CSL Finance Limited (530067) Q4 FY23 Earnings Concall Transcript

CSL Finance Limited (BSE:530067) Q4 FY23 Earnings Concall dated May. 18, 2023.

Corporate Participants:

Sayam Pokharna — Director

Rohit Gupta — Managing Director

Amit Ranjan — Chief Operating Officer

Chandan Kumar — Credit Head

Analysts:

Vishal Prasad — VP Capital — Analyst

Ajay Sharma — Cycas Investment Advisors — Analyst

Dhwanil Desai — Turtle Capital — Analyst

Nikhil Upadhyay — SIMPL — Analyst

Rupesh Tatiya — Intelsense Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the CSL Finance Limited Q4 FY ’23 Earnings Conference Call hosted by TIL Advisors Private Limited. [Operator Instructions]

I now hand the conference over to Mr. Sayam Pokharna from TIL Advisors Private Limited. Thank you, and over to you sir.

Sayam Pokharna — Director

Thank you, Gautam. Hello, everyone. Good afternoon, and thanks for joining the Q4 and FY ’23 earnings conference call of CSL Finance Limited. The results and investor presentation have been updated on the Stock Exchange and on the company website. In case, someone does not have a copy, please feel free to reach out to us or to be added to the mailing list.

To take us through today’s results and update us on the business, we have with us Mr. Rohit Gupta, Managing Director; Mr. Amit Ranjan, Chief Operating Officer; Mr. Naresh Chandra Varshney, Chief Financial Officer; Mr. Chandan Kumar, Credit Head; and Ms. Rachita Gupta, Whole-Time Director. We will be starting with a brief overview of the quarter gone by and of the whole financial year from Rohit sir, followed by a Q&A session.

I would like to remind you all that anything said on this call that represents any outlook for the future, which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. These risks have been mentioned in our Annual Report.

Over to you, Rohit, sir.

Rohit Gupta — Managing Director

Yeah, thank you, Sayam. Good evening, everybody. I welcome you all to the quarter four and financial year ’23 earning call of CSL Finance Limited. Thank you all for taking out time to attend this call. It is a pleasure to address you all today and walk you through our performance for the quarter and the full financial year.

So first of all, I will start with an update on our balance sheet. So our loan book stands at highest ever at INR732 crores as of financial year ’23, an increase of 41% year-on year, and an increase of 8% quarter-on-quarter compared to quarter three financial year ’23. More importantly, the mix of AUM, stands at 60%, portfolio is 40%, SME Retail portfolio, the highest ever in favor of SME Retail. As many of you are already aware, we have been trying to grow our SME Retail book faster, the results of which have been visible in our previous year performance.

The total disbursement for this quarter stood at INR147 crores, which is lower both on the year-on year and quarter-on-quarter. The main reason for this has been intentionally lower disbursement on wholesale side. As we have explained earlier also, the wholesale is a little lumpy, both in terms of disbursement and collection. Sometime in a particular quarter, we do much higher disbursements and correspondingly, the collections are also higher. So it’s a factor of collections also. And sometimes proposals culminate [Phonetic] more in a particular quarter, that’s why it’s better to see wholesale business from year-on year perspective than on quarter-on-quarter. And whereas the disbursement on the SME Retail front have been good in quarter four, same as in quarter three.

So collection efficiency as a whole for the company is 99%, a trend consistent for entire financial year where our wholesale book has been with 0 DPD, and it’s around 98 point some — 98.5% [Phonetic] on the SME side. So you will notice we are carrying some higher liquidity as on 31st March ’23, which was primarily on account of some scheduled NCD repayments in April 2023, which we have paid amounting to INR40 crores. We have enough sanctions. We have enough sanctions in-hand from the newly on-boarded lenders as well as from existing lenders for the coming quarter.

On the leverage front. We have leveraged our book to 1.13x as of financial year ’23, compared to 0.64 as of financial year ’22, and 0.98 for the quarter three financial year ’23. We are maintaining a healthy capital adequacy ratio of 50% and a comfortable headroom to growth on the leverage side, especially now that we have a higher mix of SME Retail in our loan book. The latest four lenders to be added to our portfolio of 15 lenders are Muthoot Capital Service, Utkarsh, Fincare and STCI Finance. We also received no sanction from existing lenders partners — lending partners like HDFC Bank and Tata Capital.

I would also like to bring to attention a continuous leave improving asset quality, where we have been seeing a consistent decrease in our GNPA and net NPA for the last eight quarters. As of financial year ’23, GNPA stands at 0.61% and NPA stands at 0.35%. These have been more than provided for our provision coverage ratio stands more than 200%. In this year, we have also recovered bad debts amounting to INR2.33 crores in financial year ’23. We continue to show good traction on the recovery side in the coming year also.

So now coming to the profit and loss side. Our total income stands at INR118 crores, an increase of 57% over financial year ’22, primarily on account of growing loan book. Our net interest income stood at INR88 crores, an increase of 43% over financial year. As you have noticed that net interest income growth has been lesser in financial ’23, because of increased borrowing costs linked to MCLR and repo rates. These higher borrowing costs have especially kicked-off during quarter three and quarter four, and that is why the NIM have little dropped in those quarters. Going forward in coming few quarters, this cost will be passed on our customers, which will help us to improve our net interest margin.

Further as a strategic move, we are getting more active on transitioning our wholesale book towards floating rates, which will insulate us from sudden moves in interest rates going forward. You will see effects of this in coming three quarters. Subsequently, our PAT for the year stood at about INR46 crores, as an increase of 36% over the previous year. We maintain an ROE of 12.56% and ROA 6.94% for this financial year.

Now coming to the operational update part. Operationally, we have been pushing out a lot of improvements on the tax side, the customer onboarding loan underwriting platform has witnessed lot of improvements over the last year and many had been laid out in the roadmap given in our investor presentation for the coming year. Compared to a year ago, we are now much more confident of our technology capabilities, processes team on the SME Retail front. A lot of focus is on improving employee and branch level efficiency with extensive training and migration programs already undertaken in financial year ’23 and also plan for financial year ’24. We are focusing on metrics like AUM per branch, AUM per employee and all efforts are going towards improving these metrics. So we see a better cost-to-income ratio.

Looking at — going forward, looking at response on our SME Retail side and get more confidence in our abilities in this region will be moving forward with a rolling — rolling out six to 10 new branches in the coming financial year. We may also take shutdown of some underperforming one or two branches. So the net branch addition will be eight to 10 branches in this financial year. On the team side employee addition will happen on the branch level with new branches, but at actual level, we are well-placed to cater to a larger set of operations.

If you go for penetrating review in the current financial year. Coming to our AUM mix, we further see a transition from a current 60-40 mix and 50-50 mix by the end of the next financial year. We are optimistic about the outlook for financial year ’24, as the company possesses the required team, technology, purchases on capital for the coming year.

Now this was a brief update on all parameters. Now I put our team and myself to questions from your side.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Vishal Prasad from VP [Phonetic] Capital. Please go ahead.

Vishal Prasad — VP Capital — Analyst

Hi, good evening. Sir, SME loans, we have started three years back and we have been ramping it up very, very aggressively. So now it is 40-60, we plan to make it 50-50 next year, probably. So if you could talk about where do we see SME versus wholesale in next three years, four years? And since we are not — we are slightly new in SME segment, so what kind of risk do we see that we may face going forward and how we are trying to mitigate it?

Rohit Gupta — Managing Director

So — the next year, we have planned ourselves that we try to achieve a 50-50 mix and we are very hopeful that we’ll be able to do that based on the team addition and kind of effort, which has gone during last financial year, both in terms of processes, technology, training and the business which we have done and now the team is fully motivated yet up for the target which we have set for those zones and branches. As a broader level, we see that our focus will be more on the SME side, but depending upon the dynamics of the market and we see that 50-50 to 60-40 maybe a optimum level in the next two years to three years. But some things — certain things are little dynamic and if we see more space and become more confident that going forward the SME will be our focus area.

And thirdly, about I think, Amit will also add on the risk side. As a company, we have always thought of gradual expansion on the SME side, just because we want to see that what kind of risks are coming and those risks we are taking care of towards processes and announcements in the credit policy and parameters which we keep and towards the digital platform, which we have kept will start giving us information and start doing that analysis. So the core purpose of shifting to this platform, we have a lot of effort has been done by the company in last financial year, last 18 months. And going forward, still it’s an ongoing process. And in next six months, we also see that the first level of — to larger extent the platform will be fully ready. And so I think, Amit, will add more on the risk side of your problem.

Amit Ranjan — Chief Operating Officer

Yeah, hi, Vishal. Basically in SME, the main question you asked was what are the challenges we are going to face in coming financial year. First of all, the challenges were earlier also and challenges will be there in the future and present. So we need to be very, very careful in identifying our clients. And we are not going very aggressively in terms of doing business. We want to have a very organic growth and cluster-wise approach is required. Wherever we are present, we are expanding within those areas only. We are not getting into new geographies, because that is going to be a new area after one-year, one-and-a-half years.

And in terms of underwriting. We are trying to make most of the thing from subjectivity to objectivity by putting certain 10 to 11 parameters on which these clients are analyzed for their eligibility. So most of the things will be based on the platform derives and lot of algorithm is going to be made in coming six months based on specific industries. Whatever we have done in past 18 months, we have enough data on which we are our analytical team is working on. And we are trying to get most of the influences from the past, the business and we try to rebuild on that information from this financial year.

And like I said earlier, we are not aggressive. We don’t want to open most of the branches and then there’ll be issue in justifying the cost also. So we will be very cautious in opening branches. We will be very cautious in again, identifying the right kind of client, mostly, since it is direct marketing team, which we are doing and direct sourcing from the market. So most of the clients will be new to the company. And they will be new to credit. So it will be easier for us to make them understand educate also that paying EMIs on time is good for them, so that they can come under main banking — mainstream [Phonetic]. So that’s the idea, we carry for SME for this coming financial year and we intend to do at least new book of 200 or 210 to 220 [Phonetic] crores in this financial year.

Vishal Prasad — VP Capital — Analyst

Sure, thank you. So, what’s the current breakeven AUM for the branch?

Amit Ranjan — Chief Operating Officer

So currently in branch, if we open up, it takes around INR6.5 crores to INR7 crores to have a breakeven and then start making our profitability. So at least INR7 crores of our business is required for a branch which comprises of a branch manager, credit manager and three to four RM and RO. So this — and it also depends on the rentals, because we are present in Tier 2, Tier 3 cities, the rental and the cost of manpower also deferred. So ideally on an average it requires INR7 crores of an AUM by which only we can go for a breakeven.

Vishal Prasad — VP Capital — Analyst

Okay. So based on this INR7 crore and what details [Phonetic] I got in the previous call, so you have mentioned that the branch becomes breakeven at INR7 crore become decently profitable at INR10 crores and at INR20 crores the branch is being [indecipherable]. So out of 26 branches, how many of our branches are doing more than INR20 crores and between INR10 crores to INR20 crores?

Amit Ranjan — Chief Operating Officer

So in our 26 branches, few branches we have shifted from one location to different locations and there are addition of around four branches to five branches, but since we have started doing business from July ’21 [Phonetic] onwards prior to that it was COVID, the business has not happened and it was in a lull period, so from July ’21 [Phonetic] till now, there are at least 50% of the branches, which has got INR10 crores. In INR20 crores range, there is not any branches, why, because the ticket size we are maintaining at an average of around INR10 lakhs to INR12 lakhs. So reaching INR20 crores this financial year, I hope that at least 50% of my branches will cross INR20 crores of an AUM.

Vishal Prasad — VP Capital — Analyst

Okay. Sir, generally our AUM per branch is INR7.92 crores. And we are making that INR7 crores [Phonetic]. So — and I understand most of our branches are new, probably they are barely profitable. So, if we today decided that we are not going to open any more branches. And we operate with these 23 [Phonetic] branches we have. So over a period of two years, three years, when the new branches become more established, what kind of change do we see in terms of profitability of the SME segment?

Amit Ranjan — Chief Operating Officer

So in terms of profitability, like I said earlier also, we are not aggressive in opening branches, but we will definitely add-on few branches in this financial year. So in terms of profitability we see at least 2.5x in terms of per branch, because INR7.5 crores to INR8 crores, we have already achieved at least an 80% to 85% of the branches. So moving from here, we’ll be all — because we are not adding any manpower — additional manpower in any of the branch. It will be only a replacement cost which will be there. So we intend to do at least 2.5x profitability in coming two years to three years.

Vishal Prasad — VP Capital — Analyst

So for our new branch, how much is the capex and opex that we’re doing the first year?

Amit Ranjan — Chief Operating Officer

So capex is generally, it’s not beyond — for a year it is, if we take salaries and the fixed salaries and assets and rental part, it does not go beyond INR15 lakhs to INR20 lakhs. So we take INR3 lakhs to INR3.5 lakhs to INR4 lakhs a month, so at least, INR40 lakhs, INR45 lakhs a year is the capex, sorry, opex. And the capex is not beyond INR4 lakhs to INR5 lakhs.

Vishal Prasad — VP Capital — Analyst

Okay. And out of eight SME branches which are more than three years old. So what is the total AUM under these eight branches?

Rohit Gupta — Managing Director

That figure I will have to update you, but generally it is around INR80 crores to INR90 crores of that total branch, which is more than three years. INR80 crores to INR90 crores of the AUM, we are maintaining. Because practically if you see most of the business has happened in the past year and July ’21 onwards only. When we were rebuilding the SME after the COVID period and we have increased little bit on the penetration in the urban areas of the [indecipherable]. So the figure side also increased from INR4 lakhs to INR5 lakhs average ticket size, the ticket size also increased from INR4 lakhs and INR5 lakhs to INR12 lakhs, INR13 lakhs. So currently, most of the branches, which is more than three years will managing at least INR80 crores to INR90 crores of the AUM.

Amit Ranjan — Chief Operating Officer

And pre-COVID portfolio is less than INR30 crores as of now, we have seen lot of foreclosures in last financial year. So that was also one reason that where our portfolio has run down. And so now most of the portfolio is the post-COVID. So it is less than INR30 crores, along 15% of our portfolio, 12%, 13% of portfolio is pre-COVID portfolio.

Vishal Prasad — VP Capital — Analyst

Okay. Thank you sir.

Operator

Thank you. The next question is from the line of Ajay Sharma from Cycas Investments. Please go ahead.

Ajay Sharma — Cycas Investment Advisors — Analyst

Hi, thanks for taking my call. I just had a —

Operator

Mr. Sharma, your line for you it’s been unmuted. Sir, please go ahead.

Ajay Sharma — Cycas Investment Advisors — Analyst

Yeah. Hello?

Operator

Hello. Yes —

Ajay Sharma — Cycas Investment Advisors — Analyst

Yeah, yeah. Am I audible. Yeah, so I had a few questions. The first is what’s the company’s cost of funds.

Rohit Gupta — Managing Director

The cost of funds, which were less than 10% at the start of the financial year. It is around 11.25% as of now, 11.2%.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay. And do you see this going up or coming down over the next year?

Rohit Gupta — Managing Director

11.1% and this time basically vis-a-vis last one or two quarters. And so our quarter three and quarter four. So 11.1% is the weighted average cost of borrowing.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay. And do you see this going up or down in the next one year?

Rohit Gupta — Managing Director

By now that pressure we have not seen in last one, one-and-a-half month, which was there I would say till March. Now, whatever we are speaking to lot of new lenders for the next in this — for this quarter and we are not seeing that. Now we are seeing a little eased. Now we have a little more bargaining power in saying then that to reduce the cost of borrowing as what was in March.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay, okay. And I’ve read on the presentation that the company is looking at launching an unsecured product. Can you tell us a little bit about this. And also how you plan to manage risk with this product? Is it for existing customers? Or is it for new customers?

Rohit Gupta — Managing Director

No, we plan to do that in the last quarter, but because of the platform, we built a different platform, we go from that and where we want to do it on the same day. So we are targeting a particular segment. It’s a particular segment where we are having a data from a very big company, which is providing that source to us. And with a little bit of I would say the trend built for the borrowers. So that is a helping point for us. And so the ticket size will be around INR2 lakhs to INR3 lakhs to start with. And so we can better talk when we do a few accounts on that. And probably at the end of this quarter few of the accounts will be on-boarded.

And after that — but rest, because most of those segments we are targeting, it’s the niche segment where order based raw material requirement for those people is required. And where the — I would say repayment fee will also happen between 60 days to 90 days. So they are short-term, short tenure loans, and which will be consistent with what they — we will take again, because we have a continuous flow of orders. So we don’t see too much risk and there will be certain — we have built certain credit parameters to do those loans.

But as of now, I can’t say too much, but they are far better as compared to giving PL loans of 50,000 [Phonetic] to public at large. They’re targeting a particular segment based, on that, where they have been doing business for last three years to five years, at least and have a reasonable turnover. Sometimes the biggest risk from this segment comes and you don’t have a credible data, but that will be a little advantage to us, as we’ll be having a credible data in terms of whatever the — we have been doing business in terms of business.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay. And along with same lines, can you just talk a little bit about the client profile of your SME retail borrowers. Like, are they already in that what is the interest coverage. It is the first time that they’ve asked us to former lines of credit. Can you just give us a bit of information about them.

Rohit Gupta — Managing Director

Yeah. First, we have to understand the target audience of our SME division, because SME is a very wide word from 5 lakhs to 5 crores people categorized as SME. Our target audience is Tier 2, Tier 3 cities, very small entrepreneurs like Haryana merchants, like small workshops. Maybe cattle field having multiple small sources of income within their family, running family shops, government [Phonetic] shops. So these small trading people in different segments. They are our primary customers in Tier 3 cities. And so to assess their interest coverage ratio, you will not get any audited or credible financial information in a qualitative format from them. And they do most of them or some of them are not new to us. They are already having some personal loans or maybe housing loans. So CIBIL and their credit history is one important parameter for us. Apart from that, what kind of turnover than income they are generating based on their businesses. Vintage is very, very important, because these families are mostly families they are at least four to six people are living sometimes a joint, based on that, we take that, there maybe four applicants and much their collective income into that.

And secondly, this is where a huge under-penetration is there. We have 50% to 60% of India still live and where it has become very difficult for banks to penetrate these segments and to do collections from this segment. As a company, we focus that we have to build a knowledge around particular few segments. And if we are able to do that. So then our presence and a little less we will have as compared to targeting a very matured SME manufacturer, either they will be relying on bill discounting mode maybe see more from banks. So that is not the segment where we can build a niche or competitiveness — our competitiveness will come. So — and this segment is neither can be fully breezed through the FinTech mode also, primarily being totally secured our 92% customers will take their self occupied residential property and we are doing the complete 13-year chain not in such kind of a mortgage. So these are fully collateralized. Our LTVs are less than 50%, and they are — it’s been a little lower reputation. We are taking not going more than 35%. So, first, we are fully collateralized. Secondly, they are still are not fully penetrated. Thirdly, they can’t be penetrated by larger banks, the way they need to be assessed and way they need to be serviced. And so — and that is why more-and-more wealth are looking for whole ending with the NBFCs, which are focusing in these areas. And most of them are falling under MSME Udyam Registration. So these are priority sector loans response into that.

So to your question that you can make a reasonable assessment on the interest coverage ratio and all those ratios based on some audited or unaudited financial parameters. That is not there. As Amit has told various elbows and how to make this objective, an objective one based on their what kind of network they have, what kind of assets they have created, what kind of stock they are keeping, what kind of margins they may be enjoying, what kind of living standard they have, what kind of children in which kind of schools they are studying. So based on how they have grown in last 10 years, then you portfolio it all those parameters and put into a proper and run elbows and build a knowledge around that. I think reasonably you can do it. Definitely, there can be a 2% to 3% of NPA. Those are not NPAs, because we are able to from our record of recovery in last 18 months prior to that, there was an embargo of classifying as an NPA.

We are — because they are fully collateralized, we are able to recover. And the recovery is from surfaces far faster, which is 20 less plus. And in other even multiple ways of execution arbitration and [indecipherable] also was in board. So sometimes few cases gets added up, some few cases, we are getting a resolution. So having a larger NPAs, which can’t be recovered seems not that probability is little lesser.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay, okay. I understand. Now I’ve been an investor with the company almost in 2015, I’ve been very impressed with how the wholesale lending book has grown and how it’s withstood COVID. So my question is why go through the effort and the difficulty of building an SME retail book and building a sales force when you can focus more on the wholesale book. And with the same effort there and we’ll expand much more, right?

Amit Ranjan — Chief Operating Officer

You’re absolutely, right. But I think sometimes having a combination of both retail, retail where we want to build our knowledge, the same way we have built-in the wholesale. So wholesale, there are two, three limitation. Because of ticket size, there is lot of write-ups [Phonetic] from the banks and the rating agencies that exposure per customer [indecipherable], sometimes because of the lumpiness in certain this time is lot of accounts get taken over.

And thirdly, it gives us a — the SME is a very regular granule business their disbursements are very, very happening regularly at given rate per month and collections are very, very predictable versus wholesale, where to all those they have to do make the repayment before the repayment schedules. So we wanted that, it gives a very good mix of both. And we are able to utilize our capital to the mix. And may help us to bring more lenders into our profile and help us to bring visibility of our company as a whole also.

So we think it was required and that was why we have added it, otherwise, as a company, why wouldn’t have we added if we are able to think that the single wholesale business was fine. So that was our thought behind that.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay. And my final question is revenue, overall guidance about the loan book?

Rohit Gupta — Managing Director

Ajay, I’m not able to understand.

Ajay Sharma — Cycas Investment Advisors — Analyst

Do you have any forward guidance about the loan book, any targets?

Rohit Gupta — Managing Director

We have — till-date why this giving no guidance. And — but we have given a guidance on the product mix. Definitely, now we are on a growth path from four lenders, which we were there for three years, four years during COVID and post side of it. Now we have focused lot of building our liability side. Now we have 15 lenders and we hope that first four lenders will come this year and the focus is on growth, but both the divisions there now stabilized, team has been stabilized, operating the platforms and the policies.

So the focus will definitely be on the goal side. And last two years have been reasonably good for the company. So putting numbers that definitely, we have a lot of scope to leverage Archer’s [Phonetic]. We are only 1.13 [Phonetic], through the debt road and opportune time and by our any other instrument. So yes, when we have made to all those efforts in last 18 months, the focus will be on the growth and definitely be achieving good numbers will be our focus.

Ajay Sharma — Cycas Investment Advisors — Analyst

Okay, okay. Thanks. And all the best. Thank you very much.

Operator

Thank you. The next question is from the line of Dhwanil Desai from Turtle Capital. Please go ahead.

Dhwanil Desai — Turtle Capital — Analyst

Hi, Rohit and team. So my first question is, so I think if I look at the disbursement and loan book number, I think last year we disclosed around INR760 crores and our loan book has grown by INR216 crores. So can you give some flavor as to what are the typical repayment in the loan book that we are having. And going forward as the SME proportion increases, is that going to change? And a question tied to that is that in terms of tenure for SME loans, are we looking at longer tenure SME loans and each loan what is the current proportion and how do we see that going forward?

Rohit Gupta — Managing Director

So there are two questions, one on the wholesale and one on the retail, I think. So, and then will give — tell us about the wholesale longer tenures and the repayments around it, and the [indecipherable] will take protective masks.

Chandan Kumar — Credit Head

Dhwanil, hi. Chandan, this side. Dhwanil, for wholesale loans, generally, the general tenure is range between 36 months to 48 months in which propose from our side and funds in terms, but being as the role that told you earlier that the cash flows are very lumpy. So the cash flow from the project to start coming within the first year itself once the project gets launched. So as per our experience in last five years, we see that for a general tenure of 48 months loan, it get closed within 24 to 25 — 24 months to 36 months within that period itself for whole processing, for growth housing, for larger ticket size loans, I’m telling you.

And for small building loans that is wholesale is small. Average tenure as around 36 months, 24 months to 36 months, where we can see a capital starts coming. After 12 months will the part of the floor or part of the project will get sold. And within 24 months most of the account get closed. So here you can see the collection in wholesale is very much lumpy and we used to collect much more in advance then the subdued repayment guidance. That is why like the disbursement numbers and the loan book NPAs [Phonetic] is on the snap side.

Apart from that, you can see that — in wholesale, we do various kinds of opportunistic business, what the tenure, the loan get closed within a particular year itself. So that comes into the wholesale, as well as the collection part also, but it does not impact our loan book, that is going incremental value to the loan book. That’s a very kind of opportunity base business. What we get — enter into a particular financing year and get our exit into particular financial year itself.

Rohit Gupta — Managing Director

But we are focused on one segment only. We are not going into too many areas, because as a company, we strongly believe that we should only focus where we have build knowledge. The Chandan — what Chandan had guide just like to add. There are certain accounts, which we board at a much higher IRR, but as those cash flows become much more stronger and at certain times those get taken over with much lower rate, at — so by larger bank. So that is — we at the time of boarding also understand this account will be for six months to nine months to 12 months, but — and Chandan has categorized these accounts has opportunity base, but they are in from the real estate segment only. Only but at the time of boarding, we sometimes able to perceive that the customer will not be there with us for a very long period. And sometimes when we get at a very attractive rate, it becomes very, very difficult to retaining, but those customers have been very, very repetitive with us, because the kind of understanding, they feel that we have about the segment and what is going around within the authorities and practically what is happening on the [Technical Issues] and what kind of decisions required to be taken at opportune time and with the speed. So they do come back to us.

Amit Ranjan — Chief Operating Officer

Okay. And —

Rohit Gupta — Managing Director

On the retail side, yeah.

Amit Ranjan — Chief Operating Officer

On the retail side, we have various products, ranging from four years to seven years maximum. And we don’t intend to increase the tenure in coming financial year also. So average like it is almost like in the wholesale also the onboarding of the client happens here in SME. And we also see that the balance transfer happening within 24 months to 36 months. And average tenure currently now our complete portfolio is around 56 months to 60 months. So we don’t have any issues in maintaining the same tenure in the coming financial year also. There are cases, which is around 5% to 4%, where we think of giving little bit higher tenure like eight years on that, but there are only exceptional base, primarily 95% to 97% of my book is less than 60 months on an average.

Rohit Gupta — Managing Director

Dhwanil, in those cases that they run down after two years, three years, our either demanding drop off or they get taken over by other institutions.

Dhwanil Desai — Turtle Capital — Analyst

So is it a fair understanding is that as the SME proportion increases, bank the disbursement to loan book ratio will improve for that? Because SME will have higher tenure.

Amit Ranjan — Chief Operating Officer

Yes, definitely. So what Dhwanil is asking that this loan book to disbursement ratio. [Foreign Speech] That will increase on —

Rohit Gupta — Managing Director

It will increase on the SME, not wholesale. Lastly — because it is very granular. Last year we did around INR145 crores, INR150 crores from the retail and MSME side around INR85 crores and that is our SME, but definitely then their mix will improve, our disbursement on the wholesale will come down little bit, definitely.

Dhwanil Desai — Turtle Capital — Analyst

And second question is on disbursement base. Looking at this number, even if considering that Q4 was an anomaly because we wanted to conserve liquidity. Still in that INR190 crores, INR200 crores kind of a range. So — and we have intention of scaling up SME for a brand JUM [Phonetic]. So next year do we see more than INR200 crore quarterly run rate going forward. How do you look at that?

Rohit Gupta — Managing Director

Quarterly run rate of the total disbursements?

Dhwanil Desai — Turtle Capital — Analyst

Yeah.

Rohit Gupta — Managing Director

Hopefully, sure that definitely it should come.

Amit Ranjan — Chief Operating Officer

The combination of [Speech Overlap]

Rohit Gupta — Managing Director

The SME is more granular and wholesaler is more bigger and some lumpy. So on a year-on year, I think we should be able to do that.

Dhwanil Desai — Turtle Capital — Analyst

Okay. And one last question. So from what was the real difficult at INR7 crore number, generally our branches become break-even on an average. So currently we are at INR7.92. And so, is it safe to say that at a portfolio level, SME is almost close to breakeven or slightly better than breakeven. And as we scale up the incremental profitability will flow to the bottom line, that is the right way to look at it?

Rohit Gupta — Managing Director

Yeah, yeah. We are profitable even right now. We only put — so we just — so I don’t know how industries do that. When we assess our profitability internally, even our own equity, we put out cost to that. So that is a key [Phonetic]. Now, the profitability has to come from that. Targeted cost of borrowing is the cost of borrowing for our equity part also. So, if you don’t put that cost to that for our internal profitability metrics, then even our retail is also profitable.

Dhwanil Desai — Turtle Capital — Analyst

So what I’m getting [Phonetic] is that the next year or the year-after that, you know —

Rohit Gupta — Managing Director

As Amit has already explained, our opex will not increase too much in proportion to, either it will be doing it. So definitely now the additional business will give us more margins where as compared to as we have told last quarter also. Now most of the manpower had to grow at INR1,000 crores. We don’t see too much addition from the opening of the new branches or adding few more deeper to the existing branches.

Amit Ranjan — Chief Operating Officer

And moreover the platform is already ready. We have worked very hard for the last 18 months. And now it’s time to scale up from those branches only. So like I said earlier also that we don’t have to put more cost into building a branch, or hiring a manpower, or building on the technology front also. We need only have to go more into the market. You know making the branches average productivity move from INR70 lakhs to INR1.25 crores. Similarly, then only we’ll have profitability at all branches and much, much better way in coming financial year, because with the platform we just said, right now, it’s only what we have to do is to pump in business from the same set of branches adding few. And I don’t see any reason why we cannot be profitable in all branches in coming financial year.

Dhwanil Desai — Turtle Capital — Analyst

Got it. And last question on provision tax. I think we are doing far more provision than what we statutorily required. And as a provision covenants ratio also is pretty high. So are we likely to continue by far, are we kind of trying to build a buffer for the rainy days that is the thought process?

Rohit Gupta — Managing Director

We have kept our benchmark debt for, stage one and stage two assets, we will be having 1% provision coverage ratio minimum as compared to 0.4%, which is a certain limit. And for the secured one, we are doing between 0.4% to 0.5%. So when we take cumulatively last year, our per agent growth was higher. So our reason for standard asset was much higher. So around 60% have gone for the standard asset provisioning. So that is why the provisioning coverage ratio has increased. And I think these are — yes, we are little more conservative. And so we intend to carry this policy because we have made a policy now. We don’t intend to change it, then we like to maintain the same policy going forward.

Dhwanil Desai — Turtle Capital — Analyst

Got it, got it. Thank you. Very useful. Thanks for it.

Operator

Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead.

Nikhil Upadhyay — SIMPL — Analyst

Yes, hi, good evening and congrats on good set of numbers. And what we had said prior to the year, we’ve actually achieved it. So great, congratulations to the team. My question is basically on Slide 33, where we have given a breakup of SME Retail. On the active accounts, if I had to ask, at the beginning of the year, we had around 14, 15 [Phonetic] accounts, which are around 27% [Phonetic] today. So of these accounts, which we started with how many would we have been able to retain. And how would be, how many would be completely new to the system? And where they’re coming from —

Rohit Gupta — Managing Director

We don’t have upfront, but the number of accounts that we boarded was much higher. We have seen a lot of foreclosure in last financial year, but those numbers, what was the foreclosure. And so I think we will start putting even that in future, but upfront as of now we need some time to give the data, but right now, we will not be able to give the correct [Phonetic] numbers, in terms of number of accounts.

Nikhil Upadhyay — SIMPL — Analyst

Okay. So they’re all coming from —

Rohit Gupta — Managing Director

1,140 [Phonetic] accounts we’ve ordered in last financial year. So the rest opening plus 1,140 minus had been closed, either being foreclosed by the borrower or may have been taken over by the other banks.

Nikhil Upadhyay — SIMPL — Analyst

Okay. So where are they coming from, sir, if I look at the average ticket size, which was INR7 lakh has moved to INR10 lakh. And if I also look at the average LTV, which was around 27%, there we see a jump of 34%. So the newer accounts which have come up. It seems that the average ticket size is also larger and also the LTV ratios are much larger. So at this time —

Rohit Gupta — Managing Director

Yes, I will explain that, and Amit will also add. We have been a little strategy on that side, because in COVID period, we are seeing that prior to COVID, we were focusing more on the INR5 lakh to INR10 lakh kind of a ticket size. What happened, those are purely rural, one would say. And secondly, those accounts give a marginal borrowers. Whenever anything goes wrong in their family in terms of medical, health, education or any dynamics in terms of businesses, so we found that they were coming a little bit under spreads and the quality of the properties. When we started moving into Tier 2, Tier 3 [Phonetic] cities mostly within the municipal limits or on the borders of municipal limits. We have the quality of the property is far better the vintage of the business base and multiple business source we start getting. So the LTVs, will definitely going to — as we told we had low education area rural areas with limit after between 30, 35. But as you move to more semi-urban or little urban areas, their LTVs we have to go at least 45% to 50% sometimes. So that is the two reason.

And thirdly, we have also found that strategically [Phonetic] helps us a lot and there was a structural strategic decision also that a certain portion of our segment. We will start focusing those small borrowers, maybe 20 lakh to 30 lakh kind of a ticket and making the 25%, 30% of our portfolio. So, it is not because of security [Phonetic], but in terms of we are able to diversify ourselves, the quality of collateral is far better. The vintage of the business and multiple source of businesses are much more there. And we have found also those people have in terms when they’re started taking the networks and multiple properties also. And that helps when sometimes in stress, they are able to dispose of a surplus property, which again you’re targeting a very marginal borrower of 5 lakhs, 7 lakhs, so presence of those multiple.

Nikhil Upadhyay — SIMPL — Analyst

Okay.

Amit Ranjan — Chief Operating Officer

And to add to this, Amit, yeah, and to add to this, like on the strategy front, also we never wanted to go into the rural areas because of the quality of the property. These clients were — basically we marginal and we wanted to operate on a much more liquid market wherein, if you know something happens within the dynamism of the market, these people are able to have such kind of cash flows that at least three to four EMIs are at their disposal. So we wanted those clients, those type of client on our portfolio, so that it becomes little bit moderate in terms of cash flows, also in the quality of the property, which has to be in the market or a urban area for the saleability and easy accessibility of those property. So it’s a much, much better way to operate in SME segment by this way by protecting your interest as well as looking after client interest as well. And these kind of clients are basically small or medium type of businessman who keeps on having multiple of business, multiple of properties. So it is easier to operate and communicate with them. They are little educated also from a credit point-of-view.

Rohit Gupta — Managing Director

Nikhil, last year in COVID time, when we were doing this as a less than 10 lakh, 5 lakh cases, so we came across that sometimes if the dynamics in COVID, the dynamics changed very fast, certain businesses were closed. They were not able to come back. So being very much — being on the marginal side, sometimes to come back or recover from a little difficult stress period becomes difficult for those customers. So they are.

Nikhil Upadhyay — SIMPL — Analyst

Second question is —

Rohit Gupta — Managing Director

[Speech Overlap] on a targeting 5 lakh, 7 lakh, doing in perfect collateral, taking large sales deals, doing things are far better — faster. [Speech Overlap]. Yeah, yeah. Strategically we thought, and because lot of retrocession went in the COVID period when we analyze each and every account. So it was — that was the one reason because of which I would say LTVs have gone up so far better collaterals we are getting and in terms of ticket size also.

Nikhil Upadhyay — SIMPL — Analyst

Yeah. Second question is, now, if we consider and one of those key parameters you said is, the ability to match that customers cash flows or with this ability to retain. And if I attach it to the unsecured loan part, which you are, you mentioned in the presentation, what gives you the edge that, if we go into the unsecured loan products for MSME in Tier 2, Tier 3 cities, how much of our current revenue generally replicate it, and when we are going into our unsecured versus a secured phase, if in secured this cash flow was 100, and we were giving him a loan of 20, in unsecured, what would that metrics be, of which we would like to maintain.

Rohit Gupta — Managing Director

Nikhil, first of all, we are targeting a particular segment, it is mostly they’re getting order based. So when we are funding them, they are taking raw materials based on some order. We will be only funding, will be discounting there, we will not bill [Speech Overlap]. So we are not giving just personal loans or business loans. We will be just discounting their purchases, which they will be making from the particular set of retailers. So it is a — I would say, the counting of your purchases. And secondly, those are mostly order based raw material business purchase. And every period for their segment was 60 days to 90 months.

Amit Ranjan — Chief Operating Officer

90 days.

Rohit Gupta — Managing Director

90 days. So secondly, and whatever we have learned from the secured part, definitely we are putting into that. We built a separate platform, Amit.

Amit Ranjan — Chief Operating Officer

Yeah. On this one, see how we are going to coexist together is, we are not going out of any of the geographies. We are present there. Our team is present here, we are not making any special team out of it. We are having a data, which is working — the data where we want to go. It is a better data in terms of these clients are already there. And the bills are getting funded from us for 50,000 to 2.5 lakhs. It is a completely digital platform that’s the reason we are taking a little bit of time, we are just adding more credit analysis into that. And that the underwriting, partially also there, earlier, we wanted to fund them and wanted to take at least two days to three days, but we want it. Now, we have an idea. And we are targeting that we should give them a loan within 24 hours with the details, which we have. The team is there. The credit underwriting, which is a centralized credit underwriting team, which will be based out of HO. Sourcing will happen from the same branches where we are operating from the SME. Yes, the ticket size will be a lower side, and it will be a mix off to start with 10% of the portfolio in the coming financial year 10% to 15% of unsecured and remaining will be 85% to 90% will be a secured one.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And last question. The yield on these loans will be accretive to the average yields for the company. And secondly, on the credit cost side, if we have to consider the credit cards and because we had both wholesale and SME book, would the credit costs are the provisions which we are carrying for the SME book, be higher than the wholesale book?

Rohit Gupta — Managing Director

Yeah, definitely. Most of the — because there is not a single account into DPD on the wholesale. So you can see, yes, definitely. But if you see last 18 months, our gross NPAs in spite of our book increasing by 200 crores in last 18 months have come down from 10 crores to 4 crores, even if on the amount, which we have return off, we have recovered roughly 5.5 crores in last 18 months, post January ’22, I would say. So under the granular level on the SME side also it was during COVID when our gross NPAs have crossed 2.92 crores, and mostly coming out-of-the SME.

So from that situation, where are that they’re tying 290 [Phonetic] accounts in schools, where out of that 65% to 70% have become NPAs. With most of them we have made term regular or we have resolved, barring 15 accounts, 20 accounts, which were less than 5 lakhs mostly on the unsecured, which we started in that period, which you have totally closed in last three years. So, in terms of the credit cost which has come, and it was more of with the COVID period and in the last 18 months, we have reduced to very large extent.

Nikhil Upadhyay — SIMPL — Analyst

Okay. And the yields would be accelerated for the unsecured to the total company average yield as of today?

Rohit Gupta — Managing Director

Every year it was secured. Unsecured, no.

Amit Ranjan — Chief Operating Officer

No, unsecured will definitely target a little higher yield, 20 plus times and what we are saying again and again, we don’t know the dynamics. We have to see the dynamics. And somewhat if you find that, the segment is extremely fine and where our operating cost and liquidity customers and the freight cost is seen at a much lower percentage. We may reduce it. So the dynamics of the business will ultimately determine the IRR, but we will price a 20% plus to start with.

Nikhil Upadhyay — SIMPL — Analyst

Sure, sir. Thanks a lot. I’ll come back in the queue.

Operator

Thank you. The next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead.

Rupesh Tatiya — Intelsense Capital — Analyst

Thank you. Thank you for the opportunity, sir. I have three or four questions. So first question is on the SME side. Can you give me 1 to 30, 30 to 60, 60 to 90 and 90 plus DPD?

Rohit Gupta — Managing Director

Yeah.

Amit Ranjan — Chief Operating Officer

DPDs.

Rohit Gupta — Managing Director

DPDs. Yeah, it is already there in our balance sheet. I think it will be get uploaded in a day or two. So where notes to accounts have a complete details of that 0-30, 30-60, 60-90. But I would like to add a little point on that. In our segment, sometimes bouncing percentage is between 12% to 14%, we are out of that 80%, 84%, 85% gets collected directly when we go through [indecipherable] at the time of presentation in the first week of the month. And 98% to 99% gets collected. And certain people, if they fail in a particular month, they paid two EMIs, next one they become regular. So certain new customers come, because sometimes certain businesses are seasonal than you were targeting a Tier 2, Tier 3 city and small businesses.

All businesses are not at the same velocity every month. And because of some seasonality, some encountering any health issue, some go having any marriage and all those. Certain — sometimes one can see a customer missing one or estimates two EMIs, which getting regularize. And sometimes a new customer comes and because of that, there are a few customers you will find in 0-30 to 30-60. But if you see that track record, they’re coming back, some of you may be adding. So it is because of some particularity of this segment where we are.

Rupesh Tatiya — Intelsense Capital — Analyst

Yeah, yeah. Understood, sir. But the reason I’m asking this question in SME, our collection efficiency is 98% for most of the quarters in Q3, a clinical 99%. And [Speech Overlap] we got into a numbers is because of you, so —

Rohit Gupta — Managing Director

When we say this collection efficiency, 0 to 90 [Phonetic]. So if a customer flips in a particular month, the other customer is being substituted by that, which has substituted. So the efficiency for that has been — that remains between that 98% to 99%.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay, okay. Yes, sir.

Rohit Gupta — Managing Director

Still not able to understand, Amit you can explain.

Amit Ranjan — Chief Operating Officer

Yeah. So the percentage, which we have seen 98% what rightly said by, Rohit sir, that in this kind of segment, sometimes a customer slips from 0-30 to 30-60 DPD because of unprecedented reason maybe medical, maybe some kind of an unforeseen expenses are there. So he slips from one bucket to different bucket, but in the next month, he gives all the EMIs, when the situation is better. So that is the reason sometimes it overlaps the payment done by one client and if he misses then he pays in the next month, some few of the client misses in that particular month, and then he pays, it’s a cycle, which keeps on going from month-on month, but we have a target of doing collection of synergies of 100%, but we end up doing 98% to 99%. So that’s the reason it has been given 98%. Nevertheless, the collection fees which you are seeing, if you see on an average, it is almost 0 to 90, we cover all the cases by the month-end.

Rupesh Tatiya — Intelsense Capital — Analyst

Yeah. Understood.

Rohit Gupta — Managing Director

Few of the branches do 100%, some branches do 94%, 95%. So the average comes out to 98%.

Amit Ranjan — Chief Operating Officer

98%.

Rupesh Tatiya — Intelsense Capital — Analyst

Understood, sir. Understood. My next question, sir, can you tell me what is the modified LAP book, actually LAP book as of March ’22?

Amit Ranjan — Chief Operating Officer

LAP book.

Rohit Gupta — Managing Director

Not able to understand, sir.

Amit Ranjan — Chief Operating Officer

Sir, you’re asking SME LAP book or the overall book.

Rupesh Tatiya — Intelsense Capital — Analyst

I’m asking SME LAP book.

Amit Ranjan — Chief Operating Officer

So on the cost side, if you are —

Rohit Gupta — Managing Director

Yeah. I understood.

Amit Ranjan — Chief Operating Officer

Yeah, yeah.

Rohit Gupta — Managing Director

So he is talking about, high ticket retail one, SME LAP book around 85 crores. These are small, I will say small-to-mid-size borrowers and move into the NCR far better collateral. And where LTVs are lesser than 40%, 45%. And mostly they are in the NCR region, as of now. They’re far better. And the predictability of cash flows are far better.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay. And —

Rohit Gupta — Managing Director

We’ll just compare to that. They are being averagely done at 16, 16.5 [Phonetic] and as compared to that.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay. And what is finalized growth outlooks on this for, let’s say, FY ’24, would it be higher than company. I mean company AUM growth average, would it be lower?

Rohit Gupta — Managing Director

[indecipherable] where in terms of percentage going forward year-on year, there you will see the growth on the SME side followed by, we’re a little bit different from the dynamic between the two SME LAP and the wholesale. But they’re definitely going forward. Year-on year growth will be higher on the SME side.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay, okay. Understood, sir. Sir, next question, sir is, you said credit rating review will happen on FY ’24. So can you maybe list two or three major requirements, you know for credit rating update that will have [Speech Overlap]

Rohit Gupta — Managing Director

Sometimes new safety 1,000 [Phonetic] crore is a benchmark, we have always said, but I don’t know whether it’s an unofficial guidelines or not. And other mostly what we account and counter is the top-quality customer and geographical presentation of our wholesale. So that is two basic things. In spite of that we telling them, see, we have been doing for last 11 years. So our track record and all those, but whatever that is, bare minimum, I think exposure we could have by taking the complete control over the project and the cash flows. And this is our competitor. They do a much higher ticket size. So — but still that has been the one, two major concern. And we think we are a small company going into newer areas without much — much more I would say funds. Doesn’t make sense to do small businesses in new profit, especially on the wholesale. I’m talking about this is only about the wholesale.

So as and when we are growing, we will expand to other areas. We targeted Chandigarh Kaba [Phonetic], which is a kind of mini NCR, across Panjpula, Mohali, Dera Bassi, Bharatpur [Phonetic], but we found that still market is not mature, the way we want to look at things, though there is lot of boom in the real estate in that area. The kind of developers are small time builder, which are there. We were not to the — our parameters which we have laid out was going certain things which are not properly to getting vetted from the authorities and all those. So we don’t want to go beyond our parameters.

And in spite of giving a reasonable team, they’re meeting lot of potential borrower. We found that steel market maturity is not there at this time and we will wait out for another six months to one year to see it again. And now we want to look at some part of Uttaranchal, because it’s coming up in a big way, especially Dehradun, Rishikesh and Haridwar side. And little bit maybe on the Lucknow. But these are only on the radars. And we do extensive six months to nine months research by keeping a full-fledged team and meeting potential borrower and then taking up plants.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay, okay, sir. Understood sir. Next question sir is, we have 19% yield on the SME book. I saw in your presentation that 99% of the collection happens digitally. Based on experience in some of the other segments, it is — at this kind of yield 19% yield and that smaller ticket size, this kind of business is a human touch heavy business, is what my understanding is. So I mean how often your loan officer or whoever collection for some need the actual customer, how do you balance that?

Amit Ranjan — Chief Operating Officer

I see, basically you are right, you are right, absolutely right, that the human touch is required in SME. And to update you, it’s an 100% and 110% human touch, which we are doing. You will not believe that when the customer is onboarded, I’ll start from onboarding. So right from the RM to Branch Manager to Credit Manager up to Regional Credit Manager, then Zonal Credit Manager, then if anybody from — any of us in the leadership team is also traveling also meets the client irrespective of the loan amount. So the human touch is there right on the onboarding. Pertaining to that, cost disbursement also we have an exclusive audit team which visit the client before cheque handover also in most of the cases just to check whether the customer has been informed about the company’s policies, parameters or not. And whether the businesses which has been seen by credit team, is it at par with the audit team also or not. This is onboarding and post disbursal process. Coming onto the collection, we are 99% digitally we are collecting all the payments, either through NAS or through our AIM [Phonetic] collect app and that’s the reason we have retained 99% digital because instantly we gave a receipt to our customer when once it hit the cash and the cash is deposited immediately into the branch.

Rohit Gupta — Managing Director

I will explain here little bit. First of all, basically, when put a NAS, 85% collections come through the NAS digital mode. And now I will give a more general data. In Rajasthan, we are — for the collection side, we are collecting 80% through digital, 20% through cash mode. And in Punjab, Haryana and Rajasthan, Gujarat and Uttaranchal, it is 50-50. So, if we take that more than I would say 90% to 93% is through digital mode, 7% what Amit is saying we are doing a 100% our collection team is on a digital platform. They are not giving any physical receipt. The moment he gives cash in certain cases where received e-mail, WhatsApp simultaneously get triggered. So that is a journey. Otherwise —

Amit Ranjan — Chief Operating Officer

Yeah, that’s through app only.

Rohit Gupta — Managing Director

Yeah, through app. Only 93% to 94% is coming from the digital way maybe through NAS, UPI and other way of your payments, and 7% is overall cash collection, which is happening digitally.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay, okay, sir. Another related question, sir. To this year, in your SME side, how do you see, you know risk of balance transfer. And the reason, the reason I’m saying this is that your cost of funds is high, it’s been remain high compared to list of banks from small finance bank and [indecipherable]. The cost of funds will continue to be higher. But you are kind of creating a digital trail for your customer. And I already say that a lot of your customers or need to credit customers, but after one year or two year they will have a pretty decent record, digital record. And then what is the risk of balance transfer?

Amit Ranjan — Chief Operating Officer

So the risk of balance transfer, like you said that these particular clients are new to bank or new to us. So of average, what we have seen and what I have seen in the past 20 — 18 months that we only have around 10 loan, which has been balance transfer from us to different financial institution. And the major reason was their requirement of the top of the amount which is beyond our ticket size. Generally, these kind of customer try to remain with us of the idea, because we give fixed rate of interest to them is the entire tenure [Phonetic]. And average they remained with us for around 10 lakh. I said earlier 24 months to 36 months. So I don’t see in coming year that there will be much of a balance transfer happening from us.

Rohit Gupta — Managing Director

[indecipherable] balance transfer is happening in every industry, everywhere, larger even one going for a corporate, going for lesser to new bank 4.5%. So those things will always be there. The focus is that we work, we did not domain knowledge, our target audience and keep on doing business. And still I would say, again and again, this is the only segment which is underpenetrated. The other one is more or less the [indecipherable] have been penetrated where I would say sometimes surveys are we are pricing plays a larger role or the amount which you can give. But and more of that of late, especially the PSU [indecipherable], that it is better to work with the NBFCs on co-lending format, the segment which we are.

Rupesh Tatiya — Intelsense Capital — Analyst

Okay, sir. Understood. And my final —

Operator

Sorry to interrupt, we request that you return to the question queue for follow-up questions. We have other participants in the queue at the moment, sir. Thank you. The next question is from the line of Vishal Prasad from VP Capital. Please go ahead.

Vishal Prasad — VP Capital — Analyst

Thank you. Rohit sir, I have one request, if you could. We do AGM at the end-of-the cycle, probably between 26th September to 30th of September. And last few years, we are very open with our communications. So is it possible for you to take a look and schedule the AGM a bit earlier, because last week, there is lot of rush and we keep on losing lot of AGM, sir.

Rohit Gupta — Managing Director

Yeah, yeah. We will take your valuable insight and try to do that. What happened, we always target. These annual reports and fine-tuning is and sometimes all those for — so, yes, we will therefore give a earlier deadline and all those and we will not bunch up during the last 10 days and we will try that from this year onwards, it is being.

Secondly, the second reason sometimes was when it used to happen critically, lot of those people, which have no interest, especially in North India. They come in such a huge number 300 to 500 people will come and create such a huge nuisance, we have to call police, and there only is two demand, small money and all those things. So [Foreign Speech] AGM main purpose to speak to and to want genuine any answers or want to listen it, get defeated, even those small number of people who come for that purpose. They are also not able to participate.

Vishal Prasad — VP Capital — Analyst

Okay. I was —

Rohit Gupta — Managing Director

[Foreign Speech] things are far better. The genuine people were coming. And I don’t know, Mumbai [Foreign Speech] in North, where there is a special things which are doing this way.

Vishal Prasad — VP Capital — Analyst

I was about to ask absolutely a physical AGM [Foreign Speech], but hearing to what you have said, it is okay. Yeah. So two more questions. Yeah, one second. Usually, if a branch does good, how much time it takes to breakeven and to reach 10 crores of AUM.

Amit Ranjan — Chief Operating Officer

So, Vishal, it depends on the market also. And we have categorized our branches into A, B and C also. That — suppose our branch in Jaipur will definitely reach to a 10 crore AUM faster than the branch which is built-out of the smaller place, maybe like, you know Rajsamand or Batikar [Phonetic]. But ideally if you average out 10 crore, reaching a 10 crore will be after a year at least 13 months, 14 months is required, because the first three months, branch takes — it has branches new, it takes their own sweet time to come up with the market challenges and everything. But we have kept an average target of around 80 lakhs to 90 lakhs per branch. So looking into that, by the end of this one financial year we target to do at least 10 crores per branch in this financial year also, at least it takes 12 months to 13 months to reach 10 crores in this pace particularly.

Vishal Prasad — VP Capital — Analyst

Okay. And in our wholesale lending, we have mentioned that we usually — not usually, but sometimes we partner with some of the co-lenders. But we haven’t mentioned the names earlier. So is it possible for you to name our co-lenders.

Rohit Gupta — Managing Director

Primarily, we were working with one co-lender NBFC. And so the — now from this year onwards, we have started doing down selling. We have done one transaction with quarter one with TFCI [Phonetic]. Now the focus this year will not be reducing our business, but we’re doing the same or much higher amount of business, but then bringing them through co-lending mode and assigning down selling them assigning them. So this has been that will add to our gross IRR and still our presence in the market will be there that nobody will be able to say that we are not being lesser business at the same time.

On our book the percentage rise will not be that much. So that has been the core target for next year to do higher business, but still remain within the limits on our books, which we had thought. And to name an NBFC, yeah, I have no issues. Rajasthan Global Securities, which is around 1,500 crores to 1,800 crores kind of an NBFC, and which have been doing it for last four years. We only Board where we see that our ticket size is going way beyond 15 crores to 20 crores, but we need the total control. We have complete onboarding and assessment and monitoring on daily basis. This is done by us.

Vishal Prasad — VP Capital — Analyst

Okay. And sir, last question since our cost of capital —

Operator

Due to paucity of time that would be our last question for today, sir.

Vishal Prasad — VP Capital — Analyst

Yeah, sure.

Operator

Thank you. I would now like to hand the conference over to Mr. Rohit Gupta for his closing comments. Over to you, sir.

Rohit Gupta — Managing Director

Thank you very much. I think we had reasonable discussions otherwise to people who are not able to participate, but from the questions that we have already taken, you must have got a reasonable overview. And most of them question must have been resolved. And still you can speak to our IR team or secretarial team, if somebody has any specific questions. And so again, thank you everyone for participating in the call. Your questions are important to us and we strive to be transparent in our investor communication. So, thank you. Thank you very much again.

Amit Ranjan — Chief Operating Officer

Thank you.

Operator

[Operator Closing Remarks]