Conference Call with Shriram City Union Finance Management and Analysts on Q1FY21 Performance and Outlook. Listen to the full earnings transcript.
Conference Call with Shriram City Union Management and Analysts on Q4FY20 and Full Year Earnings Performance and Outlook. Listen to the full earnings transcript.
Call Participants: Mr. Y.S. Chakravarti - Managing Director & CEO, Mr. R. Chandrasekar - Executive Director & CFO
Introductory Remarks from Y.S. Chakravarti
Good morning and welcome to all who have logged in today to the earnings call of Shriram City Union for the Q4FY20 and the financial year 2020. I hope that all of you and your families are keeping safe. Before we move on to what has happened, I would like to inform you that out of the 28,000 employees, we have around 6 positive cases amongst our employees and I am glad to inform that all of them are stable and doing well. From the customer base of over 4 million, we had only 2 positive cases and one of them has been discharged and the other is doing well. This was the Covid-19 impact on the customer base and health of the customers and employees of the company.
We are almost now 3 months into our disrupted business environment and so much has been written and talked about in Webinar, seminar and so I am not going to talk anything about the economies of the world. I will limit the comments on how we have coped with this changed business scenario. The national lockdown came into effect on March 25 and the impact of it was limited to our operations in Q4. We had already finished collecting a large portion of our loan receivables between March 7 and March 15. However, a fair amount of new business as well collections typically happen at the later end of March and we have lost out on that.
I will just take two minutes to brief you on what we have done. The moment the lockdown was announced, within 4 working days, we had a BCP in place and BCP was implemented so that in 4 days, the entire back office was operational. The biggest concern was how do you occupy 28,000 employees during the lockdown. We have taken all our sales and collection team as a unit and for each of them, we pubbed in data of about 150-200 customers including their numbers, their account particulars, amount to be paid by them, what happens if they avail a moratorium, what happens if extra interest from each of the customers has to be paid and we asked these teams to contact each single customer of the company. To a large extent, we have succeeded in reaching out to the customers, explaining to them the impact of moratorium and the long term impact on the cash positions.
We also equipped all these people close to about 12,000 people with the ability to trigger an SMS to the customer with a payment link in case the customer wants to pay through our digital mode. Payment link is the option for the customer to pay from various wallets, transfer through bank accounts, basically an ability to transfer money through half a dozen different banks. Each of the customers were reached and as a result, in the month of April, we typically have about Rs 400 crores as we collect about Rs 380 to Rs 400 crores of cash in a month. We were able to collect close to Rs 250 crores from this customer through this digital mode. On an average per month, we get about 40,000 customers transferred through the digital mode which has jumped close to 400,000 customers in the month of April. I am giving you the number because it shows how to connect with customers. Most of those were small customers paying anywhere between Rs 4,000-10,000 of EMIs.
We have 900 of our 947 branches back in operation. Customer facing collection team and sales team are also back in action digitally. We are also put in a very effective work from home system for those people who are not able to attend the office. Most of the branches are operating between 25-35% of seating capacity. Sales and collection teams who need not come to the office are advised to not to come to the office but continue the collection effort and remit the money directly into the bank. Rest of all are in place including accounts, finance, compliance and all the treasury are running smoothly.
Among the measures initiated by RBI towards relief of the borrowers was the moratorium and EMIs and we have offered a moratorium to all our loan customers. Despite having offered this moratorium, we managed a reasonable collection of 34% in the month of April and at 52% in May. We also adapted the disrupted business environment caused by the lockdown. As per the current situation is concerned, we see some movement in the economic activity which has a direct connect to our operations. There was a total shutdown in April while people started opening their businesses in May and started transacting. I am glad to inform you that in the month of May, we have disbursed around 50,000 plus two wheeler loans which is amounting to something around Rs 220 crores of two wheeler loans and again about Rs 220 crores of home loans. Overall, we were able to do around 500 crores plus of disbursements in the month of May.
Overview of the performance:
Disbursement for the Q4 was Rs 5,416 crore. We couldn’t do some of the disbursements in the last days of May because that is the time when we normally book a lot of business which got affected in the month of March due to the lockdown, particularly in MSME loans. However, overall disbursement grew 25% on sequential basis
Our pre-owned two-wheeler loans also performed well. They have grown by almost 140% YoY and 22% QoQ
Overall disbursement in FY20 was however, lower by 6% mainly because of slow growth in MSME loans in the earlier part of the year and also reduced focus on personal loans
Asset quality improved substantially. GNPA reduced almost 100 bps YoY and 60 dips QoQ
Additional provisioning of Rs. 10 Cr was made in Q4 in view of the impact of Covid-19
Cost of Funds declined to 9.35% versus 9.73% in Q3 and 9.87% year ago
During the quarter, we raised Rs 3,638 crore of fresh mobilization from a mix of privately placed entities, term loans and securitization under PCG scheme
As on March 31, 2020, the company possessed backup liquidity of Rs. 1,270 crore. The existing liquidity is sufficient to take care of disbursements until September 2020
SHFL has put in place a Board-approved Moratorium policy for its customers.
