Piramal Enterprises Ltd
NSE:PEL
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Piramal Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to Piramal Enterprises Limited Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Ravi Singh, Head, Investor Relations. Thank you, and over to you, Mr. Singh.
Thanks, Nirav. Hello, everyone. I'm pleased to welcome you all to our Q1 FY '24 Earnings Conference Call. Our results material has been uploaded on our website. And you may like to download and refer to them during our discussion. The discussion today may include some forward-looking statements, and these must be viewed in conjunction with the risks that our businesses face.On the call today, we have with us our Chairman, Mr. Ajay Piramal; Mr. Anand Piramal, Director, Piramal Enterprises and Piramal Group; Mr. Rupen Jhaveri, Group President, Piramal Enterprises; Mr. Jairam Sridharan, MD, Piramal Capital and Housing Finance; Mr. Yesh Nadkarni, CEO of our Wholesale Lending Business; and the CFO of our company, Ms. Upma Goel.With that, I would like to hand over the call to our Chairman, and I would request him to share his initial thoughts. Thank you, and over to you, sir.
Thank you, and welcome to our earnings conference call. Our Q1 performance is in line with our commitment towards building a large diversified non-banking financial company. I would like to discuss how we have successfully delivered during the quarter, reflecting our strategic focus.Our total assets under management stood at INR 63,938 crores. We have significantly improved our Retail, Wholesale AUM mix to 55:45 from 34:66 in Q1 of the last year. Our Retail AUM witnessed a 57% year-on-year growth to INR 34,890 crores from INR 22,267 crores in the first quarter of the last year.Quarterly Retail disbursements grew at 132% year-on-year to INR 5,700 crores from INR 2,460 crores in the Q1 of FY '23. Our Wholesale 1.0 AUM reduced as per our strategic plan by 38% year-on-year to INR 26,000 crores, compared to INR 41,655 crores in the first quarter of the last year. The Wholesale Stage 2 and 3 assets reduced by 34% quarter-on-quarter to INR 4,200 crores from INR 6,374 crores in Q4 of FY '23. We have built a Wholesale 2.0 AUM worth INR 3,045 crores across Real Estate and Corporate Mid Market Lending. Our GNPA ratio reduced to 2.8% from 3.8% in quarter 4 FY '23, and our NNPA reduced to 1.5% from 1.9% in the Q4 of FY '23.In addition to these business highlights, I'm glad to announce that today the Board of Directors have approved the buyback of equity shares of the company. This is in line with our consistent focus on long-term value creation for shareholders and effective utilization of capital. This buyback will be of up to 1.4 crores number of equity shares of face value of INR 2 each representing 5.87% of the pre-buyback fully paid-up equity shares at a price of INR 1,250 per share, aggregating to INR 1,750 crores through the tender offer route. I would like to point out that the promoter and promoter group shall not participate in the buyback.The price of INR 1,250 per share is a premium of 25% over the last closing price of the stock market intimation date. Considering this buyback and dividends paid over the last 12 months, the company has returned a total of INR 3,278 crores, which is 16% of the company's 3-month average market capitalization. The entire process is expected to be completed within 2 months.Here I would just like to highlight that the promoters and the promoter group not participating in the buyback signifies the big potential that we look at on the value that is in the shares in the long term in the future and the promoters are fully committed to ensure that your company performed in the future as well. The capital allocation strategy aims to combining -- combined investing in our core business and returning excess capital to shareholders.With this, I will now ask my colleagues Jairam and others to speak on our various business segments. Thank you.
Thank you, Chairman. Friends, you've seen in our -- in our numbers, some of our business performance in the various businesses. Let me start with Retail Lending. Our disbursement yields in Retail Lending improved to 14.7% from 14.2% last quarter. Our average disbursement ticket size was at INR 10.3 lakh in the quarter. 78% of the AUM in our Retail business is in secured loans consisting of Housing Loans, LAP, and Other Secured Loans, primarily used cars. In the secured offerings, the average CIBIL score of our customers is 738.We are also witnessing strong growth in our unsecured loan offerings through multiple form factors and through various channels. We have served over 11 lakh customers so far with an average CIBIL score of 755. As we continue to expand our Retail Lending business, we are also investing in manpower, branch infrastructure, technology and analytics in our Retail business for future growth.During the quarter, we added 19 new branches, which became disbursement active. With that, we today have a network of 423 conventional branches and 136 microfinance branches across the country. We serve 587 districts across India over 25 states. Our customer franchise now stands at 3.3 million, with an acquisition of 3 lakh new customers during the course of the quarter.I'll request my colleague, Yesh, to talk a little bit about the Wholesale Lending business.
Hi, good evening, everyone. In the Wholesale Lending side, we generated over INR 2,431 crore of net cash realization during the quarter through accelerated repayments and resolution proceeds of Wholesale 1.0 portfolio in line with the provisions on these assets. We continue to focus on resolution of stressed assets, which will moderate the Wholesale book in the short term. A dedicated team is involved in monitoring and executing the resolution strategy for complex recoveries and enforcement aimed to improve recoveries and monetization of assets over the following quarters.This quarter as well we concluded a sale of certain wholesale loans, including loans acquired from DHFL through 2 separate ARC transactions. In these transactions, we received cash worth INR 316 crore and issued SRs worth roughly INR 2,000-odd crore after 62% mark down. Note that various SR transactions consummated have been appropriately provided for over the quarters. With this, SR outstanding stood at INR 5,369 crores for the first quarter FY '24, of which 30% has Retail loans as underlying assets and the remainder 70% Wholesale. We expect our SR portfolio to reduce in the future via a combination of sales enforcement and collections at our carrying value.We are also focusing, as you know, on building a high-quality Wholesale 2.0 AUM wherein we have built Wholesale 2.0 AUM of about INR 3,000-odd crore by adding INR 253 crore of loans during this quarter. We will further build on this book in a calibrated manner while capitalizing on market cap. The average ticket size is around INR 165 crore for real estate and around INR 53 crore for Corporate Mid Lending -- Corporate Mid Market Lending within Wholesale business.I'll just hand over back to Jairam again.
Yes. I'll now request our CFO, Upma, to walk us through our financial performance and give us a quick overview of the liability side of the business. Upma?
Thank you, Jairam. Our profit after tax for Q1 FY '24 stood at INR 509 crores, led by gain of INR 855 crore on sale of Shriram Finance Limited stake. We sold 8.34% stake of Shriram Finance Limited for INR 4,820 crores at INR 1,545 per share. While our operating cost has improved quarter-on-quarter, it has gone up on Y-o-Y basis, primarily on account of scale up of Retail business and our investments into the tech platform.Our annualized credit cost reduced to 1.1% from 1.9% in Q4 FY '23. We maintained a strong consolidated net worth of INR 30,844 crores for Q1 FY '24 with Capital Adequacy Ratio of 34.3% on consolidated balance sheet. We'll maintain a strong liquidity with cash and liquid investments of INR 9,613 crores.On the Liability Management side, we continue to focus on diversifying our borrowing mix including securitization. The fixed floating rate debt mix has improved to 57 versus 43, fixed 57 and floating 43, and we'll continue to see further improvement in the next 3 quarters. Our cost of borrowings has improved to 8.6% from 8.8% in Q1 FY '23. Our ALM is well-matched with positive gaps across all buckets.To conclude, the performance of the company in Q1 FY '24 tells us our confidence on the company's progress towards the diverse multi-product resilient and sustainable financial services businesses. We remain focused on optimizing our capital allocation and generating an appropriate return on capital.I would now request Jairam to...
Yes. Friends, before we open up the floor for questions, there is one item, which I want to clarify on which many of you might have some questions on, which is on the goodwill side, where you saw a goodwill entry of about INR 268 crores in -- INR 278 crores goodwill write-off during the course of the quarter. Just to give you a little bit of context on this, this is related to transactions that happened back in 2014, where the company set up some funds to make investments in the real estate space. Over the years, those funds have had some challenges and the fund period has also now completed. What we did this quarter was to clean up that part of the balance sheet through this book entry. There is no cash flow associated with this. It's an aid with part of the intangibles, but we thought in the spirit of cleaning up the balance sheet, those INR 278 crores getting rid of that. This would be the right timing.With that, the total amount of goodwill left on the balance sheet for us on a consolidated basis is a mere INR 2 crores. So essentially all such entries have been resolved and taken care of during the course of this quarter. So that's one entry that might have been less obvious to some of you. So just wanted to provide that input.With that, I'd like to open this up to all of you for -- for questions that you might have.
We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Avinash Singh from Emkay Global.
A few questions. The first one is largely on asset yields, 2 parts to it. One, if you can help explaining that your overall asset yield that has dropped sharply around 1.3 percentage, sequentially. So if you could just explain some -- what is underlying modality that sort of brought this asset yield down to 10.6%. And related to yield only, on the Wholesale 1.0, I would expect the reasonable amount of the book would be kind of on floating basis, yet, if I were to look at the overall wholesale yield, that's 9.4%, and your Wholesale 2 yield is close to 13-odd percent. That reflects that Wholesale 1.0 yield is like 9-odd percent. So I mean, when those sort of, if at all, this floating loan that will be repriced, and, I mean, for how long this sort of -- because it's 9% yield on Wholesale book that looks very, very low. So that's the question here. I will have a follow-up question later.
Yes, thank you for your question. See, the main part here, there are 2 important things here that you should -- that you should recognize. The first is the -- the fact that the entire AUM is not interest earning and because of the -- and we have made some separate disclosures during the quarter, if you see our earnings presentation, you will see some disclosures on the Stage 1 book and how that splits up by interest-earning versus not. So Page 27, if you see, this is a new disclosure that we have put out, just to clarify this point.So as we are creating some of these security receipts, between security receipts and some of the other assets, which are non-interest earning. You will see that the proportion of non-interest earning assets on the Wholesale AUM has increased during the course of the quarter. What that does is that if when you look at interest income as a proportion of AUM, that metric does fall even though nothing has changed on the loan part of the book. It's just that some interest-earning assets on loans have gone to fair value side assets of SR et cetera. Now, over time, as those non-interest earning assets come down and disappear, you will start seeing the interest -- interest income through interest income start to reflect.So it's not as if the interest-earning assets are sitting at 9%. There are no 9% assets on the book. It is just that as a percentage of AUM because of those dynamics you're seeing that -- you are seeing that 9% and a little bit. So that's the main dynamics that's -- that sort of going on there. There are a couple of other smaller things in the quarter in the form of a little bit of interest over, so a little bit of increase in interest expense over the last quarter, but those are more minor compared to this major dynamics that has -- that has happened here. And that's why we've put up this new disclosure on Slide 27.
A follow-up question is on one sort of a disclosure [ note ] to account that yield comes. The potential tax assets that currently around, I guess, INR 4,200-odd crores. So is there some sort of a timeline for consolidating by when sort of for you in a position to either sort of take it into your books or, I mean -- is there some sort of a process, any timeline on that that potential tax asset for INR 4,200 crores? And...
All matters related to taxation, we have to wait for communication from the tax authorities. We do not want to review anything on our part. Let's see, over the next -- over the next 2 quarters or so, if we hear about -- about the past taxes, and if some of our submissions are all accepted, then we'll be in a place to start bringing those on to our balance sheet. But it is not for us to dictate timing here, it's for -- it's for the taxation authorities to decide time.
Okay. If I can just one more follow-up. If you can provide some sort of your consolidated capital adequacy post this buyback, I can see sort of a standalone capital adequacy given at 48-odd percent post the buyback. What would be the consolidated number, that's currently 24% post this buyback?
It's approximately 31%. It would be approximately 31% were we to go to the full extent of INR 1,750 crores.
Got it. All the best.
[Operator Instructions] Next question is from the line of Abhijit Tibrewal from Motilal Oswal.
So first of all, thank you Mr. Piramal and Jairam and rest of the team for improving the disclosures. Really is going to make life a whole lot easier for you as a management as well as for us. So a couple of questions that I had and first things first out of -- I mean, this INR 4,700 crores, INR 4,800 crores that you have received from the stake sale, we've already announced INR 1,750 crore being used for the buyback. What is the thought process around kind of utilizing the remaining money given that I think all of us acknowledge, we remain will be capitalized. So are we, at least, I mean, looking at some M&A opportunities. And if we -- if yes, in which product segments are you kind of looking at those opportunities?
Thanks for the question, Abhijit, and thanks for appreciating the improved disclosures. Our colleagues in the IR team and Rupen, our senior leader and in charge of the space are -- have been working very hard on that and I'm glad you noticed it.On your question on utilization of the proceeds from Shriram. See, there are -- as we've been saying in the past, there are 3 ways we could utilize money from Shriram. One is organic growth, the second is some sort of return to shareholders, and the third is inorganic. The first 2 continue. I mean, clearly, you've seen us take the step with respect to returning some capital to shareholders through the buyback proposal that we have in front of us.On your question on inorganic, if you track the Piramal house over the decade, you know that we are very comfortable with using M&A as a growth engine and adding value to acquired assets. It is something that we continue to be interested in. We have been active in the market and we have been looking at transactions that have taken place. Unfortunately, none of them has cleared because of pricing considerations. And needless to say, some of it stems from the fact of where our stock itself trade, and hence kind of the currency that we have to work with. So some of it does reduce some of your optionality, but we are keenly looking at -- looking at potential M&A opportunities.The kind of M&A that we'd be interested in is stuff that is -- that is kind of very similar to businesses that we have chosen for ourselves, and it could be in spaces like small business lending, microfinance, gold, some of these businesses, which are in the Bharat market, and in the retail space. Those are businesses we like and we continue to look at various options in that space.
And just one question for Yesh. Sir, what I kind of want to understand is couple of things you talked about in your opening remarks on the 2 transactions that you've done on the Wholesale side where you've also sold the Wholesale book which required during the DHFL acquisition. So 2 subparts to this question. Now that we are seeing an accelerated reduction in the Wholesale 1.0 book with these SRs now, how should we kind of look at these SRs essentially from a standpoint of over what time horizon can we expect recoveries? Or the SRs to kind of go away from our balance sheet? And if and when they do, will there be more haircuts that you are expecting, given that you've already fair valued when you roll these numbers on SRs?And lastly, I mean, what I kind of want to understand is now that for the last 2 quarters, we've been guiding that there wouldn't be any more negative surprises from the Wholesale book either in terms of, I would say, recognition or for that matter haircut, so credit cost that will be required. Are we now in a [ plane ] where we are sitting in terms of Stage 2 and Stage 3? And the more comfort that I wanted was more on the Stage 1, which is our earning assets of about INR 18,000 crores, which is sitting in Wholesale Stage 1. Are we now reached a point in time where we were much more confident that there will be no such surprises in the subsequent quarters?
So the answer to your third question is, yes. There -- we don't think there would be any surprises. We do think that we have the recognition and provisioning firmly behind us, where we find ourselves right now at is deep in the recovery mode. And the transactions that we have done in terms of the ARC deal this quarter as well as INR 6,000-odd crores of book reduction in the previous quarter, brought in line with that strategy. So what is actually seasonally part of the recovery effort that going on and we do expect that the recovery effort will continue to intensify as we go from here. But as far as the -- as far as the provisioning against the book is concerned, we do actually firmly believe that we already have that behind us. And therefore, going forward, the recoveries will be in line with what we have on our balance sheet.As far as the timelines are concerned, it's difficult to exactly predict by when we would end up actually cleaning up the -- as possible as Stage 2, Stage 3 books. The efforts are on by the very nature of the underlying assets and complexities involved in recovery of some of the assets. Our expectation would be once we rely at least few quarters for things to actually get resolved and seen in effect. So that's the answer to your first question. Second question in terms of haircuts, I already said that, that is behind us.
Just one more technical question here. So when we look at SRs on the balance sheet, are we -- will we also be required to do mark-to-market every quarter? So essentially the SR number that we will see every quarter will incorporate as a kind of recoveries that you are seeing, at least in terms of the SRs, which are currently sitting on your balance sheet?
First of all, the SR value as it sits on the balance sheet, is at a significant discount or a claim value, right? We have taken enormous haircuts -- well, enormous is an objective term, but quite a material haircut in percentile terms. The SRs that we completed this quarter were at 63% haircut on the claim value. So I just want to say that as the first one. In terms of valuation, we need to get the fair market valuation done everywhere, and it's only one way, which is the value can go down, rates can't go up on our P&L until and unless the fully recovery happens.
Got it. Thank you so much and best wishes to the Piramal team.
Next question is from the line of Vivek Ramakrishnan from DSP Asset Managers.
I had one accounting type question. So, I just wanted to understand this net loss on de-recognition of financial instruments of INR 1,482 crores and impairment reversal of about INR 1,172 crores. How does that work?
I would encourage you to actually look from an investor deck perspective. We have talked about a loan loss provision of INR 179 crores. I think that is the best -- the summary view of everything that's gone on. And -- okay, actually, let Upma talk a little bit about the INR 1,172 crores and then we'll -- I'll get back to the INR 179 crores and how to think about it. My view that's the best way to think about it, rest of the stuff just adds up to that INR 179 crores. So, INR 179 crores is the best way to actually look at our credit costs. But Upma, do you want to explain?
Actually, if that's the case, we'll just leave it there. Then I can take it offline because it'll just take time in the call. So, we can do that. So, the other question was on the wholesale portfolio. Is it fair to say that the cash that you've recovered is from the runoff of the Stage 1 portfolio and any -- and virtually all the ARC, the sales have come only in terms of security receipts, which is why the amount has increased from INR 2,017 crores to INR 3,755 crores. Is that fair to say?
I would say a significant part of reduction is due to the SR transactions in Stage 2 and 3. And we got the recoveries, small amounts in Stage 2 and 3 in terms of the cash recoveries, but also in Stage 1.
One thing I'd also remind you is that the SRs themselves have a 15% cash component, so that's -- that obviously is -- only 85% gets converted into cash. But your point is broadly correct.
Okay.
I would also say that this is from an SR creation standpoint, some of the assets that we wanted to resolve through the SR route, a large part of that story over the last quarter and this quarter, we have done, so kind of the -- in the future, the kind of resolution strategy that you would see, would be a slightly different nature, so the big steep increase in SR that you have seen over last quarter and this quarter. We are not likely to see that continuing from there on.
I would also add one more point, right? Just to put things in perspective. The SRs that we see right now on our balance sheet, is a very small portion of the overall recoveries that we have done in the last few quarters, right? That's a very important point to note here, because there are a lot of other strategies which don't show up on the balance sheet. For instance, last quarter or last year, we actually did a pretty significant asset sale which in one transaction allowed us to bring our book down by INR 1,800 crores, just as an example. Similarly, a portfolio of [ NP ] assets that we sold last quarter for cash consideration, and those efforts are going on. And as I said, while answering the previous question, I think recovery of the SRs and converting that into cash basis will go on as well over the next few quarters.
Okay. If I can sneak in one last question, there is one thing, Stage 1 land receivables. Essentially, this is -- these are assets with good cover that you expect where there are no cash flows, but you expect good recovery. Is that why it's classified as Stage 1, the INR 2,952 crores?
Yes. This, over time, we think that's where it will lead to. Right now, we're not really focusing on monetizing it. This was -- this asset sits on our balance sheet as a result of debt-to-asset swap that we did a few years ago. And there is deep embedded value in the underlying asset. But the recovery of it is something we'll focus on as we go from here.
[Operator Instructions] Next question is from the line of [ Kunal ] from DSP Asset Managers.
I have a question on the P&L side. If you look at your P&L, you have around...
Kunal, I'm sorry, your voice is not coming clearly. Can I request you to speak through the handset?
Am I audible now?
Slightly okay.
Yes. So, I just wanted to ask that on the P&L side, you have around INR 900 crores of onetime gain on account of a stake sale. And on the expenses side, again, you have around INR 300 crores of goodwill write-off. So, if we just knock that off in this quarter, again, we would have seen no profit, or at best, just a marginal amount of profit. So, when are we expecting us to return back on the profitable growth trajectory sort of?
That's a fair back-of-the-envelope calculation, and that's an appropriate representation of the quarter that we have had. I will point out that if you knock off extraordinary items from our P&L, let's say, in the last financial year, you would have seen the core operating profits to have been negative. From that negative position, we have improved to sort of a break-even sort of position during the course of this quarter. Our expectation is -- and needless to say, this is not a situation that we are satisfied with. We need to get a -- we need to do a lot better than where we are at and we are fully seized of the matter.Give us a couple of quarters, and you will see the operating income kind of net of operating expenses, et cetera all start to pick up as well. So, we are just on the cusp and over the next sort of quarter or 2, we -- you will start seeing us firmly move into positive trajectory. And as I said, we have moved from negative to kind of zero. You will start seeing us move to positive over the next quarter or 2 and move steadily towards a 4% pretax ROA over the medium term as we have spoken about in the past.
[Operator Instructions] Next question is from line of an [Indiscernible] Individual Investor.
I have the question for Mr. Piramal. Sir, I greatly appreciate the buyback decision. So, my question was why would the promoter group not infuse capital to raise the promoter stake beyond 50%? Because this will increase the trust and confidence in the business model that you're pursuing.
So, in fact, this is a buyback, so the promoters cannot infuse capital. It's the other way around. The capital is being returned to shareholders. And because the promoters have confidence in the business, we are not taking part in the buyback. So, in that, actually, our shareholding will go up.
I understand, sir. Yes. But there is another option, you can raise your promoter stake by infusing capital via warrants. So, why wouldn't you do that?
I think, we will -- we are doing what is the right thing for the business.
Okay. My second question is to Mr. Jairam. Sir, how long will this asset resolution phase last and how much will be the credit cost beyond the resolution phase?
We've mentioned -- we've been mentioning over the last couple of quarters that in the multiple phases of resolving an asset quality cycle, we have done the recognition bit, we have done the provisioning bit, and we are now in the resolution phase. The resolution phase does tend to be long, and it needs to be seen in the context of what needs to be done operationally, on an asset-to-asset basis, to turn it around. So, while we expect no further hits on P&L, operational turnarounds do take time. Yesh mentioned earlier in the call that think of the resolution process in terms of a few quarters, not weeks or months.
Okay. And how much will be the credit cost like right now and then, say, beyond a few quarters, beyond the resolution phase?
This quarter you saw a net credit cost of 1.1%. We have said in the past that the kind of business that we are building is 1.5% to 2% credit cost type of business. We don't have a specific guidance out for the year or for next year. But directionally, that's the kind of business we are building.
Okay. One last question. So, Jio Financial Services is also getting into lending business. So, will Piramal compete with Jio because this is part of extended family?
I think you should wait to watch what happens with any new and large emerging competitor. We have a lot of respect for -- for a lot of work that happens under the banners that you spoke about. We'll have to wait and see as 2 separate listed entities, we -- there are things that we will -- that we can do and cannot do. And everything has to be as per norms of SEBI, et cetera. So we will take things as they come. As of now, we have markets that we are focusing on, businesses that we want to grow in, and we will try and do our best and grow. India is a large market and lots of people can build great businesses here.
One last question, if you can allow me. The Retail AUM, so the percentage of unsecured loans is about 10%. So, in the future, say, 2 years or 3 years down the line, how much will be that unsecured loan as a percentage of total AUM, Retail plus Wholesale?
We have said that in the medium term, we'd like unsecured to be 25% to 30% of our business. We will be roughly somewhere in that range. We will see. We'll have to wait and watch what happens to unsecured from a credit risk perspective. And depending on the cycle and how it plays out, we will calibrate it up or down.
That's percentage of total AUM, right? Wholesale...
That's percentage of Retail AUM.
Only retail? Okay.
Yes.
I really appreciate it, and good luck, yes.
[Operator Instructions] The next question is from the line of Ketan Chheda, a Retail Investor.
I'd like to know what's the status of the land that we have in Andheri. We've not heard any updates in the last few quarters on that one. So, really appreciate if you could share an update on that.And the second question that I have is something similar to what has been asked before. In terms of the trajectory of the core pre-operating profit, pre-provisioning operating profit, I mean, the trajectory has been actually downward. So, while you did mention that we will go upwards, but I'd like to know that why the trajectory of the core PPOP has been going down in the last 2 quarters, at least, 4 to 5 quarters?
I think on the Andheri land, as I answered in the one of the previous questions, we have that on the balance sheet as...
Sir, sorry to interrupt you, but you're not audible. You're sounding distant.
Can you hear me now?
Yes.
Yes. I was just saying that the Andheri land is a result of debt-to-asset swap that we did a few years ago. Where are we at with that? We believe that there is enormous embedded value in that land. However, we're not certain about, or specific about the plans that we are going to actually put in place to be able to extract that value. We will actually focus right now on sort of resolving the loan book that we referred to earlier. And in the midterm, we'll actually find different alternatives to unlock value from the land. There's no material update other than that.
As far as the operating profitability of the business is concerned, as I mentioned before, the core driver that you should keep in mind is the proportion of interest-yielding assets as a percentage of overall wholesale book. If you see the new disclosure that we have added to our presentation on Slide 27, you will see that over the last few quarters a significant proportion of assets has moved from interest-yielding to non-interest-yielding as we have worked on some of these resolution strategies. So, these were assets that were accruing interest in the past, where we have now stopped accruing interest and moved them to investment category. And that's what drives a large part of the delta that you see over the last few quarters. And since that transition has largely taken shape in full, from now on, the growth that you see in the rest of the business, et cetera will start showing up in the operating profitability. And hence, my comments that just give us a quarter or 2 and you will start seeing this curve start to move up from these bottoms.
Okay. Just one follow-up on the Andheri land, again. Sorry to come back on that one. But I think in the last couple of years in one of the calls, it was mentioned that you are going to develop the land in like a couple of phases and probably one phase was done and the remaining phase was to be done. You would cut the land and so on and so forth. Those details were shared. But -- so, after that, you mean to say that there is no update on monetizing the land while those plans were formed up at that point in time?
No, there is no specific update on that is what I meant. In the midterm future, we'll find various paths to monetizing this land, including what you just described. However, that's one of the options available to us. And there is no specific plan that we can share with at this point in time.
Okay. So, there's no timeline as well by when we want to complete the monetization?
That is correct, sir.
Okay. All right.
[Operator Instructions] Next question is from the line of [ Aditya Gupta ], Individual Investor.
Yes. So, though the retail mix is getting improved in overall AUM, but the total AUM is quite stable since few years. So, what are the plans for increasing the total AUM?
Yes. It's -- you will note, of course, that over the last 5 quarters or 6 quarters, our overall AUM has been roughly the same. But the composition of the AUM has now dramatically changed from what it used to be to where we are now. We're -- as we disclosed before, 55% of the book is Retail and 45% is Wholesale. Now, as you also saw, the Retail book is growing pretty strongly. And so, now we're in a place where the majority of our book is growing and the minority of our book is degrowing, which means the weighted average will start earning positive. So, if you -- you've just got to be patient for another quarter or maybe 2, and you will start seeing this math play out. So, as the larger part of the book is growing and the smaller part of the book is degrowing. So, the math will just work out in a couple of quarters.
Okay. And my last question is that is there any fundraising like [ plans take ] through NCDs or et cetera?
As you know, we just disclosed our share buyback plan, so clearly, that's -- we're not planning to raise any funds. I will also state that on successful completion of a buyback program, we cannot be going out to market and actually raising equity for the next one year anyway. So, no, there are no short-term plans to raise any equity.
Okay.
[Operator Instructions] The next question is from the line of [ Vikram Damini from Damini Securities ].
Am I audible?
Yes.
Okay. I just wanted to clarify one thing. When you speak about Stage 1 land and receivables that are non-interest-bearing assets, I see quarter-on-quarter, it's pretty much flat, and your gross AUM on an overall level is also flat. But could you then explain why such a sharp drop in the yields and the NIMs? I mean, is that the only thing that could explain it? But since that is flat quarter-on-quarter, your non-interest-bearing assets, how else would you sort of -- can you throw some light on this on the drop of the yields?
Don't look at it in absolute terms, look at it as a proportion of the total. I mean, you have to look at interest-bearing and non-interest-bearing. If the interest-bearing part keeps coming down and the non-interest-bearing is flat or slightly increasing, then as a proportion, the non-interest-bearing kind of keeps increasing. And the yield on the interest-bearing part is not changing. So, the overall yields will come down.
So, as a percentage of your overall assets, could you just -- because I can't seem to find it on the presentation. Maybe I can take this offline with you as well?
Yes. We'll get back to you. Yes.
Okay. I appreciate it.
[Operator Instructions] The next question is from the line of Yash Modi from Ashika Stock Broking.
Just wanted some more clarity on our stake in Shiram General Insurance, Shiram Life Insurance, and our DHFL Life Insurance, 50% stake in that. If you could clarify what are we looking at, because, obviously, the public market part of it is done, now these unlisted entities?
Yes. See, as far as the insurance investment in -- for Pramerica is concerned, we are 50% owners of that business along with Prudential U.S., who owns the rest. It's -- insurance is a long-term business. We have a commitment to IRDA to actually stay invested and continue to do what it takes to actually grow that business for a 5-year period. So, that's -- you should think of that as a strategic investment where we are keen to actually grow the business and bring it to materiality.As far as the Shriram unlisted businesses are concerned, let's see, we will explore various strategic options. There is no particular timeline in mind on what we need to do here. I will assure you that what we will do, we will do in such a way just as we did first in the public markets transaction that we did recently. We will do it in a way that's good and accretive to all stakeholders involved in the transaction.
Next question is from the line of [ Parth Shah from ET Life ].
Congratulations to the management on the good set of numbers. I just had one small question. In the consolidated financial statements, there is an entry of other operating income of INR 95.46 crores, which I believe is also used to offset the loan loss provisions in the investor presentation when we are showing a summarized loan loss number of INR 179 crores. Could you just give more details on what that other operating income is?
Recovery. Recovery from prior... Yes.
I'll answer that. So, this INR 95.46 crores is primarily the recoveries on account of the Prudential write-off what we have done it last year.
Okay. Understood. Okay. And my last question is on the unsecured book. So, the 90-plus DPD has obviously seen a rise from 1.1% last quarter to 1.6% on the unsecured book. This is despite the high rate of growth and AUM increasing, we're seeing delinquencies showing some marginal increase. So, just wanted to understand on how we are seeing that part of the business and what will be the steady state guidance as far as credit cost is concerned from the unsecured book perspective?
Yes. So, Parth, that's a good question and a good observation. Yes, you're absolutely right. A large part of this increase is -- has come from our partnerships businesses. And as we have indicated in the past, a lot of these partnership businesses have had some sort of credit agreements between the originator and the balance sheet provider. And that's the portion in which we have had most of this increase. So, while optically, it shows up in your delinquency numbers, it doesn't cause P&L impact because it gets covered. If you net-off the portion which has some sort of cover of this kind, the delinquencies during the quarter for the unsecured business have been 90 basis points. So, it's a good observation. It is true that on a gross basis we have seen delinquencies increase. But from a P&L impact perspective, we have not seen that. But this is a segment that we are very closely watching and will continue to be very careful about in the quarters to come.
Understood. So, 90 basis points is what you suggested, which is probably in line with what was there even in the last quarter? So, no material spike there?
No material thing has happened there. That said, like there is a lot of growth that's going on in unsecured, so we have to be careful. So, we're not celebrating or calling victory here, like we have to watch this space very closely. But, yes, we are on a net basis at 90 basis points.
Okay. That's it for my end.
Operator, do we have... Yes...
If you don't have any further questions, maybe we can close.
Yes, sir. We have one question. Next question is from the line of [ Afzal Mohammed ], Individual Investor.
Yes, one follow-up question. So, why was there a decline Q-o-Q in the quarterly disbursement?
In the retail business, there's always a seasonality. Q4 tends to be very high and Q1 tends to be the lowest quarter in any year. So, that's -- it's just seasonality that you're seeing, nothing else.
Okay. And next quarter, would you expect similar trend or will it increase Q-o-Q?
Afzal, we don't offer quarter-on-quarter [indiscernible] guidance, so we'll see. Seasonality wise, Q2 does tend to be bigger than Q1, but let's see how it goes.
Okay. And by what timeline do you expect Retail business to be two-thirds, like 3 more quarters or one year?
See, when we started talking about the two-thirds, one-third, we said that we will get there in the medium term, 3 years to 4 years. We are making a little bit more rapid progress towards that than we had anticipated. But let us see, like if we start seeing some credit risk issues in retail, we might slow down, et cetera. So, it's hard to be very precise about these things and it's hard to actually move to a particular target on these things. Right now, the trajectory is strong. If we go on in this trajectory, we will probably reach there a bit faster than we had anticipated. But we don't have a specific target in mind.
As there are no further questions -- sorry, we have a question, sir. Next question is from the line of Vinod Jain from Wells Fargo Advisors.
Yes. My comments are about the insurance business. What are the prospects we see in this business going forward with the JV from Pramerica? And what about the mutual fund business also? Can something be commented on that?
Okay. So, on the Pramerica side, see, we purchased a 50% stake in Pramerica Life for about INR 1,000 crores as part of the DHFL transaction. When we purchased the business, the Pramerica Life entity was #19 in the leaderboard of insurance companies in terms of premiums, gross premiums. And if you see what has happened in the last year, which was the first full year when we had full control, in GWP terms, again, starting from a super-low base, Pramerica was the fastest growing life insurance company in the country. And that has continued in this year as well. We have a very, very long way to go. Currently, we are #16 -- 15, based on the May data for the year in terms of GWP. So, we have gone up a few ranks on the leaderboard. But we have a long way to go. And our hope and intention is to make this first a top-10 life insurance company as the first milestone and then we will see where we want to go.You also spoke about mutual fund business. Currently, we are not pursuing opportunities in the mutual fund space. We have a lot going on as it is in our core businesses. We will focus on these right now, and we will take other opportunities over time as -- when we have a little bit more management bandwidth to spare.
Very well. Thank you.
Thank you, Vinod. Thank you, everybody. It has been a very engaging call and thanks for all your constructive questions and your interest in Piramal Enterprises. We hope you got all the answers. If you have any more questions, please do reach out to our IR team. The details are there on our presentation and on our website. We'd be happy to take you through any other technical questions or details that you might have. Otherwise, thank you so much for participating and have a very good evening.
Thank you very much. On behalf of Piramal Enterprises Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.