As Covid-19 second wave of infection has spread, how is the company gearing up to face it?

The sudden spread of the second wave of Covid-19 pandemic has again created a challenging and operating environment. We are anticipating the collections to witness a temporary decline in Q1 FY22 on account of several intermittent lockdowns/ restrictions being imposed across various states. The situation impacts the customers’ ability to manage their activities, as well as our ability to ensure seamless meeting with the customers. Our preliminary estimation is that the Covid2.0 is quite devastating, but impact on business will be lower compared to FY21. We draw confidence based on sufficient learning acquired last year to effectively manage the payment behaviour of borrowers in case of long duration moratorium.

How has the company managed to connect with customers during the difficult times?

Post first wave, we have revamped/ updated our customer contact database, enabling us to reach almost every customer through phone. We have also enabled various mechanisms to enable cashless repayments for customers. We have also enabled on-field disbursements which do not require customers to visit our branches.

As state after state are declaring lockdown, has the company tweaked its business model?

The company has not tweaked its business model. Learning from the first wave of Covid will help us to effectively handle the challenges on account of Covid2.0. In the event of various states declaring lockdowns, we shall be adhering to the regulatory guidelines from respective states and accordingly manage our branch and field operations. All safety measures will be adopted at branches to safeguard the health of our employees and where collections are difficult, we are working on rescheduling the collections.

Has lockdown impacted company’s operations both in terms of deposits, disbursements and recoveries?

The ongoing lockdowns are expected to have an impact on disbursements and recoveries in Q1 FY22. However, we shall continue to maintain regular telephonic engagement with our customers to understand their issues and provide the required support. Continuous customer connect will help us in faster recovery in collections as the lockdowns are gradually lifted across various states. We are having adequate liquidity on our balance sheet which will cover our fixed obligations over the coming 2-3 months. Hence we are confident of effectively managing the current challenges. As you recall, during the last financial year, we could get only 5-6 months for the normal business and still we were able to grow and present strong financials. We believe we should get 6-9 months to do normal business during this year.

After one year of Covid-19, how has the company fared in terms of deposits, disbursement and NPA recoveries?

The company ended FY21 on a very positive note with disbursements maintaining strong pre-Covid momentum, gross loan portfolio on consolidated basis growing by 13 percent Y-o-Y to ₹13,587 crore, collection efficiency on consolidated basis crossing 93 percent, gross NPA declining from 6.14 percent in Dec-20 to 4.43 percent in Mar-21, backed by provisioning of 5.01 percent. The company had a strong liquidity position with cash and cash equivalents amounting to 16.5 percent of total assets, sufficient to cover our fixed obligations over the next 2-3 months. Capital position also remains comfortable with capital adequacy ratio of 26.8 percent on consolidated basis as on Mar-21, as against 15 percent required by RBI norms.

In the last six months, what measures has the company taken to strengthen its liquidity position?

The company continued to maintain a diversified borrowing profile with a mix of domestic and foreign sources consisting of 36 commercial banks, 3 financial institutions, 2 NBFCs, 9 foreign institutional investors. Company added 12 new lenders and added 5 instruments/structures consisting of TLTRO, PCGS, CP, SLS and covered bonds. As on Mar-21, the company maintained a robust liquidity position with cash and cash equivalents of ₹2,484.4 crore, amounting to 16.5 percent of total assets, further backed by ₹2,614 crore of undrawn sanctions at start of the year. Consequently, liquidity maintained by the company is close to 18 percent of AUM, despite carrying a bit of negative carry on the interest costs.