The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Piran Engineer - CLSA Limited, Research Division - Analyst
: Firstly, on rental spends, since we started charging INR 99, just wanted to understand how the experience has been in terms of customer stickiness?
Have we seen a decline in spend? And does that come in your spend based fee or instance based fee?
Question: Piran Engineer - CLSA Limited, Research Division - Analyst
: So then what explains the higher change in this quarter. So if I take spends based revenue divided by spend, is it just because corporate spends
have gone up?
Question: Piran Engineer - CLSA Limited, Research Division - Analyst
: Got it. Got it. Okay. And my second question, last year, our instance based fees were about INR 1,800 crores. And if you could just give us broad
break-up, INR 400 crores are sourced OVL, what about the remaining INR 1,400 crores, what does that look like?
Question: Parameswaran Subramanian - Macquarie Research - Analyst
: My first question is, sir, this quarter, we've seen an increase in the NPA without seeing a corresponding increase in the revolver, could you explain
how that is happening because obviously one would assume that the customers should revolve first. So why are we seeing an uptick in NPAs
without seeing corresponding movement in the [work-force]?
Unidentified Company Representative
So Param, this account first becomes a revolver, then becomes an NPA, you're right. But some of the transactions also move into NPA by not paying
up, so that's just a route by which it becomes NPA. I think -- and that is we are seeing. We have to look at it from a range perspective, okay? Our
numbers pre-COVID, when our revolve rate was still high, versus the range of 2.5% (inaudible) quarter, we were always 2.7%. The number to look
at is right now, again, look at NPA also from a range perspective, we look at it as an absolute number. If you look at we are still with the increase at
2.2% which is much lower than what we used to be.
You have to look at the credit cost, the NPA and the ECL all together, okay? If you look at our ECL which is more like the quality of portfolio metric,
which is expected right now, if you look at it, that again, is down to 3.3%, and that actually sequential better from last quarter as well. Again, that
number, pre-COVID, was in the range of 3.6%, 3.7%. So overall, the portfolio is trending in the way that we are comfortable with. Quarter movement
between 2.14% to 2.2% is just that. It is at the end of the day, yes, we look to operate within a range and like we said the range is to allow us to be
able to optimize the credit cost. We are using this buffer to go out, test a few segments, you see that the self-employed has up, you see the some
of our tier 2 salaried has gone up. We are using that to test and learn a few segments because in reality we have to go back and task learning some
of these segments again.
Question: Parameswaran Subramanian - Macquarie Research - Analyst
: Got it. My next question was on the over limit fee. So I think you're showing in your profit was INR 81 crore of PAT impact is due to the overlimit
fee. So there's a post tax impact, right? So at a fee level, it's higher, right? So is it right that we lost the largely almost the entire overlimit fee and
are we going to recoup this amount -- some amount of this going forward or is this on a quarterly basis, is this something that this INR 80 crore of
bottom line impact. Is this something that we are going to work with going forward?
Question: Parameswaran Subramanian - Macquarie Research - Analyst
: So 1 last question if I can just squeeze in, is it right that rental spend would be 10% to 12% of your total spend? Is that ballpark number correct?
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