CGCL — earnings call

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Prepared remarks

Moderator · Conference Operator

Good afternoon, ladies and gentlemen.

I am Moumita, moderator for the conference call.

Welcome to Capri Global Capital Ltd Q3FY21

Thank you sir.

Ladies and gentlemen, we will now begin the question-and-answer session.

If you have a question, please press * and 1 on your telephone keypad and wait for your turn to ask the question.

If you would like to withdraw your request, you may do so by pressing * and 1 again.

Should you need assistance during the conference call please signal an operator by pressing * and then 0 on your touchtone telephone.

The first question comes from Mr. Tarun Somani from Rubics Investments.

Please go ahead.

Tarun Somani

Hello?

I am audible right?

Sir thanks for the opportunity.

I have a couple of questions and I would like to ask one by one.

So, my first question is, in Q2 you made a provision of INR 2 million and now if you look at Q3, you had a

Moderator · Conference Operator

Thank you sir.

Our next question comes from Mr. Ravikanth Bhat an Individual investor, please go-ahead sir.

Ravikanth Bhat

Sir good afternoon and thanks for the opportunity.

I have got three broad questions.

The first one is on the disbursals.

Now, you have had a very strong growth which you mentioned in your commentary both across MSME as well as home loans.

Could you quantify the absolute amount what this would have been?

Rajesh Sharma

So, if we talk absolute total disbursement has been 379 crores during this quarter.

Ravikanth Bhat

Okay.

Moderator · Conference Operator

Thank you sir.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

Sir, our next question comes from Renish Bhuva from ICICI Securities.

Please go ahead.

Renish Bhuva

Hi sir good afternoon.

I have a couple of questions; one is on our indirect retail finance book.

What I can see in our PPT is that it’s been very volatile since past many quarters.

I am assuming this will be short-term in nature and hence in one quarter if we didn’t fine the opportunity to line, I think that book will unwind very quickly and that can impact the overall AUM growth.

So, what is the strategy to smoothen out these impacts going ahead sir?

Rajesh Sharma

So indirect retail post IL&FS crisis, we have not grown that book.

Earlier we were lending to smaller NBFC MFI, then after that we have not grown that book.

However, certain times to park the liquidity we have given the money to some of the people who deal in the AAA in government securities and when they need the short-term limit.

So that is also given as indirect lending and that is where it comes as a volatility in terms of the AUM because suppose if you have given against the PFC or REC bond 50 crore rupees or 100 crore rupees of limit for 45 days, so some time quarter will show up and once the repayment comes that book completely goes away.

So that is the reason it shows the volatility.

Renish Bhuva

Yes sir, so I was just sort of thinking that so maybe in that even finance is more of opportunities lending or it is a part of our central strategy?

Rajesh Sharma

No, it is more of an opportunistic lending and many times we use it to part our surplus funds also.

Renish Bhuva

Got it, got it sir.

And sir, last question on the total provisioning buffer; so, I think it is roughly around 40 crores or so.

So, do you think sir this provisioning buffer is enough to take care of any incremental stress which we can sort of start seeing from Q4 once the Supreme Court judgment comes?

Moderator · Conference Operator

Thank you sir.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

Sir, our next question comes from Mr. Nalin Shah from NVS Brokerage.

Please go ahead.

Nalin Shah

Hi, sir, I just had a couple of questions.

First the AUM for the company is around the same range of 4000 crores.

So, what are the plans for that going forward?

Moderator · Conference Operator

Thank you sir.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

The next question comes from Preeti Singh from Value Investments.

Please go ahead.

Preeti Singh

Hi, good afternoon.

I just have a couple of questions.

My first question is, if we continue to lose customers to banks as their credit profile improves, how do we compete with the banks who are targeting the same segments and have a much lower cost of funds?

Are we getting adequate returns for the efforts?

When will our CIA ratio come down from the 35% to 40% levels?

Rajesh Sharma

Normally our customer which is in MSME affordable housing are those customers who have a business, self-employed; but they do not have adequate income proof.

These customers normally stay with us anything between four to six years time and then only they are able to migrate to the bank.

Looking at the overall opportunity and the gap in the underserved customer, we are able to acquire good growth and good number of customers.

Our customers who move to the bank for lower rate of interest and all I think is a good sign overall because our customers are acquired by the lenders, after a period they are able to demonstrate a good repayment

Moderator · Conference Operator

Thank you.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

The next question comes from Radhika Loya from Mirae Asset.

Please go ahead.

Radhika Loya

Hi good afternoon.

Sir just two questions from my end.

If you could give some color on your stage one and stage two assets and the second question would be if you have done your restructuring bill date.

Rajesh Sharma

So, I will ask my colleague Raj to answer this.

Raj Ahuja

Good afternoon Radhika.

Our stage one and stage two assets obviously have moved in quarter three versus quarter two.

In quarter two we had the privilege of moratorium which went on till August.

September when the moratorium was lifted, we had only 30 days in that quarter for the stage two move.

With that we have seen a sudden increase in the stage two assets in the current quarter.

We have actually increased the stage two assets from 180 odd crores to roughly around 400 crores in December versus September.

Our stage one asset actually at this point of time was constant so we were at 3021 crores earlier and now we are at 3100 crores.

This is more or less in line with the industry and this is in line with the pre-COVID levels also.

We had similarly around 400 levels which is roughly around 10% of the book in the stage two in the past also.

So, September two was aberration but September three we

Moderator · Conference Operator

Thank you.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

The next question comes from Mr. Bunty Chawla from IDBI Capital.

Please go ahead.

Bunty Chawla

Thank you sir for giving me the opportunity.

I am sorry I joined late and if I repeat the questions.

Sir if you can share the stage three numbers which you have already highlighted proforma around 115 crores.

What will be the provisioning against that as well as restructured asset you have given as 4% which is 44 crores and what will be the provisioning against that restructured asset?

Similarly, what is your thought process for the credit cost and the slippage in FY20?

Raj Ahuja

So, Bunty we are at 115 crores in the stage three assets and I have already answered that question that we do an ECL provisioning based on our security profiling and their capability profiling based on the past history.

In our weighted average provisioning again, stage three comes to roughly around 24% to 25% out of the total which translates to 80% TCR ratio.

That was the answer to the first question.

Second on the restructuring fees, the RBI as per their guideline, we are supposed to make 10% provision over and above the standard provisions what we do on the assets and we have taken 10% provision flat on the restructuring book, which is roughly around 110 odd crores, 2-1/2% of our total books; so 110 odd crores.

We have taken 10% based on that particular book and that is outside the stage three calculation.

So, this is over and above the provision done under the stage three of 24%, 25%.

Bunty Chawla

Thirdly sir, outlook on slippages as well as credit cost for FY22?

Raj Ahuja

We are expecting a similar level of provisioning maybe a little bit heightened provision in Quarter four.

I think as of now we will have to start watching this space because we have just come out of the moratorium window and people have started back.

Economy is going back on track now so quarter four looks like we might

Moderator · Conference Operator

Thank you.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

The next question comes from Tarun Somani from Rubics Investments.

Please go ahead.

Tarun Somani

Hello, thank you sir for taking me back again.

I have a couple of questions.

First one is like, you have mentioned that you will be foraying into new business segments.

So, can you enlighten us a bit more on to what particular business segments or geographies are you targeting, and would it mean that you would slow down on the existing business verticals like MSME or affordable housing?

Raj Ahuja

I will take up this question.

At this point of time, I think like Mr. Rajesh has already said that we are looking at some new segments but that is more to enhance our business and a little bit more cross-selling to our existing customer base to optimize the cost of acquisition.

So, we are very, very clear that this is not at the cost of the existing products.

Our existing products are doing very good and we have created a niche in those products, and we are very comfortable in those business segments.

So, we continue to grow in the existing business segments.

On the new products, we are still working on what are the products where we can have synergies.

We are internally yet to close our product mix for our future.

As and when we do any kind of new product launches and all we will obviously come back to the community.

Tarun Somani

Okay sir.

Raj Ahuja

But those products will be more synergetic to our existing lines and we are not trying to get into very different or non-niche products for ourselves.

Moderator · Conference Operator

Thank you.

Ladies and gentlemen if you have any questions please press * and 1 on your telephone keypad.

Sir, that was the last question for the day, now I hand over the floor to Mr. Rajesh Sharma for closing comments.

Rajesh Sharma

Yes, thank you all for joining the call.

As we said we will continue to remain focused on our strategy of growing the retail book and we feel that the coming quarter and the next year is going to be quite exciting for us in terms of AUM growth as well as the profitability.

Thank you all of you.

Thank you so much.

Moderator · Conference Operator

Thank you, sir.

Ladies and gentlemen, with this we conclude our conference call for today.

Thank you for your participation and for using Door Sabha’s conference call service.

You may all disconnect your lines now.

Thank you and have a good day everyone. _____________________________________________________________________

Note

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