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IndoStar Capital Finance Ltd
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Hi, everyone. Thank you for joining us, and welcome to the call. With us today, we have the entire management team of IndoStar Capital Finance, led by Mr. Raj Sridhar, Executive Vice Chairman and CEO. Without further ado, I would now like to hand over the call to management for opening remarks, followed by Q&A session. Over to you, sir.
Thank you, Piran. Good morning to all of you, and welcome to the call. The Q2 had been a stable quarter for us, with some exceptional achievements. So I would like to take this opportunity to list out some of the positive developments which have happened during Q2.So all of you are aware that due to the pandemic, the lockdown started from March and the Reserve Bank of India naturally came out and announced moratorium. So the moratorium 1.0 was very stiff, as you all know, because it was 100% lockdown. There was absolutely no economic activity. And our mainstay business of MSME, which includes commercial vehicles and SME, have not been able to operate. So all these have been the features of moratorium 1.0. So the collections during that -- those months dip and many of our borrowers have sought moratorium.Subsequently, Reserve Bank came out and then extended the moratorium by another 3 months, which had been June, July and August. So during this period, simultaneously, there has been an unlocking announced by central government and various state governments. Except in containment zones, economic activity slowly and gradually started. And we could feel that and realize as we have been getting better and better in terms of collections.So during these 3 months, collections have gradually improved. And we reached a 70% collection in the month of August. And moratorium did not get extended. And RBI came out and announced that they will allow a onetime reschedulement as demanded by the industry.So during this onetime reschedulement period in September and October, our collections went up steeply. And in the month of October, we have reached 100% collection. So if you look at our collections from March to October 2020, it has slowly moved up. In July, it was 65%; August, it was 70%; September, 92%; and October, it is about 100%. So this has given us tremendous confidence and also exhibited the capability of our team which are engaged in the retail businesses. Mind you, all these have been achieved with most of our employees working from home. And we initiated very aggressive customer connect program and a terrific follow-up has been made with customers as and when the economic activity started, as you all know, the commercial vehicle is a earn and pay asset. So this clearly indicates apart from other economic indicators like GST collection, toll road collection, diesel consumptions and all that are indicating a positive turnaround in the commercial vehicle industry. So we observed in the marketplace different NBFCs adopted different strategies for commencement of business. So we felt that go and gain market share is one approach some NBFCs have adopted. And they felt that when there is no lender in the marketplace, it's a good time to go and gain market share. It's one approach.The other approach is a conservative approach, which we have adopted, where you go through the uncertain period, wait for certainty and then start the business. So in our case, in IndoStar, we felt that we should first achieve a 100% collection, which gives us the confidence to restart our businesses. So having achieved the 100% collections in October, we have restarted all the 3 retail businesses from November. So from November to March, we would be focusing to slowly and gradually ramp up our disbursements in all the 3 retail businesses.So the first message, which I am giving you, is the excellent collection performance during the most challenging period. The second most important is on account of resolution of nonperforming loans. So as you all know, that we have acquired the CV Financing business from India Infoline at around INR 3,500 crores to INR 4,000 crores in April 2019. So along with that asset, we also acquired around INR 300 crores of nonperforming loans, which came along with this asset. And that had pushed up our gross NPLs to 4.5%, 5%. And subsequent to this acquisition, the commercial vehicle industry went through a down cycle. The GDP growth was sluggish as well as the pandemic had put a lot of pressure on resolution of these NPL accounts. But we have been able to successfully sell this...See, I'm getting a lot of noise. Somebody is not putting their mobile on mute.
I will get that -- I will get that checked.
Please put it on mute because I'm getting a lot of noise.
All right. All are on mute except your line, sir.
Okay. So we have been able to execute a transaction in the month of September, where we have sold around INR 126 crores of nonperforming loans to an ARC without any impact on the profit and loss account. So this has helped our gross NPL from 4.6%, 4.7% to below 3% it has come. Also in one NPL account, which we had in the real estate, the customer has approached this for onetime settlement, and that account will also go out of our books on or before 31st of March. So these 2 are developments on the NPL front apart from the excellent collection performance, which we have reported.The third most important thing is on the reduction in the corporate book. We have been time and again mentioning to all of you that we would like to exit the corporate lending business, both real estate and non-real estate. And from a peak portfolio of INR 6,000 crores in the middle of 2018, we have brought it down to below INR 2,500 crores as of September 30. And this has been brought down by sheer collection, and we have not done any transaction of sale of any of our portfolio assets.And in the Q2, we have been able to bring down INR 452 crores of exposure from one of our large client. So that has helped us bring down this asset. And we are confident that in the next 12 to 15 months, we will take this portfolio to near 0.So these are all few important developments which have taken place during Q2. With the partnership of Brookfield, which had invested money into the company, with the kind of capital adequacy of nearly 35%, we have enough legroom. Very comfortable asset liability and a good liquidity pipeline enables us to plan aggressive asset growth in the next 5 months. During this financial year, due to the pandemic and other economic headwinds, when we are going through a muted growth, we are also not keeping quiet. While focusing fundamentally on collections, asset quality, reduction of the NPLs, selling of -- reduction of corporate lending book, we are also preparing ourselves to take advantage of potential which is going to unfold post to the pandemic. So what we did is we are focusing on few major initiatives to prepare the company to grow aggressively during the next 5 years. So we have focused on digitization. We have brought in a global consultant to help us. And we should be ready between March and June with the digitization initiative. That said, with the digitization, with the insight we have had during this lockdown, where we could achieve a lot of things by sitting at home, we also feel that our branches need not be big. So we are planning to have smart branches. When we are moving from 200 branches to 700,000, 800,000 branches in the next 5 years, all these incremental branches are going to be smart branches. The smart branches are smaller in size, combined with digitization. These 2 initiatives are going to enhance the productivity as well as reduce the operating expenses substantially. The net result of these 2 initiatives, apart from productivity increase and reduction of operating expenses, is a breakeven. So whenever we are, as a small company, expanding to a bigger company, we have to open branches. So earlier -- in our earlier expansion, when we opened 200 branches, these branches took nearly 18 to 20 months to breakeven. But now because of this digitization and smart branches initiative, we are going to break even these branches into 9 to 10 months, which is typically 50% of the time. So this is going to increase our penetration in the different geographies. So that is going to help us in aggressive growth in the next 5 years.So when we are looking at with all the strength, what we are trying to do is apart from smart branches and digitization, we are going to expand our products, we are going to expand our customer segments, we are going to be 100% retail, and we will be moving to different geographies. For example, we are today not present in east so we'll be moving there. We are also side-by-side, strengthening the leadership team. You would have seen in the press release which we did on October 20, we have brought in Deep Jaggi as our Chief Business Officer. Deep joins from HDB Finance where he was Head of Asset Financing. He had an impeccable track record in building the asset financing business, which consists of new and used vehicles, commercial vehicles, passenger vehicle, construction equipment and tractors. So these are all the 4 segments IndoStar is also planning to grow. So Deep has worked the last 10 years in HDB Finance as Asset Financing Head. We -- he has built a high-quality, high profitable platform. And before that, he was working in Chola. So he comes with a rich experience, excellent track record, at an appropriate time to IndoStar, when IndoStar is sitting with a lot of strength in terms of large equity partner, equity capital network, digitization, smart branches and all that. So Deep's onboarding is going to help us in building the asset financing business profitably in the next 5 years.So we are -- if you look at our Q2 accounts, you will find that the commercial vehicle finance business has made more profit than other businesses. This is what we have been telling all of you in the last few years that the growth, when it comes to retail business, particularly the CV Financing business, there, we are planning to be present in high-profit used vehicle financing. That is going to contribute significantly in the growth of our business.So the other point which I wanted to leave with you is on the restructuring. So during the months of September and October where the onetime reschedulement has started, we have received only 0.6% of our customers have sought restructuring. We are evaluating that on a case-to-case basis. And wherever the customers have -- business has been disrupted, we are sympathetically considering reschedulements. So as anticipated, the resettlement is not going to be a big number, which indicates clearly that the fundamental retail segments and the customer segments, asset segments are strong, and the customers are confident that they will be able to pay without resorting to any reschedulement.So the -- from November, as we get on to the growth path, we are also looking at the next 5 years commencing from April 2021, where I feel that the impact of COVID would have been substantially subsided. So from that time, the next 5 years, we are looking at with a lot of confidence, and we are excited to build a high-quality, high-profitable, 100% retail company, which would engage in the nation building activity. So with this preliminary remark, I leave the forum to the participants, and myself and the entire team of -- the entire top executive team would be happy to answer any of your questions. Thank you very much.
[Operator Instructions] The first question is from the line of Aakash Dattani from HDFC Securities.
My first question is there has been a restatement in some metrics, particularly the GNPAs. So could you please provide some more color on that?
Yes. Amol, can you take it?
Sure. The restatement, as you will see, Aakash, is coming in from the previous slide. So on the balance sheet, you'll find that we have annotated that restatement is for loan assets and borrowings. So certain off-balance sheet items, which are a part of our securitized pool which we had taken over, we have sort of brought them on balance sheet. Hence, you'll find that around INR 400 crores of assets have got added as on balance sheet and a corresponding increase in borrowings as well. That leads to an impact in the GNPA in the range of around 20 to 30 bps. And that's what we have called out as we stated. It's an accounting adjustments we have done in the quarter of Q2 of FY '21 and obviously restated the previous quarters as well.
Right. But so even in absolute terms your GNPAs would have -- appeared to have changed. So would that be because of the same accounting adjustment?
It is only because of that accounting adjustment.
Okay. My next question is on your other operating expenses during the quarter. Is there a one-off in there?
Yes. We had the same question last quarter as well. So here as well, we have called out that the credit -- the cost-to-income ratio that we are publishing is excluding one-offs. And those one-offs are again for the investments that we are doing into various initiatives that Sridhar mentioned. And that amount will be in the range of around INR 10 crores to INR 11 crores.
Okay. So my next question is in terms of your plans for the corporate book, you intend to become a 100% retail-oriented company. So over what time period would you look to run down the corporate book?
See, our corporate book has got a repayment schedule. But if you look at it, we have a waterfall mechanism in all the contracts. So as and when the developers sell apartments, we will get our money. So irrespective of reschedulement and moratorium, the money keeps coming in. And our projects are up to INR 3 crores apartment size. Sales have slowly started improving. So we are getting money back from the borrowers. So our estimate is that in the next 12 to 15 months, this would become 0.
Okay. My next question is on the collection efficiency metrics that y'all have stated, could you sort of break that up segment-wise if that's possible?
Segment-wise, we do not have here. We can give it to you separately.
[Operator Instructions] The next question is from the line of Kshitiz Prasad from Maybank Securities.
Sir, we just released our note on IndoStar. My question is, on 2 accounts. One is that, how are you seeing the trends in the real estate sector now? Is it the sales happening? Or is the liquidity crisis among developers still there to a large extent? And the second question is on the strength in the CV Financing, being a cyclical business, how you see that happening? And what's your strategy currently on that front? We have seen some kind of a contraction. Obviously, you're being cautious, but do you see any kind of recovery? Or what's the ground reality that's found here?
Yes. So I'll take your second question first. So when it comes to CV Financing, as you rightly said, that it's a cyclical industry. And in the last more than 1 year, it has been down cycle. And along with the sluggish GDP with pandemic, the new vehicle sales have bottomed out. But as you know, that we have defined our business as financing used vehicles. So used vehicles are not cyclical because it is not creating fresh capacity like new vehicles. We facilitate transfer of vehicles from one person to another. And in the CV industry, the fleet owners segment and migrant labors who have been using Uber, Ola kind of passenger commercial vehicles have been impacted badly. The remaining segments have been doing well, and we have been largely presenting transportation of essential commodities, like agricultural produce and other things which we consume on a daily basis, which are being transported in the state highways. So there is no sluggishness in this transportation as we require everything. We consume on a daily basis. Even during lockdown, we have been getting everything. So that is demonstrated by the gradual improvement in the collection efficiency also.So what we feel is, even in the best potential, we have got enough opportunity to gain market share even though companies -- large companies like Shriram and Chola are present in this segment, they are going to be our main competitors. But without competing with anyone, by defining our own customer segment, we can gain market share with the kind of aspiration we have in this business. We have got enough potential.Apart from that, the scrappage policy, which is likely to be announced is going to increase the potential for financing because the scrappage policy, if it has to be successful, will have to have a very robust replacement financing. So we feel that these are going to be fantastic opportunities for us to grow in the next 5 years.Along with that, we also have geographical expansion, like going to different regions as well as in the same regions, opening more branches, as I articulated, digitization and smart branches are going to be our focus areas. Apart from that, we are also expanding the product. The product expansion is going to be on passenger vehicle, construction equipment and farm equipments, including tractors. Since the rural market is doing very well, we will be getting into that space. And these product expansion, geographical expansion, all these are going to -- along with the base potential and scrappage policy, is going to make our asset financing business, a very high profitable, high-growth business. When it comes to your question on the real estate, I would like my colleague, Deepak Bakliwal to take it.
Yes. So the initial trends on sales velocity are encouraging. You would see that the dominant part of our book is Mumbai based where there was a substantial reduction in stamp duty. And along with that, we saw renewed energy in the sector, which was required. In some of our sites, we are seeing pre-COVID level sales velocity already been achieved.Now whether this has the legs to go to next 3 quarters and whether it's not pent-up and it will move to the coming quarters, it's something which has to be seen, but the initial trends are encouraging.
[Operator Instructions] The next question is a follow-up from the line of Aakash Dattani from HDFC Securities.
I have 2 questions, they're kind of related. So now the share of the promoter in the company stands at about 93%. Am I correct in understanding that this would have to be brought down by a significant amount in the near term?
Yes, definitely. Correct. Your understanding is correct. There is a -- 1-year time is given by SEBI.
Correct. So that being said, what are the plans that the company has in mind to sort of go ahead with that? And another related question. So you have mentioned in your investor presentation that you all would possibly be looking at inorganic growth as well. So which segment would you find most attractive at this juncture?
See, I can only say that we would like to remain as a listed company. So the compliance, as far as the regulation, will be done before the time lines. That's one. But how we will do it, that I will not be able to articulate as of today. There are multiple ways the same can be achieved. One of them, as you rightly said, is buying asset and merging with the company. There, we have articulated that we are looking at opportunities which are there in the marketplace. So we have actively looking at opportunities in the same lines of business which we are already present and also some of allied businesses. As of now, we are looking at it. And whenever something materializes, we will update.
The next question is from the line of Saurabh Kabra from Nippon Mutual Fund.
Sir, have only 3 data points which we need. First is this collection update, when we say 99.7% and this -- the amount of collection, this would include only the current month collection or overdue as well as prepayments also?
See, we are talking about total collection as it has been claimed by the entire industry. Everybody is talking about the total collection only. So that is what we are doing. So we can always eliminate and see what is the billing collection. But normally, in money lending business, the billing collection is always looked at with total collection only.
So this would include prepayments also.
Some prepayment, some overdue collections will be there.
Sure. And second question, sir, we -- as you told that we have sold certain NPA portfolio of around INR 126 crores to an ARC. Just want to check, was this sold for cash or against SRs?
No, no. Amol, would you like to take it?
This was sold against SRs. We also invested into the SRs of the trust, which is a standard practice in these.
Okay. But does that -- does investing to SRs allows the company to remove it from NPA? I just wanted to...
Of course. So what it does is that it clearly reduces my loan book, and the SRs are treated as an investment.
Okay. And sir, one last point, on the restructuring part, so we have a view on the retail piece. It is -- the number is quite good. On the wholesale side, can you throw some light that how much restructuring are we expecting on the wholesale portfolio?
See, there will be many cases which would go for moratorium as well as reschedulement as I had mentioned earlier. But that's not material because our repayment is on the developer selling the apartments. So it has nothing to do with the moratorium or reschedulement. But considering the industry and the headwinds, many people will go for reschedulement there. And that is a book, which I had -- as I had earlier told, that we are exiting, which could happen in the next 12 months.
[Operator Instructions] The next question is from the line of Amol Patil from IDFC First Bank.
This is Amol from IDFC First Bank. I have a couple of questions. One is your OpEx has increased quarter-on-quarter, 34%. Considering the COVID situation, people are negotiating with their landlords. They are having other means of cost control. I was hoping that the OpEx will go down.
Yes. So the OpEx actually has come down compared to the expenses which you have outlined, that we have deferred our increments and bonus for employees. Employees have sacrificed. The second one is on the rental premises. All the financial offices, including our head office in Parel are all on rental. We have renegotiated. The third is all the discretionary spending, including traveling during the pandemic has come down. So as against our INR 300 crores of operating expenses incurred during FY '20, we are expecting a 15% to 20% reduction, INR 240 crores to INR 250 crores only this year, FY '21, on a like-to-like basis. That we have achieved. But what you should understand is that there are expenses which we are incurring for preparing our growth in the future. Like Amol said, there are one-off costs where we are bringing in consultants to help us in digitization. There are some other initiatives we are doing. And similarly, there are recruitments we have done for the future. Everything takes 3 months. We will be opening some branches. So these are all new additional expenses which are appearing there. But if you compare the earlier year expenses vis-à-vis the current year expenses, there is a 15% to 20% reduction.
Okay. My second question is around the securitization transaction. I would like to know what was the value of loans which were securitized, its breakup into retail and wholesale, and the value of SR which is hold on the balance sheet as of end of quarter 2?
Amol, can you take it?
Yes. Amol, we have sold a gross NPA of INR 161 crores. The whole NPA book is relating to CV assets only, predominantly the IIFL-acquired portfolio that we had. The net amount of that gross NPA is INR 126 crores, which is -- and we have sold it at par to the acquiring ARC. We are carrying INR 107 crores of SR on our books as of 30th September.
So balance SR are held by the ARC, right?
That's the investor. Yes.
[Operator Instructions] The next question is from the line of Piran Engineer from Motilal Oswal Financial Services.
Sir, when you mentioned about retail lending, our collection efficiency has reached 100%. Can you give a bifurcation across the 3 segments?
Yes. As of now, readily, I do not have, but I'll share it with you off-line.
Okay. Okay. Sure. Sir, any indication of how many customers have not paid a single installment since year-end?
That also we have -- we will give you.
Okay. Okay. Fine. Sir, my next question is for the CFO. Can you just briefly talk about our incremental sources of liquidity and incremental stock percent?
Amol?
Yes. So you would have seen that since April, we have raised around INR 1,000 crores plus. With that, the whole raising has been sub-9% and where we see it settling as we speak of other funding opportunities is between 8.5% to 8.90%. That's the range we are talking about. Piran, we have been very watchful about how much resources we are raising, considering we are setting out around 36% of our borrowings are available right now in liquid cash. So we have gone a bit slow. You've seen in Q2, we have raised only INR 300 crores. And as we go ahead, as we pick up on disbursement, we will start increasing the funding pipeline.What we surely see as a positive outcome post Brookfield investment is that there's a lot of interest in the banking sector to lend to us considering Brookfield is a co-promoter now. So in terms of funding pipeline available, very comfortable on the money inflow part.
Okay, okay. And I guess this is all from banks or any of the government schemes also that have come out in April, May?
So NHB has lent money to us. And as you speak, this month itself, another substantial INR 100 crores stake will come to us through NHB into our subsidiary. But beyond NHB and the earlier raising that we did from SIDBI, they are the 2 key agencies. NABARD has been a bit slow, and we have also not really pushed to do it considering the liquidity position that we have.
Understood. And I just had 2 clarifications because I didn't hear them correctly. One is the SR book is -- the SRs that we've got is INR 107 crores, is it?
Yes, Piran. It is INR 107 crores.
Okay, okay. And when sir spoke about branches breaking even earlier, not the smart branches, that was 12 to 18 months?
Earlier it was 15 to 18 months. Now it is 9 to 10 months.
[Operator Instructions] The next question is from the line of Darpin Shah from HDFC Securities.
Sir, you have mentioned about collection efficiency in the retail business. Can you throw some light on the wholesale or the corporate business?
Deepak?
Yes. So bearing one account, which is in the gross NPA, there are a couple of accounts which are in the 30-day bucket. But we can take this off-line. I can give you the exact data off-line.
Okay. Fair enough. And Amol, a question for you here. If I look at your presentation, the liquidity bit which you have mentioned in terms of inflows and -- after repay, so there I can see that we will be collecting somewhere around INR 1,000 crores, INR 1,050-odd crores in the next 4 quarters or so. And then you were talking about reducing the corporate book materially again over the next 4 to 5 quarters. How does this will be met? I'm not able to reconcile that, if you can help me?
Sure, Darpin. Hope you're well. So Darpin, when we put out the strong liquidity position slide, clearly, I am not in a position to forecast as to when the corporate book rundowns will happen and when the inflows will happen. What we have shown here as a principal repayment is the calendarized -- or the scheduled repayments that we expect. And we have taken certain assumptions in terms of being conservative that in case of certain assets, if the inflow is only 50%. So we've built that into the inflows. So this is what you see here is the contractual inflow reduced to a certain extent as to -- with our view, as to how the inflows will happen. So this doesn't incorporate any rundown that will happen due to prepayment or with us selling down the book. So this is only the business usual scenario that is quoted there.
Okay. Fair enough. And one last bit, we already have some INR 280 crores, INR 300 crores of COVID-related provisions. Do you think we'll still require provisions to be done in the corporate book?
I missed that question, Darpin, so your voice was not clear.
Yes, sorry about it. So now, we already have some INR 280 crores, INR 300 crores kind of a provision for COVID?
Yes.
Do you think we still require more provisions in coming -- over the next couple of quarters?
Right. So where we -- hello? Sorry for that. So where we see from here, we feel that the COVID provision we did in Q4 will stay for at least another 2 quarters. We don't see a major reason to top it up with further overlay. What we will do is clearly that as we start entangling or seeing further sell-downs within the corporate book or any challenges in the retail book, we will avoid tapping into the COVID provision and we use it as a last resort. We will try to build up our defenses to the current P&L itself.
[Operator Instructions] The next question is from the line of Rakesh Shah, an individual investor. Due to no response, we'll move to the next question. The next question is from the line of Abhishek Murarka from IIFL.
So the question is little qualitative around the commercial vehicle book as such. And the question is really that on the one side, we hear very high collection efficiency numbers in the commercial vehicle portfolio across the industry. And on the other, there are still reports of truck -- or rather CV operators surrendering vehicles or going out of business or leaving the industry. So how do we reconcile these 2 things? On the one hand, very high collection efficiency or vehicle utilization. On the other hand, people giving up their fleet or running down the size of their fleet.
Yes. This can be easily reconciled. As I had earlier mentioned to you that this is a total collection. So it's not a billing-to-billing collection. Every company has reported total collection. So to some extent, there is overdue, some extent there is prepayment and all that will be there. So that is one point.The second point is that there are a few segments which have been impacted, like I mentioned to you fleet owners segment and migrant labors who have been the majority users of passenger commercial vehicles, like Uber and Ola, have been impacted. All other people are not impacted. Slowly, as they come out of the lockdown, as they start using the vehicle, they start earning, and every company is able to collect. That's it. So even if in this 100%, another 5%, 10% has come out of prepayment and overdue and all that, still you have more than 90% has come from the billing. So that's a good trend. So one side is, the existing fleet is able to run vehicles and they're able to pay. But within that, companies, which have exposure to fleet owners and this kind of migrant labor, will have an impact.
Sir, in the overall scheme of things, all these passenger vehicles, Uber, Ola, all of this would be hardly 3% to 5% but the bigger problem area is really the commercial vehicle fleet owner?
Yes, yes. Here fleet owner is impacted.
Yes. So there, on an industry basis, just broadly, what would be your guess on what is going to be the ultimate, let's say, delinquency or people going out of business? Would it be like 5% of trucks would have to be given up or repossessed or maybe 10% of trucks, M and HCV, what is your sense?
Even I don't have a number, but what is happening is that this fleet owners who have got 80, 100 vehicles, each have been funded by large banks and companies. So I don't want to name them, but they have all given money at sub-10% in single-digit to the fleet owners. And more than 100% funding also has been given. So in good days, you do that. And when the vehicles feel the pressure, then what happened is all these people have sought moratorium. And subsequently, they are also seeking reschedulement now. And more than that, mind you, many banks and large NBFCs have given them the 20% ECGLs (sic) [ECLGs], which had helped them in payment of insurance and starting the business and all. The problem is that enough load is not there in the industrial production which these big guys transport, which are happening on the national highway. They are also facing driver shortage. They are also facing the problem of diesel price increase. They are also facing the problem of loading, unloading people not there because all migrants have gone. So multiple challenges these people face. But mainly on account of lack of industrial production. So till it comes up, there will be pressure on these customers. But they will be appropriately rescheduled so that their installment amount comes down and they are able to manage it. So this is a -- there could be some amount of loss will come. But since the fleet owners are people who have got this CIBIL and all that to be properly kept to keep their credit track record. So there could be some losses which the banks and NBFCs will have to take, but it is difficult to estimate it at this point of time.
Okay. Okay. And sir, just a last quick follow-up here. So would you say that this 90%, 95% kind of collection efficiency, which, of course, includes arrears also, where would the clean number be for the industry? Would it be around 80%, 85% or maybe even lower?
Yes, yes. Definitely, it will be more than 80%.
Okay. So maybe low 80s or 80%, 85%, that should be a clean collection efficiency?
Yes, yes. Definitely. That's a good number in current environment.
The next question is from the line of Vijay Jacob, an individual investor.
Just could you help me understand the fall in NPA in the vehicle finance business in this quarter? Maybe it was covered earlier, but I missed it.
Okay, okay. We informed that we have made a ARC transaction, where we have sold about INR 126 crores of NPL at par without any P&L impact. That is why it has come down substantially.
Understood. And this pertains to your book or the IIFL CV book?
It's a combination, but majority IIFL book.
Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Thank you to all of you for joining the Q2 call very enthusiastically. As I had articulated that we are in good shape. And we have -- we are well prepared from both liabilities as well as asset side including the senior management business teams. We are well prepared and excited with an outlook for excellent growth, profitable growth for the next 5 years. We look forward to interact with you, update all of you on the development every quarter, and look forward to your support. Thank you very much.