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Q: We have seen three times growth in the profit in Q4FY21. What contributed to this growth and is it sustainable?
A: In the last quarter of the previous year, we were back to the pre-COVID levels. So, when the situation started getting better, the disbursements and collections picked up. At the same time, the credit cost, which immediately after the pandemic when the moratorium was announced, positives things have started to happen in it. So, that quarter went better because of these reasons and after that, there has been a second wave and let’s see how the second wave progresses.
Q: How was the disbursement growth in this quarter and how much impact you have seen in the loan growth because of COVID?
A: Technically, there were lockdowns across states in India in the first quarter this year due to which there is a dip in collection efficiency. If we have a look at the disbursement practically then in May and most of the June, disbursement is absolutely non-existence because lockdowns were implemented almost everywhere. So, if you look at the growth then growth will not be there for this quarter. In terms of collection efficiency, there will be a slight dip if compared with the March quarter of last year and April. But as the lockdown has opened mid-June onwards, the collection efficiency has picked up and disbursements have also started picking up. If the lockdown is eased off further because still there are restrictions in some parts of few states. If it happens, we will be back to the situation of the March quarter, if that remains, I think, we will probably bounce back in the way as it was in the March quarter.
Q: Your collection saw a jump of 105% in Q4FY21. What contributed to this growth and do you think that the levels will be met in another couple of months?
A: As I have said earlier that as the lockdowns opened, there has been an improvement in our collection efficiency. So, if I look at the lockdown period and the post-lockdown period, there is a difference of 10-15% in terms of the jump in collection efficiency. So, the way we saw collection efficiency in March quarter of around 105% which also included the old overdue. Similarly, now we are seeing that as the lockdown is opening up there is around a 10-15% jump in the collection efficiency between the lockdown period and post-lockdown period. So reaching 105%, maybe 100%, I think we are just about 10-15 days away and we will be reaching over there. As far as growth is concerned, the disbursement has been low in this quarter but it has started picking up now. As the lockdown ended and we are entering into July, disbursement has started picking up and overall it seems that in the next one year, we will make a decent growth of about 8-10% and that is at what we are looking at.
Q: What is the sector/s where you are seeing the stress? Also, your NPA figures are still around 8.4%. By when are you expecting improvement on this front?
A: Typically, around 75-76% of our work is in rural, so whatever is our disbursement is it happens in rural. Even within that, major disbursement happens in Agri and Agri-related services. So if you have a look at the agri and agri-related services as a sector within the space of micro-finance then there is no stress because monsoon has been normal all across everywhere and the output has also been normal across. So, we do not see any stress coming because of the season. And, also if seen geography-wise, then due to geography there is no particular area that can be termed as being in stress. It is only due to where lockdown has been continued for maybe a longer period of time and the containment zones have been for a longer period then, there can be bit stress but as such, there is overall there are only pockets where small stress can be seen otherwise not.
Q: By how much the NPA level can fall from 8.4%?
A: I cannot give you a number but definitely yes the way we are looking these numbers will come down. I am looking at the first quarter and if we forget it then in the next couple of quarters the GNPA numbers which stands at 8.4% will start reducing a lot.
Q: The government has done various announcements for the MFI sector. What is your view and do you think that it will improve the on-ground condition and provide relief? Do you expect any more relief from the government?
A: I think, the steps that have been taken including the first step of restructuring-II is also a very good move. Technically, the borrowers who were under stress in repayment have a second avenue through which you can repay it. So, restructuring-II is also a very big positive move, which has been given by the government. The second move that recently given in form of liquidity due to which the medium and small NBFCs, especially for MFIs, an extra liquidity provision of around Rs 7,500 crore has been provided and that will help us actually in looking at the areas where stress are visible and wherever we technically are not able to meet the credit of the borrowers will also be taken care of by these measures, like restructuring as well as liquidity boost, which has been given by the government.
Q: Any merger or acquisition plans on the cards of the company?
A: Nothing on the M&A. To be precise, I think there is not much we can talk about. But we are there in about 23 states and if seen then in this sense, we are looking at maybe a growth of about 7-10%. We will not be adding more geography but the geography where we are working – I think probably the largest in terms of our geographical presence in about 23 states – we will try to increase it in those states itself and will take a deep dive so that we are able to look at some more borrowers rather than opening up in another couple of states, which we can do in the next year and such but not this year.
Q: You have talked about 8-10% growth in FY22. So, can you name the pocket at which you are bullish the most and you are getting opportunities and would like to increase it? Is there any diversification in the pipeline and plans? Also, what growth opportunities do you see for the company in the next 4-5 years?
A: There is uniform growth across the geographies. If seen technically that you are working in 23 states and if you really look at it then UP is a big state but we have 22-25% presence over there. So, everywhere there is a scope for growth and we will look at it by deep diving into our branches and numbers across over there. In terms of how we will diversify, I think the important message that we really want to give across to all our stakeholders is that we have two subsidiaries, which are present under MSME space and housing space and both of these subsidiaries are working fine. If I will talk about the housing finance then it has an AUM of Rs 226 crore and technically the portfolio quality even during this pandemic the collection efficiency has been about 98-99%. There is absolutely no delinquency across over there. This is a big segment that is missing in micro-finance plus plus. A borrower of micro-finance takes a small loan of around Rs 50,000-60,000 that is the maximum limit. But this is giving housing as well as SME loan to a borrower who is a bit above micro and falls in the SME zone even in the rural space. So, the SME company that we have is around Rs 130 crore and the housing company is of Rs 226 crore and both of these are a big segment that is missing – we term it as a missing middle segment – and is catering to them and the portfolio quality in the space and demand is going to be very healthy. This all is secured. So, our MSME company also makes secured lending and housing finance is also secured basically because of housing finance. So, we are diversifying in the secured space due to which we also feel that maybe in the next few years the ratio that is 98% of microfinance and remaining is of secured lending, will start changing. So, probably it will be 70% of microfinance and 30% will be both MSME and housing finance.