Sammaan Capital Limited (SAMMAANCAP) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Saman Capital Limited Q1 and F527 earnings conference call hosted by MEFG in time. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. In our hand, the conference over to Mr. Aryan Sumra from MEFG in time. Thank you and over to you, sir.

Thank you. Good evening, everyone. I welcome you all to the Q1 FY27 Earnings Conference Call for Samman Capital Limited. To discuss company's quarterly performance, we have... With us, Her Excellency, Dalia Korshid, CEO, Avilara Holdings, and Mr. Gagan Banga, MD and CEO, along with other senior members of the management team. Before we proceed with the call, I would like to mention that some of the statements made in today's call may be forward-looking and may involve risk and uncertainties. For more details, kindly refer to the investor presentation and other findings that can be found on the company's website. With that said, I would like to hand over the call to the management for their opening remarks. Thank you, and over to you.

Good day, everyone, and welcome to the Cotavan fiscal 27 earnings call. This is the first quarter under the ownership of IHC that the company has executed on. The assets under management in line with our guidance. Have increased to 56,239 crores. We've done disbursements of approximately 3,900 crores. The capital adequacy is comfortable at 20.1%. Profits after tax. Last quarter, we had done all the required adjustments, provisions, markdowns, etc. From this quarter onwards, we start a compounding journey which should hopefully run across many, many years. So as the first building block of that, the quarter one's profit after tax is 243 crores. We had spoken about the fact that recoveries would continue to be an important earning support. So we had gross recoveries of 424 crores, net recoveries, net of the provisions for the quarter of 240 crores. And in normal course of business, the net NPAs now stand at 0.15%. The management has been focusing on four pillars. The most important pillar from a long-term perspective for effective execution is to have a very robust liability franchise, for which credit ratings are the most important ingredient. The companies saw domestic ratings upgrades from AA to AA+. International rating upgrades from B-plus to BB-minus. And through the course of the second half of this year and financial year 28, we are fairly confident that we will move towards domestic AAA credit ratings and internationally BB-plus type of credit ratings. Based on the support provided by IHC as a promoter, as well as... The strength of the balance sheet with the capital and the higher credit rating. The cost of funds are in the process of declining. We started at 10.5%. Through the quarter, we have reached 10%. And we are hopeful, which is stock cost of funds. And we are hopeful of going to 9.3% by the end of this year. By September, we are optimistic to get to 9.6%. The incremental cost of funds is now down to about 9%, and we hope to make that further decline to, by the end of the year, to 8.5%. And as the ratings continue to move up and eventually stabilize, we hope to hit the 7% range, 7, 7.5, 8% range over the course of the next 2 to 3. Disversals for the first half are planned at 10,000 crores. First quarter was bang on target, and that will increase to 20,000 crores in the second half. We've started widening the product segments that we operate in. We have been a monoline product company for many, many years. We've already started personal loans and loans against securities. We've also been working on building a credit platform with credit funds. So on the NBFC, we've done the first transaction of that size. I will talk about it in detail. And then we've also started buying portfolios to be able to do testing, which will help us then start executing directly on many other product segments. In the second half of this year, with the app going live, the digital personal loans product would be live. With the branch expansion happening, we would also be in a position to start implementing our micro-lap loan strategy and the rural home loan strategy. We would be building on the branch network to enable other products which require a very robust physical presence on the ground, such as gold loans, to start implementing that strategy. Financial Year 28. The branch network at the end of the first half would be approximately 240 branches, which will increase to 270 branches. More importantly, we already cover 20 states with 23 master service centers. So with the core already in play, large coverage across the country already in play, now these master service centers have to compound the number of. Spokes that they have, which is a relatively easier task versus initiating a presence in a certain state. Manpower is increasing every day. New offers are being given. We started that process in April, May. So by August, September, that would start touching a fairly robust number. In the meantime, not only are we focusing on increasing our feet on street and mid-management, with the product segments increasing, we are also focused on the complexity management which comes with many products and the assurance functions which need to be beefed up for effective risk and compliance management. So, senior management personnel are being hired, mid-level hiring is happening, and the large number hiring is happening on Feet on Street for both sales, collections, and credit processes. The third important area for the company is the entire tech landscape that we are covering, which largely focuses on building a digital-first strategy. The goal is to be able to service all of our individual and MSME customers via the app, irrespective of whether they do the complete journey, which can be done for a home loan very easily, versus using bits and parts of the journey through the app. But what our endeavor will be that every product should be end-to-end deliverable on the app itself, and that's what we are focusing on. It should go live in the second half of this year. It would need to integrate a new CRM platform, which is being implemented via Salesforce. And a new loan management system, as well as we need to manage a humongous amount of data. So creating the necessary data lake and the data processing capabilities, all of that work is going on. In order to be able to provide seamless service, seamless threaded decisions, artificial intelligence is very important, and it is also very important for robust risk management. There are 53 used cases which are currently under implementation, of which about 60% of those would be implemented within the financial year itself. Next half would be more about focusing on making the app more effective via customer service and then extending it to our DSAs. All in all, we are looking at our digital first and our AI adoption to help us do more cross-sell, to make sure that the loan lifecycle management is done more effectively at a lower cost. And overall, make sure that risk management practices are institutionalized. The force and the pillar which ensures... That the profits that I spoke about and said that this is the first input into a multi-decade compounding journey. That entire compounding for it to be sustainable and continuous is based on governance. We were happy to welcome... We are happy to welcome two IHC nominees, Mr. Krashta, who is the group CFO, and Her Excellency Dalia, who has also been kind enough to spare time to be on this call. They are both on the board. The subject matter experts within the IHC group are also on our various board committees. And then there is a peer-to-peer exchange of information and guardrails being done across risk, tech, HR, marketing, finance, and all of those functions to continue to improve the assurance function. The process of identifying a statutory auditor. Next year, all of you are aware that the cycle of auditors would change. So the process of identifying one of the big audit firms amongst the big five audit firms. is well-initiated, and we hope to close that process proactively, fairly quickly. And similarly, in parallel, we are running with a process of finding a co-sourcing partner for strengthening our internal audit function, again, amongst the top five audit firms in the country. That process we should be concluding within this quarter itself. There is a lot of focus on assurance. Both the board members and the management is well aware of the benefit of sustainability that comes via appropriate assurance, and we are all working towards enabling the same. Now I'll elaborate on each of the four pillars that I spoke about. Starting with the liability franchise, as I said, that, in our opinion, is the most important pillar. What we are focusing on in the near term is rating upgrades and ensuring a declining cost of funds. What we have achieved is one set of credit rating upgrades. What we are working on is by demonstrating our balance sheet strength, our enhanced operating scale, and ability to manage complexity. And supported by Comfort from the IFC group, a journey towards AAA, and I hope it's a short journey. In order to give the right... We have already completed a $63 million buyback of our dollar bonds. Our dollar bonds are now trading at a premium to other comparable rated peers. And I hope all of this put together will urge the rating agencies to support us by giving the necessary upgrades. Numbers, and this is probably the most important achievement of the quarter. At the time that IIT expressed its interest in becoming our promoter, the cost of funds were about 90 basis points higher. to where they've landed up in less than a year of the transaction first being announced, then receiving regulatory approvals, and then getting funded. And that should, by the time we end this year, should have declined to 9.3%. And as I mentioned earlier, there would be an annual decline of about 40 to 90 basis points. And hopefully we will get to below 8% over the course of the next three years. For the quarter, the most important piece was we were able to negotiate with our lenders to reprice our existing borrowings, which affects the overall stock of borrowings, as well as on incremental borrowings, get much lower spreads over the benchmark. We've seen a return of the private and foreign banks, which had over... In the last few years, not been supporting the company. They have been doing large underwritings for the company and large balance sheet exposures through quarter one. We've already become the third largest issuers amongst our AA plus peers, and hopefully we should come to the top of that list by the end of this year itself. From a third-party point of view, which I don't need to view, all of you can look at the screen or various disclosures and come to the same conclusion yourself, the secondary yields have re-rated both for domestic and international bonds, which by themselves imply lower incremental borrowing costs. And the borrower base is now going beyond just domestic banks to include foreign banks. Within domestic banks, private banks have come back, and domestic institutions have come back to participate in our bond borrowing program. All in all, this is a unique tailwind that we have. Interest rates. We are flattish to slightly going up for most of our peers, while on absolute value, we are still paying much higher rates. But on a relative percentage basis, our cost of funds are declining, which is a unique tailwind that we have, which will help us support our earning trajectory over the next few quarters. And the growth of assets is something which is obviously the most important deliverable from a stakeholder perspective. While liabilities are a key input to that, but to have a well-diversified, sustainable asset strategy which operates within relevant guardrails. And yet produces sustainable return on asset and net interest margins is something that determines whether NBFC is successful or not. To that end, we have dispersed approximately around 3,900 crores in Cotto 1 across five different products to approximately 12,000 new customers. All of these disbursements are happening within defined-risk guardrails. So we have moved on from simply doing portfolio management, which we had been doing for the past many years, to finally getting on to driving growth, adding new products, new customers, truly benefiting from the flexibility of being able to pursue any and every asset class, which our license as an NBFC, ICC provides to us. We are not restricted or tied down to being just a mortgage lender. So we move on from portfolio management to growth. This was the first quarter to do that. And I'm very glad with what we've been able to achieve. We are looking at this year, the first year of IFC as a promoter as an year to stabilize, put together the building blocks for sustainable growth by just Saman Capital, and then we will start exploring various options which will determine whether we build or buy. So, inorganic growth will be on the table from next financial year. Product expansion is something which is right up there. That's the strategy. How do we get from 5 to 10 to 15 products? The best in class, the NBFCs have as much as 20 products. So that's clearly a path that they're showing to us, which is sustainable, and we would like to pursue that. We are anchoring our expansion this financial year in mortgages. That's something that we know we've been doing, but in terms of both testing and scaling up products. We would look at digital personal loans as an important asset class, and similarly, in the years to come, both micro-lab loans and rural home loans will become part of our mainstay in terms of would be amongst the assets which would be contributing about two-thirds to three-fourths of the disbursement. By fiscal 28, the network would also be ready to be able to physically deliver gold loans, digitally deliver two-wheeler loans, and also integrate with various e-commerce marketplaces to be able to do buy now, pay later type of facilities. So that is something that by end of next year should be fully functional. And then cross-selling to our rural borrowers would begin between fiscal 29 and 30. So all of these are areas which are work in progress, either digitally or physically or both. And month on month, we will continue to add to the product suite. The digital first or the app first product is what is driving the overall strategy. We are working to ensure that each and every product of ours focused on the retail and MSME product goes live on the app. And digital fulfillment is something that we would want to make sure is done for every customer. The products that we cater to today, which is Home Loans and Lab, they are already live on the app, but we have to make sure that every other product is also live on the app, again when we formally launch the product. That said, it is phased growth. This year is a year of investments in physical infrastructure, in people, and in determining the guardrails within which we want to operate. So, and the understanding within the management team is that we have to balance growth with yield and risk while staying in the near-term mortgage focus, But spending a lot of our bandwidth and making sure that a large amount of our dispersals in due course of time is also coming from non-mortgage opportunities. In this, a very unique strength that we have is the fact that we are already physically present in 20 states of the country, covering practically 100% of the lendable or scaled lendable opportunity within the country. We have 23 master service renters, which are reasonable-sized offices with credit resources who have been around and understand risk and credit both and have seen cycles. And both the personnel as well as the branch. Would act as the hub to make sure that the spoke that we create for a single product or multi-product is effective very quickly and is able to scale up very quickly. It is a digital model both for the customer as well as for our internal journey of approving the credit. And one is very confident to be able to deliver and get to a 800 type of branch network by end of next year. People are obviously very important. As I spoke briefly earlier, there is an investment around increasing the capacity and the capability of the senior management personnel. So a lot of investment of time and resources is going on in that. It's not a very quick process to end, especially at the S&P level, and you will start getting stock exchange intimations from us towards the end of the quarter, going into next quarter. The mid-level and the ground-level hiring is going on. It takes about between offer to joining. It takes about 90 to 120 days. We are about 60 to 90 days in that process over the course of the next. Two months, you would also visibly start seeing a big change in the number of people that we are. August being the first month, we are almost halfway through August, and I am extremely happy to see the joinings which are happening on a daily basis. The third for future competitiveness. So we spoke about sustained competitiveness coming from the liability franchise. Growth being delivered from focus on assets, and widening of assets, deepening of assets. Sustained competitiveness would certainly come from our smooth evolution of the digital footprint, as well as AI adoption, and focusing that our growth is all data-driven. To that end, a variety of initiatives to set up the foundation of any type of a digital platform, starting from a CRM platform to just processing capability or storage capability is going on. We are also investing in data sciences and getting the right people, the smart people who understand this and have done this at scale in e-commerce companies as well as fintech companies to be supporting us. And the process of integrating with market participants has also started. There is a large buy opportunity in this. At this time, the bias is towards build such that we can effectively also have the evaluation skill sets if in fiscal 28 there is a buy opportunity to present itself. AI is a critical area of focus as well as success evaluation, to which end I believe that about 66% of the used cases identified right now are put in motion. Risk management, since we are looking at sustained but fairly high growth, is the most important, and therefore half of the initiatives are just around risk and completion. Again, The assurance function is the fourth leg that I spoke about, to which not only is tech playing a key role, but integration with our promoter group is also happening. They have stepped into the board. The board would continue to evolve in the months to come. But there is a functional oversight and a function-to-function integration which is happening across finance, information technology, and artificial intelligence, risk, human resources, data sciences, and marketing. There is a financial consolidation which is also happening for the past four months, and every day we are learning about the unique strengths of our promoter, and we feel that this is providing a very good base for us to continue to progress. This quarter, we disbursed almost 3,900 crores. About 664 crores was disbursed for home loans. About 2,000 crores for loans against property. We did one deal with a large Asia-based credit fund in which we took 20% and they took 80% of this 840 crores. And we will continue to make management fees on their portion also. So that's something which has been put into motion, and I'm very glad that it has happened quickly. We've started doing unsecured lending, both internally as well as portfolio buyouts, small numbers, but approximately 100 crores. And the Loans Against Securities product, which is a product targeted to high net worth individuals, continues to roll, works between listed and unlisted securities, is again small at 262 crores. Important initiatives which will allow us to understand these product categories and in due course of time, these would become all multi-thousand crore products on standalone basis. But we will do it steadily within the guardrails and within the operating number targets that we have set for ourselves. 97% of the disbursements were around secured loans. And 97% of the AUM is also secured. So for many years to come, that would continue to be a moat of the company that our balance sheet is largely backed by secured assets. All in all, I would say that it has been a very satisfying quarter to me. We have had many wins. That said, we are a AA plus company. We fully understand that there are 14 AAA companies. That we are competing with in due course of time. There are about five, six other AA plus companies which are relevant. We are in the pack of 20. But we are fairly confident that there is enough headroom out there for us to be able to navigate ourselves to the top. Often it is very important to understand what your current position is and where you can go. We used to be the 8th largest. Currently we are the 15th largest. Fairly confident that we will be in the top 5 in the next few years. Capital has come. Which reduces the distraction of the management team. We are uniquely placed with earning power of approximately 53,000 crores of assets. But we are a young company, a new company, which is starting to disburse with a starting number of 4,000 crores, in approximately 4,000 crores in the first quarter of disburses. No startup can do that. We probably disbursed as much as many NBFCs have as assets under management. And this growth and earning power is backed by two very important tailwinds that we have, both of which have come through and will continue to come through in every quarter. And I will continue to talk about it in a very underlined sort of manner. One is reducing cost of funds, which is being witnessed. It is also being witnessed on the P&L. And the other is recoveries. So when we had done the balance sheet adjustments of last quarter, there was a lot of skepticism. And this quarter, I hope that the skepticism is put to end. We have returned a quarter of healthy recoveries. We will continue with that trend. I am almost in the middle of quarter two, and I can confirm to you that dispersals... Our bank on to achieve the 10,000 crores of disbursals in quarter in the first half, recoveries, we will exceed the projections that we have made internally for the profit projections that we have made to all of you. This, I can say with 100% of confidence. Why I can say this for both disbursements and recoveries is because we have a trusted team. We have people who have been with us for a long time. We understand that talent needs to be continuously added, times keep moving, whether it is assets or liabilities or tech or risk, everything is evolving on a daily basis. And to that end, we are happy to add talent. We are welcoming people into the company. We will soon start welcoming people into the senior management team. And I'm very glad that we will be having this edition of talent. The branch network is, again, something that is not a mystery for us to solve as to how do we go find the right branch or create the necessary infrastructure. We have people on the ground in 20 states who, for them, were already operating in approximately 10 cities per state. Now, for them to make that 20 cities per state is relatively easy, and 20 becoming 30 is even more easier. So this branch network and the hub and spoke that we already have is a key, key strength for us. The tech stack and that we don't have some sort of a legacy tech stack. There are several legacy issues which are relatively easier to solve. But ask any practitioner who runs a business at scale. A legacy tech stack is amongst the most difficult problems to solve. We are not burdened with that. And we are continuing to work on. Not only refreshing our tech stack, but building a completely new tech stack, because we were not doing a lot of things, like we did not have digital loans and so on. The other unique power that we have is of security receipts. So we did a large sale to ARCs last quarter. We've been doing large sales to ARCs since financial year 23. Of what we sold in financial year 23, today we've already recovered 99%. Of what we sold in financial year 24, we've recovered 95%. We've come to realize that this is the most effective resolution mechanism, and this would continue to contribute to not only reduce the opening security receipt stop, but also enhance our recovery process. So this is, again, an initiative that we took. We outsourced a large part of our recovery process, and that is continuing to work well. We will continue over the quarters to come to use this thing. Fortunately, we already have the buffers in place. We've already marked down assets and so on. So don't worry, there is no P&L pain which is going to come. But all I'm saying is that the success in resolution, 99%, 95% in a couple of years, for the last four years, if I have to look at, we've already collected 61%, whereas the industry has done about 40%. So it will be a tool that we will effectively use to reduce our burden as management, yet get the monies back for us. The disbursement is something which is of high priority. Rating trajectory is something which is being supported by how we are disbursing, how the balance sheet is, and the comfort that IHC's, by active participation with the management, actively participating in meetings with rating agencies and other stakeholders, is supporting the company. So I'm thankful to IHC for that. And all in all, I think the opportunity is huge. The opportunity is sustainable. And we are fully focused on the opportunity. Someone very knowledgeable told me, Gagan, you have been a good general in wartime. Now the test is, will you be a good general in peacetime? That surely is a challenge for me, and I am all up for the challenge with my team. Thank you, and we are now ready for questions.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands-ups while asking a question. Ladies and gentlemen, We will wait for a moment while the question queue assembles. Participants, you may press star and 1 to ask the question. I request to all the participants, kindly limit yourself to one question per participant and rejoin for a follow-up. First question is from the land of Raghav Garg, from Ambit Capital. Please, go ahead.

Hi, sir. Thanks for your opportunity, and I'm glad to be with you guys. Yes, Raghav. Thank you. You're audible.

Okay. Super.

I have my first question, please. I see that you're targeting typically rating by the second half-hand. I think two, three years out, you're eventually targeting 7.5% to 8% cost of funds. Once you have this in the bag, the lower funding cost, are you looking to be more price comparative from a customer acquisition point of view, or will you repay the highest price? I'm just trying to understand how are you thinking about your, you know, scalability going forward, whether you want to be, you know, whether you want to play on the price and then acquire customers, or how do you see it? That's my question.

Thanks for the question. You know, our strategy will ride on two strengths. One is a reduced cost of funds and the other is the asset light model that we have. So just if you look at the last year, we had originated and sold down approximately 7,000 crores of loans. That's a huge strength that we have. And we will continue to ride on that as well as the balance sheet borrowing costs reduce. We will do that. On the asset side, the strategy and how these two, so to say, borrowing inputs play out is that the universe of assets will start as low as 8.5. We will go as high as 20-odd percent. So we will straddle the whole universe. Very clearly, anything which is below 9.5% would be... We originated, but originated to be ultimately sold down in a direct assignments model. And above 9.5%, we can slice and dice to see what we need to keep on our balance sheet and what we need to securitize. On a sustainable basis, at least, if not more, 30% of what we originate, we will securitize. At least 60% to 70% of what we originate, we will keep as a backup that we can securitize it if we deem fit. And it's not only that prime assets of 8.5%, 9.5% get securitized. Loan against property assets of 11% to 12% also do. Affordable loans of 12% to 13% also do. So we will maintain a healthy mix of what we are securitizing, which is about 30%. What we can potentially securitize, which is another 30%. And while using our asset light strategy, which will give us more origination and management fee for the low yielding products and balance sheet spread for the slightly higher yielding products, we hope that we will have a unique model where we are not just a prime-prime NBFC lender or a lender which is doing rural and micro products because they are pursuing a certain spread and a certain yield. We hope that... With the people and the tech capacity that we have, this is a complex exercise, but we should have the capacity of being able to manage it.

Thank you. I will request you to come back for a follow-up. Next question is from Lainabhanu Chauhan from Barclays Group. Please go ahead.

Thanks, Gagan, for the update. Given the expansion plans, how much upfront effects is this required? And do we expect the cost to income to worsen before operating leverage collection?

What would be the target cost to income at scale for the company going forward?

So we have fairly ambitious expansion plans. OPEX as a percentage of, sorry, an absolute value will continue to increase. To offset that increase, we are looking at continuing to increase the fee income of the company, maybe with a lag of a quarter or two, but not more. Fee income, which comes from these CRE type of assets in which we have a small participation, but we get big. A fee via a large amount of money being managed by someone else, which we have, sorry, being held on someone else's balance sheet, which we have originated. That gives us a big fee income. I would think that by October or so, our direct assignment program, because there is a lag of six months, would also kick in and that would give us a reasonable fee buffer. And as the number of customers, that number expands, we will continue to see that additional income. I would imagine that this year we would be in the 50% type of cost to income range. And from second half of next year, that will start declining. Hopefully by fiscal 29, we will come to a 30 to 35% range.

Thank you. Banwa took us to come back for a follow-up. Next question is from the line of Abiram Paiya from Deutsche Bank. Please go ahead.

Thank you for your presentation and congrats on going from strength to strength with the dispersals. I just had one question on the roughly 3 billion that's targeted over the next 18 months. Do you see the breakup of these dispersals in a similar line to what we saw for the first quarter or what's the targeted breakup of the dispersals between the different asset classes that you have?

No, so it will not be the same. This year, about 75% of dispersals would still be mortgage-backed. 25% would be the new products, personal loans and other retail products, and the capital markets products that we will have. Of the 75%, two-thirds will be pure retail, one-third will be the wholesale AUM that we will create, of which we will keep about 20% on our balance sheet. So it would still be largely secured this year, about 90% secure, 10% insecure, and by next year, it will become 80% secure, 20% unsecured. I would like that as we go forward from the current 4-5 boxes that we have defining our dispersals, that's 1, 2, 3, 4, 5, this should by the end of the year increase to at least 8 boxes explaining our dispersals. And by the end of next year, expand to at least 15 boxes, even with small, small numbers, explaining a dispersal.

Perfect. Thank you for the response. I'll get back. Thank you, Avinam.

Thank you. Next question is from line of Vanita Garwal from Bajaj Alternates. Please go ahead.

Thank you for the opportunity. Just one question. How active is IHC in project strategy, liability management, risk management, or underwriting processes? And will you be able to quantify any tangible benefits already realized from IHC's involvement, be it in terms of business sourcing or technology partnership products? Sure. So, I will start with that, and Her Excellency, if you believe you will have anything to add, please do. But I will just spend a minute to respond to that. So, IHC's support, if you ask me in terms of tangible benefits, we were AA rated. If we would have received amount of capital. So, if you guys may have noticed, between calendar 24 and early calendar 25, we raised about the same amount of money that has come in. In rupees, we raised about 5,500 crores then, and 5,600 crores has come in. The balance will come, 3,200 crores will come over the next year and a half. Nothing happened. And here, by IHC coming in from a week to the first quarter, every rating that the company has moved up one to two notches, which is already saving the company 90 basis points on a borrowing program, which is roughly 50,000 crores. So, we are already saving on an annualized basis about 450 crores. Right? So, that... There can't be more tangible benefit. With another 70 basis points, nothing else is moving to happen between now and the rest of the year. So, 160 basis points on 60,000 crores of borrowings by the end of the year. We are saving annually 1,000 crores. That's $130 million of annualized saving, which is already... The other very big benefit is the peer-to-peer integration which is happening across. Functions. So the kind of values that we are being able to get for the software deals that we are now ordering is roughly 30 to 50 percent of the costs that were coming to us earlier without the IHC group, because it is the IHC group which is talking to the vendor versus... As a standalone company talking to the vendor. So this is, you know, some of the very tangible benefits that I can say. The intangible benefits is... This business is about people, the quality of people that I am being able to attract today at the very top, and you will see six to seven very interesting additions happening in the senior management team over the course of the next three to four months. Those guys would not have joined us had we been Saman Capital, a professionally managed company. I mentioned in my remarks about being a peacetime general or a wartime general. The war would have continued had we not been an IHC group company. A lot of our adversaries have backed off because they know that we now have a very strong promoter who is supporting us, backing us, and will back us to the hill. What is IHC? IHC has resources, it has... The entire reach, it has all the capabilities that are required to build a big business, and we are benefiting from all of this. So, very desirable, quantifiable, tangible, and much larger intangible benefits which are coming through in the first 90 to 120 days itself.

Next question is from line of Sankit from Dam Capital Advisors. Please, go ahead.

Yeah, hi, sir. Pretty clear on the guidances that we've given. My question was to Dalia, ma'am, if she can respond.

I just wanted to stress that that was...

Sorry to interrupt, Sankit, your voice is breaking a little bit. Can you come in a better reception area, please?

Hello.

Is it better?

Yes. Just wanted to know that beyond lending, what's the India dream here? Do we want to start other lines of businesses within, say, financial ecosystem, maybe, say, two, three, four years hence? So apart from just the lending, if we see your career, a pretty illustrious career with great achievements also on the investment side, just wanted to know what's the larger dream for IHB when it comes to Indian financial ecosystem.

Yeah, Dalia has unfortunately just dropped off. I will park this question. As soon as we know that she's come back in, we'll take this question and reprioritize the line. In case she's unable to join for any technical reason, I will answer that. Can we just, for the moment, park this and move to the next question? And knowing fully well that we have to still answer it.

Thank you. Next question is from the line of Niharika from CapGro Capital. Please go ahead.

Yeah, hi, good evening. I'm an audible.

Yes, Niharika, you are. Thank you.

Hello.

Yes, Niharika, you are audible.

So, what's this? Yeah, well, just going through the guidance which has been given by the management over the next five years, say, for example, ROE moving up from 6.8% to 18.7%, ROE from 1.8% to 81%, NIM from 3.5% to 8%. So I believe that the targets are too ambitious. How confident are we on achieving this, and what are the on-ground things currently being done, apart from the product launches that you mentioned?

Yes, so we are obviously confident, which is why we mustered the courage to put it on in public domain and hold ourselves accountable to that. So we put it on 20th of May, and you're asking us... About it on August of, 13th of August, probably next year, sometime in August, someone will still ask us. So we are confident. Product launches is something which is one important part of this, but it hinges on the liability franchise. I've spoken at length about broadening the base of lenders, new lender participation happening. I've spoken about ratings upgrades. AA Plus has already happened next year, AAA, lowering cost of funds, which will allow us to compete, continuing with our strength of asset light, which will allow us to straddle from as low as an 8.5% product to as high as a 20% product, choosing which one to keep on our balance sheet and which one to securitize. The other key building block is tech. How do we make sure that our individual and MSME customer can both do their entire loan journey digitally as well as get serviced digitally? So ultimately, we can get to our goal of a 30% to 35% cost income while managing a few million customers. And all of this will happen only if we have a very focused governance. model which leans into a very stable assurance model, which sets the necessary guardrails, gives the flexibility to management, but also keeps compliance and risk management right at the heart of the company. So, these are the other broad areas. If you go through the presentation of this quarter, each area has been elaborated, and it has been... Fleshed out in terms of what exactly are we going to do through this financial year, which is the important one, which will set the base and then all of the targets will automatically start happening. Thank you. I'll take one last question and then come back to the question of Dam. Sorry, Her Excellency, are you logged in?

Yes, sir. We have AMS connections.

Yes, yes, yes, yes, I am.

So, from Dam Capital, the question was that aside of the LBFC business for IHC, what are the other lines of business, businesses that you have, especially given the fact that you have a very illustrious background of managing diverse type of investments? How would you personally, as well as at an IHC level, look to take advantage of the opportunities that India has, aside of the lending business? That was the question, if you can ask. Thank you.

Okay. Thank you for the question. Honored to be here with all of you today on this investor call. First of all, we started managing so much with respect to different across the regions with respect to lending and investment. Personally, I started off my career in the lending space as a corporate banker with the city for almost like 30 years.

I'm sorry to interrupt, but we are losing your audio. Your voice is breaking. May I request you to please come in a better reception area?

I am not listening to this.

Your voice is breaking.

Oh, can you hear me?

Yes. Can you hear me now?

Yes, yes.

Yeah, okay. So just after it, I spent another 12 years with a large company, with investments across Africa, across Asia, Europe, as well as the U.S. So we've been, at that time, I was the responsible for managing all investors across industries in construction and fertilizers. Cement and chemicals. After that, I became the Minister of Investment for Egypt. This was the time we were doing the economic reform program, and with the full transformation, as well as the privatization of the ICO program, and set up a couple of things.

I'm sorry to interrupt. One second, we are losing your audio, ma'am.

You can hear me?

Yes, ma'am, we can hear you, but your voice is breaking a little bit.

Okay. Can you hear me now?

Yes, this is better.

Okay. Okay. So, if you can hear me, should I continue? Have you heard the previous part? Yes, ma'am.

Please go ahead.

Okay. So, I was the Minister of Investment, and this was a time when we've done the economically reform program with the investment policy, as well as the privatization, as well as the IPO program, as well as the sovereign wealth fund. So this was a time where we managed all the investments. Now we have, as part of IHC, we've done a lot of investments that are related and non-related to financial services, And all of them, they are in the fintech space and private equity with startups as well as large corporates. And they are across Africa, across Europe, Central and Eastern Europe, as well as Southeast Asia. So there is a lot of opportunities that are open in front of us, and we are open for so much growth. India is a big market and there's a deep market, and the IHC group has so many wealth with respect to the industries that they have experience in, From mining, from construction, from agriculture, F&B. So, as far as we are concerned, the entire group is there behind us, and there is so much that we are open for and ready. And our investment in financial services with Haman is just a start, and definitely with the digitalization as well as the AI and the tech transformation that we're working on, there is going to be so much opportunities that are available that are all going to be explored within the target market as well as the risk acceptance criteria of the group. And accordingly, we'll be able to consider and get our growth from there.

Dalia, their question was also about a side of lending other financial services that you may expect or plan in due course of time for some month to look at.

Yeah, other than lending, there is so many available. As I said, I don't know if you've heard that. There is a lot of different forms. We are exploring the different forms of all the digital, the AI space, the space, which all complements the lending and gets it all sold on a bundled base.

Yes. So to just continue with what Her Excellency said, as I was mentioning in my comments, this year is a year of stabilization of NBFC, of putting the building blocks together, and then from next year onwards, whether it is on the digital lending opportunity or any sort of cross-sell opportunity or to acquire a large number of customers, as well as fee income is a very key part. So whatever are the other drivers of fee income, asset management, providing services to high net worth individuals, and all of that, everything is on the table. We will wait a little bit. We will focus on getting this right, on scaling this up, and then all the opportunities would be evaluated under the group's variety of criteria of risk and returns, And accordingly, the decision would be taken. So, thank you, Dalia, for the response. Thank you so much.

No, I just wanted to make a comment that Saman for us is a platform and a growth platform, and there is a huge plan for it to be able to operate and work as a platform. So, it's going to be a build-up from there.

Yes. Thank you. Thank you, Dali. I think we answered the question. Thank you so much. Thank you.

Thank you.

Mr. moderator, we can take one last question.

Thank you. Next question is from Nile Sharma from Monoma Capital. Please go ahead.

Thank you so much for the opportunity. My simple question is, what is the displacement target for current and next financial year?

So this year it is 30,000 crores, and for next year it is 40 to 50,000 crores. For the first half it is 10,000, second half it is 20,000, and somewhere between 40 to 50,000 crores for next financial year. Thank you. Thank you, everyone, for sparing time, and as always, if there are any follow-on queries, we are available to answer, and look forward to speaking with you again next quarter. Thank you.

Thank you very much. On behalf of MUG in Time, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.