, it is also focused on the margins. So the focus is anyway is going to make sure that the our integration growth portfolio quality and also sound and robust financial management, triangulation always works for us. The contribution of affordable like you rightly said is now in approximately 12 years is to get 49%. So as we have always spoken I think the opportunities in both the private and affordable have to be leveraged appropriately. And leveraging the ecosystem as well.

I think the focus is going to be along all the three mix, which is portfolio management, robust financial management and growth. So I think we will — our endeavor is going to be to sustain the numbers [indecipherable] that you mentioned and look at opportunities [indecipherable] points of that.

Chintan Shah — ICICI Securities — Analyst

Sure. And one more thing on the Stage 2 portfolio and affordable housing, so kind of — that’s quite a sharp decline from 4.5 to 4. So this is largely on account of recoveries or less slippages what would be the reason?

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

So very good question. So I think the customers who had served their entire COVID [indecipherable] we observe these customers. A large proportion of them repaying very very healthily. So with natural movement they have moved into Stage 1. And of course, we have efforts intensified in that collection and also the legal framework, which also has this at all points of time to reduce the Stage 2 and Stage 3 practice, and you would have seen that now the [indecipherable] 4.99% in the portfolio.

Chintan Shah — ICICI Securities — Analyst

Okay. And just one last thing on this opex overall opex thing, so given that we are hovering more into the digital space and making various initiatives on the digital platform. So how do we expect the opex to go out and opex to hold in FY ’24 means opex to asset would be at around current levels, or will that see a slight bump up?

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

So I think.

Chintan Shah — ICICI Securities — Analyst

That is for housing as well as lending both.

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

That is why we would not getting very focused on NIM, but I think individually I think the key focus is like I said in ensuring row. Cost saturation on its own doesn’t mean that much I think functionality of ROA is extremely important, and of course, the robust management is very important. But the same time, like I said there is an acceleration in investment in technology and digital analytics that we’re doing to ensure that the appropriate growth and ROA and of course [indecipherable] part of the story gets maintained.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

And on the —

Operator

Yes,, sir please proceed.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

On the NBFC side also if you see the cost to income ratio is quite efficient in spite of adding 164 branches last year. We have maintained the efficiencies, and — so we will continue to I think operator in these levels.

Operator

Thank you. The next question is from the line of Nischint Chawathe from Kotak Institutional Equities. Please go ahead.

Nischint Chawathe — Kotak Securities — Analyst

Yeah. Thanks for taking my question. So just on the finance business. Can you split the average ticket size, consumer and personal loans, I think that’s around INR28,000 crores, between consumer and personal loans.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So, consumer loans is around INR20,000 crores, and personal loans blended personal loans is around INR3 lakh crore.

Nischint Chawathe — Kotak Securities — Analyst

INR3 lakh, sure. And on the secured side, the ticket size is declining despite the fact that LAP is going up. What could be the reasons for this?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So clearly, we are focused on building granular business and across all our segments is what we are trying to drive, and we will continue to drive that.

Nischint Chawathe — Kotak Securities — Analyst

And what would be the ticket size March?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

In secured business, you’re saying?

Nischint Chawathe — Kotak Securities — Analyst

Yeah, that’s right.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yeah, the secured business is INR1.8 crores is our average ticket size.

Nischint Chawathe — Kotak Securities — Analyst

No, no in the LAP, the LAP segment of secured business.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yes, sir, if you look at this is average, and I think this will be across the segment. But majority say it should be in the similar line.

Nischint Chawathe — Kotak Securities — Analyst

Sure get it. And just one clarification, the bureau scores that you put out into the pie chart, this is based on number of customers or is it based on the value of loan book?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Number of customers.

Nischint Chawathe — Kotak Securities — Analyst

Just moving on to health, trying to understand —

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So it’s no value, it’s just the correction that, you know value.

Nischint Chawathe — Kotak Securities — Analyst

So that includes the corporate book also, is it?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

No, we have mentioned this at the top that it’s personal and consumer loans.

Nischint Chawathe — Kotak Securities — Analyst

Got it, got it. Just moving on to health, if you could kind of help us understand how does the AUM guideline affect the health business? And any color on path to profitability.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

I think as Kamlesh also mentioned earlier, the situation will be very similar for both like finance. And I think it’s a very positive step for both the entire insurance industry. So we have to watch out in terms of the pace at which it gets implemented because I think ultimately the objective is to see how some of the benefits of this is, is passed on today, at our offerings by the industry which are more consumer kind of I would say more friendly for the consumers.

But I think it will take some time for the whole framework to get executed by the industry. And in the medium to long term is when we saw full impact of.

Nischint Chawathe — Kotak Securities — Analyst

But we are comfortably placed on this?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yeah, we are being. So there is enough mechanism in the guidelines for all category of something including us to be able to — [Speech Overlap]

Nischint Chawathe — Kotak Securities — Analyst

Perfect. Got it. Quickly moving on to the life side on Slide 40, you show the product mix channel wise, is this for the individual business or overall business?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

The product mix is for individual business only. So 81% that you say, which is traditional and 13% on the ULIP side, there is largely the composition — is the composition only [indecipherable]

Nischint Chawathe — Kotak Securities — Analyst

Sure. And the unwinding rate for you at 9.6% in the [indecipherable] is probably more on the higher side. So if you could explain maybe there is a specific reason for why it is higher this year? Is it something that you are running a larger duration — longer duration book?

Pankaj Gadgil — Managing Director & Chief Executive Officer, Aditya Birla Housing Finance Limited

So typically, it’s a function of within the traditional whatever is your composition. So if you have size of the guaranteed commitment that you have with the customer versus the spread, you’re making on that portfolio, if it is slightly better and unwinding rate in the non-par business tends to be better in a particular year. And that is why you will see across the listed companies if they’re in the range of about 7.5%, 8% it will be at about 9%.

The incremental comes on account of a product mix and also function of the committed guarantee in your guarantee book of the customer versus the strength that you can make on the same portfolio.

Nischint Chawathe — Kotak Securities — Analyst

And one last point, how much is non-par, in the traditional mix for last year and this year — for this year?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Actually we monitor the product mix as per the opportunity in the marketplace. At one point of time for our margins, we actually had excess of about more 10%, 11% on protection. In the increasing interest rate scenario that we saw last year, we thought the opportunity was more in the non-par segment. So in the traditional business about 75%, 80% of the business would be in the non-par segment. And that’s what we keep doing every year, depending on in the interest rate slightly will move the product mix accordingly. And therefore maybe at this point of time, we have — we need to look at the protection business more aggressively. But last year we did capitalize on the opportunity in non-par segment [Technical Issues]

Nischint Chawathe — Kotak Securities — Analyst

Perfect. Thank you very much for patiently answering all my questions. Thank you.

Operator

Thank you. Due to time constraints, we’ll take the last question from the line of Deepak Shinde from HDFC Securities. Please go ahead.

Deepak Shinde — HDFC Securities — Analyst

Hello. Hi. My first question is on NBFCs, so the mix of retail plus MSME is already ahead of our guidance, now at 67% and growing at only at a rapid pace. So is there any internal feeling we are looking at where the retail plus MSME we brought good 70% or 75% or we look at what kind of opportunities we have for growth in this segment? And similarly for personal and consumer loans.

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

So we’ll continue to look at the opportunity and maximize the opportunity in terms of the risk calibrated manner and these segments we will have to review it looking at the opportunities.

Deepak Shinde — HDFC Securities — Analyst

Right. And second on the asset quality. In our housing business, the 3.3% — so what is the source of this element is more of construction finance or paid across prime affordable and PMO?

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

We have a very — hi Deepak, so we have a very small this year boo, you already 30%. So it is very well distributed. And as we have to mention, it’s coming on a rapid, we’ve already seen from December to March, it has come down rapidly. And very importantly [indecipherable] now is only 4.11%. And you [Technical Issues] origination earlier as well. So we are very focused on we’re currently 96% of our onboarding is happening in CIBIL bank scores of 700 plus and also new [indecipherable]

Deepak Shinde — HDFC Securities — Analyst

Sir, these would be largely prime plus affordable or LAP [Technical Issues]

A. Balasubramanian — Managing Director and Chief Executive Officer, Aditya Birla Sun Life AMC Limited

Yes, it is very well [indecipherable]

Deepak Shinde — HDFC Securities — Analyst

Just coming back to the NBFC growth, so our personal consumer book has been growing at very rapid pace. So would we continue to seek opportunities or there is a time where we would like to take some pause and evaluate how this entire portfolios gear. So what are the [Technical Issues] in terms of growth on the NBFC side?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Deepak your voice is not very clear, if you can just repeat that question?

Deepak Shinde — HDFC Securities — Analyst

Am I audible now?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Yeah, but, yeah go ahead.

Deepak Shinde — HDFC Securities — Analyst

So on the NBFC side, our personal and consumer book has been growing at a very rapid pace, so is there any targeted line we would like to take pause and look at how this entire has been behaving before continue to grow and [Technical Issues] So any guidance you’d like to give on FY ’24 on that book?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

We will continue to focus on building a granular portfolio. So clearly on the personal and the MSME side, so we will continue to build that business, Deepak.

Deepak Shinde — HDFC Securities — Analyst

Okay. So if opportunity is there, we’ll continue to grow [Technical Issues] high pace of growth on the personal and consumer side?

Rakesh Singh — Managing Director and Chief Executive Officer Aditya Birla Finance Limited

Depending on the opportunities and which we have.

Operator

Thank you. I’d now like to hand the conference over to Ms. Vishakha Mulye, CEO, Aditya Birla Capital Limited for closing comments.

Vishakha Mulye — Chief Executive Officer

Thank you. I’d like to thank you all of you to join us today evening, and look forward to keep in touch and more interactions in the future. Thank you.

Operator

[Operator Closing Remarks]