Piramal Enterprises Ltd (PEL) Q4 FY22 Earnings Concall Transcript

Piramal Enterprises Ltd (NSE: PEL) Q4 FY22 Earnings Concall dated May 26, 2022

Corporate Participants:

Hitesh Dhaddha — Chief Investor Relations Officer

Ajay Piramal — Chairman

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

Analysts:

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Piran Engineer — CLSA — Analyst

Abhishek Sharma — Jefferies — Analyst

Vinod Jain — WF Advisors — Analyst

Deepak Gupta — SBI Pension Funds — Analyst

Bhaskar Basu — Jefferies — Analyst

Bharat Sheth — Quest Investment Advisors — Analyst

Abhijit Tibrewal — Motilal Oswal — Analyst

Aditya Jain — Citigroup — Analyst

Sachin Kumar — SBI — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Piramal Enterprises Limited Q4 and FY ’22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Hitesh Dhaddha, Chief Investor Relations Officer from Piramal Enterprises Limited. Thank you, and over to you, sir.

Hitesh Dhaddha — Chief Investor Relations Officer

Thank you. Good evening, everyone. Hope you are safe and in best of your health. I am pleased to welcome you all to this conference call to discuss Q4 and full year FY ’22 results. Our results materials have been uploaded on our website and you may like to download and refer them during our discussion.

The discussion today may include some forward-looking statements and these must be viewed in conjunction with the risks that our businesses face. On the call today, we have with us our Chairman, Mr. Ajay Piramal; Ms. Nandini Piramal, Executive Director, Piramal Enterprises and Chairperson, Piramal Pharma; Mr. Khushru Jijina, Executive Director, Financial Services, Piramal Enterprises; Mr. Jairam Sridharan, Managing Director, Piramal Capital and Housing Finance; and Mr. Vivek Valsaraj, CFO of our company.

With that, I would like to hand it over to our Chairman, and I would request him to share his initial thoughts. Thank you.

Ajay Piramal — Chairman

Good day. I have great pleasure in welcoming you to our investor call today. The year FY ’22 was transformational for our company, marked by the achievement of two major milestones. Firstly, the acquisition and integration of DHFL within our Financial Services business. This has been a value accretive acquisition, and also has enabled us to achieve significant growth. It has materially given us a further impetus to our business ambitions and target.

Second, in the year, we made significant progress on the pharma demerger and simplification of the corporate structure. Demerger was approved by the Board in October 2021. We have now already received consent from RBI SEBI stock exchanges and clearances from most of our creditors. NCLT has now allowed us to convene a shareholders and creditors meetings and seek their approval. We are on track and the demerger is expected to get completed by the third quarter FY ’23, of course, subject to various required approvals.

Quarter four and FY ’22 performance, I would like to now talk about. FY ’22 saw several headwinds that brought a degree of uncertainty to the world economy and inflation risks to our Indian economy. And despite such a volatile environment, the company has delivered a resilient performance during the year. During the year, we had revenues of INR13,993 crores and a net profit of INR1,999 crores during the year.

For the fourth quarter of FY ’22, our performance had a revenue growth of 22% year-on-year to reach INR4,163 crores, driven by strong growth in Financial Services, both the DHFL acquisition and a healthy growth in pharma revenue. Our reported net profit is INR151 crores in this quarter with a net loss of INR321 crores for the Financial Services business.

The reported net profit during the year was primarily impacted due to our decision to make additional provision against Stage 2 assets worth INR822 crores and an interest reversal of INR215 crores, totaling INR1,037 crores. We reevaluated our wholesale portfolio during the quarter to detect any lasting impacts on our clients of the pandemic or recent stresses in the economy. Based on this assessment, we moved some of our non-real estate exposures to Stage 2. These were high yield structured mezzanine loans in the non-real estate portfolio done under the holdco structure in FY 2018-’19. We have discontinued doing such kinds of deals. Over the last few years, we’ve made a significant progress in building a resilient business model that can tide over multi-year business cycles.

You might recall that we had categorized our transformation journey in Financial Services in three phases. The Phase 1 is consolidation. Prior to the DHFL acquisition, we had completed Phase 1 of our transformation where we made the business more resilient by: one, improving capital adequacy; two, reducing the loan book concentration; three, creating provisions in response to COVID-19; four, reducing leverage; five, eliminating short-term debt; and six, strengthening our liability side.

Phase 2 of our journey has been transition plus quantum growth. We have achieved a major portfolio transition as well as significant growth through the acquisition of DHFL, that would have otherwise taken several years to accomplish through the organic route. AUM grew 33% year-on-year to INR65,185 crores with retail AUM growing by 4 times year-on-year to INR21,552 crores. This has also achieved diversification. And the share of retail loans has increased to 36% from 12% as of March 21.

We have significantly increased our presence with 1 million life-to-date customers and 309 branches across 24 states and union territories. We also have granularity creating one of the leading housing finance companies in India focused on affordable housing with an average ticket size of INR13 lakhs. Off-balance sheet securitized pool of INR18,747 crores generates a fee of 1.5% per annum. All this was achieved without any additional equity infusion into our business.

The DHFL integration has made significant progress in the last six months, and we are continuing to focus on capability building. We retained 3,000 employees of DHFL, rolled out 3,000 plus job offers post the DHFL acquisition. And we have now reactivated nearly all DHFL branches. 99% of our branches are logging active, 98% are sanction active and 97% are disbursement active as of March ’22. With the DHFL acquisition and integration now complete, we are now embarking on Phase 3 of our transformation journey. And I’ve put in place the appropriate levers for the superior performance in the future.

I would like to now share with you some of our aspirations for the next five years after the financial year 2027. Over the next five years, we aspire to achieve retail wholesale mix of two-thirds retail and one-third wholesale. In AUM, we only want to double the AUM of the Financial Services business from FY ’22. We will have significant retail growth with retail disbursements growing at 40% to 50% on a CAGR basis — for a five-year CAGR basis.

In terms of leverage, we want to further optimize our capital utilization with our net debt to equity reaching to anywhere between 3.5 to 5.5 times. In retail lending, in the last quarter of FY ’22, our disbursements grew 100% quarter-on-quarter to INR1,480 crores as a result of activation of multiple branches and customer acquisitions. We are now on track to achieve disbursements of INR2,500 crores to INR3,500 crores in the third quarter of FY ’23. This is almost 5 to 7 times of the pre-merger levels. Our disbursement yields continue to improve to be 12.5% in the last quarter versus 11.3% in the first quarter of FY ’22, driven by shift in product mix disbursement.

Coming to our distribution network. During the quarter, we have now added 14 branches to our existing network while simultaneously closed down six high cost branches, thereby increasing our branch network to 309. We are now working towards all — converting all DHFL branches into multi-product branches. We are looking to expand our branch network further by adding 100 branches in FY 2023. Over the next five years, we target to have presence across 1,000 locations with over 500 to 600 branches.

Technology initiatives I would like to talk to you about. We have built an in-house software development capabilities, which are being utilized to build all our digital assets. We have set up a digital Center of Excellence in Bengaluru. We’ve hired 200 people in the technology and analytics. Also, we have now launched mobile apps, which had over 125,000 downloads so far. As part of our technology strategy, we are building a world-class tech and artificial intelligence-led lending business, which is cloud native and hence scalable.

We are investing for future growth. We should be able to significantly grow our retail business every year for the next few years as we continue to focus on capability building and investing for the future. We have assembled a best-in-class leadership team. We’ve built a technology-led retail lending business, which should help us in improving cost efficiency as well as manage better asset quality. We are expanding our product suite by launching new differentiated high yielding products. We are getting into partnerships and equity investments in leading fintech players such as a 10% equity stake in EarlySalary, which have been necessary building blocks to reach significant scale.

Now coming to wholesale lending. We see a pickup in the real estate sector. As you know, the RE sector goes through upcycles and downcycle, which typically last for six to eight years. Residential real estate inventory levels are at an eight-year low and affordability has also improved. Moreover, there has been a significant consolidation in the real estate sector over the last few years.

Our performance of our developer clients refine that collections from home buyers has increased significantly our advancement in the project completion. Over the last few years, we have significantly increased the granularity of the wholesale loan book. As of March ’22, no account net of provisioning exceed 10% of financial services network.

What is going to be our wholesale lending to finetune? There has been a significant consolidation across NBFCs in wholesale lending. PEL is among the few that has continued to remain strong, despite the prolonged crisis environment. We aim to cater to a large addressable market and started executing new deals in our wholesale business. Our new approach will be more calibrated, smaller loans, granular book and cash flow backed lending. It will be based on our long-term relationship with borrowers with superior risk management. We have created focused analytics-driven underwriting vertical to work along with the originators and group risk. Also, there would be proactive asset monitoring early warning signals. High yield loans will only be done under [Technical Issues].

Coming to asset quality. Our overall GNPA ratio marginally increased by 10 bps quarter-on-quarter to 3.4% and NPA ratio fell by 20 bps quarter-on-quarter to 1.6% as of March 2022. Total provisions post the additional provision that we made during the quarter now stand at INR3,735 crores, equivalent to 5.7% of our AUM. Provisions against wholesale AUM stood at 7.9% due to the additional provision being created during the quarter four of FY ’22. The asset quality of the acquired DHFL book is in line with our expectations. We continue to remain vigilant across our portfolio and maintain conservative provisioning to take care of contingencies arising in the future.

We also have an alternative platform. Our fund management business has marquee institutions such as CDPQ and Bain Capital Credit as our long-standing partners. The platform had more than USD900 million in committed capital across two funds as of March 2022. We aim to build a robust alternative platform by scaling up the existing funds and expanding the product line.

I want to talk about our life insurance business through the DHFL acquisition. We have also acquired a 50% stake in Pramerica Life Insurance JV with Prudential US. The customer base has — the company has a customer base of 2.5 million and a network of 15,000 plus agents. Given the company has a robust balance sheet, a solvency ratio of 404%, we aim to drive growth of the business in the coming year.

On the liability side, our average borrowing costs for the fourth quarter of FY ’22 declined 170 bps year-on-year to 9.2%, while our incremental cost of fund was nearly 8.5% during the quarter. We expect the borrowing costs to decline further as we diversify the loan book, tap additional funding sources and repay refinance our high cost debt. Moreover, we are well positioned to navigate the current rising interest rate environment as 79% of our borrowings are on a fixed rate basis.

In closing, as far as Financial Services is concerned, I could say that we’ve outlined our FY 2027 aspirations and remain committed to create a scalable financial services business across both retail and wholesale lending, while delivering sustainable growth and profitability for the long-term. With scalable high-tech driven retail and wholesale lending platform, significant firepower for value accretive acquisitions as well as organic growth with low debt to equity ratio of the Financial Services business at 2.7. And our value unlocking potential, that is the investments in Shriram, we feel that we are well placed to become one of the largest top quality NBFCs through both organic and inorganic growth in coming years.

And now, I would like to come to our pharma business. Our pharma business has delivered a 16% revenue growth delivering revenues of INR6,700 crores during this year FY ’22. Our Consumer Healthcare and Complex Hospital Generics businesses delivered strong performance with year-on-year growth of 48% in the Consumer Healthcare and 20% growth in the Complex Hospital Generics during the year. Our CDMO business grew 10% year-on-year. The performance was impacted due to some execution-related challenges faced related to logistics, availability of raw material and manpower. Our business delivered an 18% EBITDA margin during FY ’22 and 22% in the last quarter FY ’22. Despite these short-term challenges, our businesses are continuing to execute on their strategic priorities.

The CDMO business, we have been focusing on expanding major sites to customer-led brownfield expansion across our facilities such as in Aurora, Pithampur, Riverview, Grangemouth and [Indecipherable]. In all, we have USD157 million of growth-oriented capex investments committed across various multiple sites. We are increasingly partnering with customers as the Phase 3 projects transitioned to commercial. Our revenue from commercial products has increased 3 times since FY ’19 to $56 million. We are also leveraging our end-to-end model to offer integrated services and now have a track record of executing 170 integrated projects. And this number has grown by 1.5 times since FY ’19 and contributes to 36% of our development order book.

In addition, over the last few quarters, we’ve also made more inorganic investments we’ve invested in Hemmo Pharmaceuticals adding peptide API development and manufacturing to our capability and in Yapan Bio, broadening our services in the biologic space.

Coming to hospitals. Complex Hospital Generics, our businesses leverages a differentiated portfolio of 40 existing products and grew 20% year-on-year. We continue to retain leadership position in key portfolio of products across multiple geographies. In addition, we have developed a strong pipeline of 36 products in niche areas, including injectable anesthesia, pain management, intrathecal therapy and a broad range of other indications.

In the Indian consumer healthcare business, we continue to deliver robust performance with a revenue growth of 48% year-on-year and 55% in the last quarter of FY ’22. In addition, the business has delivered to our clearly identified strategic priorities during the year. We are focusing on growth from power brands, which now contributes 57% of total sales. We continue to significantly invest on media and trade spend in FY ’22. We’ve engaged well-known brand ambassadors to help us improve brand recall for many of our products.

In addition, we have launched 40 new products and 18 SKUs during FY ’22. New products launched since April ’20 contribute to 15% of assets. We’ve also strengthened our presence in alternative channels of distribution, including our own med sites, modern trade stores and e-commerce platform. In summary, post the Carlyle fund raise for pharma, we have been investing organically and inorganically across all our pharma businesses. All of our key businesses have a compelling plan for growth and executing on the strategic priorities. In the medium to the long-term, we expect about 15% revenue growth across the businesses and expect the EBITDA margins to reach 25% to 28% in the three to five years’ time.

In summary, overall, I would say that we are moving now towards two separate listed entity and we have significantly enhanced our disclosures both in financial services and the pharma businesses. We believe that both the emerging listed financial services and pharma companies with their balance sheet strength and uniqueness of our business models are well positioned to tap organic and inorganic growth opportunities and create long-term value for our stakeholders in the years to come.

The Board has recommended a dividend of INR33 per share, subject to the shareholders’ approval at the AGM. The total dividend payout would be INR788 crores. Thank you very much.

Questions and Answers:

Operator

Thank you very much, sir. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Thanks for the opportunity. Sir, on the pharma side, typically fourth quarter is strong [Phonetic] across the year high margin and in terms of earnings wise higher [Indecipherable]. But considering the execution and logistics side, this total has been subdued. So, will this spillover in 1Q if we look at it from a great trajectory perspective?

Ajay Piramal — Chairman

So, some of our deliveries which were scheduled for quarter four could not get delivered because of various execution issues more specifically at our overseas sites. So some of them will spillover to quarter one. However, there are also challenges with respect to non-availability of people and non-availability of materials for some of this. Considering in some of the sites we have constrained capacity, not all of them would be potential upside for next year, but yes, to some extent, this will spill over to quarter one.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Got it. And we’ve seen phenomenal growth in consumer product suite. So, would you like to give a little more of that?

Operator

Sorry to interrupt, but your voice is not very clear, sir.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Is it better?

Operator

Yes. Now it’s better. Please proceed.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Your consumer product sales has shown a very phenomenal growth throughout the year. So, would you like to have further color in terms of what kind of the growth rate can be expected over next two to three years?

Ajay Piramal — Chairman

So, as you are aware, we had consciously decided to reinvest profits back into the consumer products business and significantly increase our media spend. And with that intent, we are pushing up our brands through a lot of media-related spend. In the mid-term, we expect the consumer products to grow at about 20% with continued focus on growing the power brands through a lot of media and trade spend.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

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

Ajay Piramal — Chairman

We don’t give business wise guidance in pharma. And on an overall basis, we expect the growth rate to be nearly 15%, in line with our track record of last couple of years.

Tushar Manudhane — Motilal Oswal Financial Services — Analyst

Sure, sure. That helps.

Operator

Thank you. [Operator Instructions] The next question is from the line of Piran Engineer from CLSA. Please go ahead.

Piran Engineer — CLSA — Analyst

Yeah, hi. Thanks for taking my question. Few of them. Firstly, can you elaborate a bit more on some of these restructured assets — sorry, some of these assets that we’ve put in Page 2, those mezzanine loans, which sector do they belong? How many loans are there? What it is SEBI LTV outstanding? How much can we recover? Because it’s been a while since COVID has happened, things have recovered. We did not recognize this and now eight quarters after COVID, we are recognizing this. So, what really changed in the environment that we are recognizing this now?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Yeah, let me answer that first and then you can ask the other questions. So, as Chairman said that, first, let me give a background that these are related to non-RE, basically the holdco level mezzanine debts, which are loans or bonds, which were given to renewable sector. Having said that, the number of accounts in the non-RE, if you have seen it before I go directly to answer your question, has been coming down. We had a book of INR9,000 crores, today it is below INR5,000 crores, in fact it is below INR4,500 crores. So we have been constantly bringing it down because that type of a business, which is non-RE at the holdco level, we have stopped doing that business for a while.

Now coming to your question, so basically in these, we were looking at — we looked at three of those accounts, two being from the renewable and one was an auto ancillary, and one was a large account in the renewable space. As you know, we have been talking about it for the last one year. We, among the other bondholders, had put this company for sale, and we were expecting certain realizations. However, the realization, which has now come through the bid processes, is lower than what we expected, and that is why this extra provisioning has been made by us.

Similarly in the other asset, which is of course smaller, again a renewable asset, which was put to sale. The realization is lower than what we expected, and that is why the difference of extra provision. Coming to the third one, which is an auto ancillary — it’s on the auto ancillary sector supplying parts to the two-wheelers, here we have made an extra provision looking at the performance as on date. But however, this I would say is an abandoned caution. There would be an opportunity to recover more than the provision. But the other two assets, the first two assets were basically put on the block and we are in the final negotiations. Some of them have actually come in the papers, as you would know. And that is the reason why this extra provision has been created.

Piran Engineer — CLSA — Analyst

Got it. So, I assume you’re talking about Mytrah Energy. So that essentially means that Mytrah has moved out of your restructured book and into your Stage 2 book?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Mytrah was always into the Stage 2 book. Because as you know, we are one of the bondholders at the holdco level. And there are several — I think more than 25 lenders at the SPV level and we had jointly done an OPR for Mytrah and put the asset or the company for sale, which was a year ago.

Piran Engineer — CLSA — Analyst

So then, [Indecipherable] incrementally moved into Stage 2 if it’s not Mytrah?

Ajay Piramal — Chairman

No, it is not incrementally moved to Stage 2. There are multiple assets that have moved stages. But on the particular asset you’re talking about was already in Stage 2 as of December. There are some other assets that have moved to Stage 2 right now. And they also happen to be in the same sectors that Khushru mentioned a moment ago, which is renewable, and Autolac [Phonetic].

Piran Engineer — CLSA — Analyst

Got it. And it’s interesting that our Stage 2 book is up from INR700 crores, INR800 crores and we’ve made the same amount of incremental provision, INR800 crores that’s essentially like 100% driven default.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

That’s just a coincidence. The numbers are just a coincidence. That is not the way the numbers have been arrived. The numbers are — as you will see the overall provision coverage at Stage 2 level has overall been increased, so multiple assets have been incrementally provided for some of those assets near the sale proceeds stage, as was mentioned before. And so they have been — the provisions there have been trued up to whatever the realizable values are that we’re seeing in the market right now and some others have — the provision coverage has been increased. It’s just a coincidence that the delta increased and the increase in provision happens to be roughly the same amount.

Piran Engineer — CLSA — Analyst

Okay. Okay, got it. And if I may just ask on the wholesale lending business. What is the status of the Omkar land in Andheri that we took on our book about six quarters back. And I think it was some INR1,200 crore, INR1,300 crore exposure. Any status on that, please?

Ajay Piramal — Chairman

So, first of all, let me just clarify that — and I’ve said it last time also — that please look at this as a real estate investment by the Group. It’s not a loan into the asset, which is in Andheri East. So, let me tell you what is the status of that. The good news is that with COVID behind us, being an SRA project, as you’ll be aware, SRA was not allowing any permissions, etc, because of COVID, because of humanitarian ground during COVID but that has now gone away. As we speak, in fact, the first phase as we call where this is jointly held by us and also Yes Bank. We are in the final stage of resolution where the entire project has been sold only as part of the buildings have to be completed.

While we speak, there is a second parcel of land where we called Phase 2 which is also vacated. We are also in dialogue with other developers for monetizing the land or doing a joint development. So, yes, the news in the last three months that we have moved forward in terms of certain permissions and some in terms of negotiations also. But please look at this as a real estate project and not a loan.

Piran Engineer — CLSA — Analyst

Okay. So how much cash flow did we receive from sale of the first phase?

Ajay Piramal — Chairman

So what is going to really happen, let me explain to you. Please look at the Phase 1 and Phase 2 together, what we are planning to do, we are going to use cash flows from the first phase to clear up certain portions of the second phase and also maybe partly the third phase. So, look at it as an integrated project. Post the second phase, we will be having a surplus, which will be quite substantial, which would take care of a substantial portion of our investment. And then of course, we need to decide whether we want to do a one-time monetization or keep on monetizing it in phases. Because you must appreciate, this is a very large project. So the Group will take a call phase wise.

Piran Engineer — CLSA — Analyst

And who is the builder in the JDA?

Ajay Piramal — Chairman

So, we being the owners of the land, in the first phase, we will be getting — we have already tied up with a developer to complete the project. The second phase, we are already in the bid process with the other developer. So each phase could have different developers because certain portions of land would be commercial, certain would be residential. And this being such a large PR, look at us as master developers and master planners and we will be allocating the phases to different developers.

Piran Engineer — CLSA — Analyst

Got it, got it. And my last question..

Hitesh Dhaddha — Chief Investor Relations Officer

Piran, I think there are other people also in the queue. Maybe you want to join the queue again.

Piran Engineer — CLSA — Analyst

Okay. Sure.

Operator

Thank you. The next question is from the line of — [Operator Instructions] The next question is from the line of Abhishek Sharma from Jefferies. Please go ahead.

Abhishek Sharma — Jefferies — Analyst

Yeah, hi. Thanks for taking my question. I just wanted to understand the pharma guidance, given in a bit more detail. So, if I understand correctly, what you gave in terms of revenue growth and EBITDA margin was more of a medium-term guidance. I wanted to have more color on near-term FY ’23, what kind of growth, can we expect? Because of spillover, would it be more than 15%? Will it be lesser? And also on the margins, this 25% to 28% trajectory, is it back-ended, do you expect to achieve it within FY ’23 itself and if not, then divest? Thanks.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

For FY ‘2 specifically, we are targeting growth in the high-teens. In terms of margin, considering the current inflationary scenario and highly volatile environment, I don’t think it would be prudent to make a guidance right now. So we’ll keep that for later. But on revenue, we are targeting a growth of high-teens.

Abhishek Sharma — Jefferies — Analyst

So, then is it safe to say that 25% to 28% margin guidance, this is more back-ended. And do you have a timeframe by when do you expect to achieve it?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

So, as we have stated in the past, it’s over a three to five-year period that we are targeting to achieve this margin range.

Abhishek Sharma — Jefferies — Analyst

Right. Got it. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vinod Jain from WF Advisors. Please go ahead.

Vinod Jain — WF Advisors — Analyst

Sir, this is more of a suggestion than a question. Whether you’re going to have a Finance Day, like you had a Pharma Day some years back, to explain in detail the retail lending you are proposing to do in the affordable housing space?

Ajay Piramal — Chairman

Yes, it’s very much on our mind. It is something that you should expect to see us go forward with. We just need to think through the timing and the context of the demerger, but that is coming about. But it’s a good suggestion. It is something that we are seriously thinking about.

Vinod Jain — WF Advisors — Analyst

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Deepak Gupta from SBI Pension Funds. Please go ahead.

Deepak Gupta — SBI Pension Funds — Analyst

Hi. Thank you for taking my question. I just wanted a clarity on this non-real estate exposure of INR4,500 crores roughly. The INR2,300 crores which has moved from Stage 1 to Stage 2 is a part of that INR4,500 crores and this does not include Mytrah Energy. Is my understanding correct?

Ajay Piramal — Chairman

Yes. So, this is part of INR4,500 crore non-real estate book, and Mytrah is part of that INR2,200 crores.

Deepak Gupta — SBI Pension Funds — Analyst

Okay. I thought Mytrah was already in the restructure, so that all already restructured, right, so you would already have a 10% provision on that.

Ajay Piramal — Chairman

Yeah. So, as Mr. Jijina mentioned that given that we are in the process of closure on some of these transactions, we felt that those transactions will leave some more provisioning and hence we have taken into that. This basically also indicates that the transactions are going closer towards closure.

Deepak Gupta — SBI Pension Funds — Analyst

Understand. So what is your current restructured book now?

Ajay Piramal — Chairman

Same as we’ve mentioned last quarter. It’s almost 3% of our wholesale loan book.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

No, let me answer that. I think the restructured book, we had only two assets, one from the real estate which was roughly around INR170 crores, INR180 crores, and the other was Mytrah. So with Mytrah going away, the OTR asset will be only one, which will be in the real estate space.

Deepak Gupta — SBI Pension Funds — Analyst

Okay, great. The second thing on the retail segment. Now, I can see that disbursements have done quite well for the fourth quarter in the retail segment. But somehow the loan book has been flat on a quarter-on-quarter basis. If my understanding is correct, that’s INR21,552 crores, last quarter also outstanding loan book was INR21,554 crores. So does it mean that Dewan book is replenishing at a very fast pace? Are you having with repayments — prepayments on the demand housing book?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

I think your observation is accurate. The AUM of the retail book has been broadly flat, it has actually increased like 0.5% or something through — on a quarter-on-quarter basis. We are seeing total customer reduce attrition of just under INR500 crores a month. And we saw, of course, roughly INR1,500 crores of disbursements. So that’s why you’re seeing roughly flat AUM. However, this has to be seen in the context of how the Dewan book is bound to grow and develop, right, from the entire set of Dewan branches as more and more disbursement happened, the crossing of the lines between disbursement and attrition will take place, which has already taken place in March. So, in January and February, the attrition amount was greater than our disbursement amount. In the month of March, our disbursement amount became significantly higher than attrition and has stayed that way since. And hence, you should expect that this trend of AUM growth now starting to happen, that will continue. In the first six months, we were seeing the full force of the attrition of the DHFL book, but only very small part of the DHFL book was still originating disbursement. And hence, you saw the AUM pressure. We are now on the other side of that equation.

Deepak Gupta — SBI Pension Funds — Analyst

Sure. My third question, Jairam, is on the fixed and floating rate mix for the asset side. I believe you’ve given in the presentation 37% of the loan assets, they are fit for what duration? What would be the duration of the loan book? And I suppose this would be well estate loans which are fixed. This will be the wholesale loans which are fixed.

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

You’re talking about the asset side or the liabilities side? We are talking about the asset side.

Deepak Gupta — SBI Pension Funds — Analyst

I’m talking about asset side, yeah.

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

See, the asset side, you’ve got both wholesale and real estate in the fixed rate side. On the retail side, apart from housing and LAP business, pretty much everything else is going to be fixed rate. And they are — you can imagine that all the fixed rate business that you’re going to have is going to be roughly as of four-year kind of average maturity.

Deepak Gupta — SBI Pension Funds — Analyst

Understand. Understand. And the fourth question is, I believe you’ll have taken enabling resolution to raise INR600 crores through NCDs. And currently your cost of funds is 9.2%. So, do you think you’ll be able to raise money at low coupon versus cost of funds at 9.2%?

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

Deepak, we mentioned a little bit earlier during the call that on an incremental basis, our coupons at which we raised money in Q4 was roughly 8.5. Now let’s see — the environment keeps changing and some of these enabling resolutions, we want to take without having a very specific idea of when we want to go to the market to raise. When the market opportunity is right, we will go and raise. I will reiterate that our book today is extremely liquid. We have INR8,000 crores plus of cash that is sitting on the balance sheet. So there is really no need for us to borrow anything significant in the short-term. So we are very, very, very liquid right now.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Let me add, Jairam, some couple of points here. Number one, as Jairam said that already we are sitting on high liquidity. Number two, I think you asked a question on the mix between fixed and floating on assets. I think on the liability side, in fact we are 80% fixed and 20% floating. I think that we should take that also into account. The third is that in fact in the last few months, rather than raising money, we have been actually prepaying the high cost debt with high liquidity which we have. And it continues to have with wholesale also continuing to ramp down. So I think you should look at it in that context.

Deepak Gupta — SBI Pension Funds — Analyst

Sure. Thank you so much.

Operator

Thank you. The next question is from the line of Bhaskar Basu from Jefferies. Please go ahead.

Bhaskar Basu — Jefferies — Analyst

Yeah. Good evening. I have a couple of questions. Firstly, the retail NPL of about 1%, could you clarify — does this pertain to the DHFL book or the new businesses which you have generated over the last six months?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

No, it’s all going to be the legacy book. Bhaskar, the new book has not had enough time to get into NPA. So, it will take — it will get there, it’s just not there yet. So, the book that you suggest, this is both the legacy book of DHFL, which overtime some part of the standard book will continue to flow and also the small legacy book that was there in PCHFL, that also small part of it will continue to show. In terms of slippage rate, it’s a very, very small slippage rate, so it’s not really moving in any significant way.

As far as the DHFL standard book is concerned, our model already predict a certain level of new NPA formation from the standard book of DHFL, which is totally priced in into the transaction. And what we have seen so far since September 30 has been entirely in confidence [Phonetic] with what our models had predicted.

Bhaskar Basu — Jefferies — Analyst

And any updates on the recoveries from the off-balance sheet book in this context?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

From the off-balance sheet book. Are you talking about NPA recoveries, etc, or are you talking about off-balance sheet?

Bhaskar Basu — Jefferies — Analyst

Off-balance sheet NPLs of DHFL, from there, I mean, you were expecting to recover something.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Let me take this opportunity to explain the concept of POCI, which I hope some of you partly made — we made a significant disclosure on this in the presentation. POCI, which is Purchased or Originated Credit Impaired, is a book that we have created and we have specifically disclosed. You can think of this, we have not used that phrase in our disclosure, but you can think of this broadly as a bad bank. Essentially this is where all the stressed part of the book actually goes and saves. So, from DHFL, roughly INR9,800-odd crore of face value of assets has been moved to — or INR9,500 crores of assets has been moved to this category called POCI. And it has been recognized on the book at a value of INR3,500 crores.

In other words, it has been marked down by 63%. So what we are saying is, this “bad bank” is likely to have a loss-driven default of 63%. Now, this — in the accounting standard, this POCI book will continue to remain in that POCI category forever. These accounts are never going to become Stage 1 or Stage 2 or Stage 3. They’re never going to become NPA. They’re just going to remain in the POCI book forever. All the recoveries that we made sure will go towards either reducing the value of POCI, or if loss-driven default is lower than what was assumed in this 63% haircut, then it will come through to our P&L. So that’s the way in which the DHFL stress book has been accounted for in our balance sheet right now.

With that background, let me just come back to talking about the recoveries that have happened. In the six months since we have taken over DHFL, we have on a cash basis recovered INR715 crores worth of loan from this POCI book. Of that INR715 crores, roughly INR425-odd crores have come in this last quarter, this Q4. This INR715 crores, of that some INR430-odd crores had come from the NPA book, of which there was about INR7,000 crores available, and the rest has come from the non-NPA but stress book, all of which sits in that POCI context. So, as you can see, from that overall POCI book which is marked down by 63%, we have already recovered INR715 crores. And that is reflected in both — in some part in the interest income slide and some part in the provision side.

Bhaskar Basu — Jefferies — Analyst

Okay. Thanks. That’s very helpful. Just a second question, on the guidance of 5 to 7x increase, and as we’ve seen, basically the disbursals has been scaling up faster than the book growth. So, how should we think about housing disbursements as a part of this INR2,500 crore run rate and how should we think about it from a perspective of book growth in housing?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

So, overall we should assume that housing is going to be just under half of the — or around half of the new disbursements that we do. And from a book growth perspective, we don’t have specific guidance for the short-term. But I think it’s fair to assume that the overall book growth will be well north of 20%.

Bhaskar Basu — Jefferies — Analyst

Thanks. And just one last data-keeping question, if I may. What was the write-off? Were there any write-offs during the quarter?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

No.

Bhaskar Basu — Jefferies — Analyst

Okay. Okay, thanks.

Operator

Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead.

Bharat Sheth — Quest Investment Advisors — Analyst

Hi. Thanks for the opportunity. So, on this affordable housing side, so can you give some color what is current size of the book and how do we really plan to expand and what will be the NII that we are looking, I mean, our respiration of the NII maybe in those book?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Yeah. Thanks for your question, Bharat. If you look at the overall book of INR21,000 crores, I think that right now, roughly 70% of that is in this category that you would call affordable housing. So, essentially the housing book with less than INR30 lakh ticket size. The average ticket size of our housing portfolio is about INR18 lakhs, right. So, pretty much the entire housing loan portfolio that we have is in the affordable category. The new business that we are originating in this segment, Bharat, we are originating at a yield of 11.25%. And so from there, you can back-calculate on to what the inventories are based on whatever leverage assumption that you want to assume, right?

So, 11.25% is the yield. As you can see, it is meaningfully higher than what some of the prime customers in metro towns, etc, are able to get today for housing. And that’s because the customer segment that we are going after is a segment that is less served by bank and the properties are also less well understood by banks and hence we are able to extract this kind of deal.

Bharat Sheth — Quest Investment Advisors — Analyst

Okay. On this non-RE book of holdco level, INR4,500 crores, INR2,200 crores in the SMAC, so how much further sales are we expecting or stress [Phonetic] that we are seeing as of now and overflow in next one year?

[Technical Issues]

Operator

Ladies and gentlemen, the line for the management is reconnected. Thank you, and over to you, sir.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Hi, folks. Apologies for the technical glitch, but we are back. So, last we left, there was a question about whether we expect any further slippages into Stage 2 or whether we feel we are appropriately provisioned for the INR4,500 crore book, which is the non-RE structured lending holdco book that we spoke about before. I believe that we are well provided right now. As we mentioned before, we’ll keep looking at HTD [Phonetic] of assets and whether anything needs to change. For now, we feel very good about where we are with the increase that we did this time or this quarter. On the provisioning side, we feel that we are fairly well provided.

Operator

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

Abhijit Tibrewal — Motilal Oswal — Analyst

Thank you for taking my question. Good evening to all of you. Most of my questions have been answered. And maybe the next two questions that I’m going to ask are not going to be anything that’s not been discussed on this call today. But I just wanted to ask this for better clarity or maybe to understand this more holistically. So, the first question around, I mean, this INR4,500 crores of non-real estate book structured for the [Indecipherable] at the holdco level. So, I mean, just trying to understand — I mean — so I mean, like someone else also pointed out at the beginning of the call. I mean, just when we were thinking that we are all through COVID and we have managed it, I mean, really, really well, especially your wholesale loans. I mean, you have these Stage 3 accounts that kind of stumble out of project and we’re having to take — I mean, I could say, aggressive provisions on these loans.

I mean, don’t you think — I mean, five months down the line that you’re looking at pharma demerger, wherein the expectation will be that, I mean, the disclosures would have to kind of match up to work other HFCs and NBFCs. So, don’t you think that over the next maybe two quarter order, it will be prudent to kind of recognize, replace that you think could boost risk and maybe provide the [Indecipherable]? That’s the first question.

The second question is, I mean, are disclosures have meaningfully improved? And I must compliment your team for that, and especially in the Financial Services side. But do you still find it kind of difficult to look at the various pieces of the puzzle together. So, I mean, I think during the call we suggested that we’re looking at something like a 40% to 50% kind of a disbursement CAGR over the next five years in between disbursements. And I think somewhere you also talked about loan book growth north of 20%. So, I mean, I think we’ve between that, I mean the consolidated is growing at 20% CAGR over the next five years. I mean — and how would — I mean wholesale dealings in the scheme of things, I understand you’ve guided for one-third of the book being wholesale or maybe even the longer term?

And then lastly, I mean — so let’s say, five months down the line in the year, [Indecipherable] financial services, you ended in balance sheet. I mean, what is it that you have in mind right now? I understand it could be a difficult question. But what is it that we have in mind for the needs? What would be the cost ratio is looking like and eventually, I mean, on your financial services business, including the newer product segments that you’re doing, what kind of credit course can be there and what kind of eventual ROE that you could be looking in your financial services? Thank you.

Ajay Piramal — Chairman

Wow, that’s a lot of questions. But thanks for all of those, Abhijit. I appreciate your interest. Let’s take your questions one by one. Your first question was around the INR4,500 crores, and kind of that’s where we started. Let Khushru answer that and then we will take some of the rest.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Yeah. As I said, let me repeat this, that the major one — in fact we just spoke a few minutes ago — is Mytrah, where it was provided, so I want to make that statement because you’ve mentioned about disclosure. So it was not like we were aware and we are disclosing it now. So let me again go through this whole process of the major — out of the three, the other two being small, the big one is Mytrah. We have been always speaking about it. It was in Stage 2. This asset was put by all the bondholders, including us, and a host of public sector banks who were at the SPV level for sale for the last one year. There was a bid process which was run by Barclays.

And as we got the bids and finalized, we realized that we needed to provide more, because the realizable value is less than what we had all expected. And that is why we are providing this. In fact the major portion out of this one-time provision is on account of Mytrah. So it’s not that we knew about it. It was provided before, it was in Stage 2 because we had done an OTR along with all the banks. However, unfortunately the value realization is lower than what all the lenders expected. I just wanted to make that point once again on this provision.

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

Let me then make the sort of the broader point that you are asking, right, Abhijit, which is basically as we move toward a financial services entity over the next few months, how do we think about disclosures? How do we think about cleaning up the book from a provision standpoint, etc? And you made some really good points. And I mean, clearly — I mean, we think similarly, you saw our actions this quarter, so that should reflect what our mindset is. We want to make sure that by the time we have a separately listed financial services stock, a few things happen; A, our disclosures are top notch and that you’re able to build a good feel for what the financial services business looks like; and B, that a lot of cleanup act, if any, that needs to be done, has all been taken care of.

Please recollect that two years ago, we had taken roughly INR2,000 crores of incremental provision on our book to take care of any contingencies that might arise out of COVID, etc. In this quarter, when we’ve gone ahead and actually made these incremental provisions, we did have the optionality to actually dip into that big pool that was created a couple of years ago. We chose for exactly the reason that you articulate not to do that. We chose to make incremental provisions and take them through P&L and keep retaining the old provisions that were made two years ago, because we want to make sure that the balance sheet is fully robust and strong by the time we list as a separate FS entity. So it is very much on our minds. You will continue to see us to behave in ways that are reflective of that desire to have a conservative and robust book when we let.

Your second point on disclosures. I’m glad you noticed. We have — in a lot of our conversations, one on one, etc, we have been asking you all to tell us what you would like to see from a disclosure standpoint. What you see this quarter, for the first time, you’re seeing us disclose a lot of information on the FS side specifically, right, showing separately what our P&L is, showing separately what the stage wise classification is of assets, etc, all the details about our POCI book. There is a lot of disclosures that we have tried to put in this quarter, which we believe will lay a good strong foundation for all of you to be able to start building robust models from a more firm starting point, right? I understand that you will probably need more over time, and that’s fine. We will continue to listen to you on what is most useful, but hopefully you’ll find this a useful first step as you started off by saying and hopefully this will allow you to understand our FS business very deeply.

Our intent and desire, let me be very clear, is by the time we are a separate listed company, our intent and desire is to be fully caught up in terms of whatever we think is the best and most appropriate best-in-class disclosure that makes sense for our investors and to have a balance sheet, which is adequately bulletproof by that time.

Ajay Piramal — Chairman

Thanks, Jairam. And lastly, if you could, just guide on how are you kind of looking at the DuPont of the Financial Services segment?

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

Yeah, yeah. The DuPont on the Financial Services, so we’ve shown some balance sheet view, we have not shared a P&L view for the five years. Our thinking right now on this, Abhijit, is that we are thinking that when we do a Financial Services Day that we were referring to a little bit earlier in this conversation, that might be when we actually talk to you all in a little bit more detail on that front. As of now, what we are saying is, an overall FS AUM doubling over five years, so that gives you a little bit of a sense of what the CAGR is going to look like. Also, the mix shifting from where we are today, which is 64-36 wholesale-retail to 35-65 retail-wholesale, right. That’s broadly where we are going. So, from there, you can individually derive what the wholesale CAGR is going to look like and what the retail CAGR is going to look like. On top of that, we have shared a little bit of what our expectation is on retail disbursement CAGR. So, this should start giving you a little bit of a sense, which hopefully it’s a good starting point. Let’s discuss more in detail as we get into the FS Day about what else might be useful from a P&L standpoint.

Abhijit Tibrewal — Motilal Oswal — Analyst

Sure. Thank you so much for patiently answering the questions and look forward to the FS Day. And kind of wish you and your team the very best as you embark on Phase 3 of your company. Thank you so much.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Thank you for the appreciative wishes.

Operator

The next question is from the line of Aditya Jain from Citigroup. Please go ahead.

Aditya Jain — Citigroup — Analyst

Hi One clarification. The POCI book has nothing to do with fraudulent assets which are subdued, right, so this is separate from those completely?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

No, no. This is completely different from that.

Aditya Jain — Citigroup — Analyst

Perfect, okay. Thank you.

Operator

Thank you. The next question is from the line of Sachin Kumar from SBI. Please go ahead.

Sachin Kumar — SBI — Analyst

Yeah. Good evening, everyone. Thanks for the opportunity. And I have a simple question. Let’s take — this pharma division is — I think it’s trending [Phonetic] towards 50% to the overall profit of PEL — the overall revenues of PEL. So, how does it complete [Phonetic] PEL after carving out of pharma business and how PEL itself as a strong holding given the Financial Services and the Pharma business? So, how do the company…

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

Can you please repeat the questions?

Sachin Kumar — SBI — Analyst

Yeah. I just wanted to know how asset is carving out the pharma business, how do you project PEL in the next five years as a Financial Services business?

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

So, see, the intent, as you know, is to carve out pharma by the last quarter of this calendar year. And because we have shared separate financials for the FS business right now and you have the consol as well, from there you can derive what some of these pharma financial metrics are. The structure from a separation perspective is a pretty straightforward one. So, this FS business, as it exists, along with the equity that is allocated to FS as well as what we have termed unallocated equity, all of that will stay in this entity of PEL, so — which will hopefully, with RBI’s blessings, turn into a regulated NBFC entity. And that entity, along with all our lending business, the insurance business, the alternatives business, and any potential inorganic transactions that we might do in the FS space in the future to utilize some of the unallocated equity will form the heart of the FS business. And that’s the balance sheet P&L that you will see going live in the later part of this year.

Sachin Kumar — SBI — Analyst

Okay. So, how much is the AUM you’re targeting at for the five years, sir?

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

The AUM, as we mentioned before, currently we have a net financial services AUM of INR65,000 crores. And we have said that over a five-year time frame, we are building a business that will double this, right? We are not offering specific guidance for the next six months, if that’s what you’re asking about at the point of demerger, what will our AUM be? We’re not offering specific guidance for that.

Sachin Kumar — SBI — Analyst

Okay. All right. And I would also like to take this opportunity to personally congratulate Piramal, sir, for being awarded the Commander of the Order of the British Empire by the UK honorary [Indecipherable] to the entire Piramal team. And I have one question Piramal, sir, I was just going through an article, where it mentioned about 10 years back that India as a country was not suitable option for investment because of the geopolitical, all those reasons. So, has there been a change now, like it has searched for specific [Phonetic] change, and we look forward for investment in India for the pharma business — for expansion of the pharma business?

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

I think so. It is an investment for pharma business, but let’s take this off the line. I think it’s a longer discussion. Thank you.

Sachin Kumar — SBI — Analyst

Thank you, sir. Thank you so much, sir.

Operator

Thank you. The next question is from the line of Piran Engineer from CLSA. Please go ahead.

Piran Engineer — CLSA — Analyst

Yeah, hi. So, thanks for the follow-up. Just a couple of clarifications. When we mentioned on this 40%, 50% CAGR in retail disbursement, is that from the steady — to INR1,500 crores to INR3,500 crore quarterly investment, right?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Yeah. You have pretty good response [Phonetic]. See, the way we had framed it here, Piran, and we can talk more about it offline, if you want. But the way we’ve framed it here is, 40% to 50% CAGR over FY ’22 numbers.

Piran Engineer — CLSA — Analyst

Over FY ’22 numbers. Okay. Thank you. Fair enough. And the second clarification is that [Technical Issues] DHFL book, but that’s POCI [Phonetic] book, is that part of the INR18,000 crores we’ve got from Dewan or is it over and above that? I’m a little bit confused here.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

No, no, no. So, basically, think about it this way, Piran, that we — the transaction was for INR34,000 crores, right? So we paid INR34,000 crores. Of which, INR14,000 was cash on the balance sheet, so remove that. That gets to INR20,000 crores. That INR20,000 crores was allocated roughly, roughly at INR17,000 crores in retail and INR2,000 crores in wholesale. Now, you look at the book and then you say, okay, what is the face value of the retail book? And the face value of the retail book, including the NPA book there, etc, is, let us say, INR25,000 crores.

And against that INR25,000 crores, if you are going to allocate something like INR17,000 crores or thereabouts, that essentially indicates that there is a big sort of haircut. The question is, how will that haircut be allocated? The POCI book is a part of that INR25,000 crores original DHFL book which was either already turned — had already turned into NPA before we purchased the portfolio or wasn’t deep enough stages of delinquency that our models suggested that they are going to become NPA anytime soon. So we took all that book, which we are terming originally credit — originated as credit impaired. And we actually got it on our book and we put it into this firewalled category called POCI and said, this essentially has become a bad bank. I’m going to massively haircut this piece and then anything extra that I get out of that will essentially be P&L accretive. Otherwise, the rest of the book is essentially my good book. That’s the way this has come about. So it’s all part of the DHFL transaction only, nothing different.

Piran Engineer — CLSA — Analyst

Got it, sir. Over and above those INR18,000 crores, INR19,000 crores of loan you all took over on your balance sheet?

Khushru Jijina — Managing Director, Piramal Finance Ltd.

Yes.

Piran Engineer — CLSA — Analyst

Got it. Okay, fine. That’s helpful.

Khushru Jijina — Managing Director, Piramal Finance Ltd.

So there is also — in case that’s solving the confusion, there is an off-balance sheet item of another INR18,000-odd crores.

Jairam Sridharan — Managing Director, Piramal Capital & Housing Finance Limited

No, no, no. That was not the confusion. My only thing was that the book value of the loans that you all took over was INR40,000 crores, INR41,000 crores, INR42,000 crores, and it came in to your balance sheet at INR18,000 crores, INR19,000 crores, excluding all the cash, just the loan. So, that means a haircut of INR23,000 crores, INR24,000 crores. I wanted to know if this INR9,500 crores was part of the INR23,000 crores, INR24,000 crores or part of the INR18,000 crores, INR19,000 crores, but I’ve got the answer.

Piran Engineer — CLSA — Analyst

Got it. Got it. Thank you.

Operator

Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I now hand the conference over to Mr. Hitesh Dhaddha for closing comments. Over to you, sir.

Hitesh Dhaddha — Chief Investor Relations Officer

Thanks, everyone. In case you have more questions, please feel free to reach out to the team, IR team. Thank you.

Operator

[Operator Closing Remarks]