Ugro Capital Ltd (UGROCAP) Q3 FY23 Earnings Concall Transcript

Ugro Capital Ltd (NSE: UGROCAP) Q3 FY23 Earnings Concall dated Jan. 27, 2023

Corporate Participants:

Shachindra Nath — Vice Chairman and Managing Director

Amit Mande — Chief Revenue Officer

Anuj Pandey — Chief Risk Officer

Kishore Lodha — Chief Financial Officer

Analysts:

Satish Kumar Sharma — Choice Equity Broking — Analyst

Shital Gawade — ULJK Financial Services — Analyst

Ankur Kumar — Alpha Capital — Analyst

Akash Jain — Ajcon Global Services Limited — Analyst

Nirvana Laha — — Analyst

Joel Ilias — — Analyst

Tulsi Badrinath — — Analyst

Vignesh Iyer — Sequent Investments — Analyst

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to UGRO Capital Limited Q3 FY ’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

From the management team, we have today, Mr. Shachindra Nath, Vice Chairman and Managing Director; Mr. Anuj Pandey, Chief Risk Officer; Mr. Amit Mande, Chief Revenue Officer; Mr. Kishore Lodha, Chief Financial Officer; and Mr. Nirav Shah, Chief Strategy Officer and Head of Investor Relations.

With that, I now hand the conference over to Mr. Shachindra Nath. Thank you, and over to you, sir.

Shachindra Nath — Vice Chairman and Managing Director

Thanks, Inda. For some reason, my LAN line is not working, so I’m speaking from mobile. Good evening to all participants. Thanks for spending time to listen to our results for this quarter. We have delivered as per our plan, which has been made public.

But before that, for those who might be joining new, I would like to take you through the journey of UGRO in few words. UGRO was set up as India’s first listed vehicle which started fresh. We acquired a small listed NBFC in 2018 and raised approximately INR950-plus crore of equity capital from globally-acclaimed private equity investors. We started our lending journey in Jan 2019, which was the first — just post ILFS crisis. In 3 years of our inception, we have seen through many other crises, like DHFL, Yes Bank, COVID and all other kind of other challenges for FinTechs and NBFC. For all of us here and for our customers, this has been one of the most difficult times. Still, we have persevered and crossed the milestone of INR5,000 crore of assets under management and 38,000 customers maintaining the credit cost under control. This, among our peer set, is the most accelerated buildup of a lending business in this segment. This is the result of overinvesting in our operating infrastructure, data analytical infrastructure and distribution architecture, and we are seeing the results on asset growth and bottom line performance.

Since our inception, we were, and continue to be, of the opinion that India’s small business lending is at inflection point of explosion. We have seen a 1.5 decade of consumer financing growth. And now you would see a similar growth for small business financing. This is happening on the back of being able to underwrite an SME customer through the lens of fast emerging data stack underpinned by GST, digital banking, maturity of bureau, coupled with deep data analytical progress, which can underwrite the cash flow and not just the collateral.

In addition to this, we believe that every small customer is different, and they are not homogenous. Therefore, you have to evaluate them with sectors and subsectors. We therefore built our credit scoring model, GRO Score, which uses the data of GST banking and bureau and our underwriters uses our sector as subsector-based templated underwriting scorecard. We have one of the largest data analytics and technology teams for a company of our size and vintage. We always believed that data and technology will drive the MSME lending in India and true to our belief, the entire ecosystem is now transitioning to an on-tap financing similar to what we have seen in consumer lending many years back. Our credit scoring model, which provides a decision within 60 minutes is now well accepted across lenders and our co-lending partners.

In last few calls, I did mention that India’s NBFC lending model is transitioning from an on-balance sheet to now off-balance sheet lending. And UGRO is leading this transition as a leader. So on one side, we have the strength of serving the MSME through multiple products, and on the other side, we have our co-lending and liability partners. We have been investing heavily in teams and distribution networks and taking all the costs upfront by creating a franchise which has the strength to now originate loan in excess of INR600 crore per month.

Banks lending to NBFC like us will take another shape in the form of co-lending and, here again, we have seen the changes over the last many months. We continue to maintain a healthy mix of on-balance sheet and off-balance sheet risk by steering our co-lending and co-origination partnership with more than 10 of the large banks and multiple large NBFCs. As we speak, our off-book AUM ratio has reached 35%, which we had targeted to achieve by March ’23. With respect to the on-balance sheet liability, UGRO is one of the few companies who have been backed by 65-plus lenders in a short span of time. Our total off-book volume was INR724 crores compared to INR590 crores in quarter 2. The breakup of INR720 crore was co-lending of INR273 crore, direct assignment of INR108 crore, and this was supported by co-origination of INR343 crores. Income of co-lending and direct assignment is recognized upfront on the basis of discount rates. However, for the co-origination income, it accrues to us over life of loan as if the loans were on our balance sheet.

Over our 4-year journey of precise execution and a process-driven approach, UGRO, today, has become a large-scale MSME lending platform, comprising INR5,000 crore of asset under management, INR1,800 crore of quarterly disbursements, 100 branches, 38,000 customers and more than 1,500 employees. While our numbers have been made available to you, I would share few highlights.

Momentum in growth of AUM and disbursement, our total AUM increased to INR5,095 crore from INR4,370 crore in last quarter, up by 16% quarter-on-quarter. We have recorded the highest ever disbursement in Q3, which stood at INR1,874 crore for the quarter, which is 13% higher than the last quarter. Growth in terms of the total net income, our total — net total income has increased to INR108 crore for Q3 versus vis-a-vis 24% in Q2 ’23. As a percentage of on-book AUM, the net total income increased to 12.9% from 11.3% in last quarter. Our OpEx and cost-to-income ratio stood at 63.9% in Q3 ’23 as compared to 62.7% in Q2 ’23, primarily on account of certain one-off expenses being recognized in the quarter. Adjusted for this one-off expenses, our cost-to-income ratio would have been around 60%. The employee cost month-on-month basis have been stable. The increase is only on account of bonus provisions, which we do normally in the last 2 quarter of the financial year.

Our path to the higher ROA and ROE and profitability, the trend is very clear. Our PBT has increased to INR22.2 crores in Q3 ’23, registering a 27% quarter-on-quarter growth. And our PAT for Q3 ’23 stood at INR13.1 crore, registering a 149% quarter-on-quarter increase. Our cost of borrowing has seen no significant increase. We have a very well-diversified base of 65-plus lenders, including some of the largest banks in NBFC. While the cost of borrowing has remained at 10.5%, for most of the other players, it has increased by 100 basis point or more, while our cost has increased only by 20 basis point in last 2 quarters. And the last but not least, the disbursement in the Lending-as-a-Service or what we call the co-lending model, we have seen our total off-book portfolio increase to INR1,775 crore, which is about 35% of our total AUM.

We have started to see the result of the scale and liability franchise that we have created. Efficiency has started building out in our network and same has started to reflect in our profitability on quarter-on-quarter basis. Despite demonstrating higher growth and improving profitability, the capital market seems to have not looked at the potential of our platform over the next 2 to 5 years. This might be because of our lower market cap, coupled with capital markets have been muted for lending businesses and our differentiated lending model not fully propagated among institutional investors. We have proven our asset engine, its growth potential, our credit engine, and its ability to control credit costs and now our focus for next year will be delivering profitability, which is comparable to any traditional or vintage lender. This, we believe, would put us in the bracket which is superior to banks and traditional NBFC.

We have demonstrated that from the last year PBT of INR20 crores, this year at 9 months itself, we have reached INR50 crores. But now we will focus on doubling the bottom line over next financial year, while asset engine would continue to grow. It takes a lifetime to build financial institutions. We are toddlers vis-a-vis some of the other institutions in our industry. But with a deep sense of responsibility, we say that we are committed to build India’s largest small business financing platform, serving the need of the customer who otherwise do not get access to credit. And in that journey, we would build a financial profile with consistency, which only few have ever achieved.

Thank you for listening to us. We are here to answer any question which you may have. Thank you.

Questions and Answers:

Operator

[Operator Instructions] Our first question is from the line of Satish Kumar from Choice Equity Broking.

Satish Kumar Sharma — Choice Equity Broking — Analyst

So my question is about incremental disbursement. So over the last quarters, we have seen incremental disbursement to the supply chain financing has been increased compared to other prime unsecured and secured segments. So can you throw some light on this, sir?

Shachindra Nath — Vice Chairman and Managing Director

Your question is that you are seeing the growth in our disbursement? Or is anything specific…

Satish Kumar Sharma — Choice Equity Broking — Analyst

Incremental disbursement for supply chain financing segments has been increased over the last few quarters compared to other segments like prime secured and prime unsecured segments.

Shachindra Nath — Vice Chairman and Managing Director

Yes. I’ll give you headlines thinking about why it is happening and Amit can take you through further. Look, as you would see our last 3-year journey, and you look at our distribution model and our risk profiling of our portfolio, we started with prime segment to begin with. We started with 8 location prime businesses supported by 500-plus intermediaries and then over a period of time, we implemented multiple other channels. So then within our branch infrastructure, we opened roughly around 75-plus micro enterprises branches. Each of these branch takes roughly around 18 months to get to a level of breakeven and then they start throwing assets from that point onwards. We then establish our ecosystem channel, which is the machinery financing and supply financing, our partnership analysis channel and digital, which will go live soon. So it is the evolution and very heavily investing into multiple distribution channels, and they are now — that’s why the benefit is coming now. As time passes, each of our channel would grow. And also, you would see the yield profile of the company improving because most of our channels are secured and higher-yielding segment. And also now, we have established our data analytics and GRO Score far more because we have a track record of almost now 3 years to 3.5 years. So that is also helping us to grow all of our channels. Amit, if you want to add something?

Amit Mande — Chief Revenue Officer

So, Mr. Satish, thank you for the question and thank you, Shachin. Truly — and while you’ve covered that all our channels are now really coming up the curve and really being able to service all kinds of needs, supply chain is a very peculiar channel that we want to focus on because that really services the short-term need and typically in these seasons, which are festive seasons, one would see that the supply chain demand is extremely high. We’ve been servicing this demand over last quarter and this quarter again. And so we — and so the disbursement in this channel has seen significant growth. However, this will also remain our key channel to service multiple focus sectors, like green energy, like [Indecipherable], like health care, and we will continue to focus on this channel and in future as well, this will remain a significant contribution of our disbursements.

Satish Kumar Sharma — Choice Equity Broking — Analyst

And, sir, my next question is about the operating expenses. So the cost-to-income ratio is around over 60%. So — and it’s a meagre share of our income. So when should we expect this to normalize going forward, sir?

Shachindra Nath — Vice Chairman and Managing Director

So, sir, the way — and I think so, we have expected capital market to be cognizant of the fact that you are seeing a company with a 3 year vintage, started at ground zero. When we raised our capital, we had not a single person in the company, nor a single loan. Most of the time, what you are seeing in listed world is companies which operate as unlisted for at least 5 years, 7 years, 10 years and get to a level of maturity and then come to the market. And that’s why you pay them an X amount of premium. So we have established our business right from day 1 in the opening layer of a listed market and invested very heavily in the OpEx. So these — our numbers are not comparable to most of the our peer set, but obviously, you don’t have to worry too much about it because you have choices to make, as when you board an aircraft, the pilot says that you have many airlines to go on. So you’ll choose what provides you the best. But also — you also think in terms of what would take you to your destination with safety vis-a-vis many of our peers, which actually, in the initial first 5 years, bleed on the bottom line. So they burn capital and then come to a breakeven point and operating profit.

We have been profitable from day 1. And also, we are competing head on to come to a cost-to-income ratio, a return on asset and return on equity, which is equal to or better than most of our peer market. Our year beginning cost-to-income ratio was 72%. It is now at 60%. So all of our OpEx is now more or less complete. And what you are seeing is only the growth on the asset side. So with every passing quarter, this would continue to improve. I have said in my opening remarks that from a INR20 crore of bottom line, we have now delivered INR50 crore of PBT in the first 9 months and our endeavor would be to double it for the next year. So — and I did say, if you look at our quarterly presentation, we have said that, in 2025, we’ll be at cost-to-income ratio of roughly around 45% which is the best in the market.

Operator

[Operator Instructions] We’ll take the next question from the line of Shital Gawade from ULJK Financial Services.

Shital Gawade — ULJK Financial Services — Analyst

So congratulations, sir, for great sets of number, finally you achieved INR5,000 crores of AUM milestone and we are sure that by ’25, you can easily achieve INR20,000 crores in your milestone. So I have some couple of questions on the yield side. As you are focusing on the off-balance sheet portfolio, around 50% by FY ’24. So currently, the yield on loan portfolio, which is a total of on-book and off-book is around 17.4 percentage. So I just wanted to know — because the liability side is diversified, so that is the reason you can sustain your cost of borrowing. But I just wanted to know on the yield side, how is your view on the future that if you’re focusing on the off-book, which is — obviously it’s a high-yield business, so going forward, how you’re looking on the yield side — yield on portfolio side?

Shachindra Nath — Vice Chairman and Managing Director

Sir, sorry, off-book to on-book, yield on portfolio has no difference, right? So when your yield of portfolio is at what rate we lend to the customer, right? So that is independent of when we are lending to the customer. Whether the asset is going in my balance sheet or is it going to a co-originating partner or it is going to a co-lending partner, yield on the portfolio is yield on the portfolio, right?

Shital Gawade — ULJK Financial Services — Analyst

Okay. So just wanted to know that what is your expectation like going ahead by ’24?

Shachindra Nath — Vice Chairman and Managing Director

So as I was answering the question from Choice Broking, that our prime business which is technically a lower-yielding business is now, in terms of the percentage terms, it is roughly around 50% of our monthly volumes. But our higher-yielding business, micro enterprises, the machineries is there and few others, are now gradually growing. So we expect and we are not making a prediction, but we expect that our income — I said that we will endeavor to double our profitability, and that’s a combination of OpEx remaining flat, credit cost remaining same, stable and flat and our portfolio yield gradually going up and AUM growing up to double the profitability. So I think so it’s very difficult sitting here to predict in percentage term what would be the yield increase on the portfolio. But definitely, there’ll be an inching up which will happen now.

Shital Gawade — ULJK Financial Services — Analyst

Okay. Okay. Great, great, great. And the second question is on NPA side. So now obviously it’s only 2, 3 years of operations of UGRO. So currently, it’s like very nominal GNPA and NNPA. So now the company is focusing on the AUM growth part. So going forward, how — because the narrative of AUM is secure, right? So how going forward you are expecting that the NNPA will be by ’25?

Shachindra Nath — Vice Chairman and Managing Director

Anuj, do you want to take this?

Anuj Pandey — Chief Risk Officer

Yes, I will take that. So the overall portfolio quality is a function of the overall portfolio mix as well as in individual business lines, what is the expected GNPA. So with our statistical scoring models now quite stable, we are in a position to somewhat predict of how the portfolio will behave. As you would — and we have been reiterating this in previous calls as well, the endeavor is to have a healthy balance in the portfolio with secured book overall to be around 70% and unsecured book to be around 30%. And the projected — if you see our 5-year plan, the projected gross NPAs are likely — not likely to be over 2%. And the way things are, and we have seen the early warning signals and early indicators of the portfolio, we think we would remain within that.

Shital Gawade — ULJK Financial Services — Analyst

Okay. Fine, fine, fine. And on the — last one is on the capital raise. Like in the last 3 years, you raised around 30 billion through equities and debt. So going forward, because now that UGRO is focusing on off-book AUM, so now is there any plan in one year down the line for any capital raise?

Shachindra Nath — Vice Chairman and Managing Director

So we have already disclosed at the beginning of the year itself that by end of the quarter, which is the fourth quarter of this year or the next quarter of — first quarter of next financial year, we would be doing the capital raise. Its shape and size is not yet defined. But at the speed, at the growth rate which we are, we would definitely be raising capital.

Operator

We’ll take our next question from the line of Ankur Kumar from Alpha Capital.

Ankur Kumar — Alpha Capital — Analyst

Congrats for a good set of numbers. Sir, you talked about safety and in the line of that aeroplane. So I just wanted to ask because we have grown to INR5,000 crore in about 3.5 to 4 years, and we have good targets for coming 2 years also. So — but this fast-growing is generally considered not so safe in the financial institutions as in from the capital markets’ perspective. So how do you think we are going to manage in terms of both growth as well as managing the NPAs?

Shachindra Nath — Vice Chairman and Managing Director

So the answer to this is that, sir, if you look at — if you compare us with 10 other NBFCs, which are in micro enterprises segment, there is not a single one which started with a total capital at the day 1 of INR950-odd crore. So we have recently seen Five Star going IPO. Five Star to reach at the scale where they are, have taken 15 years, but it is not because either the capacity was a problem or the market opportunity was a problem or speed was a problem. It is because they started with only INR25 crore of capital. And to get to the base of capital where we are, it takes roughly around 10 years. So the fast growth is not a function because we are disbursing money recklessly. So right from our day 1, the log-in to disbursement rate for UGRO has been stable at 30%. For a INR400 crore worth of loan, we originate INR1,600 crore every month. It is a function of the capacity which we built first 3 years, and that is what is affecting the volume, and that’s what’s maintaining the credit quality.

So this business in — at the end of 2020 had only 150 people, 8 locations. At the end of 2022, it had roughly around 1,500 people, 100 locations, 150 people in technology, 40-plus people in data analytics. So our growth — and we are not chasing growth, actually, our installed capacity versus what we are delivering, we already have a gap of 30%, 40%. So we are not chasing growth, growth is coming because all our verticals have been [Technical Issues] established with both people, technology and credit processes. There’ll be definitely a point of inflection after which the company would grow at 15%, 20% per annum basis. But till that time, the base effect of our infrastructure will deliver the growth.

Ankur Kumar — Alpha Capital — Analyst

Sure, that’s great to know, sir. And sir, in terms of tax rate, this quarter we had high tax rate. So can you explain why and what is our expectation for the tax rate in the coming years?

Shachindra Nath — Vice Chairman and Managing Director

Kishore, you want to take that?

Kishore Lodha — Chief Financial Officer

So it is largely because of 2 factors. One is that since we are into MAT, we are still into the old regime, so which is higher compared to the normal tax rate. And also during the merger of Asia Pragati, we have inherited some carryforward losses where we have created deferred tax assets, some of which has got lapsed during the period, and hence, we had to reverse those losses. So H1, we have taken a hit of around INR7.2 crore. And we have incrementally made provision of around INR4 crore during this quarter. So cumulatively, in YTD December, we have made additional provision of around INR11.3 crore on deferred tax asset which was created earlier and now require reversal. Otherwise, we would have been — if you remove that, then we would have been in normal stable regime of 30%, which is in line with the old regime of taxation. We are into MAT, hence, we have not migrated into the new tax regime.

Ankur Kumar — Alpha Capital — Analyst

So how much of this deferred tax asset is still pending, sir?

Kishore Lodha — Chief Financial Officer

So deferred tax asset is pending in the books is roughly around INR17 crores over next — which is available for over next 2 to 3 years and one would be available till next 7 years. Part of it, we should be able to utilize. But a part may — again, we may have to take a reversal in coming quarters.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And sir, one question. In terms of coming 12 months, what are the risk that we see in terms of achieving our guidance in terms of — I mean, you’re saying doubling of the profit before tax and growing AUM that far. So what are the risks that we see in the business?

Shachindra Nath — Vice Chairman and Managing Director

So we operate in the customer [Technical Issues] customer segment in the known ranges of INR10 lakh to maximum INR3 crore, unsecured loan only maximum of INR25 lakh segment. Generally, all of this noise of about inflation, economic slowdown, Ukraine War and all of that, we believe that, to a very large extent, the micro enterprises segment is [Technical Issues] And also, we are not seeing a major economic slowdown to happen in India which can cast it to the bottom of the pyramid. So generally, from the customer segment in which we operate, we are seeing very healthy growth for all our segments of the market. Having said that, as in financial institution and as a lending institution, this increased rate scenario is obviously of a concern because if our borrowing rate consistently keep increasing, then obviously, that’s a problem because our customer finally cannot afford a very high cost because they have a very limited margin. But good thing or good story about it is that we are now seeing the rate hike taper down, and we are only hoping that only 1 or 2 hikes to happen more.

Second, I think so that generally, the liquidity in the banking system has reduced because the credit demand has been extremely high. And obviously, as you know, we are largely dependent upon banks and also the capital market [Technical Issues] DFIs. But we are not growing by INR25,000 crore a year. Our growth rate and number of [Technical Issues] lender, we think that is also not a big challenge, but that’s also continue to be a risk for the broader market.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And sir, in terms of secured book, you’re saying 70% book is secured, what is our LTV on that book?

Shachindra Nath — Vice Chairman and Managing Director

Anuj, you want take that?

Anuj Pandey — Chief Risk Officer

So it is divided between secured-by-property and secured-by-machinery, primarily. So in secured-by-property, our average LTVs are around 55%. And on secured-by-machinery, our average LTV would be around 65% to 70%.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And sir, last question would be, as in you talked about capital markets not appreciating our journey so far. But we have lot of — as in, we have PEs on the Board. So what is exactly — can you — as in, you would have talked to some of the institutions. So what is exactly that they seem to be thinking that we are missing because of which capital market is not appreciating us?

Shachindra Nath — Vice Chairman and Managing Director

So as I said, that there are multiple reasons and very difficult to specify. But first and foremost reason that we emerged just prior to ILFS crisis and capital market has seen multiple financial institutions to be under trouble, DHFL, Yes Bank, so on so forth. Then capital markets saw a massive wave of COVID, which affected the lenders generally. So I think so those elements itself, while there was a broader rally in all other sectors, banking and NBFCs had not seen a rally. Now we are seeing little bit of a rally happening only for top-tier private sector banks, but there are also many number of banks and NBFCs, which are what we call the traditional and legacy, which are also available to public market at a very reasonable price. I think so, look at it this way, if we would have done an IPO — primary IPO now or 2 years down the line, you guys would have paid a value which would be 4x, 5x higher than what we are today. But we are okay with that. But eventually, our model is superiority on a lower capital base, being able to — an entity, which is being able to generate much higher ROE would get appreciated. So no businesses, which are superior to their peer set can remain out of mainline radar for a very long period of time. And we are making a conscious effort for broader market to understand us better.

Ankur Kumar — Alpha Capital — Analyst

Sure, sir. And in terms of closest listed competitor, would we call Five Star as our closest competitor or…

Shachindra Nath — Vice Chairman and Managing Director

No, sir. I think so that — I think we are in the domain of FinTech and FinTech credit platform are yet to be listed. Paytm was the last and BankBazaar the last FinTech which got listed, but both of them were noncredit businesses. And both of them went to the market on metrics of listing which are — at least I don’t understand. So if you look at our asset profile and our business profile, we don’t have a direct peer set. So our client business compete with the bank, our microenterprise business compete with Five Star, Vistaar, Veritas, our supply chain finance business compete with global FinTechs, which are in supply chain, our [Technical Issues] business compete with electronics and others, our P&A business is — similar to that would be a Max Financial, which is invested. And when we launch our digital channels, that’s will be a completely FinTech platform. So I think so, we are creating a category of India’s largest small business financing platform driven by data and tech. So — and we hope that others would also follow. It is very difficult to say this is our nearest here. But only from a valuation perspective, while we are big, broad, diversified, so it’s monoline business or where they are, so obviously investors have to make their choice [Technical Issues].

Operator

Our next question is from the line of Akash Jain from Ajcon Global Services Limited.

Akash Jain — Ajcon Global Services Limited — Analyst

Congratulations, sir, on a very good set of numbers. My question pertains to the growth for FY ’24, like, AUM target, we have around INR7,000 crores. So predominantly, we have shortlisted around 8 to 9 sectors and exposed to those accounts which have a credit history. So are we looking to broaden our sectoral outlook beyond those 9 sectors?

Shachindra Nath — Vice Chairman and Managing Director

Anuj?

Anuj Pandey — Chief Risk Officer

So when we had selected these 8 sectors and then we added a 9th sector called Micro when we started the business, they were actually pretty large sectors in themselves and contributed about 45% to 50% of total SME GDP. And the way we have — now we are seeing traction overall and the buoyancy. If you recall, our 8 sectors, 3 are quite service-oriented and 5 are mixed, all towards consumption. We are seeing very good growth in these sectors. And at this point in time, we don’t see any reason why we should add. But in case there is an opportunity which comes in where we see a lot of potential, theoretically, we are open, but at this point in time, we would like to focus on these 8 sectors and keep building our expertise.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. And secondly, on the commitment of the private equity players. So is there any outlook of the private equity players to stay with the company?

Shachindra Nath — Vice Chairman and Managing Director

So, sir, any investor, whether it is a private equity player or a public market investor, have the flexibility and freedom to come and go, right? And that is the way we would like it to be. Like in an HDFC or ICICI or large platform, investors come and go, the platform or the institution should stand on its own. Having said that, we started with 4 private equity investors, of which 3 of them continue to sit on our Board. And we are still within their investment cycles, and there, there is a long residual fund life. So [Technical Issues] when we’ll be near to their fund life cycle, we’ll gradually divest, but that is not happening today. So let me add this. Sometimes I’ve seen sell-side analysts asking this question that what would happen when these large investors would sell. See I’ve taken the case — example of, say, AU or few other large NBFCs, institutional ownership through private equity is very common now. But normally, these ownership don’t come into the public market. So there are larger financial institutions, which would like to come and take over some of these shareholdings. So today we have 4 Asia private equity funds in our business, but there are then large funds, Sovereign and others, both active and passive. As we continue to grow in size, they like to start — or they would like to participate in platform like ours.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. My other question is on the GNPA and NNPA ratio. If not for this fast AUM growth, what could have been our GNPA ratio and NPA ratio?

Shachindra Nath — Vice Chairman and Managing Director

Anuj?

Anuj Pandey — Chief Risk Officer

So I’ll take that. So basically, you are referring to our static pool delinquencies by vintage. And we keep monitoring that they wouldn’t have been too different. So the post-pandemic sourcing, post-July 2021 when we implemented our new GRO Score 2.0, which took into account both the banking behavior and repayment behavior by sector, we are seeing that even after 12 months, 18 months, the book quality remains consistent. So it wouldn’t have been too different.

Operator

[Operator Instructions] Our next question is from the line of Nirvana Laha an Individual Investor.

Nirvana Laha — — Analyst

So the first is a bookkeeping question. So for the 9 months of FY ’23, I can see that the total comprehensive income is about INR25.4 crores. But the equity from March ’22 on the books to now has only increased by INR2 crores. So how are we accounting for this?

Kishore Lodha — Chief Financial Officer

I will take this. Your question is right that our profit has increased, it is not reflecting into our total equity because if you remember, last quarter, we have done a setup in ESOP trust where we have purchased [Indecipherable] of worth INR25 crore, which was adjusted with the capital. Hence, with this adjustment, it is what it is.

Nirvana Laha — — Analyst

Okay. And is this trend likely to continue? So when will we see the book value increasing through profits flowing through to it?

Shachindra Nath — Vice Chairman and Managing Director

In our public disclosure, the ESOP trust approval is for roughly around INR28-odd crore, of this, INR25 crore has been exhausted, the rest of it will get exhausted as an when the trust decides, that’s independent of us. But we should see now — with every passing quarter, we should see attrition on the network of the company.

Nirvana Laha — — Analyst

Okay. So the next question is regarding the deferred tax assets. So Mr. Kishore, you said that INR17 crores were still left from that demerger. Can you tell us what percentage of the INR17 crores is likely to lapse again and hit the PBT? Because this number is affecting our ROEs clearly, so a clear guidance on that would help us model things.

Kishore Lodha — Chief Financial Officer

So as we move forward, depending upon the profitability, whether we will be able to absorb it or not will depend upon what kind of profitability we will have in future. But clearly, we can foresee that, next year, our deferred tax liability, which is about to lapse is close to INR7 crore. In our belief, with the profitability target, which we have in mind, we should be able to absorb that. So there should not be any impact on PAT next year on this line. And then there is another line, another deferred tax asset, which is there, which is roughly around INR2.3 crore, which will be lapsing sometime around 2029, ’30 so that much will not impact — unlikely to impact because by that time, our profit will be very high and probably we will be able to absorb it next year or the year after. There is one portion left which is available — which will be lapsing this year itself. A part of the provision we have done in this quarter and the balance portion, we will be — if the profitability, we are not able to absorb in next quarter, then that part we will be taking in the next quarter.

Nirvana Laha — — Analyst

And how much is that, may I know?

Kishore Lodha — Chief Financial Officer

I will have to check and get back on the same.

Nirvana Laha — — Analyst

Okay. I’ll connect offline on that. Secondly, on your projections for FY ’25, you have given 2 ratios this time, which is PBT by average total assets and PAT by average total assets. So if I look at the PAT to PBT ratio there, it’s coming to around 18%; 4.5% divided by 5.5%, that’s around 82%. So does that mean the normalized tax rate for UGRO going forward is going to be in that 18%, 20% range? Or are you factoring in some deferred tax assets reducing the effective tax rate?

Kishore Lodha — Chief Financial Officer

So it will depend on 2 factors. One that — as I explained earlier that we are into MAT as of now. So whatever provisioning we are doing, it is on account of deferred tax. So going forward, if the profits are there and we are able to absorb the MAT bracket which is available, depending upon each sector, the final tax rate would arrive at that point of time.

Nirvana Laha — — Analyst

So as an outside investor, I should go ahead with 25% as the effective tax rate?

Kishore Lodha — Chief Financial Officer

Not exactly, because again, MAT credit is available, so it will be available for utilization in ’24-’25.

Nirvana Laha — — Analyst

Okay. I’ll connect with you offline on this, Mr. Kishore. I have a few questions on collection efficiency. So the same-month collection efficiency this time is around 94%, and it’s consistently at that level. So I was just comparing the collection efficiency with banks. I know Mr. Nath has earlier said that, that may not be the right way to look at MSME collection efficiency, but still wanted to just get a confirmation that the 6% that is flowing into buckets, how will this resolve into NPAs? I know that this was explained in the last call, but 6% optically, when I benchmark with banks, which may not be the right benchmark and so I’m asking for this guidance, it looks like it could translate into higher than 1%, 2% NPAs. But if that is not the case for our kind of lending, I would just like you to explain that, please.

Shachindra Nath — Vice Chairman and Managing Director

[Technical Issues]

Operator

Sorry to interrupt, Mr. Nath. Your voice is kind of breaking up. So could you please repeat the last few sentences?

Shachindra Nath — Vice Chairman and Managing Director

Sure, sure. So I was answering this question that our 94% collection efficiency, what you’re comparing with the bank is — ours is 98%, right? So total collection, which is including overdue versus — and plus current month demand is the way most of the NBFCs and banks report, that is at 98%. Now Anuj, can you take this 94% and what happens to the 6%? And how — is that the right way to think that the 6% is all flowing into NPA?

Anuj Pandey — Chief Risk Officer

Yes, I’ll take that. Thanks, Shachin. So typically, collection efficiency numbers should be seen in conjunction with the subsequent bucket resolution numbers. So when an account bounces the check for the first time, it moves to what in industry is called Bucket X and the Bucket X resolution rate is the primary driver, along with collection efficiency on what would flow further. Typically, in our case, because it’s a small business lending, the Bucket X solution rates are closer to 98%, 99%. And hence, whatever is going forward is close to 1% and 1.5% only, which will eventually can become NPA. So a collection efficiency number, along with the Bucket X resolution number will normally give the full picture.

Nirvana Laha — — Analyst

Okay. On the co-origination book, so what is the percentage of FLDG that we usually have to provide?

Shachindra Nath — Vice Chairman and Managing Director

So it varies, right from 3% to 7.5% is the first loss cover on co-origination with other large NBFC we have provided for. But the losses would be similar to what is on our balance sheet. So I think so, if you — whatever you are seeing in our credit cost is the total credit cost which is right now is 1.5%.

Nirvana Laha — — Analyst

I see. And this is only applicable for when there’s an NBFC on the other side of the transaction, not when a bank…

Shachindra Nath — Vice Chairman and Managing Director

Banks are not allowed to take FLDG as per RBI circular.

Nirvana Laha — — Analyst

Okay. And could you tell me, out of the INR74 crore total provision, how much of it would be towards covering the FLDG guarantees?

Shachindra Nath — Vice Chairman and Managing Director

Very, very small. Anuj, you have that number?

Anuj Pandey — Chief Risk Officer

So the provision is — the way we provision is the way if the co-origination business would also have been booked on our own book. So there is no difference. It is just that we cover it adequately by the way we do it in Stage 1, Stage 2, Stage 3. So at this point of time, the coverage would be in line with that product. Typically, our Stage 1 provision for unsecured loan is close to 1.5%. For a secured loan, it would be around 1%.

Nirvana Laha — — Analyst

Okay. So the reason I was asking was, today, the provision is 1.5% of on-book AUM. So after removing that number, I just wanted to check what the provision to AUM ratio would come at. But I can write to you offline and get that number. So last question from my side…

Shachindra Nath — Vice Chairman and Managing Director

So I think so, this — our provision includes the book which is co-originated book. So if I have INR100 of book of on-balance sheet and INR100 book on co-originated, we presume as if we have INR200 of total book. And when we provision, we provision as Stage 1, Stage 2, Stage 3 on the total of INR200.

Operator

[Operator Instructions] Our next question is from the line of Tushar Malhotra, an Individual Investor. There seems to be no response from this line. We will, therefore, move to our next question, that’s from the line of Joel Ilias, an Individual Investor.

Joel Ilias — — Analyst

Congratulations on the numbers again. I just had a couple of questions regarding the customer journey. So do we have any KPIs for evaluating customer stickiness, customer satisfaction and customer retention? I wanted to know if we are aggressive with trying to get customers to be repeat — customers to borrow repeatedly as in, what is our approach towards customers? And how do we evaluate that?

Shachindra Nath — Vice Chairman and Managing Director

So we are still, as I said in my opening remarks, toddlers in this business. Today, we have multiple channels and these channels, depending upon the need of the customers, through multiple sources, are originated with customers for their multiple credit needs. There are few things which we focus upon: one, turnaround time; second, meeting the credit demand subject to the credit approval process; and third, post- disbursement experience, which is in terms of timely providing all of what they wanted to do that. Now, customers — that is the — we don’t do formal customer satisfaction service. We have done our — and very large impact study, which is published on our website, and it has also multiple testimonials of what kind of impact we have created for every segment of the market. And if you read through, that would be very interesting insight in terms of very large base of 36,000 customers, what we have been able to achieve.

With respect to one aspect of further credit need or, for example, a customer which has taken a loan of machinery — loan against machinery from us, whether we have approached the customer, whether he has come back to us for taking a secure loan, that has not yet started because in terms of our installed capacity versus what we can sell, there is always — there’s still a gap. But now, this year, we are gradually progressing on that as well. Then we should be able to cross-sell multiple other things which a customer needs. So it’s an evolution and we are on that evolution progressively.

Operator

We’ll take our next question from the line of Tulsi Badrinath an Individual Investor.

Tulsi Badrinath — — Analyst

Congratulations on your excellent results. I’m curious about the experience of the branch. Out of the current branches, say about 100, how many have broken even? And when do you expect the remaining to turn profitable? Also, are you planning on expanding?

Shachindra Nath — Vice Chairman and Managing Director

So, we have — of the 100 branches, we have roughly around 25 branches, which we call the main 25 cities in the country, which service what we call the prime customer segment. Those branches, given the size at which they operate and little higher ticker size with lower yield, most of them are broke even very quickly. So, except, I think so, 5 or 6, which would be recent addition in this year, most of them are [Technical Issues]. The micro enterprises, that’s much harder business to build because these are Tier 2, Tier 3 towns and these are direct originated business so you have sales, credit, collection, legal, all of that. And then you have to have an origination strategy. You have to also build a brand, because, remember, we do secured loans. So if a person who is taking a INR10 lakh of loan, but giving the papers of a INR20 lakh worth of his property which is his only property, right? So there is the brand establishment and determination has to happen. There, we have roughly around 35-plus branches out of the pool of 71. And that’s what I was saying that with every passing quarter, you will have a block of 15, 20 branches who now would keep breaking even and then they will have a positive cash flow coming to the company. So this is where we are right now.

Tulsi Badrinath — — Analyst

And my second question relates to GRO Score. I was just curious whether — when you can see the fit between the concept and what the data actually shows you in practice, have there been some surprises or positive surprises?

Shachindra Nath — Vice Chairman and Managing Director

Anuj, you can take that, but I think so, this time, we have moved it to our annexures. So on the Slide 37 of our presentation, you can still see the analysis and — of our GRO Score and are they in line with expectation or not. We would say that they are in line with our expectations. But Anuj, do you want to add something?

Anuj Pandey — Chief Risk Officer

Yes. So if you recall, our GRO Score classifies the customer by risk band from A to E. And what we do continuously quarter-on-quarter is to look at the performance, not only of our own customers, but the customers whom we have scored but not disbursed, on how they are performing on other loans which they have taken from other financers. And so far, we find that the risk classification is stacking up quite decently, so no surprises. Although the data is still — for the kind of comprehensive work which we have done, we would like to wait a little more — 2, 3 quarters more to see in case there is something else which comes in. But all the early indicators are indicating that the hypothesis of that GRO Score classification will stand good.

Tulsi Badrinath — — Analyst

And this is also with GRO Score 3.

Anuj Pandey — Chief Risk Officer

No, this is GRO Score 2.0. GRO Score 3 is what we have just piloted, that will take into account GST as well in addition to the repayment behavior from bureau and the banking behavior. So, that, we are going live in this quarter.

Operator

We’ll take our next question from the line of Akash Jain from Ajcon Global Services.

Akash Jain — Ajcon Global Services Limited — Analyst

Sir, my question is regarding cost-to-income ratio. Say for, in the presentation, it is mentioned like for FY ’20 projection is around 45%. So for to reach the AUM size of around INR20,000 crore and — how will we reduce the cost-to-income ratio, like, what expenses will go off? Or…

Shachindra Nath — Vice Chairman and Managing Director

So nothing would go off, only your income side would keep going up. So you have reinvested into a physical technological data analytics infrastructure and your incremental cost increase in terms of the OpEx versus your multiplier on the AUM and asset side would keep bringing down your cost-to-income ratio.

Akash Jain — Ajcon Global Services Limited — Analyst

Okay. And since we are very strong on the technology front, so is there any plan to develop a special app like SBIs YONO app, similar to that kind of app for digital onboarding of customers?

Shachindra Nath — Vice Chairman and Managing Director

So, watch this space. I think from mid-February you’ll see it.

Operator

[Operator Instructions] We will take our next question that’s from the line of Vignesh Iyer from Sequent Investments.

Vignesh Iyer — Sequent Investments — Analyst

So I just wanted to know, we are — our disbursement side is growing around like 11%, 12%, 13%. So can we expect the rate to be maintained at around 11% to 12% quarterly CAGR for at least 2 or 3 quarters going ahead?

Shachindra Nath — Vice Chairman and Managing Director

Sir, as I said, our disbursements are not a function that we are lowering the yield for the customer. Our disbursements are a function of our capacity, which we have built over last 15 — 8 quarters, actually, right? So I don’t think so that there is any decrease in our portfolio yield which will happen. In fact, we are now working, as we see the higher yielding portfolio, microenterprises, machinery business and few others, we think that there will be few basis — at least some increase which will happen on the yield. So I said this, that our OpEx to income ratio or our bottom line would increase by virtue of seeking size of the business growing a little bit of increase in our yields and OpEx remaining flat and in spite of probably borrowing cost going a little higher, we still think so that our profitability would keep going up from where we are.

Operator

We’ll take our next question from the line of Saikiran Pulavarthi from Pulavarthi Advisors.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Just one quick question. You have got a very interesting slide about the…

Operator

Mr. Pulavarthi, I’m sorry to interrupt. Sir, if you’re on a hands-free mode, can you switch to handset and speak, please? We couldn’t hear you clearly.

Shachindra Nath — Vice Chairman and Managing Director

We could hear you. You were talking about an interesting slide, yes.

Saikiran Pulavarthi — Pulavarthi Advisors — Analyst

Yes. So there is a slide which explains the business model of Lending-as-a-Service where you have explained the ROAs and the ROEs, which will be far higher than normal on-balance sheet model. I do understand that you are already having certain off-book kind of a model which you’re doing it. What could be the journey from the current level, probably, to a co-lending model where we will see the ROAs and the ROEs expanding meaningfully? At what scale or what are the milestones as investors we should track? If you can just help us explain, that will be really helpful.

Shachindra Nath — Vice Chairman and Managing Director

So I think so we have — that also we have given in our presentation, we have been giving it for a quite a bit of period of time. So if I may request you to look at the Slide 20. And our Slide 20, actually — in fact, we were thinking of taking off this slide because we have already explained it. So in our Slide 20, you’ll see that we have said that by FY ’25, the return on asset should go up to 4.5% and ROEs would go up to 17%, 18-odd percent. And with that, off-book to on-book at roughly around 50%. Now this is dynamic. When we say an off-book AUM, this off-book AUM have multiple components, the co-lending, the direct assignment, the co-origination, so on so forth. But the broader point is between traditional and — high leverage is not possible for nonbank. It’s a very difficult task. If that is the constraining factor, then with low leverage to generate high returns, you have to build a semi-marketplace model, which is an off-book model. And we are a market leader, and we’ll see how it evolves.

Operator

Our next question is from the line of Rishi, a Retail Investor.

Rishi — — Analyst

Congratulations on a good set of numbers. I think a couple of questions that I had have already been answered with regards to what you saw this business as being different from [Indecipherable] and also on the gestation period of [Indecipherable] over 4 years already. So I think you’ve answered these questions. I just have one further question on what your official communication on the rating agency [Indecipherable] would be. I think there was a recent [Indecipherable]. And I did see the announcement from [Indecipherable] but would be good to hear from you on this.

Shachindra Nath — Vice Chairman and Managing Director

Exactly same thing, sir, which we have written. So we have not minced our words when it comes to what we have disclosed. So in 2019, we were signing a co-lending agreement with the State Bank of India. At that time, we had neither a requirement of any debt nor that much of asset book and that rating was required to be taken urgently and we went to Acuite and they gave us the rating. And we signed our first co-origination agreement with State Bank of India. We didn’t realize at that point of time because at that time, Acuite, which was earlier called SMERA owned by SIDBI and large number of financial institutions, this is also the same period of time where rest of the rating agencies were deeply affected by ILFS and DHFL crisis. So they were not doing fresh rating of fresh NBFCs, whether it was ICRA, whether it was CARE, or India Rating, all of them were deeply affected by the ILFS crisis. So when we took Acuite rating, we didn’t understand the challenge with a rating agency like Acuite. We have been raising this concern for a very long period of time in Acuite that market acceptance of Acuite is very poor. To an extent, a large private sector bank on whose Board, there is the Chairman of Acuite is there, but still that large private sector bank don’t accept Acuite rating. So having — and also there is this market benchmarking, if you are rated by — used to be rated by Brickwork, Infomerics and Acuite other rating agencies rate you 1 or 2 notch lower than those rating agencies because these Acuite and likes of rating agencies are not considered in terms of quality at par with the other rating agencies.

Acuite actually, in order to continue holding on to our business, upgraded us. First, they made us stable outlook, then they upgraded us, I think so, in August from A to A Plus. But in spite of that, we decided that we have to transition right into larger rating agency and went ahead and took CRISIL as the rating agency. CRISIL, in all their judgement, rated us A Minus, which was 2 notch below what Acuite had rated us. Now that is not in our control. But I think so Acuite came under severe pressure because, as you know, regulators nowadays look at it very seriously and each of the rating agency has to go and explain why their rating is too different from the other rating. And that’s why when that happened, they had raised this concern that why we had gone and accepted CRISIL at a 2 notch below. We told them that, look, we can’t survive without — with the size and scale of our operations, we cannot survive, and that’s why we have taken other rating agency. And in order to self-justify themselves for a very flimsy ground which actually, if you read our letter, all of their grounds are infructuous, as in, they have no meaning, they decided to bring it down from A Plus to A. We are transitioning Acutie out. None of our lenders, both the term lenders or any other lender have raised a single point of concern with their rating downgrade. Hopefully, this is very clear.

Rishi — — Analyst

No, that’s very, very clear. And just one further question. With the funding that you’re seeing for start-ups and other tech platforms in India, do you see any issues with the FinTechs that you are associated with on the GRO-Xstream platform? Do you see any less participation from them in the recent past? Or anything…

Shachindra Nath — Vice Chairman and Managing Director

Is your question is, are we investing into those platforms? Is that the question?

Rishi — — Analyst

No, no, no. The users of our GRO-Xstream platform where you are doing co-lending with other FinTechs like Elara Capital, et cetera, do you see them participating less on the GRO-Xstream platform these days sales or are the participation still…

Shachindra Nath — Vice Chairman and Managing Director

No, I think so, sir, with — actually, the opportunity set for that is much larger and much wider because our self-origination channel, we technically stop at that yield band of — for a customer band or a risk band of what we call the 18% to 19%. There is a large set of customer population which starts at 18%, 19% band and go all the way to 30%, 35% band. We don’t do that on our own. But obviously, there are a large number of credible platforms. It can be a FinTech, it can be any small NBFC, it can be a revenue-based financing or any form of innovator, which is backed by good capital and have ability to absorb losses and willing to work with us. So actually, the number of partnerships has — our integration has gone to almost 79. However, we have been holding on to not growing that book quite rapidly. So on an average, we are doing INR50 crore a month. And we have been diversifying the base of our partners. We are evaluating and seeing that, should we increase this, given that now we have 2 years of experience, we understand each partners and there we have seen their vintage. So we — I think the beginning of the next financial year, we’ll take that call that whether we maintain this at the same rate where we are or we accelerate it, given the number of partners have grown.

Rishi — — Analyst

Okay, understood. I have one last question, I don’t know if I can squeeze it in or I can get back and move.

Shachindra Nath — Vice Chairman and Managing Director

Please go ahead, no problem.

Rishi — — Analyst

Yes, this question is — I mean, I’ve been listening to interviews from Five Star Finance and one of the things that they said as their moat is the noncompetitive nature of Tier 4, Tier 5, Tier 6, and that’s why they believe that they are working off a much higher valuation than other peers. I was wondering as to how would you see this, given that UGRO is not really in Tier 4, Tier 5, Tier 6? I don’t even know what Tier 6 is, to be honest, but what is, according to you, a good geographical seat for UGRO? How deep would you penetrate in the future?

Shachindra Nath — Vice Chairman and Managing Director

So I would refrain from commenting on what other players talk about their business and what their moat is, that is for the market to judge. I think so we have — at the beginning of our micro enterprises channel, we think that the real credit need is for the micro enterprises: the micro enterprises, which exists in Tier 2 and Tier 3 towns. And as you rightly said, I don’t understand what is the Tier 6 town, from my experience, coming from a very small town, city, that is largely a tehsil or a taluka, very difficult for that to have a business franchise where you can go and do too much of credit. But Tier 2, Tier 3 town are good enough. And as per our last evaluation, we looked at the entire India and our analysis tells us that the 5 or 7 states from a creditability perspective are the best states and roughly around 350 pin code location where the cluster behavior of the credit is very good. So we would like to go in those 5 to 7 states and in those 350 to 400-plus cluster locations.

Operator

We’ll take our last question from the line of Nirvana Laha, Individual Investor.

Nirvana Laha — — Analyst

Mr. Nath, my question is on the Lending-as-a-Service slide. So I see that earlier we used to have 6 and 6 NBFCs as partners. This quarter, it has come down to 4 NBFC. And we used to show a pipeline of potential deals, that I don’t see this quarter. So my question is, to reach our INR10,000 crore off-book target for FY ’25, how are we placed in terms of these existing 10 partners? And how much do we need to depend on forging new partnerships?

Shachindra Nath — Vice Chairman and Managing Director

So, sir, why it has come down, because we have learned the art of saying no. Because once you started with your though that actually we are a small company, we are a young company, and any one who is showing interest, we should do all efforts and just go and sign up. We realized that in marriages, it is not just important for bride and groom to come together and tie the knot, they have to live together also and living together had different connotation. Even if you have been a boyfriend, if you have been partners and known each other for a long period of time, once you start living in the same room it’s a different story altogether. So in view of that, certain — not the bank, but certain NBFC which we signed up, but we don’t think so that philosophically, our philosophies match. So we have suspended those partnerships very amicably, and we’ll go back to them. In terms of new — why the new lines are not there, because the existing capacity we are not being able to service. The top 3 banks — public sector banks in India, the numbers which you are quoting up to 2025, 75% of that actually is among the first 3 banks which we have signed up, right? And we have not been able to deliver that at all. So that’s why we were under so much of pressure from existing large banks, each one of them having expectation that we will deliver INR100 crores per month, we thought that we should limit our relationship right now and expand only next year, when — so one bank has now reached up to, I think so, INR700-odd crore, other banks have reached around INR200-odd crore. So I think so, INR1,000 crores to INR1,500 crores wherein a large bank would pause and review us and then give us another INR1,000 crores of line. So I think so, we have more than sufficient partnership which exists today. And as our choice, we can increase it whenever we want.

Nirvana Laha — — Analyst

This is wonderful to hear Mr. Nath. And as an investor, if I may request not to remove Slide #20 because every time we see the FY ’25 figures, the aspirational figures, it reinforces the fact that that’s what management is aiming for, and that’s why we are invested. So a small request from my side.

Shachindra Nath — Vice Chairman and Managing Director

We will keep doing that. We expected that by giving that slide, people will not look at us from last 2 years perspective, and yes, they’ll focus on what we are going to deliver in next 2 years, and they will correlate with quarter-on-quarter performance. We were not seeing any good result of that. That’s why, being disheartened, we were thinking of removing it, but we’ll take your input and not do that.

Operator

I now request Mr. Shachindra Nath to add a few closing comments. Over to you, sir.

Shachindra Nath — Vice Chairman and Managing Director

Thank you very much for listening to us patiently and asking very good questions. Obviously, every time we come on the quarterly call and when we hear each one of you, it motivates us to keep doing what we are doing today. But even if you have further questions, Mr. Nirav Shah, our Head of Strategy and Investor Relations and his very capable team would be happy to answer any further questions which you might have. We’ll see you next quarter at the end of the year. Thank you very much.

Operator

[Operator Closing Remarks]