PTC India Financial Services Ltd (NSE: PFS) Q3 2025 Earnings Call dated Jan. 29, 2025
Corporate Participants:
Priya Chaudhary — Investor Relations
R. Balaji — Managing Director & Chief Executive Officer
Abhinav Goyal — Interim Chief Financial Officer
K. Srinivas — Executive Director
Analysts:
Manoj Kumar Pande — Analyst
Channamallu Halagodi — Analyst
V.P. Rajesh — Analyst
Amey Chheda — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to the Q3 FY ’25 Investor Conference Call hosted by PTC India Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes.. Should you need assistance during the conference call, please signal an operator by pressing star 10 on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Priya Chaudhary. Thank you, and over to you, Ms. Chaudhary.
Priya Chaudhary — Investor Relations
Thank you. Good morning, everyone. I’m Priya Chaudhary. I’m Head, Investor Relations at PFS. Welcome to Q3 FY ’25 Investor Call for PTC India Financials. We are delighted to have this opportunity to connect with our stakeholders to discuss the company’s performance, strategic priorities and the way ahead. The past quarter has been marked by progress in our key focus area, which shall provide us a stepping stone for the growth going-forward. From focus on resolving legacy issues of NPAs, financials to disbursement of INR866 crores till Q3 FY ’25 compared to INR585 crores the whole of last financial year to positive cash flows across ALM buckets, just to name a few. With sectoral tailwinds of increased infra spend and focus on sustainability, we are well-positioned to drive growth. I will now like to introduce the top management team of PFS present in today’s call, Mr. R. Balaji, MD and CEO; Mr. K. Srinivas, Executive Director; Mr. Abhinav Goyal, Interim CFO. With this, I will now like to hand over the call to Mr. R. Balaji for his opening remarks and insights on the company’s performance. Over to you, Balaji.
R. Balaji — Managing Director & Chief Executive Officer
Thanks, Priya. Good morning all. So this quarter — the last quarter was a significant quarter in the sense, we made significant progress in our transformation journey. As all of you are aware, PFS has been blaked by qualifications on its financial statement. So in last quarter, we made a significant progress towards removing it. How this was achieved, this was achieved by two or three critical steps. One, we significantly enhance our systems and controls. This was done through automation of IT systems and putting other checks in-place, wherein we have greater control over the end result without compromising on customer-centricity. That was one. Two, more importantly, this has been done by ensuring that the employees are engaged and aligned. So with these two, with passion of the people got unleashed, the organization started showing results. As far as business is concerned, we have taken cautious steps towards getting back on to growth. And this is a multi-year journey and the efforts that we are putting in would manifest in the subsequent quarters, which I will comment at the end, et-cetera. The only analogy I would like to give is today above-the-ground, the visible outcomes might not seem to be many. But here I would like to share the example of the Chinese bamboo tree, like when the Chinese bamboo is planted, for the first five years, nothing much is visible above-the-ground. But on the sixth year suddenly the bamboo shoots up to close to 20 odd meters. It doesn’t mean nothing five years happened in the first five years. First five years, it was growing the route so that it could actually strengthen itself. We are not saying it’s going to take five years. But what we are saying is in the next two, 3/4, we are transforming. We started in-quarter two, quarter three, quarter-four significant things happening. The results should start being visible from quarter-four onwards in terms of business outcomes and also more importantly in terms of resolution of stress assets and other key changes. So I would leave it to Abhinav to take you through the quarter that was there. Subsequently, Abhinav, Srinivas and I would be there to answer all your queries. Come on, Abhinov
Abhinav Goyal — Interim Chief Financial Officer
Yeah, so very good morning to all stakeholders as our MD Balaji has just mentioned that this quarter is a year of achievement for us in terms of the qualification, which we were having since last few quarters has been dropped by the auditor. It’s because of the continuous dedicated effort of the management and the team. So that’s a milestone which we achieved. So there are two aspects for any financial statement. One is the quantity and second one is the quality, right? So quality is of utmost importance, which we have achieved to large extent in this quarter. There is still some scope of improvement in terms of emphasis of matter on which we are working and probably in the coming quarter or in quarters to come, that may also be taken care of. Now as regard to financial performance, of course, the performance may be evaluated on the basis of two parameter one is the performance and another one is again a performance. So first, if I talk about it is just we did a section of INR225 crore and a disbursement of only INR300 crores in the current quarter. So this is how one can look at the financial. But another way of looking at the performance is that against the nil sanction in last quarter, we did INR225 crore, it’s a beginning, which has been started and against a nil disbursement in last quarter, we have done a disbursement of INR300 crore. It’s a beginning which has been started. So I will go through the financial figures. This quarter we have reported a total income of INR158 crore and total expense of INR77 crores. Our profit before-tax is around INR81 crores, which is higher in comparison to last quarter or higher in comparison to corresponding quarter of last year. We have reported a profit-after-tax of INR67 crore. One of the major contributor for that is the reversal of provisions, which we have made in earlier yet. This quarter we have a reversal of INR11.33 crore in terms of unsustainable provision in one loan account, Island FS Tamil Nadu, where we have a recovery in this quarter. So this has not only contributed in our profit-after-tax, but also have contributed in terms of cash-flow to the company. And in terms — on that amount, in-quarter to come, we would be having more profit to the company. Now in terms of our cost of borrowed fund, it has been increased to 9.57% in this quarter, but with the improvement in the quality of our financial statement and the start of the performance, we are quite hopeful that this aspect also will be taken care of in the coming quarter. Interest stood at 1.85%, net interest margin is 4.46%. Our earning per share is 1.05 for the quarter, which been improved for 0.74 in last quarter and it was 0.78% in the corresponding quarter of last financial year. Our cost-to-income ratio is 17.71%, capital adequacy is fantastic level, although it’s not been fantastic for us. Reason being, we are expecting to have a reduction in capital adequacy, so as there should be more business to the company and more income generation to the company and more value-creation to the stakeholders. Our debt-to-equity ratio is 1.15 times, return on-net worth is 10.09% and our return on assets is 4.51%. So over to you Balaji.
R. Balaji — Managing Director & Chief Executive Officer
Thanks Abhinav. Now before I come up with concluding remarks, Srinivas would speak for some time on what we are doing as far as the business front is concerned. Srinivas, please share
K. Srinivas — Executive Director
Good morning, everyone. I think Abhinav and have given a fairly detailed overview of the company’s performance and a brief overview of the business prospects. Now if we look at it from in terms of pure numbers, there are certain what has explained is you would have all listened to that. But then, yeah, from a purely business growth perspective, there have been substantial efforts in trying to increase the business turnaround times and the business and the credit sanctions and all, some of which is reflected in terms of the figures that quoted. But what also the figures not reflect is substantial efforts that have been taken to retain some of our existing clients, which have been very fruitful in the sense that these are quality assets and which we have taken a lot of pain to retain them. And the — and also what happens is that it is also a message to the — to our clients that we value the relationship and we are willing to go the extra mile in terms of — in terms of retaining them and this also helps in providing much more stability to our loan book. The second part is, there has been a consistent progress compared to the previous financial year in terms of disbursements as well as loan sanctions. And that effort is well underway. And in terms of sanctions,
Operator
Sorry to interrupt, ladies and gentlemen, please stay connected while we reconnect the management line ladies and gentlemen, we have the management line reconnected. Sir, you can go-ahead.
K. Srinivas — Executive Director
Yeah, I think sorry for the network disbursement to continue from where I left off. The — I was, I think, talking about the Q4, I was just starting off in terms of the prospects for the Q4, substantial efforts have been made to improve the pipeline of proposals under evaluation. And I am happy to state that while we remain conscious of the quality of credit that we are willing to take on our books, we do have significant pipeline in terms of the number of proposals that are currently under evaluation, which would be maybe in the range of at least INR500 to INR600 crores. And we hope that in terms of sanction proposals, the Q4 would reflect a significant improvement in numbers. And depending on the timing in terms of the sanctions and the compliances with respect to the predisbursement conditions and all that. We hope to have some significant — depending on that, we hope to have significant amount of disbursement in Q4, which would be a substantial progress compared for the overall — overall numbers from FY ’23 — FY ’24 to FY ’25. Balaji, want to add anything.
R. Balaji — Managing Director & Chief Executive Officer
Thanks. So Abhinav and Srinivas spoke about the various in terms of financial results and about the business. I would take a step-back and go back to what said last investor call after the Q2 results. In that call, we had said this year is going to be the year of stabilization and one had mentioned what are the things that we will be focusing upon. So one of the things which we said like, for example, I categorize it like we need to strengthen the foundation. Therefore, the key thing is how do we resolve the legacy issues that we have, all of you would have seen in the financial statements that the qualifications have been removed. But more importantly, systems and processes have been strengthened. So we are institutionalizing our internal processes. As far as strengthening management and leadership, new talent is being onboarded and in the 4th-quarter, they will be coming on-board and employee engagement has been increased. Now while we are enhancing the employee engagement, one thing which I must say it’s not happened in Q3, but it has happened in January of this year is we have restructured our organization to make it much more customer-centric, so that there is a concept of a relationship manager who would be with the customer across the entire life-cycle. So that way we are delineating the business side from the credit side of it. We also created a separate operations department, which will ensure that we are able to have processes and controls in-place with no conflict of interest. That’s what one we are doing. And two, the other thing which we had spoken about was actually strengthening the asset quality and recollect that around four of our assets or cases account for more than 90%, 92% of our NPAs. So the progress, there have been significant progress in some of them. The one critical thing is NSL that is Naga Patnam. It has been we got a successful bidder through the NCLT process, but the original promoter or the management went to the court and got a stay. We are happy to state that in the month of December, the stay-in Andhra court has been decaded. Now the Telangana I, sorry, Thilangana and then the ball has now shifted to the NCLT, we expect resolution. So this is a case where which accounts for INR125 crores or approximately 2.4% of our gross NPAs. While we have provided for it, the money should come hopefully by, if not in this quarter by next quarter, it will straight away go to the bottom-line. Another case, which is reasonable, which again accounts for close to 2.6%, 2.7% of our NPAs. So we are happy to say that we are proceeding with the change of management. Now the entire process is in-place. We expect to resolve this asset by the end of this quarter, by end of March 31st, when we’ll have the winning bidder. And two, more importantly, the entire money would come to the organization before the end of June quarter. That is second thing. Now the important thing to note out here is currently, our net outstanding net, which is INR55 crore INR60 crores, which is seen as a net NPA, we expect the recovery to be substantially more than this. Therefore, we will not have to take any impairment that could be a positive accrual as far as this is concerned. The other case, ILFS, everybody knows ILFS Tamilado Power Company was restructured and for the past 14 months, the payment has been on-time. The security creation has been done and the company is awaiting a credit rating. Once this credit rating happens, it would most likely happen in June. I’m not sure by the June quarter, we were expecting it to happen by March-end. We are not — while there are indications it could happen, but I’m not exactly — I cannot comment with certainty that this would happen. Once that happens, it will again become a standard asset. Again, this would release some INR75-odd crores that we have provided for it. That leaves us with Danu, which is INR280 crores, which is close to 5.5.5% of our loan book size with a net NPA of approximately close to 3%. We are progressing towards resolving this and we expect this to be resolved by June. But even if we exclude Dhanu, so what we can see the other three cases, which are NSL or ILFS or, which nearly account these three cases account for nearly 65% 70% of our gross NPAs. And these three — these cases account for close to 40% of our net NPAs. We’ll be able to clear it off with a positive thing. The way forward will be clear by end of March that something shall happen. The second thing — what third thing, sorry, what we are doing is we are significantly going to upgrade our IT capabilities. This, I would like to put it in two across two significant things one, strengthen the overall application architecture to ensure that customer-centricity is of delivered at the highest-level and more importantly, the controls are maintained. This will involve creating a data warehouse so that all the important data of the company is in one place. And more importantly, to ensure ease of internal operations, we are going to undertake a significant automation activities to ensure that overall the internal friction points are reduced to the minimum. This is something that would happen. And finally, since we don’t have any hard assets in financial services, we are actually their people dependent. So apart from engagement, a significant internal talent upgradation activity is happening, wherein we’ll be going through the assessment centers to ensure that people are given the identified, the strengths are identified and more importantly, they are being provided the support to enhance the skills and capabilities to meet the future requirements of the organization. With all these things, we are sure that quarter-four would be good. And more importantly, our foundation would have been on a reasonably robust footing so that we can attack the market with renewed weaker in the subsequent quarters. That’s it from our side. Srinivas, Abhinav, Priya, and I are here to take your questions.
Priya Chaudhary — Investor Relations
We will now open the session for Q&A.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R&2. All participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles hello the first question comes from the line of Manoj Kumar Pande, who is an investor. Please go-ahead.
Manoj Kumar Pande
Hello, good morning to everyone sir, my first question is as the bi briefs given by CEO, Mr. Balaji that the company has already consolidated its ma internal systems. So now the project pipelines are to be the main things which need to be augmented. So how — I want to know-how — how much and what efforts the company is taking and what would be the — what would be the figures would be at the end-of-quarter four for this financial year? And secondly, second question which is also that you see our capital adequacy ratio is increasing every quarter. Now it has crossed even 50%. So we — this indicates that you have too much lending capacity. So how soon you are going to arrest this — this increasing capital adequacy ratio and increase your lending substantially, what management is taking — what extra measures management is taking place for all these things? Thank you.
R. Balaji
Thank you. I will answer your second question first. Yes, you’re right. Capital adequacy will be addressed only by the increasing loan book. And increase the loan book, apart from getting enough customers, we also need to have enough resourcing lines. I am happy to state that yesterday, we received an in-principle approval from one financial institution for INR500 crores. So now once if one player comes on-board over the next few months, we expect other financial institutions to start lending to us that would make us to compete in the marketplace to acquire more customers. Now we let’s come to your first question, what are the prospects? We are cautiously optimistic that what disbursement we did in the first-nine months, we will be able to double that in the 4th-quarter.
Manoj Kumar Pande
Okay. Thank you so much, sir. So I beat you all the best. Please continue upward journey. That is more expected from us.
R. Balaji
Thank you.
Operator
Thank you. Ladies and gentlemen, a reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Channamallu Halagodi, who is investor. Please go-ahead.
Channamallu Halagodi
Good morning, sir. Thank you for your good setup numbers for this quarter. Quarters. Am I audible, sir? Yes. So when we will appoint the Chief Financial Officer and Chief Compliance Officer, sir.
R. Balaji
The Chief Financial Officer has been selected and we have sent it to RBI. Since it’s a Director on Board, that’s a procedure that needs to be followed. Since the change in the executive or the nominary directors is more than 30%, it needs to go to RBI for approval. We expect the approval from RBI very shortly in the next two to three weeks and then the person based on how soon is relieving — getting relief from his existing organization should have — will join. So we expect the Chief Financial Officer to join by end of March or early-April. That’s what we expect. And as far as Chief Compliance Office is concerned, they got some restructuring. By March 31st, the Chief Complaints Officer would be in-place.
Channamallu Halagodi
Okay, sir. Thank you sir.
Operator
Thank you. The next question is from the line of VP Rajesh from Banyan Capital. Please go-ahead you. MR. V.P. Rajesh, your line has been unmuted. Please go-ahead with your question, sir.
V.P. Rajesh
Sorry about that. I was on-mute. Good morning, Balaji, and congratulations on —
Operator
Sorry to interrupt you, sir. May I request you to use your handset, sir, your audio is not clear, sir.
V.P. Rajesh
And just a minute, please. Yes, sir. Is this better now?
Operator
Yes, sir. Please go-ahead. Thank you.
V.P. Rajesh
Okay. Congratulations, Balaji. It’s great to hear that you have your first approval letter for the lending line. And my question was that, you know what kind of rate are we getting on that? And because now that, as you said, the other folks will also start providing the lines, what kind of growth can we expect in fiscal ’26 on the loan book?
R. Balaji
So see what we have got as an in-principle, therefore, it would be too preceptuous or too early for us to comment on it. And as a matter of principle or policy, we do not commit on — comment on the individual sanction rates like what Abhinav shared in the quarter three, what was our weighted-average lending rate. Now the thing what we are looking at, if you — we have seen this year, we said this is stabilization and therefore, we’ll be ending with a small growth compared to previous year. So we expect the book anywhere between INR5,800 crores to INR6,000 crores. That’s where we would lend as far as this financial year is concerned. But more importantly, once if the other lenders start coming in, right, thing just is not to benchmark with the past in terms of what it is. Going-forward, we would seek to disburse on an average close to some INR800 crores to INR1,000 crores on a quarterly basis. Because you would — I would appreciate that in this industry, we cannot control the customer prepayments because once the project gets commercialized, customer would get it refinanced at a lower rate. So it would be anywhere looking at next year, INR3.5 crore to INR4,000 crores of disbursements for the next year. That’s what we would be doing for. And you can work-out your numbers as far as the AUM is concerned, depending upon where we are based upon prepayments and others. But it will be a substantially healthy growth rate that we can assure you on behalf of the PFS teams.
V.P. Rajesh
Right. No, that’s very helpful. Thank you for that. My other question was that in terms of the NIMs, how do you see those moving? You know most of the banks and NBFCs that have reported so-far in this earnings season have been talking about the liquidity being tight. And is it fair to assume that it is not impacting us that much because we were — we have a lot of equity capital to be lending out at least in the current quarter. So just wanted to get a sense of that.
R. Balaji
Thank you. So Abina will take that.
Abhinav Goyal
Yeah. So, again this side, as regard to NIM, although it stood at 4.46 at this point of time, but as you rightly said that major contributor sir as of now is from equity. So going-forward, our focus would be on having a more loan portfolio in terms of more profitability to the company. So this ratio may be on — towards downward trend in-quarter to come, but the focus should be on a interest where we are targeting to maintain in range of 2% to 2.5% at least, which as of now it is standing at 1.85%. So that’s how our financials should be looked into. And with the more leverage that leverage would have an impact at one point of time, we were at INR13,321 crore. Right now, we are at slightly above INR5,000 crores. So that’s the target right now we are having to achieve in next one to two years. So this ratio will be down, of course, but there will be more value to the shareholders. That’s how our financials will be losed.
V.P. Rajesh
Got it. And then lastly on the credit rating, do you expect that to be upgraded before your year-end financials are in-place or just wanted to get a sense of the timeline that could it happen before your annual financials are available, presumably by then all the — all the matter of emphasis, etc would have been taken care of. So just wanted to get a sense of the timing on that.
R. Balaji
We can expect whatever we want. We are expecting much more on the credit rating agency. See, I will just — but civilities are part, right? I would just try to go back to what CRISIL in September has reaffirmed our rating — long-term rating at A. Three things in terms of our things, what are the constraints for us going-forward? One is ability to do business. Two, ability to garner additional resources. Three is the quality of the asset book. So now if you look into it, we are making beginnings in business. It will just only strengthen from here. We’ve also taken initial steps towards garnering resources. And as far as the asset quality is concerned by the end of March, there’ll be improvement and more importantly, resolution path will be clearly defined. So I don’t want to speak for them. But once the annual results comes only then you’ll be in a position to take a proper informed decision. So what we could say by June, significant changes would have happened and that’s when the action would begin significantly.
V.P. Rajesh
Understood. Thanks a lot and all the best.
R. Balaji
Thank you. Thanks,.
Operator
Thank you. The next question comes from the line of Amey Chheda with Banyan Capital. Please go-ahead.
Amey Chheda
Yeah. I just had two questions. So in the last con-call, sir.
Operator
So maybe we request you to use your handset, please?
Amey Chheda
Is it better now?
Operator
Yes, sir, slightly better.
Amey Chheda
Yes. So in the last con-call, we had guided for NIMs to be around 4%, 4.5%, right? And right now actually we are — is it a downward revision of our guidance for NIMs?
Abhinav Goyal
No, sir, NIM, as I mentioned in response to the previous question, see, NIM, as of now, the major contributor would be in terms of equity, right? So going-forward, our focus would be having more growth in terms of portfolio, so as to create more value to our esteemed shareholders and other stakeholders as well. Now if we do that, then there would be more leverage to the company. And with the increase in the leverage, there would be an adverse impact on the NIM. Of course, it would be maintained in certain range, it should be over 3% over a period of time.
Amey Chheda
Okay. And what is the ideal debt-to-equity that we are comfortable with?
R. Balaji
I mean, one second. Just to add-on in last-time, if I recollect properly, what we have said is two things. In the medium to long-term, we would ensure that our return on asset is anywhere between 2.5% to 2.75%, so that we’re able to maintain it and this. Now like what Abhinav was saying, as we are expanding our debt-to-equity, as we get more resources from banks, that be a compression of NIMs because our equity contribution is going down. And going back to the primary thing what you said, therefore the most important thing is what is our interest spread that we would be maintaining in the 2%, 2.5% so that we are able to get not only a healthy return on assets, but more importantly, as we expand our book size, even our return-on-equity improved substantially.
Amey Chheda
So once things stabilize, right, by the end of this year and probably by Q1 of next year, what is the kind of cost-to-income that we can see on a steady-state basis because this quarter it has increased due to higher opex.
R. Balaji
See, it’s not a question of opex, ultimately it’s a question of denominator. Once our books increase, I think we will ensure that our cost-to-income does not increase 15%. Now it’s 13% or something, 13% 13.5%. So we will ensure that it does not go more than 15% because the two areas where we need to focus upon, right, is while we are aggressively ramping-up the business, right. We will also invest in two critical areas. One is significant investments in our risk department as it is the regulators around the world are focusing a lot on risk. So that’s one thing which we’d be upgrading upon. And two, ramping our business development or relationship management team so that we are able to acquire more customers. And three, very importantly, in terms of upgrading our assessment capability capacity in terms of our credit team. So these are the three. So let me put it this way, since our balance sheet size is small, I, I would urge you not to look at quarter-on-quarter basis because sometimes it will give the thing. Look at overall 12 months. So by the end of FY ’26, they should be around 15 odd percent, that’s what it would stabilize at.
Amey Chheda
Okay. Just last question. So what would be the interest cost difference between, say, if you get funds from banks versus financial institutions? I’m not asking the exact rates for each of them, but will it be 250 or 300 basis-points differential for us.
R. Balaji
So could you repeat the question between these two people,
Amey Chheda
Banks and financial institutions?
R. Balaji
Let’s get and then we will talk about data. Okay. So at this point of time, close to 97%, 98% are from banks. Right. So at this point of time, whatever be the interest differentiate positive or negative, right, it would be minus Q. So I think this would be something which for FY ’27, that’s when we got diversified significantly beyond banks, that’s what it would make a — our difference to our sourcing mix.
Amey Chheda
The reason I’m asking you is that you know, know as we get more financial institution funding, right, they come at a slightly expensive or rate. So just wondering if our cost of funds or cost of borrowings will increase here on because of the mix change.
R. Balaji
So, see, I think the most important thing that’s a very valid question time. So the important thing from a financial institution perspective, there are two things. We need to have resource diversification to reduce concentration risk so that tomorrow whatever happens in any segment of the market, it does not impact us adversely. — and obviously that’s the price to be paid-for such a trade-off. So what is it that we need to do in order to maintain our margins was to deliver a good return on asset. So as to — therefore, that means we need to manage our asset side well. So here I would ask to answer what he is planning to do to ensure that our margins are maintained.
K. Srinivas
Yeah. Thanks,. See, couple of things that are there, which we are consciously looking at in terms of the growth in loan book as well as the existing asset book management. One, of course, is in terms of the ticket sizes. I think earlier BFS was very comfortable when the loan — overall loan book was closer to or in the range of, say, INR10,000 crores INR15,000 crores. We were happy with the higher-ticket sizes. But then, yes, considering the decreased loan book at the moment, we are from a very — from a concentration risk perspective, even on the asset size — asset side, we are looking at slightly lower-ticket sizes, so that the overall concentration risk is not too skewed. And secondly, we are also looking at different products and that doesn’t necessarily mean that we are looking at non-infrastructure sector or something. But even within the overall infrastructure segment, we are looking at areas where we can improve our yield. These can be in the nature of our structured products in the infrastructure space or these can be in areas within the infrastructure space where we — where we — where there is a possibility of making higher yield while looking at the credit quality closely. The second is from a diversification, we have a 25% space open for non-infrastructure segments and this is an area that we’ll be looking at very closely in terms of more — in terms of the diversification that it provides and also in terms of the wider opportunities that are available in this space.
Amey Chheda
Okay. Thank you so much.
Operator
Thank you. The next question is from the line of Manoj Kumar Pande, who is an investor. Please go-ahead.
Manoj Kumar Pande
Thank you for taking me back again. My — one more question is, sir, are you planning any resource phasing from foreign financial institutions? Because last two years back, something was planned and it could not materialize due to certain regions. I think it may have offer you some cost advantages also.
R. Balaji
Yeah, I will take that.
Abhinav Goyal
Yeah, Mr, you are right. So we explored it in 2020 and then again explored in 2022. Somehow it was not. Of course, we are open and we are exploring with our overseas relationship to have a further guideline to us.
R. Balaji
Okay. Okay. Just to add, Mr Pande, your entire — I think our entire perspective is reducing concentration risk both on the asset side, like what spoke about projects and also on the liability side. Okay. So primarily our entire approach is currently, 97% 98% is from banks, primarily public sector banks. So on the liability side, diversification will happen across three fronts. First front, diversify across the banking sector, get more number of banks on-board, get private sector banks also on-board. That is the first leg of diversification. Secondly, move from banks to non-banks, may say non-banks, whether mutual funds through bonds, mutual funds or insurance companies, that is the second-stage of diversification. Three, more importantly, diversify between domestic and international. That would be the third level. Now if we have to go towards international thing, apart from our performance, one of the critical thing was to have a qualification-free balance sheet, which we achieved as far as the end of 3rd-quarter is concerned and this full year’s annual financial statements will vindicate that. More importantly, the international investors would also look at other activities, look at organization in an holistic manner. So what we have also started doing, we are developing a roadmap for ESG so that apart from our financial performance, we are coming across as one of the key or leading organizations in ESG. And as far as ESG is concerned, the roadmap is fleshed out in the subsequent in the April or the July quarter, we’ll be able to share — share more details with all of you so that we want to emerge as a pioneer in the funding of green finance, not just do responsible lending, but ensure that across the entire value chain of PFS, we are seen as a beacon for the entire industry. That’s our roadmap and that’s what we work upon. With that and our improved financials and size, we’ll be able to attract the international investors whom we want at our terms in terms of tenure and pricing.
Manoj Kumar Pande
Okay, good, sir. Good. So we expect that next year-by second or 3rd-quarter, you would be able to approach some foreign financial institutions.
R. Balaji
No, I’m not saying that. Our road-map is ready because it’s a long multi-year journey. For us, next year primary thing is broad-basing within the domestic financial institutions, broad-based amongst banks and get some incremental monies from insurance and mutual funds. That’s the primary thing. International will take — if it comes great, but I think we one should look after ’27 and beyond.
Manoj Kumar Pande
Okay, sir. Thank you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to Mr R. Balaji for closing comments.
R. Balaji
Thank you. Thank you all. I think you all been patient with the organization for the past few years. Our only submission is that the green shoots are there but there’s a lot of hard work which we as a team need to do before we truly come up to speed and the next few quarters would be very interesting. What we could say as far on behalf of the management is significant efforts are going. Sometimes that timelines might go a quarter year or there, but we are reasonably confident that in the medium-term, we should be able to get to a good book size and more importantly, not only have a good return on asset, but once we’re able to leverage reasonably well, even our return-on-equity would start coming up to scratch. That said, look-forward to your inputs and support. Thank you very much.
Operator
Thank you. On behalf of PTC India Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you