Cholamandalam Investment and Finance Company Ltd Q4 2020 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rohan Mandora - Equirus Securities Private Limited, Research Division - Analyst : Sir, on Slide #26, where we are giving the bifurcation in terms of the provisioning. Sir, for the current year, for normal provision for Stage 3, we've kept it like around 31%, which was around 37% kind of a trend earlier. So what's the thought process here? Will we see this increasing? Or what is that is covered under COVID? So that is one. Second is on Slide #33 and 34, where we are indicating the outlook for the industry. For FY '21, we are indicating that the growth now -- in the [final sales] number would be lesser than FY '19. So some color on what is our thought process here because this is as per the CRISIL. So are we in sync with that expectation? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2020 / 4:30AM, CHLA.NS - Q4 2020 Cholamandalam Investment and Finance Company Ltd Earnings Call And thirdly, the scheme that we had rolled out with -- in partnership with Maruti, we are offering 2-month EMI upfront -- EMI waiver upfront -- EMI moratorium upfront to those loans. So what gives us comfort in giving loans to these segment of customers when they are already facing some kind of cash crunch? So what's your thought process behind this partnership and this kind of structure? Ravindra Kumar Kundu - Cholamandalam Investment and Finance Company Limited - President, Business Head of Vehicle Finance & Executive Director Yes. So Ravi here, I will just reply on the Maruti scheme. See, Maruti scheme is nothing but it is just the holiday period for the EMI to start. So always, we actually give 30 days holiday period for the normal customer. Every loan is actually funded like that. If you take the loan in the month of June, on, say, suppose today, your installment will start on 5th of July. That is a 30 days moratorium. In this case, we have given them 2-month holiday. So the installment will start from August. And these customers are not having any cash crunch. They were actually having a plan and they were basically planning to buy the vehicle. And mostly, these are entry-level Maruti car wherein the customers are situated in the rural market, wherein the rural economy is not that impacted. And we are not diluting any norm with respect to the LTV or documentation or cash flows or bank statement or KYC or field investigation. The only thing which we are giving opportunity instead of paying from July 5, your installment will start from August As far as the provisioning concerned, I think the CFO will reply you.

Question: Rohan Mandora - Equirus Securities Private Limited, Research Division - Analyst : And, sir, on the industry outlook, Slides 33, 34.

Question: Rohan Mandora - Equirus Securities Private Limited, Research Division - Analyst : Sir, just one data-keeping question. What percent of your customers by value would have opted for moratorium at the end of March, April and May, respectively? And what was the absolute collections in April and May, if you can share these 2 data ones? Ravindra Kumar Kundu - Cholamandalam Investment and Finance Company Limited - President, Business Head of Vehicle Finance & Executive Director Come again?

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : Couple of questions. First question is with regards to, we're taking -- not taking the moratorium from banks. Is it more of a posturing? Or is it that we don't want to take moratorium because the banks are not offering? Can you provide some light on that? And the second question is with regards to the home loan. Now in FY '12, we had introduced the SME loans and it could not scale up after FY '12 as much as we had expected. What gives you the confidence that we'll be able to scale up the home loans? And if we do have a plan, what is the level of scaling up that we have the intent to? The third question is in your 2-wheelers, Royal Enfield and Honda, they're low margin products as compared to the rest of the 2-wheelers. So why are we entering or why are we doing low margin products? These are my 3 questions.

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : Has the banks offered your moratorium? Have they given you moratorium and you said no? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2020 / 4:30AM, CHLA.NS - Q4 2020 Cholamandalam Investment and Finance Company Ltd Earnings Call

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : And they were PSU banks or private banks?

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : And how would it be any different from the scaling up of SME business that we have spoken off in FY '12 because we haven't been able to scale it up as much?

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : Sure. My third question? Ravindra Kumar Kundu - Cholamandalam Investment and Finance Company Limited - President, Business Head of Vehicle Finance & Executive Director I think you asked about the 2-wheeler thing? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 04, 2020 / 4:30AM, CHLA.NS - Q4 2020 Cholamandalam Investment and Finance Company Ltd Earnings Call

Question: Shubhranshu Mishra - BOB Capital Markets Limited, Research Division - Analyst : Just 2 data-keeping questions. What's the...

Question: Nidhesh Jain - Investec Bank plc, Research Division - Analyst : Sir, on the moratorium, just one clarification, whether you have used opt-in strategy for moratorium where you have asked customers who are availing moratorium or you have given moratorium by default? And the way I understood is that in the moratorium 2.0, you still believe that a large portion of this 76% book will continue to be in moratorium. Is that correct?

Question: Nidhesh Jain - Investec Bank plc, Research Division - Analyst : And secondly, sir, if you can give some color on the Home Equity side just similarly -- similar to what you have discussed on the Vehicle Finance side in terms of rollback? If there is any color in (inaudible) how the collections are happening on Home Equity, that would be useful.