Manappuram Finance Ltd
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Ladies and gentlemen, good day, and welcome to the Manappuram Finance Limited Q1 FY '24 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Sanket Sheda from DAM Capital. Please go ahead, sir. Thank you, and over to you.
Thank you. Hello, and good evening to all of you. We are ready to discuss Manappuram Q1 FY '24 results. We have an entire management team with us, Mr. Vazhappully Nandakumar who is MD and CEO, A. Bindu, who is the CFO, [indiscernible]; Mr. Rajesh, Unizo CFO; Mr. Kamal Kumar, Head of Vehicle business. Ms. Sui, who is CEO; and Mr. Robin Carole, who is the CFO. Without further ado, I'll hand the call over to Mr. Nandakumar for his opening remarks, post which we'll follow up with the question and answer. Over to you, sir.
Thank you. Good evening, ladies and gentlemen. Welcome to the conference call for our first quarter FY '24 financials. I take great pleasure in presenting our results at a time when India is being hailed as said by spot in the global economy, and the optimism about India's growth prospects is all peers. As we are now the most popular and useful country in the world. So by [Indiscernible] will power our country, and we at Manappuram are well-placed to seize the opportunity. In the last call, I had need for a balanced and prudent growth strategy. This quarter, we achieved notable growth in both AUM and profitability. I'm happy to share that. We have recorded a net profit of INR 498 crores, with an improvement of 77% year-on-year driven by profitability gold loan and consolidation in microfinance business. We have witnessed a year come out. Gold loan AUM stands steady at INR 20,603 crores by stand-alone AUM, INR 23,758 crores. That's grown by 12.6% year-on-year. The consolidated AUM is at INR 57,086 crores retroceding an increase of 20.6% over the year-ago quarter. I remember with gratitude to all the stakeholders for this creditable performance, but more than anything else, it is the first of our customers that have helped us cruciate the various challenges that pop up, begin small and pressed off our as we continue with progress. The NPC space is growing with the means of new players, but India under-penetrated financial markets. You move for a larger number of players, 2 products company's microfinance subsidiaries, Asirvad, as possible of INR 10,141 crores, showing a growth of 44.6% year-on-year and a net profit of INR 111 crores during Q1, we service net loss in the year-ago quarter. I have no doubt that the share of microfinance in the overall profit pie is set to go up in the days to come. Like in the previous quarters, we continue to support Flexim growth in the workplace business, recording 59.8% increase year-on-year with an AUM of INR 2,805 crores, followed by home loans with AUM of INR 1,203 crores, 1.5% increase than the corresponding quarter in FY '23. The strategy of diversifying into other sectors is gaining base. The share of nongold verticals in our total assets on the management that stands at 44%. And this is very much in line with our stated objective of achieving a 50-50 portfolio mix, in gold and nongold segments. We will continue with our royalty of becoming well diversified NBFC. Microfinance business is expected to continue to gain [indiscernible] as this sector probably is well with economic recovery. MSME and personal loan segments are also areas where we want to lease our process. All this, while we continue to maintain a comfortable liquidity position will be more a complete review of financial performance. I'll hand the floor to CFO. Please go ahead.
Thank you, sir. Good day, ladies and gentlemen. Thank you for joining us today. With regard to Q1 performance, our consolidated AUM for Q1 FY '24 was INR 7,086 crores, representing 4.6% sector growth and 20.6% Y-o-Y growth. Consolidated profit after tax was INR 498 crores, which was up by 20% Q-on-Q and up by 76.7% Y-o-Y. ROE on a consolidated basis was 20% and ROA was in. Our leverage is currently only 2.8x. GNPA at 1.45% versus 1.33% during the previous quarter. Cash and cash equivalents on a consolidated basis was INR 2,452 crores. Under-bank line was INR 2,580 crores. Our CP exposure is made in the stand-alone NBT. Stand-alone borrowing cost has gone up by 18 basis points in Q1 FY '24. Part the gold on business, which constitutes 56% of consolidated AUM. That is the remaining 44% comprised of microfinance vehicles, housing, and MSME business. Consolidated gold loan was INR 2,603 crores, increase of 4.3% Q-on-Q and Y-o-Y flat. During the quarter, we were able to add 4.46 lakh new customers. Our average gold on LTV at 64%, online go-on book accounts for 55% of total gold loan book. Our stand-alone PAT was INR 381 crores, up by 23.2% rental and up by 1.3% Y-o-Y. Coming to Microfinance business, Asirvad Microfinance stands at INR 1,140 crores, including gold loan AUM of INR 790 crores. Q-on-Q, 1% grew and 45% increase Y-o-Y. That for MSR business has increased to INR 111 crores in Q1 versus INR 199 crores in Q4 FY '23. Collection efficiencies from MFI business stood at 102%, and disbursements during the quarter was INR 1,814 crores. Cumulative sales provision in a year worth INR 217 crores and net NDA stands at 1.29%. Our anniversary arrears improved to 22.6%. ROA for the quarter was 4.4%, and ROE of 26.6% for the quarter. Vehicle Finance, we have reported an AUM of INR 2,805 crores, which is up by 14% Q-on-Q and 60% Y-o-Y. ROA for the tenancies around 4.2% for this quarter. Collection efficiency, including areas, 100%, GNPA 2.9%. Gold loan business reported a book of INR 1,203 crores up by 9.7% Q-on-Q and 37.5% Y-o-Y growth. Now operates from 66 brands and a profit of INR 3.2 crores. Collection efficiency for the quarter was 98%, GNPA at 2.8%. MSME and Allied business. AIM stands at INR 2,360 crores. ROA 3.2%, collection efficiency, 97%, and the NDA of 1.8%. Our on-lending AEM stands INR 805 crores with a disburser of INR 47 crores during the quarter. Provisions and write-offs in a stand-alone NDT to INR 21 crores compared to INR 4.3 crores in Q4. Both declined an interim dividend of INR 80 for the quarter compared well capitalized with CRAR of 30.5%. Network stands at INR 1,078 crores, and the book value of INR 190. Thank you can now go for the Q&A session.
[Operator Instructions]. The first question is from the line of Mr. Abhijit Tibrewal from Motilal Oswal.
Congratulations on a good quarter. So I had 3 questions. Now the first one is more around the yields and cost on borrowing. I just wanted to understand, last quarter, we had done that because we kind of moved from the 3-month to 6-month tenor, we had seen a minor blip in yields this quarter. On Slide #6, you reported net yield on goods have improved to about 21.6% during this quarter. So now what's the trajectory going to be like for the coming quarters? No problem. I'll repeat myself. Sir, last quarter, we had shared that because there was a change in gold loan tenor from 3 months to 6 months. We've seen a minor blip in gold loan yields during the last quarter. That has obviously recovered this quarter. What we reported on Slide #6, the net yields on gold loans have improved to about 21.6% versus 21% that you reported last quarter. I wanted to understand what's the trajectory going to be like on gold loans going forward. And a related question here, why have you suggested that the cost of borrowings have gone up by about 20 basis points? What's the trajectory going to be like? Because very clearly, we didn't see any significant rise in the cost of borrowings last year, even though our report rates have moved up. So if you could just answer these 2 questions first.
So gold loan, we hope to maintain a yield between 21% to 22%. That is -- yes, our schemes are structured like that, and we hope to maintain that. Cost of borrowing has gone up by 20 bps. And it will be – Ms. Bindu you can say [Indiscernible].
Yes. So this quarter, we have for basis points. The set that's happening. And even without a report hike, we are seeing a slight increase in the rate from banks. So I think this quarter also, we have to expect a similar increase.
Then the second question that I had was more on the gold loan growth. Obviously, we are seeing good drilling growth, strong gold loan growth last quarter in 4Q, again, another quarter of strong loan growth. But what I wanted to understand here is, very clearly, right, I mean, by hearing your opening remarks, you suggested that we have added about 4.46 lakh new gold loan customers. But in terms of the overall gold loan customers that you report, they are not going down. The tonnage, if I look at it, it's not going up. So essentially, is it predominantly -- I mean, higher gold prices which will eventually lead to higher LTV versus 64% that you be reported as on this quarter, which will lead to gold loan growth in the coming quarters? Or is there also reason to believe that we can also increase the customer franchise in gold loans going ahead?
So we plan to grow at around 10% to 12% by reducing the customer base. It is not just rallying around the gold price. So the customer acquisition is seeing improving, and that is the vision of our expectation to grow at a rate of 10% to 12% annually, which has been told earlier also.
Got it, sir. And sir, just one last question for [Indiscernible]. So in the consolidated statement, you are seeing about INR 55 crores of net gain on fair value changes -- if you could just explain what is this?
So in the case of direct segment transactions, we can do a trending of income based on the profile concept. So it was in the last year's financials also. This is coming from MF financials. So if you see last year also, some quarters, based on the L number, there will be an income. But in the subsequent quarters, it will get adjusted.
Shouldn't that come in net gain on the recognition of financial statements? Because all other companies that we track, we typically report this upfronting of an antinomy net gain on day to recondition of financial instruments. So this quarter, I mean because of assignments, we are reporting this INR 55 crores of net gain on sale value? As this is a bigger number on Y-o-Y, this was INR 10 crores last quarter to about INR 9 crores.
But if you see the last year full year number because we were doing on an average INR 2,500 crores. It was -- the full year, it was INR 100 crores. So that will get adjusted. So mention the DA volume because this quarterly, it was high, so it was there. And we are also creating reliability for that portfolio. So the normal operating income only.
The next question is from the line of Nitin Aggarwal from VT Capital.
One thing on asset gold loan book. Stage 2 has decreased by [indiscernible]. It has come down from 1.9% to 0.8%. And Stage 3 has not increased by that much. So if you could just explain the movement there. Also the console provisions that we have made, a major part of it has come from MFI, so if you are seeing good resolution, what is the need to make such provisions? And will this continue? And lastly, if you could provide less than 12% yield part of growth that we used to provide in our presentation?
So in the case of MFI book, there were some write-offs also. That is the reason this quarter at the moment between Stage 2 and Stage 3, in that other was high, but we expect the credit cost to do overall remain within the guidance. So that is the impact for this quarter. And on that percentage, et cetera, gold loan until we thought of removing that slide, but 90% of the book is about 1%.
Sorry, 90% is above 12% yield.
Yes.
And now this will not go beyond 90, I guess, as was mentioned as part...
Yes, it will be in the...
Any overall yield of around 21%, 22%, which is the same.
Okay. Also, this write-off, so if you could provide us a number, how much was the write-off? And you said that it will remain in the same range. So are we expecting more write-offs this year? And will the credit costs remain at the same level?
So during the quarter, we are around INR 100 crores. [indiscernible], we expect reduced credit costs.
There was INR 5 crore, INR 7 crores of write-offs in this quarter, and in coming quarters, we are not expecting that, right?
Yes.
Okay. And was this entirely from micro, is there any more stress in this book -- in enterprise book?
Early from microfinance book.
Thank you. The next question is from the line of Shubhranshu Mishra from Philip Capital.
First part, if you can decompose the 10%, 12% growth guidance because in the 10%, 10%, there will be a ticket price increase of 5%, 6%, which is a normal inflationary growth, there'll be some branches which would be breaking even or the productivity hence, would be another maybe 2-odd percent. So actually, the actual growth is limited to maybe less than 2% in that case. So if you can decompose that. Second is if you can split by booked into less than INR 50,000, INR 50,000 to INR 1 lakh, INR 1 lakh to INR 2 lakhs, and INR 2 lakhs and above. That is the first data point I wanted. And the second data point is from the loan for auction-rate average LTV, both in percentage as well.
So 10% to 12% growth affected is from new customer.
No, it has never happened [indiscernible].
Yes, yes. Conditions have been improving in the gold price. [indiscernible].
Comparatively as also in this quarter, it was only INR 14 crores during the quarter.
And on the LTV now?
LTV, 64%. [indiscernible].
The next question is from the line of Piran Engineer from CLSA.
Just a lot of things. Bindu, you mentioned the credit cost guidance you're giving is unchanged. If you could just remind us what is the guidance for the year?
So on the average AUM, our expectation in the new scenario of percentage credit cost. So that we should be able to maintain that is for 2%, 2.5% as credit cost is what we are expecting.
But it was 3.8% this quarter. So the sharp decline is coming due to what is it?
So this quarter, yes, we have taken some write-off, and that is the reason it has gone up. But if you see the stage 1 state, et cetera. We are not expecting higher [indiscernible].
Okay. And just secondly, in terms of -- for the gold loan business and branch or single had like 2.5 million customers for now 4, 5 years. I just wanted to understand in this $2.5 million, let's say, how many would be new to Manappuram, and how many are just rolling over that loan?
During the quarter, we added new to Manappuram customers of nearly 4.4 lakh, so at this fast-serving business, we are adding a lot of new customers, and that is helping us to grow the business.
Okay. And if I just multiply this number by 4, would that be the number of new customers you're adding last year?
See, every quarter, every day, we are adding almost 5,000, 5,300 new customers. So that trend is improving as the category customers, which we are addressing is also becoming active. So we are seeing an improvement in the new customer addition. So that is helping us to grow the business.
Sorry, I think when you say new, is it new to Mannapuram or someone who took a loan 3 years that is again coming back, you're classifying this in this 4.4 lakh?
New to Mannapuram.
So that's quite a large number.
On boarded, then we will consider as an existing customer only. There will be campaigns for large customers. But this 4.4 lakh is to new customers.
Okay. So if you could just sense apart from 4.4%, how many -- so how many loans did you want this quarter then? Not in Crores in the number of people because it will be new to Manappuram plus some people rolling over plus some old people who are reactivated.
Yes, that always used to be very high because our average life of gold loan is around 100 days only. So to maintain an INR 20,000 crore book itself, we have to do have 10. So almost 3x of that will be the disbursement number. So that is a larger number. So we are adding new customers, and businesses are improving, but at the same time, the earning is very fast. So during the quarter, we did a disperse almost INR 39,000 crores.
And to how many customers are INR 39,000 crores.
INR 3.49 lakhs headcount.
Could you repeat that, please?
3.49 lakh headcount. [indiscernible]. So every quarter, there will be 1 journey.
The next question is from the line of Nithin Swati from Kotak Institutional Equities.
So this is just again a clarification on your cost of borrowing. And your cost of borrowing has gone up around 70 basis points quarter-on-quarter. Is that the right way to look at it?
So in the stand-alone entity and the subsidiary microfinance, we have seen an increase in the cost of borrowing. So the 70 basis points are largely on account of increase in the cost of borrowing in a year, stand-alone increases with 70 basis points.
The increase is 18 basis points. And during the quarter, most of your borrowing is coming -- I mean, the increase is mostly coming from bank loans, and you practically not raised any, NCD investment have gone down. Is there any specific reason for it?
So in the case of a stand-alone entity, we did an NCD transaction on agility, and as you know, mutual fund market, of course, there will be -- or the NCD investment will be less due to this last quarter, EDs, et cetera. But again, we are getting a response. So we are working on a few transactions.
Sure. And just coming back to the cost of funds, the cost of funds increased significantly in the subsidiary because of any specific reason?
So CEO of the bank line, the reset that happened during the quarter. So that is the reason for the increase. And now it is for a 2-year term loan, et cetera, is coming around 10% as range. So that is the reason that has gone up.
Have you seen any -- sorry, have you seen any adverse reactions in within Bank center to the news that came out?
So we are taking liquidity, but there will be some additional -- or those things are happening, but we have enough liquidity to grow the business.
Got it. And finally, I think on the competitive side, on gold loan revenue, we really are that the worst is over. Or would you still see there are pockets of competition?
Yes, gold loan, we are able to grow, and as I say, we are expecting a growth of 10% to 12% through new customers that we sell not only through new customer association but also the higher amount of loans our customers, our ticket size is slowly going up compared to, yes, the previous years.
But the competitive intensity from banks has reduced? Or would you kind of say it is stable?
So you're asking about competition?
Yes, that's right.
The bank's customers and the NBFC customers are different profiles in BC customers wanted to turn around, and they foreclosed and came again 80% repeat customers, et cetera. So the bank's competition, we may not lose our customers with is enough set for banks and nonbanks with spaces with large.
[Operator Instructions] The next question is from the line of Shreepal Doshi from Equirus.
Sir, just on the cost of fund side, I wanted to understand what is the incremental cost of borrowing for the stand-alone business and for the MFI business.
Stand alone, it will be on our own. We are expecting soon the rate of INR 875. Wherever this on the -- in terms of [Indiscernible], incremental you are expecting in the resort.
Okay. And have we seen any increase in the last, say, on a sequential basis on a quarter-on-quarter basis?
Yes. As I told in earlier also, kind of last quarter the cost of fund has gone up. So similarly, also, we are expecting the coming quarter.
Okay. Just while this number was said earlier in the call, I wanted to understand the split of the gold loan book in terms of ticket size, so which is below 50,000, 50,000 to 100,000, above 100,000, and about 300,000 ticket size.
[indiscernible] 17% total 43 and the above 1 lakh to INR 570, we will come back to you.
Okay. And what is the update for the capital raise plan that we had indicated for the MFI business?
So we are exploring many ways we may need capital to risk capital. So we are not finalized for various options are being considered.
So will you be limited to capital or we might look at other options as well? Like I mean selling the business or a loan.
So we don't want to sell our stake. So it will not be a seller at all. So of the growth capital we may raise Manappuram sales.
The next question is from Aalok from MNCL.
Congrats on a great set of numbers. I was just trying to understand how do you look at the improvement in the yield on the gold loan portfolio front. I'm sorry, I will say anything conversation, but -- so we've seen meaningful improvement in the yields there. How do we look at those numbers incrementally?
So we hope the yield will remain at a range of 21% to 22%. So we are able to get this set of 10% to 12%.
So you're saying that to the 10%, 12% customer, and AUM growth addition, we are not seeing any kind of pressure on the yield front.
Yes, yes. We hope we'll be able to maintain this list.
And some light on the east for the MFI portfolio?
Yes. MFI portfolio, the yield is down 2%.
Okay. Sir, is there too much to --That when I look at your gold loan AUM and the gold tonnage kind of being kind of not going in the same thing. So I'm kind of trying to read too much into it, or the Chinese content should also improve as the new clients get additional go through?
No. See, someone talked about competition from banks. What I hold is the bank's customers, their profile is different. They can really rely mid-ticket sales loans, and they can meet all not time in the fields for availing the loan. Whereas our customers always look at the turnaround time of around 10 to 15 minutes. They are mostly self-employed people, et cetera, et cetera. So these customers are not going to contractors. We're going to contractors. And that segment is very large, not is not estimated from. It is a general assortment that the size would be at least 3x of the sector. So with all persons, et cetera, we will be able to win away those customers. That is what we have been doing, and there was some sluggishness with also the spending, et cetera, et cetera. So the things are slowly coming back. And with our growth projection in the economy, et cetera, et cetera. We hope to maintain growth at a level that [indiscernible] people.
The next question is from the line of Kushan Parikh from Morgan Stanley.
I have a couple of questions. So the first question is around Asirvad MFI. So I mean we've had good Y-o-Y 40%-plus Y-o-Y growth in the AUM, and Asirvad Q-o-Q, it was still flat. So what should -- on the growth guidance that you are looking at for the MFI business going forward? And also, I mean, we had a little bit of a Q-o-Q uptick in yields. So we said that fees are currently around 25%. So do we expect these reels in the Asirvad business to sustain going forward as well? And if I could just ask one clarification question, the write-offs that we had in Asirvad business. So this is an impact number?
So AUM growth expected is around 30%, 33% during the current year. So there was some sluggishness because we had some concerns about the funding availability. So we refer even though that has not happened, we actually reserved some cash liquidity with us. That is why it has slots down to some extent. But in the coming quarters, we'll be able to cover it. The second part of the question is the yield. Yes, this segment is not much concerned about the yield or the concern is the availability of service, how fast we can dispose the loan, et cetera. So these issues are just with technology, et cetera, it is to improve also. So the concerns about whether we are able to achieve growth of around 30%, 33%, and with a yield of 22% is what we believe. About the write-offs...
Write-offs during the quarter was INR 57 crores.
Understood. Just if I can just squeeze in a couple of more bookkeeping questions. What was the gold loan ticket size for this quarter as a ticket price and the average tenor?
Or, you could say, 80%, and the tenor is nearly 90 basis points. That is still in on [indiscernible].
All right. So just trying to understand, I mean, would our growth have been benefited from the slightly longer tenor in gold loan?
The average tenor remains around 90 to 100 base. That is not changed in the tenor.
The next question is from the line of Jigar Jani from B&K Securities.
So on the non-gold businesses, we have seen a spike 12 GNPA for almost all non-gold businesses we work in for personal loans and the senior housing finance. So any guidance on where you see these numbers settling for each of these businesses these are like hydro businesses for us, but the asset quality also seems to be deteriorated on a Q-on-Q basis. So any color on that?
[indiscernible]. And you see as there will be some extra effort to do that, it is only because of that only, a marginal increase only. We are not seeing any asset quality issues is among [Indiscernible] during the quarter
So going forward, can we expect this to be range bound or probably decline across the...
No, year-end it may be 10, 20 basis points up and down, that is a...
On average, it would be maintained and also we are making [indiscernible].
Okay. Sure. And the growth rates for these businesses would be sustainable this 30% to 50% [indiscernible] because of the low basis I think we are at, right?
So we have a large customer base, and we have not expanded to service where we do on loan. We are slowly expanding. And in these sectors, the base is low. So we hope we'll be able to maintain around 35% to 40% growth annually.
We have a follow-up question from Abhijit Tibrewal from Motilal Oswal.
I wanted to understand that during the call, you highlighted that the gold loan average tenor is remaining between this 90 to 100 days. So, I mean, don't you think that in that earlier than we used to follow these 3 on gold loans, we were always on that constant treadmill where no either had to be removed or rolled over -- and I think some time in the last earnings call you were highlighting that the yield compression happened because we move to 6 months gold loan tenure. Are you also highlighting 12-month gold loan volumes, right? I mean, because once we do that, I mean, it will tend to stick around longer on your balance sheet rather than you having to spend so much time and energy on trying to renew or rollover these quarters.
[indiscernible] stop the reason for the average life. See, what we see for the time remodel around 20% of total loans are close to doing the custom of beds itself. And another 20% was in the proceeding month, one of the 40% during the 3 months pass that is the culture being followed by these customers with this long time, it is not because of the shorter tenor. Even when the tenor was 3 months, the auction takes place within 6 months already. So it is not because of that. Even when we released the life of a tenor to 6 months, it remains like that. It's not because that tenor is shorter or long term, it is the nature of our customers because they are well looking for this agent for farming or for small businesses, et cetera. They are conscious about redeeming the performance. So as when they get the money there. And then in number, 80% of our customers are repeat customers. So that is the nature.
Got it. Sir, one last question from my side. I just wanted to understand how are we kind of now defining those online gold loan, OGL. Very clearly, if I look at the last 4 quarters over the last year, right, the proportion of online gold loans that you report has moved up from 46% to 55%. If I look at the ticket sizes that you're reporting here, while ticket sizes at the overall level have gone up by about 4% Y-o-Y. It has gone up by 12% in OGL. So how are we defining OGL now and essentially, why are you seeing such sharp moving ticket changes vis-A-vis the blended ticket sizes?
The ticket sizes will be so much different. See, the online gold loan actually increases the comfort level. They can operate anywhere 24 hours. Other than that, there is no decline.
But we are taking slightly higher tickets sale for online gold loan since the beginning.
[indiscernible] but now the customer convenience is they're more and more online who will say ATMs we have [indiscernible] in our app also. You can see that appraisal really increasing. So that way, for convenience, we've seen that customers started using more and more on a daily basis.
Okay. So sir, anything, where the disbursement happens online, is classified as an online gold?
Yes, yes. Online into their call the region app, et cetera, et cetera, and they can operate from anywhere.
The next question is from the line of Malind Agrawal from Value Capital Partners.
Okay. I have 2 questions. So first question is, why is Asirvad Microfinance's loan book at Q-o-Q, given the growth guidance that we have for the full year of 20% growth on the consolidated loan book? Do you see that in Q1, the Asirvad microfinance loan book is flat Q-on-Q. And what kind of sequential Q-on-Q growth do you look at internally while setting the target to deliver a Y-o-Y growth of 20% plus? That's question #1. Question #2 is, when are we coming up with the IPO for Asirvad microfinance business? That's question #2. And question #3 is with regards to the showcase motors issued by RBI. So what is -- briefly you could explain what is that? And what kind of supplier have we given it to RBI because I couldn't see that replying to exchange filings. And one part with regards to the ongoing investigation. So briefly, if you could tell us where -- at what stage is it right now? So those would be the 4 questions.
So actually that growth the last quarter. So we see some liquidity for some time and are basing some liquidity problem, which has not actually happened. So around 1.5 months, we slowed down on disposal. That is the reason why -- but we will be -- we are making it in the coming quarters and our expected growth of around 25%, 30%, we'll be able to achieve as to the fact it was is concerned. The second is that in litigation as intimated earlier, the FA has been posted. So the predicate claim is one. So when the predicate claim is one and as well as rules as per the law. The secondary mitigation also should go. There are several pronouncements by the FX growth. So we are in the process of getting the second part also cost, which may happen within 10 days. That is what we believe. So as the fee is forced to the meter issue is warm, the other one is only a proceeded. Regarding the [indiscernible].
Yes. So this is on account of the pending auction surplus. So we reply to them given the additional measures which we have taken to reduce this. Sometime back, it was almost INR 53 crores, and now we reached to around INR 37 crores now. So we will continue our effort, and we are using technology also to identify these customers Out of this INR 37 crore, a large amount relating to the period before 2018. So there are some practical difficulties to find out and the average amount also very less only. So in all cases, we have sent the registered check to the customers. But in many cases, it is a small amount, these customers are not in cashing the kit we are following up with these customers to get the check. So a lot of effort is going on. So we believe that we should be able to reduce this.
[indiscernible] IPO or Asirvad Microfinance?
So Asirvad definitely need capital for growth. From the promoter side, we don't want to sell any stake. So we can now state at the same time from growth capital. We need to raise money. We have not finally decided whether to go for an IPO or the monitor, etc., et cetera. So discussions are going on, but no decision has been taken.
Okay. And if I could squeeze in one more question, please. So looking at the future, we have set the target loan book at 50-50. So basically increasing the non-gold portion. So if I look at the future, the loan growth, whatever that will happen, so would we be increasing our yields in line with the increase in the cost of borrowings that will happen in the future? So would it be fair to assume that the net interest income growth rate would exceed the loan book growth rate? What hasn't been delivered in the future?
See, the gold loan, we have the ROA, and the other businesses also are improving their ROA because the growth is happening and the employee business is increasing. So on average, we are hopeful of maintaining an ROE of nearly 8%.
Yes, how about the net interest income growth? Would that exceed the loan book growth?
In with the growth...
[Operator Instructions] The next question is from the line of Pang Mandell from Alpha Invesco.
I wanted to ask about your opinions about the new initiatives that the government is taking with regard to open credit enablement network. And how may that affect our business going forward?
So we have to analyze that. But see, what I can say is, see, we are doing business at the bottom of the page. So in this area, there will not be any negative part. It's a technology as it is financial inclusion. We are on the inertial side possible. And the overall India is also growing. So I think with the newer technology solutions, et cetera, we are going to be benefited.
Okay. So we do not see the towering threat for the next 5, 10 years or [Indiscernible] and I also wanted to ask about any update on the approval for branch expansion by RPS.
So see, a consolidated level, we have added around 520 gold laon branches. So that the scale of our expansion needs. To your specific questions of getting brand expansion in a number of finals, yes, we are yet to get. Yes, we are able to.
Haven't been in a very long time [indiscernible] since you applied for the 2020/2021.
See, the challenge here is a surplus in gold loan, yes. So we have done a few things to ensure that the surplus is not increasing. So the surplus has gone to a level of INR 52 crores. Now it has come to INR 36 crores. So progress is being made, and RBA is being informed about that. And I hope that will take care of the RBA requirement.
The next question is from the line of Nitin Agarwal from VT Capital.
One question on the cost of borrowing. One follow-up there. There's no contribution. So 20 bps increase came from gold loans, stand-alone book. And around -- if I'm not 60 to 70 -- 50 bps, around 5 months came from the book and the landed cost of borrowing increased by 62 bps. So you said that 20 is expected again in the stand-alone business this quarter. Could you give the same expectation for MFI as well because the reset call is 50 bps? Will it again happen in this quarter? And also just relating to this question, if yields are 21% to 22% and incremental borrowing is 20 higher. Am I wrong when I say that we will not be able to maintain such margins or it will dip a bit in the coming quarters?
See, the coming quarters, now the increase in the CRR, et cetera, et cetera. So all will depend on the government's policy. But what I can say is the sectors we are in, the small ticket gold loans, that is around 50,000 microfinance or small ticket finance, which are mostly used cars or mockumentary ticket sales is around 6%. Passing on this 20 bps of 30, this may not be difficult. So what I say is the other one all depends on the external conditions. But internally, we are hopeful of maintaining the NIM.
Okay. And the increase in cost of borrowing from MFI book, what do we expect? Do we expect the same 50-bps increase this quarter? Or is it later?
No, because see this quarter, it may little which may remain at this level. There are reinstallations in the PSL. And the banks are providing with these other to grab this PSL. So there is no reason why it should go.
Okay, and the reset entirely we are seeing are we seeing the entire reset and borrowing in this work.
These are by way of that assignment at it. So there is a good demand this quarter, this half year 1. So the demand for this PSL will be more.
Okay. So just on the cost of fund side, this will remain at the same level. And overall book, even if there is -- an overall good even there is 20 to 15 the pass-on will be easier given our target segment. Am I correct when I summarize it?
This is not predictable because it all depends on the government smallish et cetera, et cetera. Total, you've seen increase in the CRR et cetera, but what I said is what is most important for us is to maintain the profitability. That will be mainly.
Okay. Got it. Another question about the cash trends that you mentioned. So some while back, when someone asked about the impact of such EV and everything, if it's over and if you're getting bank lines and other faction? So there was a liquidity crash because of which this quarter's MFI growth was quarter-on-quarter not very great. And going forward, we are seeing sanctions coming from banks now that everything is over. Is that correct? Or can you see any other cash rent?
No, I will make you clarity. See, regarding EDs the predicate time is gone, is cost to be the post is the case. So automatically, the investigation will go -- it has gone -- and we got a full stay also in the meantime, the watching efforts are going on. We hope that the question will wrap in another port net. It is coming to almost 2. But with the FL loss the bank funding has considerably improved. It is last quarter actually was divine because of one of the sanctions, but we reserved some liquidity, it anticipating some liquidity currency. Actually, this has not happened. So now we have started in the full swing on other businesses in the stand-alone these were not affected because of that. Yes. only in gear. This has been done as a precaution and not leading else. Now we are able to get enough sanctions on the banking system. So the title will not be concern going forward.
Okay. It gives much clarity. And just one last thing. Just one clarification in combined, as you mentioned that the surplus was INR 52 crores. It has come down to INR 36 crores. What was that about, if you could just clarify it for me?
Option surplus in the case of the bilingual customers for gold loan, we will recover the money to auction. And we will address it a resumable balance, we will be reimbursing to the customer within 15 to 20 days, we have to pay back to the borrower. So this INR 36 crores is the accumulated amount over 14 years. The surfer generated an over these 4 years. It may be some INR 300 crores out of INR 36 crores is spending. Average amount is very small, and there may be customers migrating, and they may not be interesting in the check. So this is the reason for the unpaid amount of INR 36 crores.
It has been accumulated for the years together not in the recent years.
Okay. Got it. And will we be able to increase our tonnage from here? Or what is the view there?
See, when the gold price goes up, the tonnage comes down because the people will get money with that reduced quality. But if gold price goes down, they tonnage goes uo. This is usual.
The next question is from the line of Naval Gada from DSP Mutual Fund.
Yes. Sir, a couple of questions. First is relating to OpEx growth, both in the stand-alone NPV and in Asirvad. What is your expectation in the current year on OpEx growth? And the second question is relating to what quantum of tonnage was released in the current quarter. And if you have some sort of ballpark number for the same time last year.
Yes. The OpEx is slightly low level because of the lighting recentered cost. But going forward, it will come down. The business is stabilizing. So it will come down. Regarding the tonnage.
That is the question release of tonnage.
[indiscernible]
It shall come down.
Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand over to the management for closing comments.
So thank you for a good participation. We hope that we have answered the questions to the satisfaction of all, and we definitely are available for offline and online meetings. Thank you so much.
Thank you.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.