Manappuram Finance Ltd (MANAPPURAM) Q4 FY23 Earnings Concall Transcript

Manappuram Finance Ltd (NSE:MANAPPURAM) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

V.P. Nandakumar — Managing Director and Chief Executive Officer

Bindu A.L. — Chief Financial Officer

Raveendra Babu — MD of Asirvad Microfinance

Analysts:

Sanket Chheda — DAM Capital — Analyst

Abhijit Tibrewal — Motilal Oswal — Analyst

Shripal Doshi — Aquarius Securities — Analyst

Analyst — — Analyst

Bhushan Parekh — Morgan Stanley — Analyst

Unidentified Participant — — Analyst

Shubhranshu Mishra — PhillipCapital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Manappuram Finance Limited Q4 FY’23 Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Sanket Chheda from DAM Capital. Thank you, and over to you.

Sanket Chheda — DAM Capital — Analyst

Yeah. Hi, good evening to all of you. We have with us the entire management team of Manappuram. {indecipherable] and four month and the end of the year.

[Indecipherable] and Bindu, who is the CFO. Also we have with us Raveendra Babu, who is MD of Asirvad Microfinance and Kamal Parmar, who heads of Vehicle and [Indecipherable] Finance. Without further ado, I would hand over — hand the call over to Mr. Nandakumar, for his opening remarks and then we can follow-up with Q&A.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Thank you. Good evening, ladies and gentlemen. Welcome to the conference call for our quarter and full-year FY’23 financials. I take great pleasure in presenting our results at a time when India is set to become one of the fastest-growing global economies of the world. So the optimism about India’s growth prospects in all [Indecipherable] in the country is now universally acknowledged in economics are close to be an island of macroeconomic stability. But interest shown by many countries to trade with us in a [Indecipherable] exemplifies our improved stenting. In the last con call, we had first need for a balanced and prudent growth, but it’s — his financial year, there are strong signs of that strategy being put into practice. That’s why we achieved good growth in both OEM and profitability. I’m happy to share that we have recorded a consolidated net profit of INR415.3 crore in Q4, which is an improvement of 59.1% over the year-ago quarter, primarily driven by profitability in gold loans and a turnaround in micro-finance business.

Full-year consolidated profits also grew by 12.91% to INR1,500.2 crores. Gold-only AEM was INR19,746.2 crore, an improvement of 6.08% over the previous quarter. While stand-alone AEM at INR24,445.6 crore grew by 9.1% year-on year. The consolidated AEM has reached INR35,452.3 crore in Q4, representing an increase of 17.2% over the year-ago quarter. I gets asked all the time about the increasing competition and the emergence of new players, not only in the NBFC space, but also in the digital lending space. So, India’s underpenetrated financial market gives room for a large number of players to coexist without sacrificing profitability.

The company’s microfinance subsidiary reaction has posted an AEM of INR10,42.9 crore showing an impressive growth of 43.4% year-on year, and a profit of INR99.3 crores during Q4, taking full-year profit to INR218.1 crore this financial year. You save is INR15.3 crore in FY’22. That’s a factor we full benefits ongoing economic recovery, the share of microfinance in the overall profit buy is set to go up in the days to come.

Continuing the trend in the previous quarters, we have posted and received growth in the group of announced resilience, recording 49.0% in Greece Year-on year, and then IMO INR2,455.1 crore followed by home loans within a AEM of INR1,095.8 crores. It is stirring at 29.6% increase over the corresponding quarter in FY ’22. Home loan profitability has improved to INR19.5 crore this financial year from INR7.2 crore in the previous year. It’s affected the of diversify into other sectors is gaining pace and this rebalancing is reflected in March ’23 quarter results.

The share of non world verticals in our total assets under management now stands at 44% and is in-line with our objective of achieving a 50 portfolio mix, between gold and the loan gold segment. We will continue to grow SFH with this policy becoming a well-diversified NBFC. Collections from Microfinance business is expected to improve further and this sector correlates well data economic recovery.

In the housing finance business, the focus on the lower ticket housing loans. We decided to end up the niche areas like finance in healthcare professionals and smaller hospitals with the fourth quarter initial. On our corporate loan front, we have already disbursed around INR1,000 crores. For the Vehicle Finance business, we are increasing the penetration rural in semi-urban locations. Our use of own digital lending platforms and automated approval processes.

Now, we have introduced an app called the [Indecipherable], which brings all products under one umbrella. MSME and personal loan segments are other areas where we want to increase our present. I want to add one more thing, in the recent past you would have seen in the media about the CED rate and all and they all clarified how it is, it is yeah, something belonging to something of 12-years old, very. And whatever requirements are there everything have been submitted and RMB has been overseeing that was the last 10 years, 11 years. And they have given us a letter saying that we are lovely set. But whatever DSA, the background and also told. The one person who have complained in 2011, he again prepared a complaint is his brother’s name and asking the ED to investigate and the high court without looking into the earlier caution petition of his allowed that and that is the reason.

So whatever has been submitted, they have done it. But I am happy to share that its operations has been fully state through high court’s to order to date in in the upper court there they pronounced us the order and we are yet to obtain the return copy of that. We expect that to come by the late evening today. So the operations have been stayed and we are confident of crossing that order of Enforcement Directorate. So this is what they want to share about that because I feel like some of you are anxious to hear about is that.

For a more comprehensive review of our financial performance I hand over to our CFO, Bindu A.L.

Bindu A.L. — Chief Financial Officer

Thank you sir. Good evening ladies and gentleman, and thank you all for joining us today. Our consolidated AEM Q4 FY’23, was INR35,452 crores, representing 11.2% sequential growth and 70.2% YoY growth. Our consolidated profit-after-tax was INR415 crores for Q4 FY’23, which was up by 5.5% QonQ and up by 59.1% YoY. All non-gold businesses reported an ROE, ranging from 2% to 4%.

Consolidated profit after tax for the year was INR1,500 crores, which was up by 12.9% YoY. ROE on a consolidated basis was 17.5% range and ROA was 4.3%. Our GNPA at 1.33% versus 1.61% during the previous quarter. Liquidity position, cash and cash equivalents on-hand on a consolidated basis was INR3,000 crore and undrawn bank line was INR2,949 crores as on March 31, 2023. I see big fortunate name in the standalone entity and our ALM is well-positioned across all the buckets.

Standalone borrowing cost has come down by 6 basis points in Q4 after the repo rate hike. Talking about the gold loan business, which constitutes 56% of consolidated AEM, whereas the remaining 44%, includes Microfinance, vehicle finance, housing and SME finance. Standalone gold AEM has increased by by 5.4% QonQ. Yield at 21%, which is slightly lower than Q3 FY’23 due to increasing the tenure of gold loans from three months to six months tenure.

During the quarter, we were able to add 4.56 lakh new customers. Average ticket size at INR57,546 and average duration of 71 days. Our gold loan average LTV of 60%, which is well below the peer group. Our standalone revenue — there is a small reduction on account of the higher liquidity, which we placed in Q3 for repayment of our dollar bond. Our standalone PAT was INR309 crores, down by 2.9% sequentially and up by 16.5% year-on-year.

Coming to Microfinance, Asirvad Microfinance the AEM stands at INR10,040 crore including gold loan AEM of INR705 crores, up by 16% QonQ and up by 43% YoY. PAT for the MFI business has increased to INR99 crore in Q4 versus INR70 crores in Q3 FY’23. Our collection efficiency from MFI business during the quarter stood at 104% and disbursements during the quarter was nearly INR3,000 crores.

In Asirvad, the gold loan AEM as on March 31, 2023, stands at INR705 crores. Cumulative ECL provision in Asirvad basically stands at INR242 crore, net NPA stands at 1.15% facilities. CRAR 19.6%, ROA 4.05%, ROE of 26.6% in this quarter. Vehicle Finance, we have reported an AEM of INR2,445 crore, which is up by 16% QonQ, [Indecipherable] 49% year-on-year. Collection efficiency for the quarter was [Technical Issues] from 3.01%.

Home loan book AEM INR1,096 crores. This is up by 9% QonQ and 29% YoY. This operates in a 66 branches and reported a profit of INR7.3 crores during the quarter and was INR19.5 crore for the year. Collection efficiency for the quarter was 101% and GNPA at 1.9%. None to MSME and others at INR1,945 crore, collection efficiency at 110%, and GNPA at 1.5%. Our own lending AEM stands at INR875 crores with a disbursal amount of INR420 crores during the quarter.

Our asset quality improved on account of that, our provisions [Indecipherable] the standalone entity stood at INR4.3 crores compared to INR9.8 crores in Q3 FY’23. The Board has declared an interim dividend of INR0.75 for this quarter. Our capital position is strong with a capital adequacy ratio of 31.7%. Our control net sell stands at INR9,645 crore at the book-value of INR113.9.

Thank you. Now we can go for the Q&A session.

Questions and Answers:

Operator

[Operator Instructions] Our first question comes from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah. Thank you for taking my questions. Nandakumar sir, if you could just clarify on what you said during your opening remarks, then if you heard it right. You have now received a stay order on the ED investigation and what you said is a written order is expected sometime by evening today.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. Okay. They both are, case also I will tell you, this has been clarified from before also. It’s 12 year-old about Manappuram farm, which was my proprietary concern. And that had some public deposits. And one local complained that the policies I have taken in the premise — only in the premise of one of our Finance et cetera. And the [Indecipherable], we have as what is interesting and system, it has been done and they offer myself to repay everything. Yeah, in 2012 and the amount was put into an escrow along with interest. And these have hopefully repaid along within this except INR9 lakhs where the customers are untraceable.

So total amount put in — yeah, used for that was INR159 crores and the balance outstanding is only INR9 lakh and this are come regularly supervised by [Indecipherable] and as a part of their process. They have issued a letter also. They have largely satisfied with our action to back them. And no key now can complain. refer the complaint courts saying that all the previous inquiries and investigations he is not satisfied. Now EDs will investigate et cetera. So if I got, let’s say we also investigate.

Filing an FIR with the police, and police already referred this case. And the court also have closed it. So that is all. The EV then he asked for details that has been just provided. And yeah, surprised did they have read in the office last week. And yeah, this order was issued authorities some both offerings to sell assets personal assets. It includes a part of my changes in monochrome Finance also. This order. So, we consulted lawyers in ruling that’s opening, they said yes this is absolutely a high-handedness with some ulterior motive. So they said we can easily. So as the first process to begin this, we prepared our this thing in one of the Polish Court of Kerala. Then the base of that today we’re participating industry team notable just less pronounced, stay order in the operational, the executive order from EUV.

And other councils are very sure about vertical about pushing that in though that’s two to three hearings after hearing the other side. This is the stay order. So, this is a situation. So as such, it is — it’s operations is stayed, and they will release although freezing orders. So it will — they have to defreeze it. The frustration. And the [Technical Issues] order will be available in the late evening maybe around eight o’clock.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it sir. Congratulations on that. Sir, another thing I wanted to understand is on the gold loan business. This quarter we have reported a sequential decline of…

Operator

Abhijit, sorry to interrupt you there [Speech Overlap]

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah, is the line better now?

Operator

No, your line is better, it’s the management line that has been disconnected. Please stay. Ladies and gentlemen, we have the management team connected. Abhijit, you can proceed with your question.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah, thanks a lot. Sir, thank you for really elaborately answering my previous question. And the next question that I had was on the gold loan business. This quarter we have reported about 140 basis-point sequential decline in your net yields in gold loans. We have given out the reason this is because of the conversion of gold loans from three months-to six months.

So if you could just help us understand how does conversion or increase in 10 gold loan from three to six months led to decline in the yields in gold loans? And B, sir, I mean for the last many quarters now we are seeing continued trade-off between the gold loan growth and spreads or margins in the gold lending business. So just wanted to understand that even though we see that the competitive intensity from banks have at the margin been easing out, we are not quite seeing that happening in terms of the trade-off between the gold loan growth and the spreads.

So is there sweet spot, therein you can operate at slightly lower gold loan yields settle for maybe slightly lower margins and ROAs in the gold loan business. Will that help you get to a situation where you can demonstrate both stable spreads in margins and good gold loan growth as well?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So your first question, was from the tenure, from three months-to six months, how is it affecting the yield? So if it is three months, immediately after three months of the date of Flex, it becomes overdue. And the audits are just available. No doubt, do charges are available only after six months. But if led to some decline in the yield. So, we are planning to operate at the end of around 22%.

So our yield now is a growing yield because we are slightly increased that. And with the new changes in the product structure et cetera, we hope it will settle that at around 22.5%. This is going to be — see, we don’t believe that for reducing the yield by 1% or 2% will improve our business. What we expect see here is around 10% growth in gold loan area. So we are growing at that pace now, 10% AEM growth for the FY’24. So we will be able to settle around that.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it sir. This is this is — this call maybe I’ll come back-in the question queue. Thank you so much and wish and the team all the very best.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Okay.

Operator

Our next question comes from the line of Shripal Doshi with Aquarius Securities. Please go ahead.

Shripal Doshi — Aquarius Securities — Analyst

Hi, sir. Good evening and thank you for giving me the opportunity. Sir, I wanted to ask you a question pertaining to the microfinance business. So, on that front like we are already having an average of more than 6 times. And I think the capital adequacy is also below 20% or 20%. So, what is — so, are we looking to infuse capital or is there any thought on that front? Because given the kind of growth we are having in this segment, so what’s your thought process on this front?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So, microfinance business definitely need capital. So, on the one side, we will infuse capital that may be around INR500 crores and also subordinate that to an equal amount to our subsidiary. And also permanently what we say is to raise capital from outside from it to IPO or maybe one or two so, privately. This is already the — we have talked to some mutton bangers already and for proceeding, all are they waiting for the Q4 results FY[’23 results. Now, that is ready, we will start scouting gross capital from outside also and from the parent side, as I already said, we may infuse somewhere around INR500 crores because which should be within the covenants with Ramada lenders. Then here to also with support subsidies.

Shripal Doshi — Aquarius Securities — Analyst

Go ahead. Like wanted to understand what is the disbursement that we have done in the NFIPs, like under Asirvad in FY’23 overall and 4Q FY’23?

Bindu A.L. — Chief Financial Officer

Nearly INR7000 crores for the full year. INR8300.

Shripal Doshi — Aquarius Securities — Analyst

Okay, and this quarter? Okay, we’ll get it. That’s okay. Got it. And sir, what has been the write off in this business in FY ’23?

V.P. Nandakumar — Managing Director and Chief Executive Officer

INR113 crores.

Shripal Doshi — Aquarius Securities — Analyst

Okay, INR113 crores. That is for the whole year FY ’23, right?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah.

Shripal Doshi — Aquarius Securities — Analyst

Okay, got it, sir. Thank you sir. One just last question pertaining to Golden business, what percentage of our book is about INR2 lakh ticket size in the gold golden business?

V.P. Nandakumar — Managing Director and Chief Executive Officer

About INR2 lakhs, it is 35%.

Shripal Doshi — Aquarius Securities — Analyst

Okay. About 2 lakhs, it is 35%. Okay. Got it. And sir, what is the highest ticket size that we have ever done in gold? If you could give some sense.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Like INR50 lakhs, INR1 crore also will be there, but that will be very minimal in number.

Bindu A.L. — Chief Financial Officer

Maximum add a set of customers.

Shripal Doshi — Aquarius Securities — Analyst

So up to INR1 crore?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah.

Shripal Doshi — Aquarius Securities — Analyst

Okay. Got it, sir. Thank you so much for your time sir. Good luck for the next quarter.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of [Indecipherable] from [Indecipherable]. Please go ahead.

Analyst — — Analyst

Hello, am I audible?

Bindu A.L. — Chief Financial Officer

Yes.

Analyst — — Analyst

Yeah, thanks for the opportunity. I just want to ask on the gold know you side. So you say that we expect to operate about 22%. So do we expect next quarter or Google you will bounce back to around an apple was the month of April school nude?

Bindu A.L. — Chief Financial Officer

Yeah. So, currently, it is around 21% for the quarter, but steadily it is going up. So, we expected to achieve by the end of Q1. So, average may be slightly lower, but we will be able to achieve at the end of the quarter.

Analyst — — Analyst

So, you will see some monthly basis is going up. So, by the end of first quarter you will come back to 22%, is that what you are saying? Just clarify.

Bindu A.L. — Chief Financial Officer

Yeah. So, by the end of Q1, we will be able to reach 22% AGL for our gold loan business. So, as we started from 21, it will be the average for the quarter will be 21.5, but we will be reporting a 22% yield at the end of the quarter.

Analyst — — Analyst

Okay. In cost we used to share you know what a month three years so, do you mind sharing what I’m offering you for April?

Bindu A.L. — Chief Financial Officer

Yeah, it is steadily improving.

Analyst — — Analyst

Okay. Got it. Thank you, and then the change of duration from three months to six months changing strategy or is just a timing mix more customers tend to pay six months this quarter or how do they work?

V.P. Nandakumar — Managing Director and Chief Executive Officer

See, the thought will take us two to three months to six months because a lot of surplus in auction is accruing. So, we felt like judging the gold value of the last couple of years, the roof in increasing the tenure to six months is not a big price of course. Because and also I want to tell you all other lenders are offering for one year without same LTV. In the same LTV they are offering a tenure of one year.

Analyst — — Analyst

Okay. Is our entire portfolio now on six months or…

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. Because all the all the pledges will move to that because all new pledges will be in the new tenuous.

Analyst — — Analyst

Okay. Thank you. That’s all. Thanks for the opportunity.

Operator

Our next question comes from the line of Bhushan Parekh with Morgan Stanley. Please go ahead.

Bhushan Parekh — Morgan Stanley — Analyst

Thanks for taking my question. I have three questions on the liability side. Just wanted to understand through the past week since the ED investigation began, what is the feedback that we have from banks and fixed income market participants regarding this ED action? And have we been able to raise any fresh funding and is it on similar terms as before? And just lastly, just want to understand if — I mean if this affects your loan growth expectations going forward, I mean, due to the if there are any funding interruption?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So, I want to tell you this is not something this whatever led to this is not something new. This is known to all the stakeholders for the past 10 years and they will know everything has been repaired also 10 years from the very old story. So one person was creating this problem, the same person or even the last one year. So this is nothing new as far as our stakeholders are concerned. And now we obtain a stay and everything is not something which can create any problem. We are very sure our concerns are position removed from so we are crossing this case in the High Court in the coming weeks.

So this cases was said about next week our counsel will argue and we very strong ground. And that similar case was the through his wife because — while through his wife that was already caused by the court. So it’s not an issue you’re already fully self in this case and the quarters, so it’s coaching is only a matter of time in grooving, we got to say, and that will be saved with our stakeholders. And with that, we don’t expect liability if challenges on account of that. And some other banks have renewed that. One is HDFC bank. Now I’m leaving to our CFO.

Bindu A.L. — Chief Financial Officer

Yeah, so we have enough control lines and post the event also, we were able to get disbursements from few banks. In other cases, they may be updating the credit committee. So once we get the stay order, we will share with all the lenders. As MD sir told this is an old issue, it is — this information is available in all our public documents, including the prospectors, et cetera. So, the set thought created was issue for the liquidity profile.

Analyst — — Analyst

And just on the terms of funding, I mean, have they changed or I mean, they remain similar to what was before the event?

Bindu A.L. — Chief Financial Officer

It is similar only.

Analyst — — Analyst

Okay. And just if you could — part of guidance on your loan growth plans as well. I mean, do they change in any way going forward? Or we still looking to do around 20% overall control basis?

Bindu A.L. — Chief Financial Officer

So, the business plan will continue as per the plan. We are not seeing any liquidity constraints at this point of time, which will reduce the growth. Funding is not a constraint that this one have done.

Bhushan Parekh — Morgan Stanley — Analyst

Understood. That’s helpful. Thanks for that. That’s all from my side.

Operator

Our next question comes from the line of [Indecipherable] from CLSA. Please go ahead.

Unidentified Participant — — Analyst

Thank you. Yeah, hi, thanks for taking my question. I had one clarification. So, all of all of the loans on the book today are six months.

Bindu A.L. — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

Okay. And second thing just in your notes to accounts, you mentioned about this RBI inspection, show costs notice that you all got. So, can you just elaborate on that please?

Bindu A.L. — Chief Financial Officer

Yeah, this is relating to financial year 2021. During the inspection or they pointed out the extension of tenor which we were following for last so many years. That inspector interpreted this as are all over off loan. And do you remember there was a spike in NPA in FY’22. Because of this RBA response and we provided all the details and we are discussing with RBI on this issue and we are awaiting the feedback from them.

V.P. Nandakumar — Managing Director and Chief Executive Officer

We had a personal hearing also. So, we are expecting a positive response rather than because we are Q&A reply which we hope that this will convince them the background.

Unidentified Participant — — Analyst

So, I — so Bindu if you can just clarify like you are extending the loan, what exactly about extension [Speech Overlap]?

Bindu A.L. — Chief Financial Officer

Okay. So, in the past our scheme structure was initial tenure of loan will be three months and if the customer is servicing the full interest, he will get an extension for another three months. So, this was the scheme structure. As we again test the cashflow of the customer and he has to service the full interest after the completion of treatments. That is how we were doing. From like 2014 onwards we were doing like that only by FY ’21 inspection that is that is interpreted as rollover of loan and we are whether we have access to the cash flow of the customer is there any concession These are the stories which we are answering. Hope that is clarified.

Unidentified Participant — — Analyst

And your competitors also have such scheme or you serve [Speech Overlap]

Bindu A.L. — Chief Financial Officer

Our competitor, I think everywhere it does one year scheme. In our case only two or three months from 2014 onwards.

Unidentified Participant — — Analyst

Okay, but these do not extend? That is my question.

Bindu A.L. — Chief Financial Officer

That, we don’t know.

Unidentified Participant — — Analyst

Okay. Fair enough. And just lastly in terms of this book, which is a less than 12% yield, which you’ve given on Slide 18. Does that go to zero anytime or is this sort of a steady state?

Bindu A.L. — Chief Financial Officer

No, it will be — the 12% scheme will be maintained.

V.P. Nandakumar — Managing Director and Chief Executive Officer

May not get to 13%, but will be 8% to 10% level. The scheme is already exist earlier also.

Raveendra Babu — MD of Asirvad Microfinance

The blender the yield, we have structured in a way that the blender the yield would 22.5% towards the third quarter of this year. It is consistently increasing. This quarter, we expect that to settle around 22%.

Unidentified Participant — — Analyst

Okay, and banks are still offering the 8%, 9% gold loan even now? Like NDRC have stopped, but are banks still doing that?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So, we don’t see that sort of aggression now because those were the days where they were getting liability growth, but not getting adequate asset sales growth. Now they are getting asset sales growth more and liability growth. So their aggression in small loans. So come down, particularly for loans are coming down. We don’t see which are today’s.

Unidentified Participant — — Analyst

Costs. Okay, this is helpful. Thank you so much, and all the best.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah.

Operator

Our next question comes from the line of [Indecipherable] from Kotak securities limited. Please go ahead.

Unidentified Participant — — Analyst

Hi, thanks for taking my question. You mentioned that around 35% of your loans are about INR2 lakhs. What was this the show for FY’22 budget?

Raveendra Babu — MD of Asirvad Microfinance

For FY’22 last year it was 45%. Sorry, it was not 45%. Its around 28%.

Unidentified Participant — — Analyst

Sorry sir 28% became 35% actually. The number of the proportion of loan book about INR2 lakh went up?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah.

Unidentified Participant — — Analyst

Because I thought you had articulated a strategy where you’re kind of going down.

V.P. Nandakumar — Managing Director and Chief Executive Officer

But mostly that is INR1 lakh to INR2 lakh. This is about INR2 lakh I guess.

Unidentified Participant — — Analyst

So between INR1 lakh to INR2 lakh, how would the proportion has changed?

V.P. Nandakumar — Managing Director and Chief Executive Officer

It’s 22% — 24%

Unidentified Participant — — Analyst

.Okay, and I mean, how much would it have been changed?

V.P. Nandakumar — Managing Director and Chief Executive Officer

18%.

Unidentified Participant — — Analyst

Okay, 18%. I’m not sure maybe you can actually discuss this, but I didn’t quite understand the reason for the decrease in potential new significant just by the fact that more in detail.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Can you repeat that question? It’s not clear.

Unidentified Participant — — Analyst

The decline is projected even faster upon that, because I’m not sure if I followed that properly.

Bindu A.L. — Chief Financial Officer

Yeah. So, recently, we have increased the the contract of go launch from three months to six months and it is a transition phase. The yield — the other target is already there et cetera will be less and during that tenure we are offering as it is a slightly longer tenure, the interest will be less that is the reason this one version there is a difference between Q4 and Q1 — Q3 and Q4.

Unidentified Participant — — Analyst

No. So, I didn’t quite follow so what you’re saying is that you actually give an incentive to the customer saying that I will give you some discounts if you move to a longer tenure or how I should read it?

Bindu A.L. — Chief Financial Officer

Yeah.

Unidentified Participant — — Analyst

Sure. And just finally, I think there was an RBI circular, which is talking about even charges and kind of not controlling basically the charges can be made to the customer. So do you have any view on this?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So whatever is that we as a club we have to come up with that. But we can factor products in a way that whatever is the yield or we expect that is available. But after the products have been restricted in such a way that so the towards the end of this year, we will reach a level of 22.3% on the portfolio. So that was the — we have seen the instructions with regard to build charges et cetera, et cetera will comply with that, even in spite of that.

Unidentified Participant — — Analyst

Okay, got it. Thank you very much and all the best.

Operator

[Operator Instructions] Our next question comes from the line of Vaibhav [Indecipherable]from Honesty and Integrity Investment. Please go ahead.

Unidentified Participant — — Analyst

Yeah. Hi, thanks for giving the opportunity. So didn’t follow up with the question that the earlier participants asked. So in terms of the total penal that were charged for FY’23, can you give me that amount in absolute terms?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Those details…

Bindu A.L. — Chief Financial Officer

Yeah, we will.

V.P. Nandakumar — Managing Director and Chief Executive Officer

We’ll share, we’ll come back separately. We don’t have it at present, we’ll share with you.

Unidentified Participant — — Analyst

Okay. But in percentage term generally what is the policy that like 1%, 2% of the loan amount or what is the policy in percentage terms?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. 3% per annum. Yeah, that was the policy.

Unidentified Participant — — Analyst

Okay. And this penal interest starts, the meter is starts the moment it crosses 90 days, right?

Raveendra Babu — MD of Asirvad Microfinance

Yeah, it becomes…

Bindu A.L. — Chief Financial Officer

Overdue interest.

Unidentified Participant — — Analyst

Okay. Got it. That’s it from my side. Thank you.

Operator

Our next question comes from the line of Shantanu from Think Investments. Please go ahead.

Unidentified Participant — — Analyst

Yeah. Hi, I guess I missed it in the beginning, just want to know what is the guidance for our loan — gold loan segment for FY’24?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So, what we have projected — what we budgeted is around 10% growth. So, we are in line with that as of now.

Unidentified Participant — — Analyst

Okay, and our yield for FY ’24 would be around 22.5%?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. Towards the end of this quarter, it will reach around 22%.

Unidentified Participant — — Analyst

Okay, and for the non gold loan part, what could be the growth guidance?

V.P. Nandakumar — Managing Director and Chief Executive Officer

So, in my opening remarks, I have mentioned about our overall objective for the single 50/50. 50 gold and 50 non-gold. So now, the non-gold is that. So, we hope in another one year and one and half years, two years, we’ll reach that level of 80%.

Unidentified Participant — — Analyst

Got it. Okay. That’s it from my side. Thank you.

Operator

Our next question comes from the line of [Indecipherable] from Sean Feld. Please proceed.

Unidentified Participant — — Analyst

Hey, sorry, just a follow up question to comments earlier. So basically on the go home view side so basically this quarter, we moved from three months to six months, right? And you were saying if I understand correctly, that we gave away the building. So just wondering, you know, you’re saying their monthly goal on you is steadily increasing now should reach 22% by end of this quarter. Just all the other stuff, why is that? Is it because we stopped giving those incentives already or why don’t you is the US moving up, back up?

Bindu A.L. — Chief Financial Officer

Yeah. So as we discussed on the yield, and then we increase the tailor from three months to six months, the customer will be getting the contracted rate of interest. Instead of three months, he is getting the corrected rate of interest for six months. In the past, if it is a three month contract, the overdue interest will be charged from the date of maturity. So, after 90 days, there will be an overdue interest. Now, during the tenure of six months, he will get the contracted rate of interest. So, as the transition is over, then it will be in the same flow. So that is the reason steadily the index improving.

Raveendra Babu — MD of Asirvad Microfinance

The time therefore, three, four month only. That increase already reflected in April onward. Like it is now 21.4 range already reached. So it is certainly increased. Leverage is increased.

Unidentified Participant — — Analyst

Okay, so April 21.5% you’re saying, if I hear that correctly?

Bindu A.L. — Chief Financial Officer

Yeah. As on date.

Unidentified Participant — — Analyst

Okay, understood. Cool. Thanks so much.

Operator

Our next question comes from line of [Indecipherable] Wealth Management. Please go ahead.

Unidentified Participant — — Analyst

Hello. Am I audible?

Bindu A.L. — Chief Financial Officer

Yes.

Unidentified Participant — — Analyst

My question is related to MFI space. How are you seeing this panning out in next couple of quarters and what is the expectation or guidance for group three, four quarters down the line?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. See, the demand is very good. In the MFI space, demand is good. Quality is steadily improving. So, all depends on the liability. We are getting the liabilities, the renewal, et cetera. And after the squatters are the CELT and clearing the cloud in the sky ED et cetera, et cetera. We hope the renewables will come through and what we are we are targeting is around 40% growth during the current year. 55% to 45% and we hope will lead to that.

Unidentified Participant — — Analyst

Thank you. That’s it from my side.

Operator

Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal. Please go ahead.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah. Thank you for allowing me a follow-up. Sir, I mean again coming back to this three months to six months for my benefit and the benefit of the people on the [Technical Issues]

V.P. Nandakumar — Managing Director and Chief Executive Officer

I’m not audible. There is some some noise in the call. Hello

Operator

Sir, the line of Abhijit has left a question queue. We move on to our next question, which is from the line of raga mod one from Raghav [Indecipherable] VCAMC Private Limited. Please proceed.

Unidentified Participant — — Analyst

Hello. Hi, big thanks for digging up this question. So, this is regarding Asirvad Microfinance. I would like to understand the geography mix that’s playing out as of Q4 and want to be the maximum concentration what state going forward. And also it can enlighten on the expansion plans the other state which were not enrolled for Asirvad.

V.P. Nandakumar — Managing Director and Chief Executive Officer

See, Asirvad, the business is spread across the country and we have a decision not to have a portfolio of around 10% in a particular state. And also to restrict the portfolio to 1% in a particular district. So in that way we can say that the operation subsidy across the country. And now the maximum exports is in Tamil Nadu which is below 20%. It was around 70% couple of years but it has some numbers and gradually it is coming down.

Bindu A.L. — Chief Financial Officer

Yeah. In our investor presentation page number 26 years giving statements distribution of MFA.

Unidentified Participant — — Analyst

Okay. Thank you. I also want to understand what will be Asirvad presence in Andhra Pradesh going forward after the recent high court judgement which relaxes the version or the demos if I can.

V.P. Nandakumar — Managing Director and Chief Executive Officer

[Technical Issues] regarding NBOC are [Indecipherable] in the state in moneylenders act, these are another ways of supreme. So, no hereafter no state can enact a separate law for NBFCentirely it is a view of union government means now, there’s like other states, we can do microfinance business in Andhra Pradesh, Telangana without any change. Now just like other states only. So, what we don’t have any plan for a plastic expansion on your graphical spread this year, the reason is, last year we have expanded and this year we want to deliver the benefits even with the person brand spanking of around 1700 branches, 1800 branches across Indian routing go long branches in our company can reach a level of even 30,000 that sort of physical infrastructure is already laid. So there is no expansion plan this year.

Unidentified Participant — — Analyst

Thank you just. Just a final question. If you can also let us know on Assam portfolio, considering most recently we can see that many of us are now coming back to Assam. So what is the position of Asirvad in Assam?

V.P. Nandakumar — Managing Director and Chief Executive Officer

For Asirvad, the presence was bigger and we don’t have much hits as far as the Assam portfolio is concerned. It was very small. We have just entered only.

Unidentified Participant — — Analyst

Right. So my question is, will they expand in Assam going forward? What is the business plan like in Assam? Will this continue to be restricted?

V.P. Nandakumar — Managing Director and Chief Executive Officer

This year, we are rationalizing our plan is to rationalize that expenses. Why? because last year, we have injured into a brand new expensive et cetera, put people et cetera. Now we held up people capacity as well as the brand new capacity, even to travel the business. So we don’t plan to expand on plans in network this year.

Unidentified Participant — — Analyst

Understood. Thank you. That’s it from my side.

Operator

Our next question comes from the line of Abhijit Tibrewal from Motilal Oswal. Please proceed.

Abhijit Tibrewal — Motilal Oswal — Analyst

Yeah. Thank you for running this follow-up. Am I audible?

Bindu A.L. — Chief Financial Officer

Yes.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yes.

Abhijit Tibrewal — Motilal Oswal — Analyst

For my benefit, and him and some others, as well on the call, just wanted to understand this extension in tenure from three to six months from what I recall. And please correct me if I’m wrong has not been done recently. I recall — I mean four quarters back or five quarters back, we were seeing accelerated options. Immediately post that is where we have started moving from a three month gold loan product or six months gold loan product. So please let me know if this understanding is correct and in fact that we are not really incentivizing customers to move from three months to six months, but rather as our offering we are offering a six month gold loan product versus 12 month gold loan product which is offered by the competition?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah, so the strategy — we started moving from three months to six months, few months back, but the transition was more towards the last quarter. That was the reason.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it, sir. And that’s the standard product offering that we have now right? A six month gold loan product?

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. Now we don’t have three months gold loan products at all.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it, sir. Sir, the next thing where I needed some clarification is we have partly answered this question. Last quarter we had given the state of gold loans this ticket size less than one lakh, one to two, two to three, three to five and above five lakhs. So if that user can please provide that.

V.P. Nandakumar — Managing Director and Chief Executive Officer

We’ll share that.

Abhijit Tibrewal — Motilal Oswal — Analyst

Alright. And sir, last question. While we have already guided on the gold AUM growth, how are we looking at the non gold product segments? What kind of growth aspirations that we have in the non gold product segments?

V.P. Nandakumar — Managing Director and Chief Executive Officer

MFI may grow around 35%. And HLC also may grow around35% — 35% to 40%. And [Indecipherable] and MSME et cetera. These are showing a trend of a growth of around 50%.

Abhijit Tibrewal — Motilal Oswal — Analyst

Got it, sir. Sir, this is very useful. Thank you very much.

V.P. Nandakumar — Managing Director and Chief Executive Officer

Thank you.

Operator

Our next question comes from the line of [Indecipherable] with CLSA. Please proceed with the question.

Unidentified Participant — — Analyst

Yeah. Hi, thanks for taking my follow up. Sir, if you could just give your overview interest number for fourth quarter and third quarter?

Bindu A.L. — Chief Financial Officer

We will come back to you later.

Unidentified Participant — — Analyst

Okay, sure. Thank you.

Operator

Our next question comes from the line of {indecipherable] with PNK securities. Please go ahead.

Unidentified Participant — — Analyst

Yeah, thanks for taking my question. Just one question. Our cost of funds has seen a decline sequentially on a console basis from Q3 to Q4. Any particular reason for that and what would be guidance for borrowing costs for next year?

Bindu A.L. — Chief Financial Officer

So, one benefit we got during the quarter due to our repayment of dollar bonds, which was costing 11.5% and a half percent is we redeemed at the beginning of the quarter. So, that has given us some benefit. And in the case of Asirvad, the rate is not going going up as [Indecipherable] because we were able to get the funding, better pricing, because as a group, we are getting the liquidity. So that is also getting us benefit. In housing finance, also as the growth is there, improving the earnings. These things are helping us to get a better pricing.

Unidentified Participant — — Analyst

Yeah. And any guidance for next year? Any increases?

Bindu A.L. — Chief Financial Officer

Yeah, so we are to see the overall market scenario because last year, we are seeing a 250 basis points increase in the repo rate high. So we have to see. I think there’ll be further hikes then we may be able to continue at this level. And based on the repo rate hike, we may see an increase in the customer.

Unidentified Participant — — Analyst

Sure. And lastly, on the SMA and personal loan business, we saw a marginal spike in GNPA in this context. Anything to read in that or it’s just normal course of business with growth there is a small spike?

V.P. Nandakumar — Managing Director and Chief Executive Officer

That is small ticket unsecured loan, where our yield is around 25%.

Unidentified Participant — — Analyst

Okay. So that there there is some input…

Bindu A.L. — Chief Financial Officer

Overall scheme that is very small. I think INR140 crores, INR150 crores a year.

Unidentified Participant — — Analyst

Okay,. Understood. Okay. Thanks so much for answering my question. Thank you.

Operator

Our next question comes from the line of Shubhranshu Mishra with PhillipCapital. Please go ahead.

Shubhranshu Mishra — PhillipCapital — Analyst

Hi, thank you for the opportunity. The first question is around the competition. So, is it competition only from gold financials and banking to bone those are the competition is also coming from micro SME lending from banks or NBF seas as well as fintechs? That’s the first. Second is a data caping question a second, please be accrued interest in this quarter and the options that have happened in this quarter? And also if you can get this piece of the alien into less than one lakh, one to two lakh and greater than two lakh? Thanks.

V.P. Nandakumar — Managing Director and Chief Executive Officer

See about competition. See, now also, we understand that largest — the portfolio is without an organized sector which may be around three types of the sector and organist lead. That’s only an estimate because of no data. So, an India is importing around those in terms of gold and jewelry sale is also increasing. And also the product is becoming Prime example this product to lifestyle product. So, in this process, there are enough opportunities for larger number of organized players to generate customers from the unorganized sector. So, the competition was not the issue really.

The NBF seas generally do short term loans for the newer in Europe around or three four months, and ticket size of around INR50,000 to INR60,000. For the bank, the average loan ticket and tenure is much much higher. So, bank customers and non bank customers are different. So, with all these taking into your own land, the rural economy started coming back, we feel the competitive intensity will come down and we show the science of that. Hello?

Shubhranshu Mishra — PhillipCapital — Analyst

Yes, sir. Sir, this still doesn’t answer my question. Sir, my question was mostly competition is from a different form factor whether it’s from micro SME lending from various banks and [Speech Overlap]

V.P. Nandakumar — Managing Director and Chief Executive Officer

Yeah. So, see gold loan is gold loan. Why? Because this is instant loan, there is no other instant loan. Gold loan customers are very increasingly only. So, even those customers which were availing micro loans that may not be sufficient for their purpose to meet their purpose need. So they — so in addition to whatever they do they do their will this go longer than repay and always when the gold is blessed, the first priority of what the repayment will be going on because these are all family jewelry.

Shubhranshu Mishra — PhillipCapital — Analyst

Understood.

V.P. Nandakumar — Managing Director and Chief Executive Officer

So the other loans. Increase in other loans, personal loans, et cetera, these don’t post much threat as far as gold loan is concerned.

Shubhranshu Mishra — PhillipCapital — Analyst

So, if you can answer the data points that I asked for the loan interest, the official.

Bindu A.L. — Chief Financial Officer

We’ll share that separately.

Raveendra Babu — MD of Asirvad Microfinance

We’ll share it.

V.P. Nandakumar — Managing Director and Chief Executive Officer

We will share that separately.

Shubhranshu Mishra — PhillipCapital — Analyst

Sure. Thank you.

Operator

Ladies and gentlemen, that was the last question for the day. I now hand the conference over to the management for closing remarks.

V.P. Nandakumar — Managing Director and Chief Executive Officer

So thank you for the active participation. And whatever details you asked for, we will share with these details — micro details. Thank you.

Operator

[Operator Closing Remarks]