Muthoot Finance Ltd (MUTHOOTFIN) Q4 2021 Earnings Call Transcript

Muthoot Finance Ltd  (NSE:MUTHOOTFIN) Q4 2021 earnings call
dated Jun. 02, 2021.

Corporate Participants:

George Alexander Muthoot — Managing Director

Oommen K. Mammen — Chief Financial Officer

K.R. Bijimon — Chief General Manager

Analysts:

Kunal Shah — Analyst

Piran Engineer — Motilal Oswal — Analyst

Digant Haria — GreenEdge Wealth Services — Analyst

Anand Bhavnani — White Oak Capital — Analyst

Subrat Dwibedy — SBI Life Insurance Co — Analyst

Dhaval Gada — DSP Mutual Fund — Analyst

Prashant Sridhar — SBI Mutual Fund — Analyst

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Aswin Balasubramanian — HSBC Asset Management — Analyst

Amit Ganatra — HDFC Mutual Fund — Analyst

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Vikas Kasturi — Focus Capital — Analyst

Vikram Subramanian — Spark Capital Advisors — Analyst

Sayantan Bhowmick — PineBridge Investments — Analyst

Susmit Patodia — Motilal Oswal Asset Management — Analyst

Dipanjan Ghosh — Kotak Securities — Analyst

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Vikash Agarwalla — Bank of America — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Q4 FY’21 Earnings Call of Muthoot Finance, hosted by ICICI Securities Limited. [Operator Instructions]. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions]. I now hand the conference over to Mr. Kunal Shah from ICICI Securities Limited. Thank you, and over to you, sir.

Kunal Shah — Analyst

Thank you, Mallika. This is Kunal Shah from ICICI Securities. So today we have with us Mr. George Alexander Muthoot, our Managing Director and Mr. Oommen K. Mammen, Chief Financial Officer from Muthoot Finance to discuss their FY’21 earnings as well as medium-term strategy and outlook. So congratulations sir for a robust growth and ROE even in this challenging year. And on behalf of entire investor and analyst community, I would want to convey our deepest condolences and heart felt gratitude on the demise of Chairman sir. So over to you, sir.

George Alexander Muthoot — Managing Director

Thank you. This is George Alexander Muthoot, Managing Director of Muthoot Finance. I have with me our Chief General Manager, Mr. K.R. Bijimon, Executive Directors, Mr. Eapen Alexander and Mr. George M. Jacob, and also the CFO, Mr. Oommen K. Mammen. I’m sure the other directors are also on the call listening from elsewhere. We are speaking from the head office at Cochin.

You may be aware, we would like to place on record our definite heartfelt condolences and — on the passing away of our Chairman, my elder brother, Mr. M.G. George Muthoot on 5th March 2021, last — 5th of March this year. So at this meeting, we have appointed Mr. George Jacob Muthoot, one of the promoters of the Company, who was unanimously elected as — unanimously appointed as the Chairperson, Chairman of the Board of Directors, a position left behind by Late Mr. M.G. George Muthoot due to his untimely demise on 5th March. He’s the younger brother of M. G. George Muthoot, of course, my elder brother too. He is taking over the mantle. Mr. George Jacob Muthoot said he’s truly honored and humbled to accept that Chairmanship of the Company and privileged to take this wonderful Company and the team Muthoot Finance forward in the next decade and beyond.

Remembering the past Chairman, Mr. George Jacob Muthoot, and we all feel that he along with the other members of the family are truly committed in upholding the values and benchmarks set by the — by our elder brother in the business — in the business, profession and in life. We are all sincerely and severely focused on achieving the vision and mission set by Late Mr. M.G. George Muthoot whose guiding principles, ethos and values continue to guide us today and in the years to come.

So with that as our condolences on Mr. M.G. George Muthoot, our former Chairman, I would like to formally present to you the financial results for the financial year 2020-2021. Key milestones is something which I would like to present here. Our long-term rating has been upgraded to AA+ by CRISIL and ICRA. Our loan portfolio crossed INR52,000 crore mark in this year. Our total revenue for the year also crossed INR10,000 crores. These are good and clear milestones.

Profit before tax also crossed INR5,000 crores and net worth crossed INR15,000 crores. The total loan disbursements in the year is INR1.24 lakh crores or INR1,24,000 crores is the total loan disbursement in this year. At this point, I would like to slowly think back about the shareholder value, which our Company has been able to create. Our initial public offering was in April 2011 and our listing happened in May 2011. The issue price and that time was INR175 and today it is around INR1,400, a good INR600-plus share price increase. The market capitalization at the time of issue was INR6,504, and today it is around INR50,000-plus.

The BSE Sensex which is 644% growth, whereas the BSE Sensex from INR18,000 has gone to INR49,000 and INR50,000 and it is — it has grown by 167%. The gross loan assets at that time in 2011 was INR15,800 crores, which is today INR52,600 crores, a growth of — a cumulative growth of INR36,000 crores or in percentage terms INR232 crores. The revenue also has more than doubled from INR4,500 crores to INR10,500 crores and the profit after tax from INR892 crores to INR3,722 crores, again a growth of INR317 crores.

Our net worth, as I said earlier, has increased from INR2,900 crores to INR15,000 crores, a 421% increase. Dividend per share which was 4% at that time has now come to 20% — INR20 per share, which is a 400% growth, and the total dividend payout at that time was INR149 crores, which is today INR802 crores, which we paid two month — a month back. The total dividend we have paid to the shareholders in the last 11 years is INR3,544 crores, this we personally feel — I personally feel has been a reward, has been rewarding to the investors who have been with us even from the initial public offering at INR175.

The key financial highlights as I said, the consolidated AUM has increased by 24% year-on-year at INR58,218 [Phonetic] crores. The consolidated profit after tax is now at INR3,819 crores, which is a 21% year-on-year growth and the standalone AUM has grown by 26% year-on-year at INR52,600 crores. Standalone profit after tax, increased by 23% to INR3,722 crores. CRISIL and ICRA upgraded us from AA to AA + stable and dividends of 200% on face value of 10 involving a payout of INR820 crores.

The branch network which is 5,400 — 5,330 has grown to 5,451, the Group branch network, and the contribution from the gold loan business in the consolidated gross AUM has grown 27% to INR52,000 crores. The other — the home finance, the subsidiary has de-grown its book, but it is now on a growth path now, and this year we plan to do good disbursal in this year. Last year, our disbursals were very, very low and we were doing a consolidation collection at that time. Belstar Microfinance, the microfinance has grown its book to INR3,300 crores as against INR2,600 crores which is a year-on-year increase of 25% and this year, the loan portfolio — this quarter, has increased by INR414 crores.

The profit after — the profit after tax has certainly come down — has come down to INR47 crores from INR99 crores, mainly against the provisions, which had to be made, mainly due to the COVID impact. The Muthoot Insurance business, again a 100% subsidiary has generated good profit and it has generated a profit after tax of INR32 crores against INR11 crores in the previous year. The Sri Lankan subsidiary, which is gradually becoming like Muthoot Finance a gold loan company, which — initially when we entered the company, it had nil gold loan. In the last eight years, they have grown their gold loan book and today they are almost 50% of their book is gold loan, and we hope that we expect that it should also become just like Muthoot Finance, a 90% plus gold loan company.

This year, the — against the previous year tax after — profit after tax of INR7 crores, this year it has reached only INR5 crores, again the COVID impact etc., had its impact in Sri Lanka also. The Muthoot Money, which is vehicle finance arm of Muthoot Finance has also not grown its book last year. It has actually de-grown its book because the book has been running down. They are restarting the business from next month onwards. We are sure it will also go up. And it has generated a revenue of — revenue of INR70 crores and a profit after tax of INR4 crores as against INR3 crores in the previous year.

These are very new companies, only two years and three years old, we hope that this will come — this will turn around and come out of these issues next year. And today, our gold loan book, which was 88% last year, today constitute 90% of our book and the subsidiary constitute 10% versus 12% last year.

This year, the focus has been on growing the gold loan book at the cost of even de-growing the other book. So concluding the initial remarks, I would now throw open the floor to the investors who have been really supporting us all these years, all these times and we have definitely certainly, certainly value your support and we request you to continue to support us in days to come also. And now, the floor is open for questions.

Thank you.

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 Piran Engineer from Motilal Oswal. Please go ahead.

Piran Engineer — Motilal Oswal — Analyst

Yeah. Hi, thanks, and congratulations on a great set of numbers. I had two, three questions. Firstly, as of end December, our LTV was 67%, 68% and we had a 10% decline in gold prices in the fourth quarter. So is it fair to say that by end March, our portfolio LTV would have increased to 75%, and maybe breach that? And in some cases — in such cases what do we do? Do we ask the client to top up the portfolio or to top up the collateral? And if he doesn’t, then do we start re-possessing and auctioning? So that’s my first question. And there could be other ones after this.

George Alexander Muthoot — Managing Director

No, you can continue the question.

Piran Engineer — Motilal Oswal — Analyst

Okay. Sure. Sir my second question basically on Slide 32 where you talk about your customer base. Now if I add up the disbursement made to all the different categories of customers, it adds up to about INR11,000 crores, but your total disbursement this quarter was INR23,000 crores. So the balance INR12,000 crores is a rollover, is that how we read it?

And my third question is, you know, despite having AA + rating, our cost of funds is pretty high at north of 8%, and we are also maintaining a low share of CPs. So when do we really see our cost of funds coming down to the levels of other AAA rated players, other NBFCs? So that’s all from my end. Thanks.

George Alexander Muthoot — Managing Director

Okay. Thank you. And the LTV, if you look at the LTV from the today’s price, the LTV is 66%. So this keeps fluctuating in months. Some months, it goes up, it goes down. So we don’t get — we don’t panic when the LTV goes up or goes down, because these are all gold ornaments, these are all gold ornaments, we have sufficient margin headroom with elbow room with us, and we have not seen people abandoning the gold. We have been in this business and a listed Company for the last ten years, and listed after ten years. So we have not — we have not had any reason to panic. There’s nothing to panic there.

So we always give only maximum of 75% of the current LTV. That itself is good enough for us, and we have not had any issues because of that. So LTV it becomes 70%, 60%, 67%, because every day price changes. So we don’t — nobody needs to panic and we don’t call up customers and ask them to bring gold, etc., because we have sufficient margins with us and there are some invisible margins also like we give only ornaments, we don’t give gold bullion, etc.

And we regularly contact customers to pay their interest also. So those are the mitigants we have among other things. Because of that we have never had any problem with the issues. About the AA… [Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

Even if it crosses 75%, we don’t — in the interim, we don’t call the customer.

George Alexander Muthoot — Managing Director

We don’t look at it also, because we don’t need to look at that. We don’t — because today it will cross 75%, if hypothetically, and tomorrow it comes to 73%, then what happens? So we don’t — we don’t do anything like that. That’s not the business model.

The second point that — I would like to look at the slide 32 etc., AA+ plus rating, yes, incrementally our borrowing costs should come down because with this legacy loans are there that is why your loan cost — loan is high. As and when the legacy loans get off our books, get a little down from our books, the interest rates should come down. It’s not that the people are still charging us — the lenders are charging us more money, it is that it takes a little time for them to adopt to the Company to come to the — the whole book to come to a lower rate. So we are — I’m sure compared to our peers, our incremental borrowing cost are equal or if not lesser than others.

And about the Slide 32, I think I… [Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

So now, Piran, there are two points in this. The number of customers, which we have shown is the outstanding as on 31st March. There are several loans which have been disbursed during the quarter as you know, gold loans are very short term, customers would have closed before 31st March.

So… [Speech Overlap]

George Alexander Muthoot — Managing Director

Within the quarter.

Oommen K. Mammen — Chief Financial Officer

Within the quarter, intra-quarter, a lot of customers would have closed, so that is one point. So that is also a sizable number. The remaining, as you said, there could be rollovers. Rollovers could be happen because of switching of schemes by the customers. Suppose if we have a lower rate scheme in a particularly location, so the customers move from the higher rate schemes to the lower rate scheme. So that also contributes to the balance disbursements.

Piran Engineer — Motilal Oswal — Analyst

Got it, got it. If I may sir, squeeze in one more question. Now that the banks no longer have the 70% — 90% LTV arbitrage, how is competition shaping up in April and May?

Oommen K. Mammen — Chief Financial Officer

April and May is washout because many of the branches are not able to open properly. But I’m sure by 15th of June, things will start improving and people will start coming out and businesses will start reviving. Only when business starts picking up, the demand for loans will start. The demand for loans will start when business start picking up and people need to rebuild/restart their business or start new business.

Because the banks were giving 80% 90%. I don’t know how many banks would have given at that rate, it has never really affect — impacted our business. As you would have seen, we have grown much better than previous years in spite of this.

But surely if the banks have also gained some business, it is because the market has grown. The market has expanded. That’s what I should say. I mean, banks are also doing it. Market has expanded. We have not lost any business, neither have they lost any business. We have grown, the banks would have also grown. I’m not sure about their numbers. But we, from our side, we don’t see any threat of competition, etc.

Piran Engineer — Motilal Oswal — Analyst

Okay, got it. Thank you for answering my questions and wish you all the best.

Oommen K. Mammen — Chief Financial Officer

Thank you. Thank you.

Operator

Thank you. The next question is from the line of Digant Haria from GreenEdge Wealth. Please go ahead.

Digant Haria — GreenEdge Wealth Services — Analyst

Yes, sir. Sir, congratulations on great performance despite whatever challenges we keep on chasing from the economy and otherwise. Sir, my question was, mainly on the two new — one new product and service that we’ve launched. Like, if I look at financial year ’21, we started home delivery of gold loans in a few cities. So if you can just talk a little more about that, you know how has been the initial experience and eventually what is a larger plan, say over the next two, three years on this product. So that’s my first question.

And second question is, I saw some ads where we are giving large loans at a very, very competitive rate, maybe 10%, 11%. So like you know, is this product more aimed at competing with the customers who will look for banks as an alternative and what is our strategy on these lower rate loans? That’s two questions from my side.

George Alexander Muthoot — Managing Director

First of all, loan at home. Loan at home is a service which we are offering to our customers. It’s a paid service. So loan at home entails a cost for us and a cost for the customers also. So any customer who wants to avail this loan or facility, he phones us, he tells, he gives an appointment. Our branch staff go to their place, take the gold loan, check it, weight it, assess it and then bring the gold to our place and at the same time simultaneously release the gold to the customer.

There are some customers especially some large value customers who opt for this. But generally, what we have seen is 95% of the customers are more comfortable bringing their gold to the nearest branch, sitting with the branch and giving it to them. There is only a few people who sometimes want the service. If anybody wants this service, we are there to give it to them and it is definitely — a small charge is there for that.

Because generally people with more than INR2 lakhs, INR3 lakhs, is where it makes sense for them also to take this gold loan at this rate. So loan at home is a service which we offer. It is good. Our own people go there and take the — take the loan and give it back and if they want the delivery at their home also, same thing we can do there also. So that is the two things which we’ll do for the loan at home.

Regarding large loans, yes, occasionally we also have to come up with some low interest schemes to attract customers, we cannot advertise in the paper saying that we are charging 18%, 17% etc. So when we advertise, we have to advertise for lower rate. It is just a rate which you offer to big customers. Not that we have INR1 crore and INR2 crore large number of customers. There are very few customers. But then it gives a sense of, what should we say, we are also there with anybody else who is competing at low rates.

We are also able to compete at low rates. So, our average yield doesn’t come down because of that. A few customers might take it, but then certainly we need to offer — attract larger, bigger customers as well as the smaller customers, the smaller customers are our mainstay.

Digant Haria — GreenEdge Wealth Services — Analyst

Right sir. Sir, thank you for the answer. Sir, if I can squeeze in one more question. Sir, we have crossed the INR50,000 crore milestone on the gold loan book. So maybe next four, five years, somewhere maybe we’ll cross INR1 lakh crores also. So in that journey, what are the few risks and opportunities that you as a company, you as a promoter think for Muthoot Finance are? So your thoughts on this? Thank you so much.

George Alexander Muthoot — Managing Director

Digant, INR50,000 crores we crossed in December. In March we crossed — we reached INR52,000 crores, so that — but there is — I’m also — our Chairman always used to say we should aim for the INR1 lakh crore market. I think you must have heard or Chairman, that is why you are also repeating this INR1 lakh, [Speech Overlap].

He tells us, not to you, he tell us that we should — definitely we can reach it. We should be able to reach it. I’m sure going forward, we all would like to reach that. The challenges there wouldn’t be much we are, this is — operationally challenging is one thing and we are everyday try to what should we say, fine tune our operations to adjust to these things also. So, because today the average branch business is INR12 crores, around INR11 crores to INR12 crores.

So if we’re going you reach INR1 lakh crore means, we should have a INR25 crore in the branch. There are branches with INR25 crores. So we can technically — theoretically reach there. But then, we hope to do that. The challenges there, I don’t think as long as women is there, we don’t feel — we don’t feel any problem in the funding side, so that is not there — on the jovial side I said, we will not have funding issues.

But then, operationally, it is very challenging, that’s what I wanted to say here. But operationally challenging is something which we are every day trying to fine tune. Everything will increase, every issue will increase and we should be able to fine tune that going forward. As a calibrated growth every year, we should be able to reach there also.

Digant Haria — GreenEdge Wealth Services — Analyst

Right, sir. I genuinely hope, late Chairman’s vision and you and the team’s execution, we’ll be there sooner than later. Thank you and all the best to the team.

Operator

Thank you. The next question is from the line of Anand Bhavnani from White Oak Capital. Please go ahead.

Anand Bhavnani — White Oak Capital — Analyst

Thank you for the opportunity. First of all, congratulations [Phonetic] for the wonderful performance throughout the year. Sir, my question was about our credit rating. You must be having these discussions with rating agencies to talk about our robust performance during pandemic, once in a century pandemic even in the gold price fall of ’13, ’14 we had robust performance, so — and our gearing is very low. So, is there a scope for rating upgrade? I mean what is [Indecipherable] need to do to get AAA rating?

George Alexander Muthoot — Managing Director

Thank you. We always would like to get a higher rating. That is always in our mind. As they say, it goes only by steps and steps. The next step I think after FA plus should be AAA. So, we are there. Probably we will be constantly engaging with the rating agencies so that — and we will not rest till we get the AAA.

From our side, we definitely always feel that we are much better placed than many others who presently enjoy AAA. We are much better placed, but it’s only a little bit of convincing we need to give and the conviction which the rating agency also has to have probably every year of performance, every year, of stable and good performance will help them to decide on giving us a AAA rating.

And I’m sure, if we perform like this, well, it should not be sooner than later that we also get a AAA rating. There are — there are no issues with them, but it is only that they also think that their rating should be calibrated — should be given in steps and stages. So we have crossed the FA+ stage, so probably we’ll have to wait a little while for that. The little while can be six months, one year, two years. We also would like to come into the AAA league just like you. We would also like to come into the AAA league.

Anand Bhavnani — White Oak Capital — Analyst

Sure. So it’s on consideration — you keep talking and maybe if things work out in a 1, 1.5 year, you should be there. Is that the right expectation?

George Alexander Muthoot — Managing Director

Correct. Yes, sir. Every discussion we have with them, we remind them that we need to get the AAA — I personally remind them, every time, every discussion we have. We have sometimes discussion every quarter, every once in a quarter, once in a half year, we have a discussion with them. I always remind them that we should be given AAA.

Anand Bhavnani — White Oak Capital — Analyst

Got it. Sir, second question about this disbursement — inter-quarter disbursement, typically, what is the ratio? I mean, if we disburse let’s say 100 in a quarter, what percentage of it would be squared off intra-quarter? It’s at high as 60% or I mean, is it 25% [Phonetic] what’s the typical number?

George Alexander Muthoot — Managing Director

See, usually people who take a loan, I think the 10% of them close the loan in the same month itself. I think there is a number like that…[Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

Yeah. So I think in the presentation there is a slide on that. So I think it is Page 29 it is there, the details are there, how the loans are retired in the first six months. So generally if you look at for last five years, about 60% of the loans gets retired in the first six months.

George Alexander Muthoot — Managing Director

In the first three months also a good number gets retired…[Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

No, generally the thumb rule is in the first month itself about 10% gets liquidated, in the second month about 20%. So like that, first six months, the normal pattern is about 60%. Though the contractual tenor is 12 months.

George Alexander Muthoot — Managing Director

Of what we disbursed, not the outstanding sir, of what we disbursed.

Oommen K. Mammen — Chief Financial Officer

Yeah.

Anand Bhavnani — White Oak Capital — Analyst

Yes, sir. I got it. I got it. And sir, thirdly, you started diversifying into microfinance, CD and home finance and due to various reasons there was GST, then there was the elections, and so on and so forth, and then there was weak economy and now COVID. So all these products we probably haven’t scaled up to the extent that we start — when we started them.

Now, given your experience in these products of last three, four years and — what is your take? Like if assuming things gets normal and from here on there are no such hindrances, which of these products would you like to grow aggressively over next three, four years?

George Alexander Muthoot — Managing Director

So as far as microfinance is concerned, it is not related to Muthoot — the gold loan customers. So it is a separate vertical. And maybe we have a 70% investment there. That is a different class of customers. So that has its own growth business. The other 100% subsidiaries, which we have the — the vehicle finance and the home finance, these two are definitely the customers are — are potential customers of gold loan are potential customers of these vehicle finance, that is the two-wheeler, used car and the affordable homes. These are typically our own customers.

So we want to leverage on this. We want to see that the customer remains with Muthoot, that is the reason we started this. We are still — it is just that in the last two years there have been some issues with the pandemic, and also I don’t know about GST, but general economy, etc. These businesses are bound to come up better. The affordable housing is something which India definitely needs [Technical Issues] that there were some issues with builders and also the pandemic, which has actually affected the home finance. I’m sure both of that are getting sorted out. Once this is sorted out, there is very, very good potential for this and we will be starting — going much better — growing much better in those areas, this one also.

The same thing with vehicle finance. Today it is — there is an issue, the vehicles are not selling, pandemic is there, people are not going out, factory productions are — but it’s bound to change. It cannot remain forever. Probably it will take three months, six months, nine months, then we are ready for that. So these are two businesses, which we would like to grow. We have — we see potential and there is relationship about these business with our own gold loan customers. That is why we started there. It is a related business. That is why we started that. And after, maybe this year and next year, we should see it reviving and coming back to normal.

Operator

Thank you. The next question is from the line of Subrat Dwibedy from SBI Life Insurance Co. Please go ahead.

Subrat Dwibedy — SBI Life Insurance Co — Analyst

Hi, sir. And congratulations for a good set of numbers. So I have a couple of questions. First one is on Slide 31, where you are showing the margin of 50% on loans and that has been reducing consistently. Now, it is at 25%. And this does not include the accrued interest on the gold loan assets. So, at what stage this becomes a concern, and you would start auctioning aggressively?

And a related question to this is incrementally at what LTVs the disbursement be made?

George Alexander Muthoot — Managing Director

Okay, thank you. So I think the — the second question is — can be answered first. The incrementally, our new loans are given at 75% maximum 75% LTV, not that everybody takes 75%, some customers take only 60%, 65%, but the maximum we give is 75% of that day’s gold price. So that is fixed. We will not give more than 75% of that base price. So the margin, which we — which we are required to keep or which we feel safe is 25% that is always there.

So sometimes if the gold price goes up, then the — the general LTV as you said would be only 50%, then it goes to 60%, 65%. Today — at today’s price, the overall portfolio, the LTV is only 66%. If the price goes up, it will come down again. If the price comes down, it will go up, but then we are not — we don’t panic there because these are all gold ornaments only, these are our risk mitgants, these are household gold ornaments, which is used by the people. It is not that just because the price has fallen for a day, everybody will abandon their gold. That is not what we have seen in the last — last several decades. And in the last ten years, our figures are all reported public — at public because we became public.

So we have not had any issue because of that, all through, and we don’t expect anything like that now. So now the final thing is auctioning the gold. We can always give more time to the customer. And today, we as a policy, we are — we are not in favor of auctioning gold. We’ve tried to keep the auctioning to the least possible, the barest minimum which is required. So whenever customers come and ask for more time to the branch, we try to give — adjust the customer and give more time to the customer.

We have not lost any money because of that, but we have gained customer confidence and customers generally feel that we are more reasonable with them. And probably that is one of — one of the reasons since we are not aggressively auctioning the gold, one of the reasons customers prefer to come to us. Many of our competitors have almost a similar number of branches, but they have only a third of our business, that is because people generally feel that Muthoot, their gold is safe, that is what people generally want. My ornaments should be safe, and that is safe with Muthoot.

So even when we carry some NPA with us, probably today the NPA is low, 0.8% only the NPA, we can actually have that NPA zero and auction the gold, but we don’t want to do that. We don’t want to — we want to empathize with the customer and give a little more time. We can afford to have that NPA in our books, 0.8% NPA we’ll have in our books. We are sure that the customer will come and take it. If finally the customer doesn’t come and take it, that is when we go for auction.

This year our auctions have just very, very little. We’ve auctioned only INR170 crores of gold, on a book of INR52,000 crores, only INR170 crores. Last year it was about INR500 crores, previous to that it was INR1,000 crores. So actually we are now coming to the fact that we are giving more and more time to the customer, so that the least amounts are auctioned. So if you look at INR171,000 crores of auctions in the last full year, it is just 0.03% only. It is just nothing.

So if we give more — so people generally relate Muthoot Finance as a Company, which they feel their ornaments are not auctioned very quickly. It is kept and they get maximum time from us. Only very, very sparingly we use the auction method. We have never lost money because of that. We have only gained profit and we have gained customers.

Subrat Dwibedy — SBI Life Insurance Co — Analyst

Okay, sir. And one last thing on collection efficiency. So how is it shaping up now in April, May etc.

George Alexander Muthoot — Managing Director

In gold loan actually, there is no issue of a collection efficiency because collection efficiency has been very good in March. That is why our NPA is only 0.8%. In the other two, the home finance etc., the collection efficiency was 99% in March. Now it has come — in this month, it is just coming down slightly because of the lockdown.

I’m sure it will come back to the 99%. In Muthoot Money, it is 97% and in Muthoot home finance it is 99%. That was in March. April, it has come down a bit, but I’m sure when the branch starts functioning and people are able to go out, we will be able to collect the full amount. So, we don’t see any big issue there and also the portfolio there is very minimal.

Operator

Thank you. [Operator Instructions] The next question is from the line of Dhaval Gada from DSP Mutual Fund. Please go ahead.

Dhaval Gada — DSP Mutual Fund — Analyst

So, yeah, hi, sir. Two questions from my side. First is related to the MFI business. What is the current par zero on the portfolio? And if you could talk a little bit around collections in April and May, how has it trended in the MFI portfolio?

And the second question is related to, you know if you look at per these — holding per gram of customers, so about 33 grams is what customer owns, on average, based on disclosure and this number has been broadly steady or coming down in the last two, two-and-a-half years. So, is it a metric that you look for and is there a driver to increase or how should one think about it?

Because basically the reason I ask this question is, when I look at tonnage growth pre-pandemic as well, it used to be 5% to 6% for the industry. Even now, while we’ve had a pandemic year, but tonnage growth seems to be big challenge for the industry. So how should one think about volume growth for the industry? Yeah, those are the two questions.

George Alexander Muthoot — Managing Director

So, I think we have been talking about this tonnage growth for the last two, three quarters. What happens is, when the gold price is high, I cannot insist on a customer to give me gold or gold at equal to the gold price which was — today the gold price is INR4,500, the tonnage at the time of INR2500 would have — he should have had to bring 20 grams. Today for the same amount, he needs to bring only 10 gram. How can you ask him to give 20 gram? So he will give only the necessary gold.

So, when the gold price goes up necessarily, the gold which he needs to give to us also comes down. And please understand that just keeping more gold with us, doesn’t give us any income. Our income is derived only from the loan he takes. For the amount of loan, he gives adequate gold. So the adequate gold today because of the gold prices is high is lesser than what it was earlier, that is why the tonnage is there. If you look at the same gram rate probably two years back, the price would have been only INR2,500 or INR3,000. Today it is INR4,500 so customers will bring in only the required amount of gold. That is why the tonnage difference is there.

So we did not see anything into that tonnage business. And the gold loan, our company derives income only from the loans which we give, the amount of loans as the interest is on the loans, not on the tonnage. So that is growing. We are quite happy. We get the correct — the LTV based gold is there with us, we should be happy. So that the — and the about this PAR of microfinance, I think our Chief General Manager can give us an update.

K.R. Bijimon — Chief General Manager

The PAR 30 days was — on March was 2%. So for 30 days PAR was…

George Alexander Muthoot — Managing Director

It’s very low [Speech Overlap] compare to industry, we are better than the industry standard, microfinance, that’s what I know.

Dhaval Gada — DSP Mutual Fund — Analyst

Sir the slide 68 has the Stage 3, I was looking for the overall portfolio overdue outstanding right now and the collection trends.

K.R. Bijimon — Chief General Manager

Overall portfolio outstanding is INR3,300 crores.

Dhaval Gada — DSP Mutual Fund — Analyst

Overdue sir, overdue?

George Alexander Muthoot — Managing Director

We’ll come back to you…

Dhaval Gada — DSP Mutual Fund — Analyst

I can take it with Oommen sir. No problem.

Oommen K. Mammen — Chief Financial Officer

Stage 3 number is INR78 crores as of March.

Dhaval Gada — DSP Mutual Fund — Analyst

Sir. I’ll take it offline. No worries. Thank you and all the best.

George Alexander Muthoot — Managing Director

It is 2%.

K.R. Bijimon — Chief General Manager

2.2%.

Oommen K. Mammen — Chief Financial Officer

The net NPA is only 0.5% because of the provisioning, which has been…

K.R. Bijimon — Chief General Manager

Exactly. INR80 crores additional provision has been created in this year.

Dhaval Gada — DSP Mutual Fund — Analyst

Okay.

Operator

Thank you. The next question is from the line of Prashant Sridhar from SBI Mutual Fund. Please go ahead.

Prashant Sridhar — SBI Mutual Fund — Analyst

Yeah, thank you sir. Most of my questions are answered. Just two or three of them, so one, even due to some price change if the LTV crosses 75 that is in breach of RBI regulation, right. So we would have to do something to control that. If you could just talk about that.

And number two, if you could just give us the restructuring numbers you would have done in the non-gold loan business and how the collections trend over there.

And number three, just a bookkeeping question. There is an item net gain on fair value changes in Muthoot standalone. What would that be?

George Alexander Muthoot — Managing Director

Okay. With this LTV, I think I just answered it earlier also. When we give the loan, maximum is 75%. If because of the price change one — theoretically, if it goes above 75%, we don’t need to — we don’t need to contact the customer and ask anything. That is not our practice. Our practice doesn’t involve conducting the customer at that time, because we still have good margins with us. The margins is still there with us. So we have not faced any issue because of that. So we don’t ask them for additional collateral etc. So [Speech Overlap] regulations also doesn’t warrant us to do that. That is number one.

Okay. Then second is even at this time, we always collect regularly, the interest of the customer. So we have an app, which is called click to call. Click to call app is there with all this stuff, they can call and talk to the customer, just by a click of a button. And that is actually keeping the customers in contact, and our staff also are able to easily contact them, even during this pandemic time.

Even during this pandemic time, we were able to contact all the customers, with this new app developed by us, which we have named it as click to call. It is an app which enables the staff to connect to the customer immediately at the press of — at the click of a button. So to answer your question, 75% even if at some time it breaches, we don’t go after the customer. That is number one.

Number two was about…

Oommen K. Mammen — Chief Financial Officer

The net gain on fair value changes, I think you were asking about the income side. Right?

Prashant Sridhar — SBI Mutual Fund — Analyst

Yes, yes.

Oommen K. Mammen — Chief Financial Officer

So that is mostly investment — the returns from investments in liquid funds etc.

Prashant Sridhar — SBI Mutual Fund — Analyst

Okay. Okay. Sure. Nothing to do with the hedging, that’s what I wanted to check.

George Alexander Muthoot — Managing Director

So that hedging comes under the other comprehensive income. That is after profit — PAT. So those numbers are primarily because of the exchange fluctuations happening on the reporting date. Now if you look at last one year, what has happened is the exchange rate has gone up and subsequently, it has come down.

As on the March ’21. So those fluctuations are captured, but at the end of the day, all these foreign exchange borrowings have been fully hedged. What is going to hit the P&L is only the actual –the hedge cost. All the mark-to-market impact will remain in the OCI.

Prashant Sridhar — SBI Mutual Fund — Analyst

Understood, understood. Just on the restructuring in the non-gold loan businesses. [Speech Overlap] Just one clarification. So…

Oommen K. Mammen — Chief Financial Officer

Yeah. Please go ahead.

Prashant Sridhar — SBI Mutual Fund — Analyst

So, just one clarification, sir, at what LTV would you start to take action, is just one follow-up here.

Oommen K. Mammen — Chief Financial Officer

No, no, it is based on the LTV. It is not an excel formula which runs this business, I think… [Speech Overlap]

George Alexander Muthoot — Managing Director

No. It is actually something I was telling the earlier investor also, that we have a good relationship with the customer at the branch. So even if the gold goes into the NPA list, or if it crosses NPA, we persuade the customer to pay interest, sometimes the customers come and ask us please give me one month time more, two months time more. If the branch feels that it is a genuine customer, genuine requirement, we give them more time, at the cost of keeping it as an NPA in our books, hoping that he will come and take it.

So even if it fails after that only we go for auction. So auctions is our very, very last resort, and we try to keep our auctions to the minimum. See, our auction were about INR1,000 crores, three years back, last year it was INR500 crores, this year it is only INR171 crores. We are trying to keep the auctions to the minimum possible and give more empathy with the customer so that we don’t auction his gold. If you auction his gold, we lose the customer and his relatives. There will be many customers just keep coming to Muthoot, because they feel we are most reasonable in this respect.

Prashant Sridhar — SBI Mutual Fund — Analyst

So the restructured loan account is about INR6 crores? That is in non-gold portfolio.

George Alexander Muthoot — Managing Director

INR6 crores. INR6 crores is the restructured portfolio.

Oommen K. Mammen — Chief Financial Officer

Across everything. HFC, MFI, vehicle finance, all put together.

George Alexander Muthoot — Managing Director

Yes.

Prashant Sridhar — SBI Mutual Fund — Analyst

So I’m talking about the parent company.

George Alexander Muthoot — Managing Director

[Speech Overlap] Very limited.

Oommen K. Mammen — Chief Financial Officer

Other businesses, subsidiaries which is very limited.

George Alexander Muthoot — Managing Director

Very limited, smaller than this.

Prashant Sridhar — SBI Mutual Fund — Analyst

Okay. Okay. Sure. Thank you so much.

Operator

Thank you. [Operator Instructions]. The next question is from the line of Manan Tijoriwala from ICICI Prudential Asset Management. Please go ahead.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Hi, sir. Good morning or good evening. Sir, just wanted to understand on the opex to year end, we see a dip there. So where do you see it on a stable business, and what are the incremental efforts taken to bring it down this year?

George Alexander Muthoot — Managing Director

No. That is because the — the assets and the management has grown 27%, and the number of branches are still almost maybe only 80 or 90 branches have gone up. So, the per branch business has gone up from 8 crores or 9 crores to 12 crores, that is one of the main reasons why it is — the economies of scale what we are seeing. But that is for this year, probably in the next two quarters, if it inject [Phonetic] a little more, but then it may not remain this low, because this time it was quite low, mainly because the assets under management, the denominator went up quickly.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

Fair enough. Sir, one question on the gold auction. So I understand you’ve been keeping it on the lower side. Could you shed some light on what sort of profit or losses do you see on account of auctioning the gold?

George Alexander Muthoot — Managing Director

There is no profit or loss sir. If we have an excess, we have to refund to the customer. So there is no profit and loss there. Sometimes we lose some part of our interest, very little part of the interest, that’s all. So the loss is always on our side only, if there is a gain, if the auctioning is more, we have to refund it to the customer. We correctly refund it to the customers.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

But sir, on the downside, if you have to look at how much will be the downside in case you lose money on a transaction which is auctioned?

George Alexander Muthoot — Managing Director

We lose only part — see instead of collecting 22%, 23%, we may end up with 20% in some case. That’s all. It’s [Indecipherable] amount, and that’s also only on the interest sir, principal we’ve never lost INR1 till now.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

That’s what I was looking for. Sir, just one additional question, so how much will be accrued interest on the gold loans outstanding at the end of the year?

Oommen K. Mammen — Chief Financial Officer

INR2,145 crores.

George Alexander Muthoot — Managing Director

INR2,145 crores.

Manan Tijoriwala — ICICI Prudential Asset Management — Analyst

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

Operator

Thank you. The next question is from the line of Aswin Balasubramanian from HSBC Asset Management. Please go ahead.

Aswin Balasubramanian — HSBC Asset Management — Analyst

Hello? Hi. My question is with regard to the chart which you’ve given on the disbursements and collections quarter-wise. So I mean, if I look at– let’s say, the collection, monthly collection of this quarter, is at about INR7,000 crores, versus a couple of quarters back, it was about INR15,000-odd crores. So just trying to understand, I mean, is this a function of the rollover being lesser during the quarter? And I mean again is that connected to gold price falling during the quarter? And like how would the rollover proportion have changed, let’s say, over the last six months.

George Alexander Muthoot — Managing Director

We will talk about this in Slide 28 — in slide 28, in Q1, it was mostly it was a lockdown period. So people were not able to come to the office, we were not able to — both the advances and the releases were low, so what was — what we lost in Q1, we gained in Q2. That is why you see the difference. So in Q3 and Q4, it will be coming back to normal.

Aswin Balasubramanian — HSBC Asset Management — Analyst

Okay. But even if I compare this to let’s say the previous year also, or Q4 or Q3…

George Alexander Muthoot — Managing Director

Every year..[Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

So this is — second quarter event is specific due to COVID. In the first quarter, there was a severe lockdown and lockdown restrictions. So the disbursements were low. But we could make up in the second quarter as we said in the — during that time in the con-call, analyst meetings, etc, we went aggressive in terms of top-up loans and lot of customers benefited out of it. Even at that point of time, the average LTV was quite low. So a lot of customers took the benefit of it in taking top-up loan. So that’s why the existing customer loans would have closed and they would have booked fresh, that is the reason why there is a higher churning which has happened in the second quarter.

Aswin Balasubramanian — HSBC Asset Management — Analyst

Right. And one additional question, in terms of, let’s say, what will be the average sort of tenor of the loan on the books? I mean the sort of remaining tenors, the average residual tenor and how would that have changed like let’s say between one quarter, two quarters back to Q4 or it is more or less constant?

Oommen K. Mammen — Chief Financial Officer

I think, 95% of the loans are less than 12 months.

Aswin Balasubramanian — HSBC Asset Management — Analyst

At the time of disbursement, you’re saying, but I’m saying like…[Speech Overlap]

Oommen K. Mammen — Chief Financial Officer

No. As on the reporting date, 95% of the loans are less than 12 months duration.

Aswin Balasubramanian — HSBC Asset Management — Analyst

Okay. Okay.

Oommen K. Mammen — Chief Financial Officer

About 5% of the loans are overdue. This includes NPAs also.

Aswin Balasubramanian — HSBC Asset Management — Analyst

And how much would be like — let’s say more than six months and less than six months?

Oommen K. Mammen — Chief Financial Officer

I don’t have the breakup readily available, but most of the loans will be less than six months.

Aswin Balasubramanian — HSBC Asset Management — Analyst

Okay. Thank you.

Oommen K. Mammen — Chief Financial Officer

Because if you read it together with the other chart in terms of Slide 29, you can figure out how the repayment pattern happens. More or less, it is, that is the pattern we have seen in the past. So most of the loans gets revolved in the first six months.

Operator

Thank you. The next question is from the line of Amit Ganatra from HDFC Mutual Fund. Please go ahead.

Amit Ganatra — HDFC Mutual Fund — Analyst

Hello?

George Alexander Muthoot — Managing Director

Hi, Amit. Please ask.

Amit Ganatra — HDFC Mutual Fund — Analyst

Yeah. I’m referring to Slide number 13. The slide on dividend payout. Now in 2015, you know, your ROEs are lower than FY’21. Your capital adequacy today is much higher. Isn’t there a case for increasing the dividend payout ratios?

George Alexander Muthoot — Managing Director

Yeah. I think something we’ll have to take a decision, the Board has to take a decision on that. [Indecipherable] thought about such things.

Amit Ganatra — HDFC Mutual Fund — Analyst

So that was one. Because you know, you will not have a year like FY’21 hopefully in future, right? So, and in this year if your capital adequacy has improved and the kind of ROEs that you reported, that will just help the business. So please take this as a feedback.

Oommen K. Mammen — Chief Financial Officer

I think if you see slide 48, we are generating ROE of 27%, 28%, which is an externally [Technical Issues] we have a very in spite of the higher capital.

Amit Ganatra — HDFC Mutual Fund — Analyst

Correct. So that’s what, so that in fact [Indecipherable] of the business, capital adequacy is so high despite that the ROEs are — I mean are so strong. So there is — there is a case for increasing the dividend payout. That was — that was the feedback. The second is that see, last year, now this year, you had given some growth guidance and you have exceeded that guidance quite strongly. Have you any — do you want to give any growth guidance for the upcoming year?

George Alexander Muthoot — Managing Director

We have been giving a guidance of 15% every year for the last several years. We have — next year also we would like to give that guidance as 15% only. Probably we should do better, but anyways, we didn’t want — we wanted to give only a very conservative guidance. We have given the guidance of 15% for last several years, previous to previous year, we grew by 17%, previous year we grew by 19%, and last year, previous to that, we grew by 22% and this year we grew by 26%.

So probably on — this year also we may do better, but I didn’t — we didn’t want to give a — what should I say, too optimistic guidance. We wanted to give a conservative guidance. That’s why we have been telling that we will growing 15% year-on-year, minimum.

Amit Ganatra — HDFC Mutual Fund — Analyst

Okay. Thank you. I’m done. Thank you.

Operator

Thank you. The next question is from the line of Alpesh from Motilal Oswal. Please go ahead.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Yeah. Hi.

George Alexander Muthoot — Managing Director

Hi.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Hello. Hi, congratulations, sir. First question is on your slide number 31 wherein the active customers and the number of loan accounts are given right, if I see the trend 60% of your overall customer base is normally active, so any specific steps that you are taking in order to increase this share of active customers on the pool of your overall customer?

Secondly, whether the new overall customer base on the active customer base is only going back 5%, right. So, and then we are talking about 15% AUM growth, that means, we are largely banking on the — a 10% [Phonetic] kind of increase into the gold prices for that kind of a growth, if we are moving with 75% kind of LTV. So what is the strategy at play here?

And the last question would be just a data point, what percentage of your customers have got more than INR1 lakh as the ticket size in terms of the AUM and the number of customers? Thank you.

George Alexander Muthoot — Managing Director

So I think you are looking at the number of customers. These are the number of active customers. Our customer base is much more. Because more than 2 crores customer base we have. Some customers take — pledge a loan, take it back in one month and they come — may come back after three months, six months, eight months, nine months. So our customer base is three to four times the active customers. So active customers… [Speech Overlap]

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

I’m sorry to interrupt, sir. So how do I read this? Number of loan accounts are also the active loan accounts or those are the…[Speech Overlap]

George Alexander Muthoot — Managing Director

Yeah, it is active loan account.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Okay.

George Alexander Muthoot — Managing Director

It is active loan account. The customer base is much fair, so some customers who have been transact — we have a few systems of calling up customers, we call it win back customers, so we call them back and we tell them about these things and they come back to us, because they have banked with or done business with Muthoot earlier. So the churn is very high. So people keep it after one month, two months, three months, they take it back, then they go back, they may come back later probably two months, three months, six months.

So our customer base is very high, the active customers, active loan accounts in the books is what you see there.

Oommen K. Mammen — Chief Financial Officer

Active customer means… [Speech Overlap]

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

One customer we will have 1.6x as the loan account, is that the way to gauge this?

George Alexander Muthoot — Managing Director

Exactly.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

And what is the strategy to increase this active customer base, so because it’s growth is hardly [Indecipherable] on every years and we are not growing [Indecipherable] aggressively, so how are we — because our growth would largely be dependent upon the gold prices. So how are we planning to address this issue?

George Alexander Muthoot — Managing Director

So we have plans of that. We have very many marketing and sales techniques with us. And we have a good marketing team. We have a good research team also. We utilize all those things to get new and new customers. Finally, our AUM is also growing, and we have been doing that even in spite of when the gold price fluctuations were there, still our AUM has been growing. So when people need money, they will come to Muthoot.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Okay. And lastly, the data point though, more than INR1 lakh as ticket sales a percentage of AUM and the number of customers?

George Alexander Muthoot — Managing Director

So that will be about 50%.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

That is that number of customers or the AUM?

George Alexander Muthoot — Managing Director

That is on the AUM.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

And what would be as a percentage of number of customers?

George Alexander Muthoot — Managing Director

Number of customers, I don’t have that data.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

But safe to assume around 20%? Or that… [Speech Overlap]

George Alexander Muthoot — Managing Director

Today our average ticket size is INR60,000. Average ticket size today is INR61,000. So… [Speech Overlap]

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Only problem with that is just averages so that — I’m just looking for the specific data…[Speech Overlap]

George Alexander Muthoot — Managing Director

So that only means that we have sufficient number of more than 1 lakh customers also. 1 lakh is not a big amount today.

Alpesh Mehta — Motilal Oswal Financial Services Ltd — Analyst

Okay. Great. Got it. Thank you so much, sir. And all the best.

Operator

Thank you. The next question is from the line of Vikas Kasturi from Focus Capital. Please go ahead.

Vikas Kasturi — Focus Capital — Analyst

Hello, sir. Sir, I had a couple of questions regarding your — so say for the next ten years, sir, so what would be your sort of a plan for growing the business? Would it be increase of newer products related to gold loan, newer branches and some sort of some light on that, sir.

And second question would be, sir, how are you grooming the next generation of the Muthoot family in the business? Thank you, sir.

George Alexander Muthoot — Managing Director

Thank you. Actually on a lighter side, we’re actually thinking of tomorrow. Tomorrow, are we able to open the office, because of COVID. That is the lighter side as — tomorrow is there a lockdown, is there a lockdown in my area, etc. That’s on a lighter side. On a serious side, yes, we are always thinking day in and day out — day in, day out on how to grow the business. Not only one year, two years, ten years, we are always thinking about it, strategizing it, etc. So I don’t think I can explain all those things there. So we are definitely on top of it. We are aware of it. We want to grow the businesses.

Somebody — Digant was saying earlier, that we should reach INR1 lakh crore. Yes, that is a dream for us also. So we should — we should look at that. The second — the next generation, I think they are starting to get into the Company. One of the Chairman’s son has already become the Deputy Managing Director. He is based in North India, Delhi. He has been there for the last 20 years. So they are looking after the North Indian business. The other boys are also gradually coming into the business. So probably there is a — we have some plans for them also to enter into the next generation also coming into the business. That is only the generation.

The other senior employees are also being groomed to take up more and more responsibilities in the Company and the newer verticals, etc, we are also having newer people coming in to take-up senior positions in newer verticals. In the existing verticals, the senior people who have been with us are continuing to take up more and more additional responsibilities.

So succession in the family side and the non-family side both are on track.

Vikas Kasturi — Focus Capital — Analyst

All right. Thank you, sir.

Operator

Thank you. The next question is from the line of Vikram Subramanian from Spark Capital. Please go ahead.

Vikram Subramanian — Spark Capital Advisors — Analyst

Hi, sir. First of all, my deepest condolences on your loss, both personally and to the entire Company. So my question was mostly been answered, just a clarification, so again on the LTV, just to clarify, if the — the falling gold price environment had continued into the current quarter as well, that is 1Q, am I right in understanding that at the branch level, so the new customers we would have still offered incrementally 75% LTV, there wouldn’t have been any change in that, we won’t have reduced our LTV — the LTV that is offered to the new customers. Am I right in understanding that?

Oommen K. Mammen — Chief Financial Officer

So, no, the LTV is set every day, based on the gold price as on the previous day, as per the RBI working. So whatever is the maximum possible subject to internal policies, we give the loans to customers. So sometimes it can go up to 75%, sometimes maybe because of the fluctuations in the gold price, we don’t permit maximum up to 75%.

So that is a general rule.

Vikram Subramanian — Spark Capital Advisors — Analyst

Okay. Okay, got it. And in the presentation, you have mentioned about the number of new customers that have been on-boarded. So that’s coming close to about 7% — fresh loans to new customers are coming to about 7%. Is — could you please give the number and the trend of how many customers have either closed accounts or have gone back from active to inactive?

George Alexander Muthoot — Managing Director

See, there is no number, we expect that our total customers who have had accounts with us in the last four years should be in the range of 2 crores. So today, actively 50,000 or 50 lakhs of them have — are having a loan today, they may come back after one month, two months, three months, six months, they may come back at any point of time. They are our customers. It is only when they need a loan they come back.

This is — actually, we should not compare this to the home loan or a vehicle loan etc. This is a very quick loan. There is no entry load, there is an exit load. And whenever customers get the money, they would like to close the loan and go off. So because they pay interest only on the actual number of days. So whenever they have money they close it and whenever they need money they quickly come to us.

So these are our active customers. So what you see there is new customers, which is an addition to the hypothetical figure of 2 crores that is being added newer and newer customers. So some customers after two years or three years, they may not even come back, but we wouldn’t know that they’re not going to come back, but they are still our customers, they are still our customers. Probably after three, four years, probably, would have dead and gone or may be changed place etc. But we still have a very big customer base with us. The active customers who are having a loan today is what you’re seeing there.

Vikram Subramanian — Spark Capital Advisors — Analyst

Got it Sir. So, just to understand that from a fundamental trends perspective. I got what you were saying, but so — along those same lines, once a peak or the first wave got over and things started opening up by fourth quarter, that is Jan, not Feb or March when things started opening up more and more. I’m just trying to ask was there an attrition in customers? Where we’re seeing an increase in attrition in customer as normalcy started seeping into the economy?

George Alexander Muthoot — Managing Director

So, again, there is no of a customer, customer doesn’t — he takes loan and goes for — so it is — we can’t call it attrition. He has crossed the loan, he has taken the ornaments and gone home. He will come back after one month or two months.

Oommen K. Mammen — Chief Financial Officer

Third quarter we had added 3.88 lakhs. In the fourth quarter, we have added 3.61 new customers, so that is a regular phenomenon. We cannot expect the same customer to come again and again, probably he might come after one or after six months. Our ability should be to deliver the service to whoever comes in. We cannot force any customer to take a loan, right. So our ability to bring more and more new customers, so that there is a ready pipeline of people wanting to take a loan.

Operator

Thank you. The next question is from the line of Sayantan Bhowmick from PineBridge Investments. Please go ahead.

Sayantan Bhowmick — PineBridge Investments — Analyst

Thank you, sir, for this opportunity. I just had one question. Just wanted to get a sense of the current quarter and if I had to compare it with first quarter of FY’21. If you can give some color as to what is the current situation on the ground and what are your thoughts on the current quarter. That’s the first one.

And second is more of a data housekeeping, if you could just give the total provision that you hold in the standalone entity, that’s including standard specific and — basically the provision that we hold?

George Alexander Muthoot — Managing Director

Thank you. I think this year on — from ground from what we are hearing from our branches and managers, staffs etc., almost the same as last year, but small difference which you have seen is, last year the first lockdown was absolute lockdown. This time it is not that. This time it’s just been left mainly to the state. So some of them given, what should we say, localized lockdowns.

So some places, it is fully lockdown. So that is one reason. But then this time, it is extending a little more I think so, because I see this time more and more deaths happening. That’s what personally I see. Last time, the number of deaths were not this much. This time I don’t know, number of deaths are high.

But then as a — from the business side, I think it is almost the same. So, last year also — last year, it started in end of March. This year, it started in, the second wave started end of April. So there is only one month difference. So this quarter will be a difficult quarter. It will be a difficult quarter because it is not opening up. Probably by 15th of June only, it is going to get opened. So this quarter we should see a very slow growth or maybe steady state of affairs.

And the next quarter I’m sure when business starts reopening, things will be much better and people will start restarting their business, they need quicker loans and Muthoot will be there or others will be there with gold loans to offer customers to restart their business and also for expanding their business etc. So we should see better growth in the next three, four months. Surely we should see that. Your next question was about.

Oommen K. Mammen — Chief Financial Officer

Sale provision is INR625 crores. Apart from that we are keeping some extra provisions of about INR295 crores that we have kept as an excess provision in the balance sheet. So totally, we have around INR920 crores of provisions.

George Alexander Muthoot — Managing Director

Now that you have asked about provisions, there is actually no need for any provisions in gold loan company because we never have a NPA loss. We never had an NPA loss. We don’t technically we really — practically, we don’t need any provisions. So, actually that is also a reserve for us. It’s the net worth for us, actually. So that’s on the — what should you say not a technical side, but it is actually — we don’t need any provisions. None of these things translate into a loan loss because of this NPA etc. Just keep it there. So part of the network, you can say.

Operator

Thank you. The next question is from the line of Susmit Patodia from Motilal Oswal Asset Management. Please go ahead.

Susmit Patodia — Motilal Oswal Asset Management — Analyst

Hi, good evening, sir. Sir my question is on excess liquidity and what is the thinking now around that. You have been through one of the toughest years and it was not as bad as we had thought, as anybody has thought, for that matter. So I was just wondering what is the excess liquidity now and what is the thinking going ahead?

Operator

Sorry to interrupt Mr. Patodia. Your audio is not clear, sir.

George Alexander Muthoot — Managing Director

Anyway, we heard it sir. We heard it madam, no issue.

Oommen K. Mammen — Chief Financial Officer

See, like we explained in the last, I think last four quarters we have answered this. In today’s environment, we need to keep extra liquidity. One there is an uncertainty. Second, RBI also has brought in the LCR requirement. So to meet that also we need to keep additional liquidity. Third point, like last year, we could grow by 26%, 27% because we were able to raise resources in advance. They were prepared to meet the demand, additional demand in a very short period of time. So these are the three reasons why we should keep an extra liquidity. Of course, there is a negative carry, but we are also now raising resources through commercial paper, etc. at a very low rate. So net-net, I don’t think the negative carry is not much.

Susmit Patodia — Motilal Oswal Asset Management — Analyst

So how much would be the excess liquidity now Mr. Oommen?

Oommen K. Mammen — Chief Financial Officer

Yeah, as on the reporting date. I think it’s around INR7,000-odd crores.

Susmit Patodia — Motilal Oswal Asset Management — Analyst

So, you will keep that proportion of — around that number until things become normal. Is that understanding, correct?

George Alexander Muthoot — Managing Director

Not that there is no hard and fast rule that we should keep INR7,000 crores or INR8,000 crores, but then [Speech Overlap] we will have good liquidity because, even if just a small negative carry is there, I think we can — it’s better to do that.

Susmit Patodia — Motilal Oswal Asset Management — Analyst

Okay, thank you sir. All the best. Thank you.

Operator

Thank you. The next question is from the line of Dipanjan Ghosh from Kotak. Please go ahead.

Dipanjan Ghosh — Kotak Securities — Analyst

Good evening, sir. Just two questions from my side. One is — do you have any plans to infuse capital in the subsidiaries. Sir second is, what is the plans for branch additions incrementally over the next few years?

Oommen K. Mammen — Chief Financial Officer

So one question earlier was that we are having excess capital, so don’t need any additional capital, one. For growth requirements, we already have capital and we are also internally generating additional capital. In terms of the branch addition, generally we would like to have about 100 or 150 new branches, but because of lockdowns, etc. there are certain challenges.

But I don’t think — our focus is not on the branch additions for driving growth. Our focus is on existing branches to bring in more customers and availing services from our branches. So that is the focal point for growth in business than new branches because 100 or 150 branches, on a 4,500 4,600 branches is not going to be material.

Dipanjan Ghosh — Kotak Securities — Analyst

Okay, Just one data housekeeping question. You mentioned the number of INR170 crores of auctions for FY’21, how much of that in the fourth quarter?

Oommen K. Mammen — Chief Financial Officer

So, last year we auction INR171 crores and out of that.

George Alexander Muthoot — Managing Director

A good part of it was in the third and fourth quarter, because first quarter, it is all lockdown. Second quarter it is lockdown.

Oommen K. Mammen — Chief Financial Officer

And generally we give good time to the customer like MD sir mentioned earlier. So INR150 crores we auctioned was pertaining to 2006 loans which were originated in 2016, 2017, 2018 etc.

George Alexander Muthoot — Managing Director

Very old loans.

Oommen K. Mammen — Chief Financial Officer

Very old loans. So we are giving adequate time. Of course our control is on the collateral quality that’s all.

Dipanjan Ghosh — Kotak Securities — Analyst

Sure thank you and all the best.

Operator

Thank you. The next question is from the line of Sanket Chheda from Batlivala and Karani Securities, please go ahead. Mr. Sanket Chheda your line is unmuted. Please go ahead with your questions.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Hello, am I audible?

George Alexander Muthoot — Managing Director

Yes, go ahead Sanket.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Yes sir. Congrats on very good set of numbers. My question was, particularly on the funding mix. Now that we have received a rating upgrade, where do you see the shares going up in terms of listed entities or — that definitely will go up, but where the share would come down either bank borrowings or do you see ECB share coming down going ahead?

Oommen K. Mammen — Chief Financial Officer

Yeah. So, today, we have a good decent diversified funding mix. I think we will try to raise all sorts of funding banks NCDs, retail NCDs. In terms of external commercial borrowing, rates plays an important role, but again it is a very, very long-term money. So, we have not taken any call on that. So depending upon the growth and funding requirements we’ll take a call — a decision on that.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Okay. And sir, on this tonnage growth, if I understood correctly, by the end of Q4, we had reached an LTV of 75% on the book which has now come down to 65% because of the gold price, right. Is that correct. And that’s why the tonnage growth was lower than the AUM growth?

Oommen K. Mammen — Chief Financial Officer

So if you look at — the gold price has fallen to about INR4,000 towards the end of March but subsequently the gold price has recovered. I think now it’s around INR4,500 or INR4,600. So when we have drawn up the reports, we have considered INR4,000 as the gold price that’s why the LTV is 75%.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Okay. And sir, last one, again, this question was asked that whether we maintain our 15% AUM growth guidance going ahead? Till last quarter we were confident about 15% plus, but this quarter marks a remarkable performance wherein the gold prices were down 10% to 12% in the quarter, still we managed to grow 5%. So we would still refrain from guiding anything more than 15,000 going ahead?

George Alexander Muthoot — Managing Director

It is just that we would like to be on a consolidated guidance, that’s all; nothing more than that. We don’t see anything more than that, just giving a conservative guidance of 15%. Probably we would like to tell 15% and achieve more, rather than say 20%, 25% and achieve lesser.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sure sir. And lastly, the auction in Q4 was how much? INR170 crore was for the full year. But in Q4, it was how much?

George Alexander Muthoot — Managing Director

I think majority was in quarter four only because that was the time when everything was open.

Sanket Chheda — Batlivala & Karani Securities India Pvt. Ltd. — Analyst

Sure sir. That’s all from my side and congrats again on a very good set of numbers.

Operator

Thank you. Due to time constraints, we’ll be taking the last question for today which is from the line of Vikash Agarwalla from Bank of America. Please go ahead.

Vikash Agarwalla — Bank of America — Analyst

Thank you. Congratulations sir, for great set of numbers. Just couple of question. Most of my questions have been answered, but a couple of questions, would love to hear your thoughts. One is on the disbursement side, can you give us some sense of what was the disbursement trend in the month of April and May compared to the disbursement trend we have seen in the last couple of quarters? So that’s one.

And the second question is on the borrowing side. Can you also give us some idea on what was the incremental borrowing cost? Meaning, the cost of incremental borrowing in the last quarter, which will give us an idea of the current cost excluding the legacy loans.

George Alexander Muthoot — Managing Director

So, the April and May have been lockdown here and there. Most of the places it’s lockdown. Business is not, we are not able to open the branch, customers are not able to come. So this quarter, the business will be much, much lesser compared to last year where we — April and May, it will be almost same I think. Last year April and May also was the same. We were in the same situation.

Probably last year it was March and April, this year is going to be April and May. I think that’s going to be — but then I’m — we are sure all the demand, which is — all the business, which is not able to come to the branch because of lockdown in April and May will come in June, July, August. So that’s a first part. Second part incremental I think so, Oommen will to tell you, incremental…

Oommen K. Mammen — Chief Financial Officer

So, in terms of the fund raising, of course, with the rating upgrade we have done public issue. We have raised about INR1,700 crores of NCDs through public issue. There the rates have been in the range of maybe about 6.6 to 7.1 on a two-year and a third-year. I think the bonds are traded well. I think we should see better levels coming down on the NCD front. So there is lot of room for bringing down our incremental cost of borrowing.

Vikash Agarwalla — Bank of America — Analyst

Sure. Sure, maybe just one small follow-up to this is, you mentioned about ECB being a factor of the cost and previously you had mentioned that the offshore cost was slightly higher than — compared to what are getting onshore and onshore market has actually done well post that. So from that perspective, how should we look at the cost benefit analysis for ECB and then something which you also mentioned about ECB being a long-term money? So how should we look at that and then where does ECB fit in your overall funding mix?

Oommen K. Mammen — Chief Financial Officer

See ECB expenses are — cost for fundraising to ECBs is not currently being looked at, because the domestic fundraising happen — can happen at a very much, much lower cost. So, currently, we are not looking the ECB. In terms of a very longer-term funding, we have been able to raise 10 year money also I think those funds are also locked on — in the domestic market five years and third years.

So long-term funding is currently available. So currently, we are not looking at ECBs but in case there is a larger growth available and certainly if there is a very — need for a very long-term money probably we can look at it. But because of the cost factor, we are not currently looking at ECB. It’s only because of the hedging cost.

Vikash Agarwalla — Bank of America — Analyst

Understand sir. Got it. Thank you. Thank you so much.

Operator

Thank you. I would now like to hand the conference over to Mr Kunal Shah from ICICI Securities Limited for closing comments.

Kunal Shah — Analyst

Yeah, thanks. Thanks a lot Mr. Muthoot and Mr. Mammen for patiently answering all the questions. And thanks all the participants for being there on the call. Thank you.

George Alexander Muthoot — Managing Director

So, from Muthoot side, management side, I also take opportunity to thank ICICI and also the organizers for this and also definitely the participants who have always been our strength and you have always given us strength and guidance and probably lot of suggestions also. Suggestions are always welcome. Thank you all for supporting us. From our side, we will try to do the best possible. Thank you.

Kunal Shah — Analyst

Thanks. Thanks, sir and all the best. Yeah.

Oommen K. Mammen — Chief Financial Officer

Thank you Kunal. Thanks for arranging the call.

Kunal Shah — Analyst

Thank you. Thanks.

Operator

[Operator Closing Remarks]