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Aavas Financiers Ltd
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Ladies and gentlemen, good day, and welcome to Aavas Financiers Limited Q1 FY '22 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Sushil Agarwal, MD and CEO, Aavas Financiers Limited. Thank you, and over to you, sir.
Yes. Good afternoon, everybody, and thank you for participating on the earnings call to discuss the performance of our company for Q1 FY '22.With me, I have Ghanshyamji Rawat, CFO; Himanshu Agrawal, Investor Relations; and other senior member of the management team; and SGA, our Investor Relationship advisers. The results and the presentations are available on the stock exchanges as well as our company website. I hope everyone has had a chance to look at it.As you all are aware, the country witnessed a severe health care crisis during the first half of Q1 FY '22 on account of second wave of COVID-19. While unlike this year, there was no nationwide lockdown announced by the central government, but various state governments impose localized lockdowns of various degrees to contain the spread of the infection.As a result, the business was impacted during the first half of the quarter, but with the phased reopening of the states after mid-May, the business also started picking up from the second half of the quarter. For Q1 FY '22, we have disbursed INR 462.5 crore, registering a 117% year-on-year growth. We continue to grow in a calibrated manner and registered AUM growth of 21% year-on-year. All this while, we maintain our operating metrics and delivered profit after tax growth of 20% year-on-year as per Ind-AS accounting and 19% year-on-year as per IGAAP accounting for Q1 FY '22.Last year, after the gradual unlocking of the country from the lockdown imposed to contain the first wave of COVID-19, our exposure under moratorium was at 17.8% as of June 2020. As economic activity picked up in subsequent quarters and the cash flow situation improved for borrowers, their repayment behavior also exhibited a continuous improving trend, and 1+DPD reduced to 8.21% as of December and further reduced to 6.67% as of March.Based on the resilience our customers displayed last year, our learning from continuous interactions with them, we expected to see a similar trend this year as well. This time around, our 1+DPD is 12.67% as of June 2021. So if there is no third wave in the subsequent quarters and the economy continues to bounce back, we remain hopeful of gradual reduction in 1+DPD based on our experience from last year.I would now hand over the line to Ghanshyamji, CFO, to discuss various business parameters in detail.
Thank you, Sushilji. Good afternoon, everyone, and a warm welcome to our all -- earning call. During the quarter, the company borrowed an incremental amount of INR 6,920 million at 4.62% for 43 months. As of June '21, our average cost of borrowing stood at 7.25% on an outstanding amount of INR 83,200 million, with an average maturity of 127 months.Our long-term credit rating continues to be AA minus with a stable outlook from both ICRA and CARE. Despite the higher short-term rating of A1+ for short term, we continue to maintain 0 exposure to commercial paper as a prudent borrowing practice. IGAAP to India's reconciliation has been explained in detail for profit after tax and the net worth on Slide #30 and #32 on the presentation.Key parameters. As on 30 June 2021, total number of live accounts stood at 128,000. That is 20% year-on-year growth. Total number of branches was 284, that is 33 branches added in last 12 months. Employee count 4,431 as on June 30, 2021. Assets under management grew 21% year-on-year to INR 96,156 million as of 30 June, 2021.Product-wise breakup: home loans, 72.7%; other mortgage loan, 27.3%. Occupation-wise breakup: salary, 39.7%; self-employed, 60.3%. Disbursement increased by 117% year-on-year to INR 4,625 million from Q1 FY '22. As on 30 June 2021, average borrowing cost 7.25% against the average portfolio yield of 12.99%, resulted in a spread at 5.74% borrowing.Access to diversified cost-effective long-term financing from various lenders, a strong relationship with the development financial institution. Overall borrowing mix as 30 June is 33% from term loan, 23.1% from assignment and securitization, 34.4% from National Housing Bank and 18.75% debt capital markets. Asset quality. 1 day past due stood at 12.67%. Gross Stage 3 stood at 1.14%. Net Stage 3 stood at 0.86% as on 30 June 2021.During the quarter, resolution plan has been implemented for certain borrowers' accounts as per RBI Resolution Framework 2.0 dated 5 May 2021, such account with an outstanding amount of INR 1,149 million has been classified as Stage 2 and provided for as per the regulatory guidelines.Provisioning. Our total COVID-19 provision stood at INR 148.2 million as on 30 June 2021. Total ECL provision, including COVID-19 provision, and provisioning for Resolution Framework 2.0 stood at INR 662 million as on 30 June 2021.Liquidity of INR 23,550 million as on 30 June 2021. Cash and cash equivalent of INR 11,080 million, unavailed CC limit of INR 1,320 million, documented unavailed sanction from National Housing Bank of INR 4,550 million, documented unavailed sanction from other banks of INR 6,660 million.Profitability. Profit after this increased by 20% year-on-year to INR 599 million for 3 months FY '22 as per the Ind-AS accounting. As per IGAAP, we had registered a year-on-year growth of 19% to INR 713 million for 3 months FY '22. ROA, 2.64% and ROE, 9.84% for Q1 for FY '22. As on 30 June 2021, we are well capitalized with a net worth of INR 24,681 million. Our book value per share stood at INR 314.4.Now with this, I open the floor for Q&A session. Thank you.
[Operator Instructions] The first question is from the line of Abhijit Tibrewal from Motilal Oswal.
Hope both of you are doing well, and the rest of the Aavas team are also safe and sound. My first question was around the sharp deterioration that we have seen in your 1+DPD. And I think this looks far more pronounced given that the other peer that's reported yesterday has not kind of reported this kind of a deterioration. And sir, correct me if I'm wrong, but I think this kind of a stress buildup we have seen only during the one last time. So if you could please guide what was your experience like during demonetization? And when can we reasonably expect these 1+DPD numbers to start getting normalized at those 5% levels that you have guided for in the past?
Yes, Abhijit. So Abhijit, it's been a compare, like last year, when the first lockdown happened, April, May, the moratorium given to them, customer was around 24%. And in June, it was around 18%. If you will take the similar situation, now this time, moratorium has not been given, and the restructuring guidelines is already open.So out of around 129,000 customers, we have given around 1,400 customer restructuring. And as of June, only 3,000 customers has not paid the June installment. So if you will take that number, this is around somewhere 2.5% of the book. So in June, almost 97% of the customers have repaid their installments. So now in April and May when the lockdown happened, so certain customer has missed their 1 installment or 2 installments.So like in March, and it was -- number was somewhere around 6%, 6.5%, 1+. So around 6% customer missed either 1 installment or 2 installments. But at the June end, overall of the 12.37%, only 2.5% has not paid their installments. So means from June onward, around 10% customer has normalized their account. And in further July out of these 3,000, already 2,000 account has paid the July installment also. So things are getting normalized, but 1 or 2 installments for some account which has been not paid because of the COVID impact.So according to business requirement or maybe salaried customer who has INR 20,000, INR 25,000, salary and INR 7,000, INR 8,000 installment. So they may take 1 quarter, 2 quarters or some of the businesses taking longer tenure to normalize their 1 or 2 installments, which is pending. But current month installment, they have already started paying. So I don't think so that is much of a stress, but this is the right position of the portfolio at this point of time.
Excuse me, I mean if I were to just summarize that, given the kind of collections that you are looking at now, if the economy were to actually recover, we can also expect a sharp improvement in the 1+DPD number in the next 2 or 3 quarters?
Yes. So if third wave will not come, and economy is on the upscale side, yes, in next 2 to 3 quarters. Because customer has already started paying the current month installment, so there is no further stress, which is getting built up in terms of Stage 2 or Stage 3. Yes, we have certain more requests, which is pending for restructuring. We have restructured around INR 110 crore in the first quarter. Certain more requests are there, which is pending, and we are -- our trade team is working with each of the customer. But I think it will be like our collection efficiency, around 98%, 99% in June itself. And we think from here onwards, I think this will gradually come down in next 2 quarters or 3 quarters.
Okay. And the last question that I had was on your disbursement. Especially this time, the disbursement mix suggest that they were slightly skewed towards other mortgage loans. I'm speaking -- in the PPT also, you have suggested that about 15% of your other mortgage loan disbursements were towards MSME loans compared to about 7% in Q1 of 2020.Sir, why this is interesting today is, I mean, while we did some channel checks for affordable housing financials in May, you always used to hear that a lot of top-up loans are actually happening from the affordable housing financiers in May, and there was not a lot of organic housing loan demand. So what was our experience like when it comes to, let's say, top-up loans? And maybe if you could just give a breakup of your other mortgage loans as well?
So Abhijit, in our nonhousing loan, top-up will be very miniscule. We have not given any top-up to -- I don't think that will not be more than even 1% of the disbursement or the total numbers. Second thing is, as soon as the lockdown happens, the home loan customer, loan got sanctioned. But in disbursement, there is difficulty because of property paper not getting registered. And in construction cases, first stage is only 10%, 20%. So that gets deferred. It will see month-on-month number, and there was a spillover from last quarter on the nonhousing side. So only in April, we have more nonhousing loan disbursed. May was around 70 -- 65%/35%, and June is 72%/28%. So June is a normal business month, which has happened for us. And there, our housing loan disbursed -- so if you will see last Q1 FY '21 also, so housing and nonhousing was 70%/30%. And it will leave 1 month operation. We are on the same track of 73%/27%, 75%/25%. So -- and I think going forward, we will have the same kind of disbursement trajectory for all our disbursements.
Okay. Sushilji, if I can just squeeze in one last question, which has kind of gotten me curious that we opened 1 branch in the state of Odisha. And if I remember reading 1 Expedien data, it suggested that only about 2% of the total outstanding housing loans in the INR 5 lakh to INR 10 lakh ticket size used to come from Odisha. In the overall pie of 100, this 2% was contributed by Odisha.So while I understand that the competition there is low and while you might have a first mover kind of an advantage there. But if you could just briefly tell us what was your thought process in entering, let's say, Odisha, where I think the per capita income is low and maybe from what I gather, it is also a difficult market. So if you could just share some thoughts around our strategy of entering Odisha.
So, Abhijit, we are concentrating our branch-opening approach, the -- and state penetration approach. So as we have done in the last 10 years, every 5 years bracket, we open 3 to 4 new state and then go penetration in the taluka level, and that's the way we do the business. When we select the branches in the state, we do it on the 2 bases. One is, we have financial data, so state -- country level, state level, district level, taluka level; population, number of families living there; different income groups. What are the number of housing loans at this. So housing loan penetration, less than 5% to 7%; 1+, less than our benchmark number; 90+, less than our benchmark number. So those areas or markets be open, so that our branches can sustain for next 10 to 15 years the business in that. So now we have completed 2 block of 5 years. In the first year, we opened Rajasthan, Gujarat, Maharashtra, MP. Second block, we opened Haryana, Uttar Pradesh, Chhattisgarh and Uttarakhand. So now in next 5 years, again, we intend to open 3 to 4 states. So in the first year, we are opening Karnataka and Odisha.So Odisha, again, we will open 5 to 6 branches, first branch to open in Q1. And in Karnataka also, 1 portion of our branches are very much near to Maharashtra, so it's a contiguous distribution, Hubballi. And the rest branches, we will open as per our program. So there is no change in our penetration policy as per state in the district level, tehsil level branches. And we will keep on same with our analytics numbers and ground level experience.So I think wherever housing penetration is low and the market is upswing, we want to capture that market because we are in the affordable housing segment. And where there is less penetration, we see more scope. But yes, on asset quality side, our practices, we are confident now after running 11 years and 280 branches that our processes are well versed. And -- but still in new branches, as we have already disclosed our last conversation also, we go very slow. First 3 years, there is no sales target. We learn from the cash flows, seasonality, how the market behave and then we go deeper.So we will continue our same approach, being more risk averse in the new market. But again, in this new 5-year stack, we will open 3 to 4 new states. But overall branches, like we open 30 to 40 branches every year. So if we open around 100 branches in the next 4 to 5 years, 60% to 70% branches will be in the existing states, which are 8 to 9 state existing, and 20% to 30% of the branches will be in new states where we go slow for the first 3 years. Hope I have reiterated the entire branch opening process and policies, which we are following last 10 years.
Yes, Sushilji, thank you for patiently answering my questions. And I wish you and the Aavas team the very best for the next quarters.
The next question is from the line of Udit from AMBIT Capital.
Hello, am I audible?
Yes, Udit.
My questions were, what is the provisioning policy around restructured assets? So are you following the 10% provisioning norm? Or are you prudently providing a little more as per the ECL model because we've seen some of the peers doing that? So that's my first question.The second question I had was, if you could spell out the amount of interest rate or interest reversals during the quarter, the absolute amount? And if you could tell us the assets held for sale number as of June '21?
Yes. First, I'm just taking the first question on the prudent policy around the restructured accounts. We adopted more prudent policy towards the ECL guideline. So for what restructured account we had done during this quarter, we have provided around 14% provisioning on that asset.I think that is -- your second question was around interest reversal. I think we could not able to understand. But as I think last time at annual closure, I think I explained this thing in detail. We have adopted a more prudent policy around interest recognition. We don't recognize any interest income on the Stage 3 assets.
Correct. So in this quarter, whatever new assets have been slipped. So there's no reversal then in that, what you are saying?
Yes, we didn't book income there. Because last year, we changed, I think, prudent -- we adopted our prudent policy. Earlier, we used to do like that. But under Ind-AS, we changed that policy. But after, we again moved back to our original policy. We are not recognizing any income on the Stage 3 assets.
So the decline in yield in this quarter from a -- if I just calculate the reported yield, is it only because of the direct assignment not being there?
No.
2 things. Udit, there are 2 things. First, we have dropped our base rate by 15 basis points from 1st of April, which we announced in last quarter. So 15 bps [Foreign Language] and...
Rest is normal business.
And then rest is a normal business.
Those decline is a normal -- then normalcy.
Okay. Okay. And on the -- if you could tell us the number on asset sales for...
Yes, it is INR 18.6 crore.
The next question is from the line of Kunal Shah from ICICI Securities.
Yes. So firstly, in terms of the overall ECL provisions at 85-odd basis points. So how comfortable we would be -- so obviously, there would be rollbacks and upgrades, which would happen from 1+DPD. But if you, overall, look at it maybe in 31- to 90-day bucket, then does that seem sufficient? Or maybe the policy would be the way we have seen 70 bps kind of a credit cost compared to earlier years' average? Could it be higher this particular fiscal and will keep on inching up the provisioning?
As we adopted very consistent and a prudent policy around ECL theme. During this quarter, as I explained earlier questions, we have recognized certain assets as restructured where we have created -- we fit that asset -- fit under Stage 2, where we have provided a higher provision at 14%. And at Stage 3, we provide a provision of around 22% as per the ECL calculations. But we are quite confident. I think we are -- ECL provision at 0.85%. And we don't think any further, I think, major change will happen towards the overall ECL provision rate.
Okay. So then given this kind of a situation, overall, we should see the credit costs settling down and normalizing to where it was earlier in terms of pre-COVID level?
Yes. Apart from that, I just -- I want to update one more issue -- thing here. Like, total ECL portion at INR 66 crores as per the -- if you refer to the presentation. This INR 66 crores also include INR 31 crores provision we have created on account of COVID Phase 1 and COVID -- under recent restructured account.
Sure. And there would be pipeline as well of restructuring, wherein some further provisioning would be needed because, I think, we would not be done...
But INR 31 crores already we have created on account of stress, on account of stress.
Okay. And further pipeline, which could be there, that, we will have to, again, create more provisioning. So whatever, maybe 10%, 14-odd percent that will just get added?
Yes, Kunal, that will depend. We will do reassess of earlier accounts also, how they are performing, in the next quarters, as well as if the fresh addition will be there. So accordingly, that provision will be created.
Sure. And in terms of the nature of restructuring, if you can highlight how it has been driven to the customers?
Yes. So Kunal, government announced this -- around 5th of May, we got the Board policy approved. But interimly, because customers are having the moratorium experience. So as soon as lockdown happened, we started receiving applications around it. And as per the Board-approved policy and as per the RBI guidelines, we created a proper set of -- we have given customers options to apply for that through various modes of communications.And as soon as we were getting that communication, initially, I think for some 20, 25 days, it was difficult to go to customer, assess the business at its business place. So we did a virtual kind of assessment. And when the lockdowns started opening up, we started visiting the customer place, looking at business, looking at cash flow, GST returns if they are able. Salaried customer, so they said that their salary is coming less. We take their bank statement. And so we've completed the entire process. And then all those cases, based on the condition, went to committee. And then our committee was convinced that, yes, restructuring is the right mode and customer -- this restructuring will get success. Then only we have given these restructuring approvals. Still, we are working on some of the more applications. We were not able to process 100% of the applications because of the time lag and accessibility, certain end customers have not given the documentation. But looking at the current numbers, I think some customers have begun their -- restructuring applications also because now the business has come down to normalcy very fast. And some of the customers -- so in the earlier, we have said that there might be 2% to 2.5% kind of restructuring, which can come on board. But I don't -- I think now, the number will be lesser than that number.
And moratorium would be for 1 year, how would this be?
No. So it's as per customer requirement, certain time, 3 months; certain time, 6 months, 9 months. So according to customer's requirement and the assessment of the credit team, both the things matching. Accordingly, we have created the same.
Sure. And last question in terms of securitization, what would be the overall view for the full year? Maybe this quarter, we had not done anything as that. But otherwise, in terms of the securitization, how should we expect it going forward for next 9 months?
Kunal, as we articulated in our management thesis around the assignment transactions. We take assignment as our funding tool, depend upon the business growth and depending upon the pool price, availability in the market, we do the assignment transactions. So it purely depends upon that. So like last year also, quarter 1 was, we didn't done any assignment transactions. Similarly, this quarter also, we didn't done any because other funds at a level at a very competitive price.It was like -- you referred, if we -- we have mentioned in our call, I think fresh fund we raised during this quarter is a much competitive price. So we didn't done any assignment transactions during this quarter. But overall basis, we can -- you can refer last 3-year trend, similar trend will be maintained for this year also.
The next question is from the line of Bharat Shah from ASK Investment Managers.
Just one question. Numbers part in technical provisioning. Are we, in your opinion, more than probably likely to be incurred or reflects your good judgment as to where the cost should be, and that is how it is provided?
Actually, with auditors, every 6 months we do the reassessment on loss given default and PD ratios. And same thing we will do in -- so it's due on 30th September, every 6 months we do. And accordingly, whatever ratios come, we provide that. So the earlier basis, it is 21.4%, which has entirely seen the COVID first wave also. COVID second wave is not much that severe like the COVID 1 because I have told earlier, it was 17% moratorium and now in June, only 2.5% customers has not given their installment.So I think, more or less, we will go by that model. And on that, Stage 3 comes around 22%. This restructuring guideline, we have followed, but here also, we have provided as per the ECL model. And over and above, we have -- so restructuring and COVID provisioning is somewhere around INR 31 crore, INR 33 crore. I think that is sufficient.And going forward also, even if portfolio behaves very well, we intend to keep this as a buffer in the balance sheet. And we try to -- we'll try to strengthen balance sheet further, so that we benchmark ourselves against the best practices maybe, going in a way where we can provide maybe most of the Stage 3 at most of the provision.But technically, you are right. Right now, it's a technical provision. And hope so if COVID 3 will not be there, we will have much better results than this.
So, Sushilji, INR 33 crore is buffer and entirely futuristic kind of conservative provision. After this, management -- sorry?
INR 31 crore.
So INR 31 crore is income with the buffer provision over and above the INR 66 crore identified and likely credit cost. INR 31 crore is entirely additional contingent amount within the provision.
Bharat, the total provision is INR 66 crore. It includes the INR 31 crores additional provision we made on account of COVID Phase 1 and the COVID Phase 2.
Right. So it's a buffer provision. There is no details identified in likely cost, but is it through precaution?
Yes. Yes.
The next question is from the line of Nischint Chawathe from Kotak Securities.
My question actually pertains to your incremental funding cost. I think somewhere you mentioned that you've raised money at something like 4.62% this quarter. I just wanted to understand, a, which are the sources from you -- from which you're raising money? And b, how sustainable do you think such low cost of funding would be?
So, yes, Nischint, and Ghanshyamji will divulge. But I will say, when we raise money overall every year, so there are different instruments, so NHB funding, long-term bank borrowing, assignments and NCD and at different part -- different time of market, different moneys available at competitive prices. So in Q1, we have raised most of the money from NHB, which was -- but -- and overall, it we will, NHB money is just every year around same costing. Last year also, I think it was around same costing.And rest of the money from the different instruments maybe will base in different parts of quarter. So first, NHB money is available around a net price. And rest of the instrument, anyway, the price, which is dribbling in market, we are able to do. But it will not go further below 7% to 5% next 6 to 9 months, that is our foreseeable future. But yes, we will keep on borrowing at very competitive prices in that going forward also. Ghanshyamji?
Sushil, I think you -- Shushilji, I think, very well covered. If you have further more question around the cost of borrowing, so then I will try to answer.
So, sir, see, if I recollect rightly, I think NHB refinancing used to be like 6% to 7%, right? 7.6%?
Yes.
It's although large -- low number.
Yes, low. NHB is a different product, which starts from sub-3% to somewhere 6% or 7%. All these rating -- certain products are a fixed rate product, which we give to everyone the same rate. Certain product, they give link to the HFC rating framework, which they have internally. So if you start from 3% to -- it can go up to, let's say, 6% to 7% or 8% also depending upon the HFCs. But as Sushilji mentioned, we are at 7.25% at June end. So we are -- it looks so, okay, we are now almost has become very competitive as overall cost of borrowings looking at the current interest rate and the likely incoming quarter scenario.
But this 4.62% facility, do you think such low subtype of a facility from NHB will continue?
Again, let me again allude to it. Like, today, we have around remaining borrowing sanction INR 455 crore, which we mentioned in one of that 24 slide number. So out of INR 455 crore, there may be certain -- some components. They can give us a lesser price, certain amount may come at a higher price because they have their own mechanism to give a different product to different institutions.
Okay. So it is better to just benchmark with the 7% to 7.2% like what you got?
Yes.
The next question is from the line of Karthik Chellappa from Buena Vista Fund.
Am I audible?
Yes. Yes.
So I have 3 questions. The first one is, if we were to look at our NPA in the other mortgage loan segments, possibly about 3 years back, this was in the region of about 0.25%, 0.26%. And this has now crossed about 1%, which is almost a fourfold increase, and is now almost equal to the home loan gross NPA. So what is it about this segment that the deterioration has been far sharper than home loans?
Yes. So Karthikji, as you know, the different business segments have got impacted because of COVID. And again, when we started this business, it was initial stage, we land this portfolio around 14% to 16% rate. And at that rate, we presume that there will be -- there might be 1% to 1.5% kind of NPA. And even after COVID, this portfolio is showing into that acceptable trajectory. But nevertheless, we assume that this portfolio will behave much better once the COVID impact will be lesser.
Okay. Okay. Got it. And Sushilji, the 12.7% of 1+DPD how will that skip -- split between self-employed and salaried? And which are the states that are above this average?
So Karthik, can we get back to you on this? Himanshu will give the number. Right now, Rajeev is not available with me.
Okay. Not a problem. I'll get it later. The last question, Sushilji is if we were to look at -- sorry.
12.6% between salaried and self-employed.
Yes. The salaried and self-employed, and which are the states that are actually above this average?
Okay. So we will give this data -- try to give this data by end of call or maybe we will -- publish in script -- transcript of the meeting.
Okay, not a problem, Sushilji. The last question is, if I were to look at the restructuring book of about INR 115 crores, which you have done and looking at the number of customers of about 1,400, I get an average size of about INR 8.2 lakhs, which is almost equal to basically the ticket size of our loan. So does this mean this restructuring portfolio is typically very, very early vintage customers? And what would explain this phenomenon, if true?
No. I don't think so.
No, no, no. Karthik, I think there's nothing as early vintage. But if we -- if this 1,400 customer is not on average ticket size versus our pool average ticket size in that home loan, we don't see any abrasion in the ticket size who sought this restructuring.
Okay. So these are not like very typical early vintages, 1- or 2-year-old kind of customers, it is a mix, but it is just that the average is closer to INR 8.2 lakhs.
Karthik, last 10 years, our average ticket size is somewhere around this number. So I don't think so -- just give me 1 minute.
Sure. Sure.
So Karthik, almost 75% to 80% of the portfolio is more than 2 years built in.
Okay. Off the restructured book, about 75% of the restructured book is more than 2-year vintage, is it?
Yes, yes.
Okay. Okay. Okay, got it. Wish you and the team all the very best for the remaining quarters.
The next question is from the line of Piran Engineer from CLSA.
Congrats on the quarter. I just had a couple of questions. Firstly, on Slide 24, can you just explain to us when you said that the outstanding tenure of borrowings is 125, 130 months. But on the left-hand side, when we look at the ALM, there are no borrowings above 10 years. And I understand ALM is for residual maturity and not from the start, but still -- and only 20% of it is more than 5 years. So how do we exactly reconcile this data of length of the borrowings?
If I understood your question correctly, so let me explain your weighted average tenor of the borrowing -- better tenor is a borrowing, is when we source a loan less of 10 years, so it gets counted for the 10 years. If you take a loan from National Housing Bank of 15 years, so the tenor is counted as 15 years. Similarly, if assignment transaction happen door-to-door maturity, so that also counts because that also gets a door-to-door maturity around that basically.If we take, let's say, we took NCD certain with a multi-let institution like ADB, ADF, IFC and CDC around 7 years, 8 years. So that gets counted as actual maturity of 7 years bullet repayment. So accordingly, that average maturity gets computed on the borrowing side. Similarly, this ALM comes out of the remaining assets, remaining liability tenor basically.
Sir, that's my question. Sir, that in that case, intuitively, in the ALM chart, most of your borrowings, like right now, if I see, out of INR 6,600 crores of borrowings, INR 5,200 crores is less than 5 years residual maturity. Only about INR 1,400 crores is more than 5 years, only about 20%. So that's my point, if the borrowing tenor is so long, why is it like this?
Yes. So Piran, I think if you will see the breakup of our borrowings. Around 23% is from NHB, that is mostly long tenor borrowings. Then around 22% from assignments, which is around, again, 16 to 17 years. Then most of the term loan borrowing from the bankers, which is around 10 years, that should be commensurate with the loan tenor, so that is around that.And then we have around 15% borrowing from NCD and all those things, where average tenor is from 5 to 7 years. So when -- so if you'll take this average -- this dated average of borrowing into how much is the door-to-door maturity of the loan, so right side table is as per that. And the left-side table...
Is residual maturity.
Is the residual maturity.
Okay. But sir, now -- sorry to harp on this, but now, for example, this quarter, we raised INR 400-and-odd crores or something from NHB. And as you're saying, it is 15-year money?
No, it is not 15 year. We have mentioned 45 months.
This here, this has an average maturity of 45 months.
Okay. Okay. But I mean, in the last couple of quarters, you all would have raised up money, which is more than 10 years maturity, right? And -- but in the ALM, there is nothing which is more than 10 years remaining. And very less, which is between 5 and 10 years old.
Piran, I think there's some confusion...
Or is my understanding incorrect?
Yes. I think there's some confusion at your end. This left side is a residual maturity. Left side is a table is made only of the own book balance sheet basically. Assignment is not there because that becomes old book item on the balance sheet date, basically.But when the right side, you see is the entire borrowing, including assignment and PTC assignment liquidation, everything is there. So both -- those 2 things are different when you see. So if you want to separately connect with Himanshu, he will explain you in detail.
Yes, I'll do that. And just one other question. How much ECLs have we done till day?
INR 14.6 crore.
The next question is from the line of Nidhesh Jain from Investec.
Firstly, the ECLGS number, what is the ECLGS number that we did in Q1? And what is the cumulative ECLGS disbursement that we did until now?
2 kinds of disbursement, [Foreign Language], current outstanding is INR 14.6 crore.
INR 14.6 crore. Okay. And similarly, what is the current total outstanding of the restructured book?
[Foreign Language] restructure, as of 30 June. We have given that number...
INR 114 crores.
It was INR 114.96 crore.
In Q4, there was no restructuring?
Sorry?
No, no.
No. We have not done any restructuring in the past now year.
Yes, sure. And then lastly, if I look at the AUM mix, the share of housing loan in last 3 years have reduced from 80% to 83% -- from 80% to 83% to around 73%. So going forward, how do we see this AUM mix? And at the same time, the share of salaried customer has gone up in our mix.
No. So Nidhesh, I think -- first, I need to correct that, we were never 82% and 18%. Last 3 years data, 75.12%/24.9%. And today, it is 73%/27%. And year-end, it was 73.5%/26.5%. And we want to remain in the same bracket. It was never 80%/18%.
The next question is from the line of [ Vikas Kasturi ] from Focus Capital.
Sir, I had 3 questions related to your business...
[ Vikas ], sorry to interrupt. Your voice is coming muffled, and have a bit of an echo. Can I request you to...
Yes, sorry, is it better now?
Yes.
Yes, sorry. So I had 3 questions. So the first one is, why is turnaround time so important for the borrower? And the reason I ask is that for a lot of borrowers, you are probably the only lender. So why is the turnaround time so important, sir?
So I think we have explained in maybe in our processes we want to best, adopt that practices and we want to give our customers best experiences. And all the processes, which we have built in the company, is around how we can improve our customer experiences. Because in the long term, for company's survival, customer experience is the key. And there is where we have invested in technology, digital processes, analytics and revamping our processes in new technologies.3 years, 4 years back, we were something around 22 days. And now we have come around 12 days. But as a company, we want to reduce it to, maybe 1 or 2 days, though it will take time. But certain push on the customers, we are able to do that in this bill. So any repeat customer and any existing customer which is asking for a pending disbursement, now we have come down to 1-day time also.So it will be our company's continuous process improvement and pursuit that we remained competitive, relevant and give our customers best experience by reducing the turnaround time of all our processes. That is very much needed in our business.
But I have read all your documents. The point that I'm still -- I'm unable to understand is that for a lot of borrowers, right, they do not get loaned from banks and other institutions. And that is why they come to Aavas, right? And even amongst out of 100 applications, I think you reject nearly 70% of those applications.So my question is, like, for a lot of them, you are the only lender. So the fact -- simple fact that you are lending to them itself would be a big thing for them. So -- but I'm positively surprised. And I appreciate what you're doing here, sir, but I'm just trying to understand that you have laid a lot of emphasis on turnaround time, in all your annual reports, also you mentioned this. So I was just trying to understand that for a borrower, why is it so important?
So take me in the right speed. My son got 18, 6 -- 3 months back, and he was a new customer to the bank. When -- but when he entered into the bank and asked, I want to open a current saving account with you. And banker asked him, can you sit down for 15 minutes, and I will try to open, and it will take 1 day. And then he asked, nowadays, bank is publishing, they can open the account in 5 minutes' time. So it doesn't necessary that it's a client who is unbanked or who is coming to formal lending system per se. And that he don't want his processes to be on time, and he is not dealing with a credible lender or banker. So I think on that side, we don't differentiate between a customer who is coming for the first time, who is first-time borrower, who is first time coming to the normal lending system and somebody who has 750 CIBIL score, we want to give same kind of experience. And as I've told you, as the management, we think that is the most important aspect of survival for company in affordable housing segment and kind of lender we are. That is of the prime importance of customer experience. And we continue to focus on this, and we will try to even better this going forward.So this is a key attribute of our company's deliverables, and we don't differentiate between experienced customers from the banking and non-experienced customer for the banking.
One more question. So could you just provide some estimates of your business per branch for your mature branches and newer branches, some rough numbers would also be helpful.
Yes. So we have had earlier explained in different forums and calls. We have 4 categories of branches, A, B, C, D. The branch classification depends on the population of the town, number of families living there and how we see the potential of that branch over the end of next 15 years. So, like, if some town has population of 4 lakhs, divided by 4 or 5, you have 80 thousand to 1 lakh families. And if we try to consider that next 15 years, we will try to find at 5% of the customer base. So we need to do 5,000 home loans in 15 years.So divide by 180 months in 15 years, we need to do 20 to 25 files per month. So 20 to 25 files per month, with our ticket size of INR 8 lakh, INR 9 lakh, INR 10 lakh, it comes around INR 2 crores of the business. So when a new branch starts, it's about around 30% to 60% efficiency, and basically within 3 years, 90% plus branches come on 90% to 100% capacity. So that's how our business model works. And I hope I have answered your question.
Yes, yes. One last question, Sushilji. What is the average tenor of the loan?
So we give 3 to 4 kind of loans. One is home loan for construction. One is home loan for purchase, MSME loan, lot loans, then there is a differentiation between customers who are salaried, who are self-employed. So according to cash flow adjustment, we provide tenor from mostly 3 to 20 years. Average tenor of our portfolio is somewhere around 14 years door-to-door maturity. On behavioral term, our portfolio tenor is 7.5 to 8 years.
The next question is from the line of [ Anand Bhagnani ] from Vito.
Two questions. Sir, the funding that you raised at 4.6%, does it come with any kind of gap because the funding is at a lower rate? And if we kind of cap the rate that we can further charge? And in this particular case, does it apply?
Yes, the cap will apply.
Yes. There is one funding, which comes from the NHB, which has an interest growth around 3%, where they put a cap of onward lending also, which is around 6 -- between the onward cap come between 6% to 7%, depending upon the G-sec rate prevailing in that period.
Does that apply to this funding, 4.6%?
No. For that, there is no cap. Cap comes only on particular borrowing.
Sure, sir, sure. And secondly, sir, our overall restructured book is INR 114 crores. And the provision for restructured book is INR 31 crores. Did I get the numbers correct?
No, no. INR 31 crore is COVID provision plus restructuring provision.
Restructuring provisions would be around INR 14 crores, INR 15 crores because you have INR 14 crores in the provision, right? So for INR 114 crores, it I might be around INR 15 crores?
Yes, yes, yes.
The next question is from the line of Shreepal Doshi from Equirus.
Sir, my question was with respect to the 1+DPD number that we have got. So what would that number be for states like Maharashtra and Rajasthan?
Sir, are you there?
Yes, give us some time. Yes. So -- so there is only difference of 2%, 2.5% between Rajasthan and Maharashtra, not much of a difference.
Okay. So sir, if you can give any 1 of the 2 numbers, that you will be...
So Rajasthan is around 13%.
Okay. Okay. And sir, what has been our bounce rate for June '20, March '21 and June '21?
So I don't have -- hello?
Yes.
Can we just -- which date you require?
So sir, as on June '20, March '21 and June '21.
So I can tell you June '21, it is around 18%, 19% was the COVID impact there. Last 2 numbers, not readily available at me at this point in time.
No, issues. I will collect it later on. Sir, just one understanding I wanted. So when we have given a home loan to a customer, and he's been paying on time and after a year or 2, if he want the additional money and we give a top-up loan. So in that context, how does the loan then get classified? Does it still remain as a home loan or that will get classified as a let?
So there are 3 scenarios. If the extra loan, top-up loan is required to construct the further home. So, say, first [Foreign Language], he has taken a loan for ground floor. Now he wants to construct first floor, then this will be classified under a home loan for construction. And if the top-up loan is required for his business, personal purposes, daughter's marriage or some other things, then it will be classified in low home loan category.
So then the entire amount -- so for example, if the -- earlier, he has taken a loan of INR 10 lakh, now they got run down and the outstanding is 5x. And if he takes additional INR 2.5 lakh for business purpose, then the entire INR 7.5 lakh gets classified as anything else?
So INR 5 lakh is considered home loan, INR 2.5 lakh is consider low home loan.
Okay. Got it. Got it. And sir, the restructuring that we have already done. So how do you see -- I mean, incrementally, do you think the percentage, like right now, it is 1.2%, how do you see that number eventually closing?
Initially, we started and we told that it can be around 2% to 2.5%. But after Q1 experience, I think this number will be lesser than that number.
Okay. Okay. Got it. And sir, one last question. Like since our...
Sir, the line for the participant dropped. Ladies and gentlemen, that was the last question for today. I will now hand the conference over to the management for closing comments.
Yes. Thank you all for attending the call. I hope we have reverted most of your questions and queries. To summarize, we continue to focus on improving customer service and being transparent with our customers. As mentioned in the last earnings call, we have reduced Aavas Financiers Limited prime lending rate by 15 basis point with the effect on 1+ on 2021. So that got affected this quarter. And thank you so much for all your time. For any further information, we request that you to get in touch with Himanshu in our Investor Relations team or SGA, our investor relationship advisors. They would be happy to help you. And thank you very much for patience listening and cooperating. Thank you.
Thank you very much. On behalf of Aavas Financiers Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.