Expect growth from all segments in FY18: M&M Fin Services

A: It was a great quarter from the collection as well as from an asset quality perspective. Our gross NPAs have come to a 9 percent level and the net NPA has gone to 3.6 percent, maintaining a coverage ratio of about 62 percent. It is also important to understand that out of these NPAs we have assets for about 12000 customers and if that was to be adjusted the gross NPA actually goes as low as 8.2 percent types and the net goes to as low as 3.2 percent which was last March number.

Also from the dispensation benefit that was taken in Q3, we have taken dispensation benefit of about 32000 customers of which 24000 has been fully resolved, about 4000 odd have been partly resolved, which means that the customers have paid part payment and they will kind of come out of it as they pay the balance. About 4000 is something that we couldn't solve, which is about 10-12 percent.

So, this quarter's results factors the dispensation benefit which was taken as been resolved, it factors if you recall, first quarter we had taken certain credits for underlying collateral which were 100 percent provided and we have reviewed them and we have brought in Rs 100 crore of additional provision in this quarter. However the gross NPA and the net NPA have gone to as close to last March levels.

Collection efficiency in this quarter is at about 103 percent and March in particular at about 117 percent. So, net-net if you add all of this we have had a great quarter from collection and asset quality perspective.

Nigel: You made an extra provision in Q4, what kind of credit cost guidance are you working with for the next fiscal, that's FY18?

A: I will not want to put a forward looking but we believe with an average monsoon expected and we believe with many large states like Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Karnataka, where we believe that there would be infrastructure story commencing in different ways and forms, I think the two together should continue to improve the rural cash flow and we should be the beneficiary of it.

One point that you may kind of want to consider is, as we close the year by March 2018, we need to migrate to 90 day NPA. However the nature of business being such that we normally have customers moving into 90 and as the season kicks in with harvest   festival, wedding seasons etc which is normally the last two quarters of the year, the cash flows do improve and the money comes back.

So, we believe that ultimately the rural growth is based on the rural cash flow improvement which is farm and infra cash flow and we expect during the year they should hold up.

Reema: Disbursement growth was quite strong in Q4. However this is typically a very strong period for you - Q4 disbursements were at close to 23 percent. Give us a sense about what the disbursements might look like in FY18?

A: We have had a 23 percent disbursement growth in this quarter while the overall year growth was about 18-19 percent. The AUM has grown at 14 percent on a large base that we had. As I explained the overall collections have substantially improved. So, if you look at every parameter of growth going forward, we see traction very positive in all of them.

Nigel: The loan growth has been led by the CV portfolio. Which portfolio will it grow by going ahead that is?

A: Normally it is not so much segmented, it is more geographical in our case since we are nationally spread across. As I mentioned 5 or 6 states that we believe we will focus a little more than otherwise which are Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Karnataka, Andhra Pradesh etc, therefore growth will come from that. However I think it is also important that our book is a multi-product book and it is not just driven by any one product. We do expect that all the OEMs are focusing on rural for their own growth with a product available for that market. We will see an overall growth coming from pre-owned vehicle segment, from tractors, from car segment as well as LCV and CV. We have introduced a new segment which is the SME segment and which is now about 15-18 months old and that is also registering a growth for us. We do believe that will contribute to the growth going forward.