Satin Creditcare Network Limited (NSE: SATIN) Q3 FY23 Earnings Concall dated Jan. 24, 2023
Corporate Participants:
HP Singh — Chairman and Managing Director
Aditi Singh — Head, Strategy
Analysts:
Rajiv Mehta — YES Securities (India) Limited — Analyst
Raunak Singhvi — — Analyst
Uday Pai — Investec — Analyst
Varun Ghia — Dimensional Securities Pvt. Ltd. — Analyst
Rishikesh Oza — RoboCapital — Analyst
Suraj Nawandhar — Sampada Investments — Analyst
Rahul Mishra — — Analyst
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Darshit Shah — ThinkWise Wealth Management — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Satin Creditcare Network Limited Q3 and Nine Months FY ’23 earnings conference call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. HP Singh, Chairman cum Managing Director of Satin Creditcare Network Limited. Thank you, and over to you, Mr. Singh.
HP Singh — Chairman and Managing Director
Thank you. Good morning, everyone. Thank you all for taking the time to join us and discuss our financial results for Q3 and nine-month ending FY ’23. I wish all of you a very Happy New Year and continued success now and in the years ahead. I hope that you would get a chance to go through our quarterly results and investor presentation, those who have not seen them yet, can access the same via our website and stock exchange.
It makes me happy to share with you that we have had a very good quarter and looking at the business performance, it is fair to say that we are on a solid ground with growth and profitability back on track. We witnessed significant improvement in our financial and operational performance, backed by sustained business momentum and consistent improvement in our asset quality, demonstrating the commitment and tenacity of our people towards the desire for excellence.
Before I move on to discuss the performance of the quarter, one thing which I would like to state is that, whatever we have stated as guidance with all the stakeholders over the last seven quarters, our performance is in line with the guidance as stated.
Coming to the operation front, we have had a healthy disbursement for the quarter at INR1,725 crores on a stand-alone basis, up by 59% year-on-year and 10% quarter-on-quarter. This was our highest quarterly disbursement in the last seven quarters. We have started laying emphasis on acquiring new clients and in Q3 FY ’23, first active clients accounted for 41% of stand-alone disbursement, up from 17% in Q3 FY ’22. Significant pick up in the disbursement led to a 11% year-on-year growth of AUM, it’s now stands at INR6,798 crores on a stand-alone basis. The consolidated AUM stood at INR7,945 crores. This growth is despite the write-offs done in nine months FY ’23. If we had not done the write-offs, the year-on-year growth would have been 20% on a stand-alone business.
A positive traction on the business side, we are poised to deliver around 15% to 20% growth in this financial year, which is well within our guided range. The most important aspect of our business now is the buildup of the new portfolio, which originated from July ’21 onwards. The performance is far excellence with PAR 1 at 0.6% and PAR 90 at 0.1% as on 31 December 2022. This portfolio quality of ours is way better than the industry standard as seen in the data by CRIF Highmark. This is a testimony to our robust underwriting process and learning from the past cycle.
The share of this new portfolio in overall on-book MFI portfolio is 90% as on date. The on-book GNPA of the Company stood at INR188 crores, which is 3.92% of the on-book portfolio down from 8.61% as on December ’21, Assam constitute 65% of on-book GNPA at INR122 crores, excluding Assam GNPA as on December ’22 stood at 1.45% and in value terms, a mere INR65 crores. The Company has sufficient on-book provisions amounting to INR140 crores as on Q3 FY ’23, which is 2.9% of on-book AUM.
During nine-month FY ’23, collection against write-offs was INR30 crores, which is till date the highest collection done by us. This is a result of our persistent efforts to collect back bad loans, even after write-offs. The collection efficiency for Q3 FY ’23 stood at 100%. We are gradually scaling our cashless collection, which is INR200 crores collected through digital mode in nine-month FY ’23. If we include cash drop [Phonetic] as part of cashless, the total share of cashless collection will be 26% vis-a-vis industry at about 21%, which is the September ’22 figure.
Now, let me update all of you about our restructured book as on date. This has now reduced from INR1,151 crores, which is INR1,151 crores as on September ’21 to INR200 crores as on December ’22. In percentage terms, it has reduced from 21.4% to 4.2% of the on-book portfolio. This reduction in restructured book is a result of INR588 crores of collections. We also have written-off INR363 crores from this book. As on December ’22, out of the restructured book of INR200 crores now, 50% of the book amounting to INR99 crores is zero DPD. We have created provisions of INR82 crores on this book, thereby ending the pain of the restructured book.
Coming to our Assam portfolio, we are optimistic of a turnaround in this geography and have disbursed loans amounting INR159 crores during nine months FY ’23. The delinquencies in this book have been negligible with PAR 1 at only 0.07% as on 31 December 2022. The on-book AUM stood at INR270 crores, which is 5.6% of the total on-book AUM.
To give you an update on AMFIRS, category one and two have been successfully completed. The groundwork for category three borrowers, the sampling of data by credit bureaus have started. Further, the Company is well-capitalized with the CRAR of 27% up from 22.6% in Q1 FY ’23 and a balance sheet liquidity of INR1,300 crores as on Q3 FY ’23. During the quarter, the Company received the second tranche of INR25 crores against the conversion of fully convertible warrants from Florintree Ventures LLP. This investment sends a very positive signal and provides comfort to all our stakeholders. With this growth capital, we are well-poised to have a comfortable capital position.
Moving further, the managerial and leadership skills of the management team at Satin have earned us another feather in our cap. I’m happy to share that with all of you that Satin has been recognized as the Top 50 Companies with Great Managers 2022 out of 500 companies by the Great Managers Award, a platform that recognizes great managers and company that nurture great managers.
At Satin, we reiterate our commitment to sustainability of the environment and support of our communities through our various initiatives and the efforts of our committed workforce. Our Clean Energy Program continues to attract participants and recognition, while benefiting our customers. The core objectives of CSR activities on fostering women’s empowerment and encouraging education among the nation’s youth and gives me immense pleasure to share that we have been awarded by the Indian Social Impact Award for Best Education Support Initiative of the Year 2022-’23, solidifying our resolve [Phonetic] to cater to community needs. We have constantly grown by placing a strong emphasis on customer service over the years. The cornerstones of Satin are: technology integrated processes, robust underwriting, domain expertise, driven workforce and forward-thinking leadership. Going ahead, we are confident of continuing the growth momentum with better cost efficiencies while maintaining the asset quality.
Now, let me give you the financial and operational highlights of our Company. Starting with the consolidated operational highlights. Our AUM as on 31 December stood at INR7,945 crores. We have a customer base of 27 lakh as on 31 December ’22. Our disbursement for the quarter stood at INR1,880 crores as compared to INR1,348 crores in Q3 FY ’22. Our assigned portfolio stood at INR1,985 crores. As of 31 December 2022, 100% of our disbursement is made through cashless mode while cashless collections stood at 6%. We have also adopted website payment options and UPI auto debit. Stand-alone operational highlights are: stand-alone disbursements for the quarter stood at INR1,725 crore as compared to INR1,085 crore in Q3 FY ’22. We observed a strong growth momentum in the disbursement as a result of cautious and calibrated approach taken time-to-time. Average ticket size of MFI lending for the quarter stood at INR43,000.
Talking about our collection efficiency, the trends are as follows: Q1 FY ’23 97%; Q2 FY ’23 100%; Q3 FY ’23 100%. The collection efficiency of Q1 FY ’23 Q2 and Q3 FY ’23 stood at — is excluding the restructured portfolio. The collection efficiency on restructured portfolio for Q3 FY ’23 stood at 79.2%. We have a well-diversified customer base, a well-penetrated branch network across states and 77% rural exposure. On-book GNPA reduced from 8.61% as on Q3 ’22 to 3.92% as on Q3 FY ’23, INR452 crores to INR188 crores, out of which INR122 crore pertains to Assam. Our restructured book now stands at INR200 crores, which is approximately 4.2% of the on-book AUM.
As of 31 December 2022, our total branch network count stood at 1,260 branches, which is spread across 401 districts. We have a total state and UTs count of 23, which makes us a well-diversified pan India micro finance player. As of 31 December 2022, 96% of our districts have less than 1% of the portfolio exposure. We have seen a significant reduction in our portfolio risk in terms of exposure to top four states, which contributes 55% in Q3 FY ’23 versus 77.3% in FY ’17.
Our well-thought-out diversification strategy has enabled us to sail through difficult situation and capitalize on our idea of enriching our clients’ lives through financing of various products. We have disbursed around INR35 crores during nine-month FY ’23 under the product finance category, which includes loans for bicycles, solar products, home appliances and consumer durables.
An update on the subsidiaries. Business correspondent services under Taraashna Financial Services has an AUM of INR563 crores. As of 31 December 2022, the Company operates through 157 branches and has more than 3.2 lakh active loan clients. Satin Finserv limited, our MSME arm has an AUM of INR200 crores with three consecutive profitable years. CRAR of 54.3% and gearing of 0.9x. Total net worth stands at INR112 crores. Satin Housing Finance Limited has now reached an AUM of INR383 crores including DA of INR36 crore, having a presence across four states with 4,586 customers. SHFL has a 100% retail book. The company has 18 active lenders including NHB refinance. CRAR of 58.4% and getting of 1.9x. Total net worth stands at INR122 crores. The quality of portfolio remains intact with GNPA of 0.5% as on December ’22. To update you on amalgamation of the two wholly-owned subsidiaries, Taraashna Financial Services Limited and Satin Finserv limited, second motion application was filed with the Hon’ble NCLT on May 25, 2022. The said joint motion application was admitted by Hon’ble NCLT in its hearing dated July 08, 2022 and issued necessary directions of serving notices and newspapers advertisements. The Company had served the notices to government authorities and completed publication in requisite newspaper as per order. The Hon’ble NCLT in its hearing dated January 2, 2023 has reserved the order for second motion application. The pronunciation of order is awaited.
Lastly, as we are trading on the path of growth, we are prepared to the road of more profitability and cost-efficiency.
With this, I would like to open the floor for questions.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Rajiv Mehta from YES Securities. Please go ahead.
Rajiv Mehta — YES Securities (India) Limited — Analyst
Yeah, sir. Hi. Congratulations on a very healthy set of numbers. So sir, it’s good to see that we are actively addressing the delinquencies and flows from the old portfolio. And at the same time, the delinquencies from the new portfolio are minimal. So the credit cost picture seems to be clear that it’s going to go down from here on. But my question is on the income growth, because in the last few quarters — and this income growth has been coming from off-balance sheet funding and off-balance sheet direct assignments. So the income growth from the on-balance sheet portfolio growth and on-balance sheet funding availability, how should one look at it in the coming quarters? Or would the direct assignment remain a significant part on a continuous basis? Or then we will move the portfolio more towards on-book basis, the availability of on-book funding?
HP Singh — Chairman and Managing Director
So, Rajiv, if you look at the past history, post the pandemic, there was a complete dry-down in terms of the assignments. It dropped down to levels where nobody was actually doing assignments crossover there. Once the metrics for credit disbursements have started picking up, the lenders have started coming back again in terms of how we are looking at D assignment. Now, this is one of the products, which is available from majorly public sector banks.
In terms of what we look at is, when we actually — during the last stages when the pandemic was about to happen, our off-balance sheet and D assignment was close to about 25% to 30%. We are reaching that level and we will probably be within that range-bound in terms of how we look at across over there. So for us, I think, as this probably comes to a place where we are in the range-bound analysis of about 25% to 30%, we will remain across over there. And once that comes up, which we are now closer to that across over there, I think, the on-book portfolio will also start increasing across over there. And you have to probably look at from that broader perspective that this is also a product which is available and a lot of lenders actually tried to do this in terms of getting as tools in their books across over there. So my sense is, we’re probably looking at the regime post the pandemic resource as comparable to what the previous was before the pandemic of about 25% to 30% and that will remain.
Rajiv Mehta — YES Securities (India) Limited — Analyst
And sir, can you comment on on-balance sheet funding availability? Because you spoke about 15%, 20% growth for the current year and we are at 10% growth currently, at the end of Q3. So we need to grow at a much rapid pace from here on. And also looking into FY ’24, I mean, is on-balance sheet funding also coming through in the required amount as you would want to grow our on-balance sheet portfolio?
HP Singh — Chairman and Managing Director
Yeah, it is there. So Rajiv, as I’ve reiterated so many times is that, the Q4 is always a very big quarter for — in the entire year, as such. And we are poised to have that same kind of growth pattern when you look at the last quarter, which happens across over there and we’re well on close to that. We had guided for a 15% to 20%, we are on course to do that. We’ve done 11% and I think we’ll be within our guided range of 10% to 20%. On-book raising of, I think money is not a problem at all. I said, it’s only a few public sector banks, which you look at this product mainly in terms of how the funding is done. And that is how it probably moves around in the complete MFI sector, as such. And so, raising funds for on-book and the availability is a lot across over there and we have a very big basket. And if you look at our lenders, the basket contains of about 65 to 70 lenders, which are there. So no problem in terms of raising funds for on-book portfolio loans.
Rajiv Mehta — YES Securities (India) Limited — Analyst
And sir, how should we look at your FY ’24 profitability metrics, ROA, ROE? Because currently we have high trade cost and we have a direct assignment income, but when we go into FY ’24 the levels normalize for direct assignment and with the levels normalized for credit costs. And when you have growth coming back, what could be the sustainable ROA, ROE level that you would look to in FY ’24?
HP Singh — Chairman and Managing Director
So I think overall, I’m not giving you a guidance, but the range is which I’m talking about, we’re looking at a 20% growth, that is one. We are looking ROA about 3%. We are reaching there only basically. We’re looking at a credit cost of about 1.5% to 2% on a stable basis across over there, whatever pain had to happen is probably now on its last stages of finishing off and this is how the overall metrics look like, growth, profitability, credit cost, I think this is things stand across.
Rajiv Mehta — YES Securities (India) Limited — Analyst
Got it, sir. Thank you and best of luck.
HP Singh — Chairman and Managing Director
Thank you so much, Rajiv.
Operator
Thank you. [Operator Instructions] Next question is from the line of Raunak Singhvi [Phonetic], retail investor. Please go ahead.
Raunak Singhvi — — Analyst
Hi. Good morning, sir.
HP Singh — Chairman and Managing Director
Good morning, Raunak.
Raunak Singhvi — — Analyst
Congratulations on a good set of numbers.
HP Singh — Chairman and Managing Director
Thank you.
Raunak Singhvi — — Analyst
A few questions. I see that — we have seen that our customers acquisition has been broadly flat. So — and we have 27 lakh customers as of now. So can you help me as to how — what proportion will be repeat customers who should be in multiple cycles? And what proportion will be new to credit, which we will be having?
HP Singh — Chairman and Managing Director
So, Raunak, if you look at our presentation, we’ve clearly mentioned that the L1 customers now are 41% as compared to our earlier this thing. So it’s been a gradual process of — post the pandemic once things have stabilized to acquire — we’ll acquiring new customers. Our sense is flattish basically, because earlier for the last couple of years, we were just concentrating only on our repeat customers across over there. And now — with now L1 customers probably coming to the forehold and we are also going forward I think this probably will be a test. Now, we’ll have a start rise in terms of the numbers of clients which we address.
Raunak Singhvi — — Analyst
Sure. Thank you. Also one question was on to gross yield. This quarter the gross yield has been very high at 22.8-odd-percent. And so, what is generally the reason? Or is this a sustainable gross yield which you are looking at? What could be the sustainable gross yield targeted for FY ’24?
HP Singh — Chairman and Managing Director
So, the yields are marginally improving, one that the portfolio quality is improving. Earlier there used to be certain yield lost because of high overdues. As the overdues are coming back on track so yield is going up. And in any case, the lending rates have also gone up, corresponding, there’s a little bit of increase in cost of funding, but cost of funding has not increased as much as the yields have improved. So it is there, so we can surely look at excluding the DA impact close to about 11.5%, 12% of yields in the business.
Raunak Singhvi — — Analyst
Okay. Okay. Thank you. So do you think that we have provided a credit cost of around INR49 crore…
Operator
Raunak, sorry to interrupt you. Your voice is breaking.
Raunak Singhvi — — Analyst
Am I audible now?
Operator
We can hear you but your voice is not very clear, it’s breaking.
Raunak Singhvi — — Analyst
I’ll probably try again. We have provided a credit cost of INR49 crores…
HP Singh — Chairman and Managing Director
Raunak, we can’t — it’s all breaking up.
Raunak Singhvi — — Analyst
Okay. I’ll dial again. Thanks.
Operator
Thank you. [Operator Instructions] Next question is from the line of Uday Pai from Investec. Please go ahead.
Uday Pai — Investec — Analyst
[Technical Issues]
Operator
The line for the participant dropped. We move to the next participant.
Next question is from the line of Varun Ghia from Dimensional Securities. Please go ahead.
Varun Ghia — Dimensional Securities Pvt. Ltd. — Analyst
Hello. Sir, I just have two questions. One is the provision increase during the quarter. So is it an area of concern?
And secondly, what was the slippages during the quarter?
Aditi Singh — Head, Strategy
No, you are saying the entire credit cost?
Varun Ghia — Dimensional Securities Pvt. Ltd. — Analyst
Around, INR55 crores, yeah.
Aditi Singh — Head, Strategy
Yeah. So this is our endeavor to clean the book. And as you say, we are coming — like what sir had said in the beginning of the call, we are cleaning the books, the legacy portfolio we are cleaning, so it’s a part of that. It’s not a point of concern because the 90% portfolio, we have already told that it is already inescapably clean and good asset quality.
HP Singh — Chairman and Managing Director
You need to see the slide on restructured portfolio, we have written off close to about INR25 crore-odd in the restructured book, etc. So we are cleaning up the book simultaneously, so that there’s no pain left out, which is we are broadly GNPA about 65%, 70% of the GNPAs are only from Assam. So we are cleaning up the book simultaneously. So 90% of the book is clean and balanced, most of it is from Assam, wherever there’s a little bit of stress left out.
Varun Ghia — Dimensional Securities Pvt. Ltd. — Analyst
Okay. And what will be slippages during the quarter?
Aditi Singh — Head, Strategy
Around INR85 crores. All in total, but then there are whatever write-off, they are after that.
Varun Ghia — Dimensional Securities Pvt. Ltd. — Analyst
Okay. Understood. Thank you.
Aditi Singh — Head, Strategy
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Uday Pai of Investec. Please go ahead.
Uday Pai — Investec — Analyst
Yes, sir. Sir, what is the interest rate that you are offering on micro finance currently?
And sir, second question is, what is the growth outlook on micro finance [Technical Issues]?
HP Singh — Chairman and Managing Director
Sorry, if I can — it’s not very clearly audible. If you’re talking about interest rates, which we are charging from the borrowers.
Uday Pai — Investec — Analyst
Yes, yes.
HP Singh — Chairman and Managing Director
It’s about 24%.
Uday Pai — Investec — Analyst
24%. And what will be the growth outlook for FY ’24, when competition is [Technical Issues]?
HP Singh — Chairman and Managing Director
So our guided ranges are close to about 20%.
Uday Pai — Investec — Analyst
20%. And do you see the competition increasing like can you give a bit flavor on competition and how it is affecting you or something like that?
HP Singh — Chairman and Managing Director
So I don’t know if you’ve read the latest reports, which are coming in, the MFI sector is going to be close to about INR12 lakh crores. Right now, it’s about INR3 lakh crores. That is where the growth and the demand stands like in today’s world. So competition, all the more feasible and we have more competition, in fact, it’s better for us.
Uday Pai — Investec — Analyst
Okay, sir. Thank you.
HP Singh — Chairman and Managing Director
Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Rishikesh from RoboCapital. Please go ahead.
Rishikesh Oza — RoboCapital — Analyst
Hi, sir. Thank you for the opportunity. Sir, I have only one question. This quarter, our operating expenses lower compared to last year and also last quarter. So is this like a sustainable level of opex you’re going to see? Or what can be the opex going ahead, please? Can you guide on the same?
HP Singh — Chairman and Managing Director
See, we are constantly trying quarter-by-quarter to bring our opex down, and this has probably yielded results as you can see this quarter. Our endeavor is, as the portfolio in terms of when we look at recovery, we’ve got separate recovery teams — sorry, that’s not the right word to use, separate teams which are looking at write-off collections as such. So — and as we said, we’ve had the highest ever in these nine months that we’ve been able to get about 30 quarters. Once this starts taking the backseat across over there, I think we’ll have more operating efficiency coming up. Similarly, acquisition of more customer center size as we are trying to increase, once things stabilize, I think the operating efficiencies will also start kicking in. And we are looking at maybe a sub-6, somewhere we are able to bring it down. So we are right now at about 6.63%. Our endeavor in the next few quarters is also to bring it down to about 6% and it’s very sustainable.
Aditi Singh — Head, Strategy
Cost efficiency and the basic things will help us have a desirable opex number.
HP Singh — Chairman and Managing Director
Yeah.
Rishikesh Oza — RoboCapital — Analyst
Okay, okay. Thank you very much, sir.
HP Singh — Chairman and Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Suraj Nawandhar from Sampada Investments. Please go ahead.
Suraj Nawandhar — Sampada Investments — Analyst
Hello, sir. Good morning.
HP Singh — Chairman and Managing Director
Good morning.
Suraj Nawandhar — Sampada Investments — Analyst
The asset quality on the new portfolio has been impeccable, right? Is it sustainable at this level, sir? Where do you see the asset quality 12 months or 24 months down the line?
HP Singh — Chairman and Managing Director
See, this is — I won’t say early days as yet, but I think what we build up in the last, how it’s been — it’s ramped for about one and a half years now. My sense is that, it might probably be in the same range as is. Definitely, yes, but when I talk about that we got a 90-plus NPA of about 0.1%. We have not said that, it would probably be continue forever. But definitely, yes, the way we are looking at our underwriting process, the way we have actually — and this is what we’ve remained flat for the last few years as such, just to make sure that our credit quality does not suffer when we actually get into the mode where growths are taking place, and that has not been shown. It’s sustainable, yes, definitely, yes. And that’s why I said my guided range is that, we would have a credit cost on a stable year at about 1.5% to 2%. Internally, our team has taken a much better target than that, but that’s internal for us, but this is the overall thing which we are trying to guide everybody that it will be in this range-bound across.
Suraj Nawandhar — Sampada Investments — Analyst
Okay. And sir, how do you see your loan mix changing going forward? Are you focusing more on housing loans or MSME loans or our loan book, as mentioned, driven by micro finance?
HP Singh — Chairman and Managing Director
No. So we got two separate subsidiaries, which do their independent business of MSME financing and housing finance, and they are growing at their own pace. If we say that, I think they’re growing at about 50%, 60% year-on-year, and they will continue to do that. So they are separate from the micro finance holding company, as such.
Suraj Nawandhar — Sampada Investments — Analyst
Okay. And sir, what is your cost-to-income ratio for this quarter?
Aditi Singh — Head, Strategy
47%.
Suraj Nawandhar — Sampada Investments — Analyst
47%?
Aditi Singh — Head, Strategy
Yeah.
Suraj Nawandhar — Sampada Investments — Analyst
Okay. And sir, any plans to open new branches?
HP Singh — Chairman and Managing Director
Well, that happens across in terms of our operations across but we normally open about 15 to 20 branches quarter-by-quarter, that’s how…
Aditi Singh — Head, Strategy
We opened 22 branches this quarter, too. They are in very high branch opening options, other than where we want to slightly deep dive more.
HP Singh — Chairman and Managing Director
That’s why I said about 15 to 20 branches quarter-on-quarter, that’s what we try and look that.
Suraj Nawandhar — Sampada Investments — Analyst
Okay. Okay. And sir, this cost-to-income ratio will remain in this range with new branch openings or it will go up?
HP Singh — Chairman and Managing Director
No, it won’t go up, 15-20 on a denominator of about 1,000 branches, I think it’s hardly anything. So it doesn’t affect the cost-to-income.
Suraj Nawandhar — Sampada Investments — Analyst
Okay, okay. No problem. Thank you, sir. All the best.
HP Singh — Chairman and Managing Director
Thank you so much.
Operator
Thank you. [Operator Instructions] Next question is from the line of Rahul Mishra [Phonetic], individual investor. Please go ahead.
Rahul Mishra — — Analyst
Thanks for taking my question. So just on this guided credit cost of 1.5% to 2% on steady state, would you say that steady state has now begun? And I’m saying this on a full book, so not differentiating between pre-July, post-July, Assam, or do you think that’s a couple of quarters away?
HP Singh — Chairman and Managing Director
So when I say steady state, steady state is because if I tell you right now, I don’t think so I’ll be doing justice to my statement. When I say steady state starts from the steady state of in terms of affairs both in collection as well as disbursement. And steady state starts from FY ’24. So it happens from 1st of April, if I tell you a steady state, the way growth, the way disbursement, the way collection and the way I said the new disbursements which are taking place. So that’s why the guidance I’ve said is 1.5% to 2%. Internally, our target is much better than that, but this is what the steady state of affairs talks about.
Rahul Mishra — — Analyst
And this would be the whole book, everything included, pre-July, post-July?
HP Singh — Chairman and Managing Director
Yes, the whole — exactly. Exactly. And Assam is an outlier. And if you get category three, that will be an outlier in terms of whenever if that happens across. So we are confident it might happen before we end this quarter.
Rahul Mishra — — Analyst
Thank you.
HP Singh — Chairman and Managing Director
Thank you.
Operator
Thank you. Next question is from the line of Himanshu from Aditya Birla Sun Life Asset Management. Please go ahead.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Yeah. Hi, sir. Thanks for the opportunity. Just one question for me, probably I just joint up a little late [Speech Overlap]
Operator
Sorry to interrupt you. Your voice is not clear. May I request you to speak through the handset?
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Hello? Yeah. So just one question is, probably I would have joined the call a little later, you would have already answered, probably, sorry for that, but I have one question. So if you can give me this since you have already given the post-July onwards, you have already given in terms of the PAR 0, 1 to 90 DPD. Can I get a similar trend for the 10% of the portfolio which is prior to July ’21? How is the nature of this basically in terms of the forward flows in the 0 to 90 DPD?
HP Singh — Chairman and Managing Director
See, Himanshu, I think we haven’t done that analysis. But just to give you a brief, this thing, out of this 10% — about INR200 crores will be restructured book. So that is there.
Aditi Singh — Head, Strategy
And that trend is shared.
HP Singh — Chairman and Managing Director
And that trend is shared basically because in that we’ve got about INR100 crores, which is zero DPD, rest probably, I don’t have a bifurcation of 1 to 90 and 90-plus…
Aditi Singh — Head, Strategy
Around 78 is in PAR 90 and we shared that.
HP Singh — Chairman and Managing Director
So 78 is PAR 90, and we’ve got a provision of about 82 across over there. Balance is of, I think, about INR200 crores, INR300 crores, which is probably the balance which was left out of our own book of about 4,000 — close to about [Speech Overlap]
Aditi Singh — Head, Strategy
[Speech Overlap]
HP Singh — Chairman and Managing Director
So balance is about INR200 crores. And you can do the analysis, the pain probably of — even the 10% book which is there is in terms of the more stressful for the restructured book, and that is where the numbers stand.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Okay. Sir, secondly — okay, probably if you wrote these numbers. Probably you can give me some color around it in terms of the collection efficiency? Because collection efficiency as a restructured you have already stated at 79%. On the overall which is at 100%, probably of this remaining portfolio of 10%, which is outside the restructured, but still the prior to the July. Can I get the collection efficiency number if you have?
Aditi Singh — Head, Strategy
Himanshu –. So Himanshu, on 96% of the book, the collection efficiency is 100%. On 4% of the book, which is restructured, the collection efficiency is 79.2%.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Okay, okay.
Aditi Singh — Head, Strategy
This is all inclusive. Even the other book, which is pre-July ’21, but not restructured, the performance was not that bad. And another way to look at it is, when we say our on-book GNPA is mere INR65 crores, INR66 crores barring Assam, that includes the whole of the book. So that is another way to look at it.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Clear. Clear. And my last question is around the disbursement, since you’ve already given a couple of guidance in terms of the ROA stated credit cost, AUM growth. If you can give me around what sort of a disbursement trend that we should target for you, the way you are targeting for the next year that we should try? What sort of a disbursement and how probably risk-sharing that you would have very comfortable probably if any new states that you are very comfortable in terms of lending and probably once they have — and which states where you are still cautious on road [Phonetic]?
HP Singh — Chairman and Managing Director
Yeah. I think overall, what we’re looking at is, when I said the 15% to 20% growth for the next year means that average it will probably come out to about INR600 crores, INR650 crores month-on-month basis. That is what the disbursement plan looks like. But the 20% growth is what we are targeting. And this year also it will be 20%.
And in terms of geography, I think we are probably looking at each and everything. We don’t want to open up any more geographic as such, merely because I think we’ve covered 23 states. We don’t want to now get into maybe any other state but have a deep diving into whichever state we’re probably working in. For us, UP, Bihar, I think are our mainstay states, and we will continue to have a deep dive into those states, as such. But I think overall, it’s normal, as such. There’s no cautious stand to be taken across anywhere. And I just gave you an indicator in terms of my speech, I think maybe you were not there. At the time, we’ve disbursed now and our — the new portfolio over there, the NPAs…
Aditi Singh — Head, Strategy
PAR 1 is 0.06%.
HP Singh — Chairman and Managing Director
PAR 1 — yeah, 0.07%. Yeah.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
Okay, sir. And can I lastly, can you give some asset quality color of the non-MFI portfolio?
Aditi Singh — Head, Strategy
So we have given for both the company [Speech Overlap]
HP Singh — Chairman and Managing Director
Both [Speech Overlap] given. So…
Aditi Singh — Head, Strategy
0.5% for the housing company and around 4-point something for HFL and GNPA and net NPA around 2. So we’ve shared on their respective slides, Himanshu. Happy to guide you to that again.
Himanshu Taluja — Aditya Birla Sun Life Assets Management Company — Analyst
No. I will look at that. Thanks a lot.
HP Singh — Chairman and Managing Director
Thank you, Himanshu.
Operator
Thank you. The next question is from the line of Darshit Shah [Phonetic] from ThinkWise Wealth Management. Please go ahead.
Darshit Shah — ThinkWise Wealth Management — Analyst
Yeah. Thanks for the opportunity. My question is around the employee count. So when we look at the FY ’22 employee count, it’s come off substantially as on today. But when I look at the employee cost, the cost for nine-month FY ’22 and nine-month FY ’23, there’s not much difference in the cost. So if you could help us understand this? And when you say that your loan growth target is 20% for the next year, did we see a substantial increase in the employee cost, as well as the employee count? Thank you.
HP Singh — Chairman and Managing Director
So I think if you look at the yearly this thing, I think you will have to look at the growth in terms of how the increments and appraisals happen, that’s also one of the factors which you have to take into account. It doesn’t remain a steady state in terms of whenever we have a drop in the terms of employees. And also, we are taking maybe slightly experienced guys when we are looking at write-off collections to be done. These are not employees who would — as we do it in the loan officer category where we employ them as technically graduates or maybe 12th standard pass. So our loan officers are based on that. So that is where probably you might look at maybe the slight difference in terms of that.
And the second question was for you in terms of loan growth?
Darshit Shah — ThinkWise Wealth Management — Analyst
Yeah. So when we say that we’re going to do a 20% loan growth next year, so would this mean that the number of employees, specifically the [Technical Issues]
HP Singh — Chairman and Managing Director
No. No. That won’t happen. Our current optimum efficiency for every loan officer looking at borrowers is close to about 450-odd. In fact, for us, internally, we’ve set a benchmark that we would like to go to about 500 to 550. So we will not have any practical rise in terms of our employee cost or personnel cost based on that because the optimum efficiency has started setting in post the pandemic when new clients are also getting acquired, and we are deep diving into every branch in terms of increasing our number of loan clients per branch.
Darshit Shah — ThinkWise Wealth Management — Analyst
Thank you so much. That’s helpful.
HP Singh — Chairman and Managing Director
Thank you.
Operator
Thank you very much. As there are no further questions, I would now like to hand the conference over to Ms. Aditi Singh, Head, Strategy for closing comments. Please go ahead.
Aditi Singh — Head, Strategy
Yeah. So I just want to say thank you for — to all of you for coming this morning and attending our call. And I sincerely hope we have addressed all your queries, we try to be thorough here as much information be transparent. If still you feel that you want to understand something more deeper or have a detailed discussion, you can always get in touch with me or my team. My name is Aditi Singh, I Head Strategy. You can also get in touch with my colleague, Shweta Bansal, DGM-IR, and we shall be happy to take you through any details you want to understand. Thank you so much. Have a good day.
HP Singh — Chairman and Managing Director
Thank you.
Operator
[Operator Closing Remarks]