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Umesh Revankar: Not much see road sector even though there are a lot of announcements. The only big road project which has kickstarted and is ongoing is the Srinagar Highway but the rest of it has not really kick-started. So I think it will take another two couple of months to kick-start then we should see a lot of improvement.

Sunil Kumar: Okay. Any numbers which you could share in terms of like you mentioned that some of your initiatives are already brining results and other collection the recovery et cetera has monthly collections have improved. Any numbers which you could share?

Umesh Revankar: See right now we are able to collect 100 crores every month consistently and our ability to collect consistently 100 plus crore is a big advantage as well as a relief for us in the difficult scenario.

Sunil Kumar: Okay. So this number has that number gone up in the last couple of months?

Umesh Revankar: What number?

Sunil Kumar: This Rs. 100 crore.

Umesh Revankar: 100 crores collection is consistent.

Sunil Kumar: It is consistent?

Umesh Revankar: Consistent, Yes.

Moderator: Thank you. We have next question from the line of Krishna Kumar from Sundaram Mutual Fund. Please go ahead.

Krishna Kumar: Sir, we have recently seen RBI coming out with licenses for small banks. So some of them have been players microfinance players and others operating in the NBFC space also. So do you see incremental competition from players who have fair amount of reach and already been kind of getting into Used Commercial Vehicles, etc. Do you see any threat from the category of new banks?

Umesh Revankar: See they just got license and as of now many of them are microfinance or local financing activity and none of them have a Pan India network or the exposure. So I think they still would remain local and their reach also may not be that big. And moreover in Used Vehicle financing is a one niche segment where you need to build expertise over the period one cannot just enter overnight and build big presence. So I do not really expect significant competition from small banks at present.

Krishna Kumar: Okay. And on the loan tickets specifically if you have to look at average loan tickets, do you see them have you seen improvement in average loan value per Vehicle or this is a decrease in terms of loan value for average ticket size?

Umesh Revankar: See ticket size is definitely going up because new technology latest Vehicle will have a better resale values. So to that extent the inflation also will make the Vehicle prices keep going up every year. So the ticket size will

–  –  –

Krishna Kumar: Is it possible to give some color in terms of any data that you can share from say last year to this year any comparisons possible to share?

Umesh Revankar: Right now I do not have the number but I can indicate that the Heavy Vehicle share in our portfolio has gone to 49% from last year 40%. You can fairly estimate based on that the ticket size going up.

Krishna Kumar: Sure, sir. Sir and since you are right into the market is there. So are you seeing any pick-up in any particular segment of Vehicle category at least source related to construction activity any pick-up you are seeing sir in any particular segment worth mentioning?

Umesh Revankar: On Construction Equipment right now there is a good demand for the Excavators and the Backhoe Loaders the resale prices have gone up and others specialized equipment not much change is there. Dumper the resale price have gone up in the multi-axle category and as far as CV is concerned the 31 tonne, 35 tonne, 37 tonne and 40 tonne all these segment there is a good demand and good resale value.

Moderator: Thank you. Next question is from the line of Sonal Gupta from UBS Securities. Please go ahead.

Sonal Gupta: I was just trying to understand I mean what is the movement like have you seen on the freight rate and utilization side and like you mentioned I mean my main question was on resale value. So when does this resale value improvement will be translate into asset quality or reduction in provisioning for you?

Umesh Revankar: The asset quality the resale prices have gone up in Heavier segments and all the vehicles which are in demand from 31 tonne and above up to 40 tonne the resale values have really gone up significantly. The LCVs the resale values have not really gone up I feel but it is not going down also. So as of now it is not very negative. And for us the trigger for reduction of coverage ratio would be more apparent when we move towards 150 days and 120 days because then there is an early recognition of NPLs we would drop our coverage ratio to some extent.

–  –  –

Umesh Revankar: Yes, it is in line with the diesel price moment it is not really totally non-tangible it is directly in line with diesel price movement so the freight rates are not really hurting customers much because their operating margins are much better then what it was maybe year back.

Sonal Gupta: Right. And sir lastly, in terms of your lending rates since like you mentioned on the Heavy Commercial Vehicle side you will have to pass on some of the benefit but so have you passed on, has there been some decline lending rates for you?

–  –  –

Sonal Gupta: So could you give us some indication in last six months how much would have we… Umesh Revankar: On Heavy Vehicles only we have passed on something. So the net impact of that you can see in the net interest margin because the reduction of the cost was much more than the yield before the NIMs have really gone up.

Moderator: Thank you. Next question is from the line of Jignesh Siyal from Quant Capital. Please go ahead.

Jignesh Siyal: I had been a little late to join the call just needed to know what was your extra fresh slippage number for the quarter?

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Jignesh Siyal: 200 crores, right?

S. Sunder: 400 and going out of NPA was 200 crores so, net was around 208 crores was the net addition.

Jignesh Siyal: The gross addition had 400 crores?

–  –  –

Jignesh Siyal: And net have been 208 crores?

Umesh Revankar: Yes.

Jignesh Siyal: Okay. And how much does the provision impacted because of the change in dates just allocate some of that.

Change of days in the NPA recognition?

S. Mundra: That will do at the end of fourth quarter, no.

Jignesh Siyal: Okay. So there is no recognition done during this quarter, right?

S. Mundra: No. We have categorically said that we will do in the Q4 of this financial year.

Jignesh Siyal: And because of that the current gross NPA can move by 100 bps to 150 bps that is what you call it.

S. Mundra: Yes, roughly in the range of 100 basis points to 150 basis points.

Jignesh Siyal: Okay. And it might also happen that the coverage might also decline because of that, the provision sir?

–  –  –

Jignesh Siyal: And your securitization has seen an uptick during this quarter so any flavors that that how that particular thing is doing that how the demand is securitization of assets this time?

–  –  –

Parag Sharma: Some demand has come during this quarter. Normally the demand is more in December and March we have done 1,500 crore of securitization and as we mentioned in the opening commentary we will target around 6,000 crores for the full year.

Moderator: Thank you. We have next question from the line of Mayur Parkeria from Wealth Managers. Please go ahead.

Mayur Parkeria: Sir, couple of questions from my side. Sir, standard assets provision at what rate are we providing currently?

Umesh Revankar: 0.25%.

Mayur Parkeria: 0.25% so, in this quarter we provided some 80 crores, right?

Umesh Revankar: 8 crores.

Mayur Parkeria: I am sorry, I apologize.

Umesh Revankar: 80 million it is.

Mayur Parkeria: Yes, sorry, I apologize 8 crores. So that will meet the 0.25% level on a book basis?

Umesh Revankar: Yes.

Mayur Parkeria: Okay. The second question is sir, you mentioned about the provision coverage ratio. Can you give some indication as to what level will we like to target when we move to 150 days?

Umesh Revankar: See that the Board will take a call at that time. Right now, we are going by the broad approval of the Board of around 80%. So as and when we move there we will take the Board approval.

Mayur Parkeria: But sir, will it be like in the region of 50-60 or will it be still (+70%) what broad color if we because it is only now only one quarter and then next quarter we will have that so, for some numbers for us to work on.

Umesh Revankar: No, see I told you very clearly that Board will guide us on this so, we have to approach Board and give our numbers to them and then they will give us how much to provide.

Mayur Parkeria: Okay. Sir, on the calculation basis if assume today’s situation remains as is and the hypothetical situation let us say if current situation remains like this and we look at gross NPLs in the region of around 5.4 around that level then and assuming the provision coverage at around 70% will it be right to say that almost 900 crores will be required to be provided on that basis because on a calculation basis I know it is a mathematical calculation but if that can be the situation will we look at that kind of provision?

Umesh Revankar: As I was telling you the environment in which we are working is very important if the economic activity improves the NPL number can undergo a big change. So we cannot go for a mathematical calculation straightaway. Now imagine next two quarters the economic activity improves dramatically then our NPL number also will come down.

–  –  –

Mayur Parkeria: Yes and if it deteriorates it can further go up.

Umesh Revankar: Yes, it is both ways.

Mayur Parkeria: Both ways, right. Okay. Sir the other point was on the AUM side there was a question with respect to interest income side where there was no growth in interest income for the quarter on a Q-on-Q basis despite the AUM moving up. Can we relate this to somewhere where the yields on the new Commercial Vehicles because the new Commercial Vehicles are now also started growing in our portfolio. Is it that because the new Commercial yields will be lower we will see some yields coming down a weighted average basis. And hence the revenue interest income will be lower as we go ahead in relation to it.

Umesh Revankar: It may not be the only component New Vehicle is just 10% of the portfolio. So on 10% of portfolio a little reduction in yield will not have a big impact. There are multiple components into that that has already been explained.

Mayur Parkeria: Sir last on, you mentioned about the equipment financer. Sir when can we see numbers getting consolidated what is your perspective when can we see the numbers… Umesh Revankar: Last quarter, last quarter also we said.

Mayur Parkeria: That will also happen in Q4?

Moderator: Thank you. Next question is from the line of Swanand Kelkar from Morgan Stanley. Please go ahead.

Swanand Kelkar: Sir you mentioned about the ability to drop coverage ratio as you move to 150 DPD primarily because your resale values are looking up and you feel more comfortable dropping that number. My question was more about can you step-up on your collection efficiency between now and end of March so that whatever the loan book falling today between 150 and 180 you can expedite collection so that 1.2 to 1.5 what you are guiding on gross NPA addition that number can actually be lower. So can you change borrower behavior and improve collection efficiency in that bucket?

Umesh Revankar: Effort is on towards that. We are trying our level best to improve borrower’s behavior. Addition to that what is very important is the economic activity. So economic activity will improving will aid us or help us in making the customer more disciplined. So both way it helps so, only one side means the impact will be less but if it is helped by economic activity then the impact will be much better.

Swanand Kelkar: Okay. So the 120 basis points to 150 basis points number that you are today talking about is as thing stand today.

So if you were to move to 150 bps today that would 150 DPD today that would be the… Umesh Revankar: Today’s current position, Yes.

Swanand Kelkar: And that could improve if you can improve your collection efficiency.

Umesh Revankar: Definitely, yes.

–  –  –

Swanand Kelkar: And the other lever that you have got has been ability to drop the coverage ratio?

Umesh Revankar: Yes.

Moderator: Thank you. Next question is from the line of Umang Shah from Emkay Global. Please go ahead.

Umang Shah: I just have one question. In the Equipment Finance Business are we doing any fresh disbursements or the fresh disbursements are on hold in that business?

Umesh Revankar: We are not doing any fresh disbursement in that company. Right now we have freezed lending from Equipment Finance Company.

Umang Shah: Sure. And sir, so ideally what will be the residual duration of that book?

Umesh Revankar: It should be around 24 months.

Umang Shah: Okay. So assuming that I mean we do not plan to unfreeze or restart that business. So over next 24 months this book will eventually run?

Umesh Revankar: No, since it is getting merged there is no question of restarting.

Moderator: Thank you. Next question is from the line of Mohit Pande from Crisil. Please go ahead.

Mohit Pande: I had a few questions on your Tractor portfolio. Sir what would be the broad split between the commercial and agri usage of Tractors that we are financing?

Umesh Revankar: Tractor portfolio see what we have done we have built Tractor portfolio in totally different line. We have focussed only on used Tractors and we are focused only on smaller ticket size. Our ticket size average is around 1.5 lakhs to 2 lakhs on Used Tractor and most of them are operators who are using it both for farming and for hiring. So their income has not really impacted much. Even though there is some stress in the rural areas. Our tractor portfolio has not behaved very badly even though there are some increase in NPA levels but it has not really gone out of control.

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