TITLE Hatsun Agro & RBL Bank In Focus | The SMID Show | NDTV Profit
Hatsun Agro & RBL Bank In Focus | The SMID Show | NDTV Profit
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00:00 Mr. Chandramohan, congratulations on the extremely positive numbers.
00:07 The numbers look quite good operationally.
00:09 Just wanted to know if they've met your internal expectations.
00:12 Also we've seen double digit volume growth, double digit growth overall.
00:16 Can you just give me the bifurcation in terms of volumes and pricing that has given this
00:21 kind of growth to you?
00:25 This particular quarter has been doing it well without the commodity sales.
00:30 In the last nine months, in the last year, we have done a commodity sale, that is milk
00:35 powder and other things to a tune of 400 crores.
00:38 This nine months we have done only 100.
00:41 And the best of the quarters are yet to come because we have accumulated the stock.
00:46 And last year probably it was inflation which was really hitting us on the wrong side.
00:52 Now the inflation is at a moderation and these numbers are likely to only improve further
00:58 from here.
00:59 Okay.
01:00 And also just an idea about the segment wise breakup, if you can just give me some kind
01:06 of breakup.
01:07 I believe ice cream is one of your products with the highest margins.
01:10 If you can just give me what kind of breakup did you see in this quarter?
01:14 Ice cream is heavily affected this particular season because of the heavy rains, storm after
01:22 storm coming and hitting the shores of entire South India.
01:27 So segment wise probably I don't have the numbers right now, but probably ice cream
01:30 has been affected.
01:31 We expect the ice cream to do better in the month of January, February, March.
01:36 Okay.
01:37 And also the milk prices have been quite volatile and we've seen that last quarter there was
01:42 a shortage in terms of milk supply as well.
01:45 Has this quarter been better in terms of that, both prices and in terms of supply?
01:49 No.
01:50 See, last year the prices were volatile, not this year.
01:55 Actually last year the prices were up because we came out of two years of COVID and the
02:01 demand picked up and the milk supply didn't pick up.
02:04 Actually the animal was not equipped to just give so much of milk.
02:08 That created a lot of inflation last year.
02:10 That inflation has to be adjusted in selling price.
02:14 That was happening during this period.
02:15 It didn't happen the way that normally it happens.
02:16 This year probably we don't expect inflation.
02:17 There is a milk surplus available and we've already hit more than 40 lakh litres of procurement.
02:28 So we have enough stock and the cost is under control.
02:32 Okay.
02:33 And in terms of margins, we've seen that your margins have been approximately 11.2% for
02:38 this quarter.
02:39 Do you plan to maintain these margins going forward or do you think that your margins
02:45 will increase in the coming quarters?
02:47 Coming quarter it can slightly be much better than what this particular quarter is because
02:54 probably our ice cream and curd sales will improve in the month of January, February,
02:58 March compared to this season.
03:00 We don't expect purchase prices to be volatile.
03:03 So hence probably the margins can be a little better than what it is.
03:07 And the sales would also be better because we are entering into close to summer.
03:12 March is going to be very hot and the sales of ice cream and curd will be much better
03:18 than what we have experienced in October, November, December.
03:21 It has been completely raining here.
03:24 Okay.
03:25 And if you can just give me an outlook in terms of your both top line and bottom line
03:29 for the coming quarters or maybe for coming years, what is the number that you're aiming
03:35 at?
03:36 We may cross 2000 crores without any difficulty for this quarter and with a little better
03:42 profit.
03:43 Profit I am not able to say immediately because we will also be spending on advertisement
03:47 and all that.
03:48 But definitely as a growth as well as margins can improve in this quarter compared to the
03:55 last quarter.
03:56 Okay.
03:57 Thank you so much for sparing your valuable time, Mr. Chandramohan and giving us your
04:01 exclusive interview with NDTV Profit.
04:03 Thank you.
04:05 Thank you.
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08:28 Hello and welcome to NDTV Profit.
08:30 You are watching the Small and Mid-Cap Show and I am Vishwanath Nair.
08:33 We are discussing RBL Bank and its financial results which came in last evening, where
08:39 the bank announced a net profit of about 230 odd crore, which was up about roughly 12%.
08:44 The net interest income or the core income for the bank was up about 21% at about 1,546
08:52 odd crore.
08:53 The gross NPA ratio of course dropped by roughly about 10 basis points.
08:58 You have had the net NPA ratio also dropping about 2 basis points.
09:02 Now of course, the net profit for the bank has grown slower than the NII primarily because
09:06 the bank took a contingent provision of about 151 odd crore against investments in alternative
09:12 investment funds.
09:13 And this is coming in after the Reserve Bank of India changes guidelines on how bank investments
09:18 and NBSE investments into AIFs can be accounted for on the book.
09:22 I have with me Mr. R Subramanian Kumar, the NBN CEO of the bank.
09:25 Mr. Kumar, welcome to this conversation.
09:28 Pleasure having you, sir.
09:29 Yeah.
09:30 Good morning.
09:33 So, the first question I have is with regard to this EIF investment provision.
09:39 You said about 151 odd crore.
09:41 I was on the call with you yesterday where you said that the actual NEV of these investments
09:47 is about 160 odd crore, much higher than your investment, and that you really never had
09:53 any kind of stress with regard to this portfolio.
09:56 It's just that the RBI guidelines changed and therefore you had to make this provision.
09:59 Tell us a little bit more about where this stands.
10:02 Yes.
10:03 The first thing is our total investment in AIF is in the range of 120 crores, 120 crores
10:11 only, out of which we made a provision of 115 crores.
10:15 And all these relationships, if you look at it very, very closely by us, these are held
10:20 by us for the last 8 to 10 years.
10:22 And our share within that, all this AIF is in the range of 4 to 5%.
10:27 And there's no impairment that has been seen on those assets which has been on lending
10:33 or downstream lending by AIF.
10:36 Despite not having a stress on the portfolio, we complied with the guidelines because the
10:42 guidelines were plain and simple.
10:44 You have to make whatever the investment you have made in AIF, if the consumers or if the
10:49 customers are common between those with whom you deal with and those downstream they have
10:55 funded, you have to either liquidate it or you should be in a position to make a provision.
11:00 There is no distinction between that, the status of it.
11:03 However, we made a thorough study of it.
11:05 All these are in terms of tech and digital enhanced investment has been done.
11:10 All this, we have not seen any stress as per the information which we have been receiving
11:15 it from AIF.
11:16 However, as a prudent measure, as an organization which believes in compliance of the regulatory
11:22 guidelines, we went in straight and then make a provision which is contingency in nature.
11:27 And if I ask you what is the net asset value of these, today it is 161.
11:31 That means my investment of 120 is well protected.
11:35 And it also has multiple options.
11:37 We have not explored any options now because the time available to us for taking a decision
11:42 was very short.
11:43 And we took a very cautious and prudent step of providing for maybe in the next couple
11:49 of weeks, we will just explore further options available to us.
11:53 Because there is always, these are all, there is a redemption option is always available
11:58 to the bank.
11:59 We will exercise the appropriate option, taking into consideration the current relationship,
12:05 the return on the profitability of these investments and how these investments will fan out as per
12:10 the regulatory guidelines.
12:12 And we will take a call which is prudent for the balance sheet of the bank.
12:16 So would you be looking at any future investments in such funds?
12:20 That's what, right now we don't have any plan of such kind of investment.
12:24 But however, the current investment we want to review very deeply about it.
12:27 And we don't see any stress in it.
12:29 And that is why it is a contingency or a prudent measure we have taken it.
12:33 With regard to the future investment, we'll take a call as we move forward.
12:36 We don't have any such plan as we have it on the table today.
12:39 Is there any insight into when you'd be able to write back these provisions?
12:43 That is a bit difficult to say right now because we haven't evaluated completely.
12:48 We have collected all the data.
12:49 What we came to know is that the exposure which we have as well as they have, we don't
12:54 see any impairment in those assets.
12:55 That is only one small conclusion you could make it.
12:58 And we will evaluate it as we move forward in the next couple of weeks.
13:02 Then we'll take a decision.
13:03 Okay.
13:04 Staying on the asset quality question a little bit longer, I just wanted to get a sense of
13:09 what this quarter looked like in terms of slippages.
13:11 Now, analysts are pointing out that a bulk of the slippages during the quarter were from
13:15 the credit card portfolio.
13:16 However, your upgrades and recoveries have more or less addressed those slippages.
13:20 So, if you could just give us a little bit more color on the slippages and what the outlook
13:24 looks like there.
13:25 Yeah.
13:26 You know that the credit card as well as microfinance per se, the business itself has this kind
13:32 of slippages which we have already said.
13:35 Instead of giving a guidance of the slippages, we have given a guidance on credit costs.
13:39 Our credit cost guidance has been within the range of 1.5 to 2%.
13:42 And we are pretty confident about the fact that we will be within that range.
13:46 So, going forward also, we'll be able to maintain the range of 1.5.
13:49 Maybe if you look at it, whatever the credit cost which we have incurred so far, last quarter
13:53 was around 47, 48 bps.
13:55 And we are in the range of 1.6 to 1.8 now.
13:58 We will be range bound.
14:00 Second important thing is that we realize that the recovery and collection is very,
14:05 very important in respect of these kinds of exposures.
14:08 So, we have strengthened our recovery and collection mechanism.
14:11 We are focusing on zero-day collection and which we don't even allow it to go to the
14:15 first bucket.
14:16 And I can say with a lot of happiness that we were able to get back to the collection
14:20 efficiency of 99.41% in our microfinance.
14:24 And even in respect of the credit card also, that the recovery percentage has moved up
14:30 substantially than what we are seeing it in a couple of quarters before.
14:34 So, these two things and our special focus on recovery from technical return of account
14:39 as well as the NPA, wherein we are confident that we'll be able to recover more than what
14:43 we did it last quarter.
14:44 So, we'll be able to keep the slippages in check.
14:48 Okay.
14:49 I want to also tackle a little bit about the credit card portfolio itself.
14:53 Now, during the quarter, there were news reports talking about one of your partners.
14:58 Now, I don't want to ask you anything about the partner or their future with the bank
15:02 because I want to focus on RBL Bank itself.
15:05 Over the last few quarters, you have said that you have tried to do a non-Bajaj credit
15:11 card portfolio, building that alongside the existing Bajaj finance portfolio to try and
15:17 have your own business.
15:19 You also talked about other partnerships to try and diversify this co-branded business.
15:25 What is this attempt to build this other business looking like for you?
15:30 How fast do you want to grow it and where do you want to see it in say a year or two?
15:36 See, what I would like to say is, first of all, the credit card per se the business we
15:41 have acquired enormous amount of insight, enormous amount of ability and capability
15:46 to manage.
15:47 And having said that, we have the partnership model which has just going up and we articulated
15:55 very clearly that the current partnership what we enjoy with that Bajaj as well as the
15:59 others as extremely good partnership.
16:02 And we cherish that partnership.
16:03 We have been doing a good business in that.
16:05 While keeping the other point, whatever the news reports said about to rest, internally
16:11 when we look at it, we wanted to say two things.
16:14 We will continue to do that business with that Bajaj as long as the relationship and
16:18 our joint partnership indeed is valid.
16:21 And the second one is that as a prudent banker, we look inward.
16:24 First, we have decided to develop our own capability to do it, which we have already
16:28 started doing it in last two quarters.
16:30 And we have placed around 2000 plus DSTs on the floor who are working from the direct
16:35 sourcing channel for the bank.
16:37 This is primarily with the intent of reducing our cost of acquiring.
16:41 The second, our ability to get the coordination of these cards with the savings fund account,
16:45 a term deposit account and recurring deposit account is also a work in progress.
16:49 So, when we acquire a customer through this channel, we wanted to make him as a sticky
16:53 customer with the bank with the multiple products so that my wallet share of the customer increases.
16:57 That is also another side impact of the effect of sourcing it internally.
17:03 The second one, which we have just started is that a branch has started sourcing it directly
17:07 through our existing relationship, which is in the range of somewhere around 20,000 plus
17:12 we are able to get it even today, and which is a fairly good number than what we started
17:16 a couple of quarters before.
17:18 The third important thing is that we are in the process of tying up with the multiple
17:22 other MVFCs and other public sector units, which you will be hearing it in the blog.
17:28 These are all for the simple purpose of diversifying our relationship so that we are able to grow
17:34 very systematically in this card business.
17:38 While we focus on growth of our secured retail in a big way, the rate of growth of secured
17:44 retail product will be higher than the rate of growth of the unsecured, which is a credit
17:48 card.
17:49 However, having done that, we will be scaling it to the proportionate to that of our existing
17:54 product.
17:55 We have already clearly told in our 2026 mission document to what extent we will be able to
18:00 grow and how we will grow.
18:01 We will continue to maintain that guidance and we are very confident of even achieving
18:04 that guidance.
18:05 Just for the benefit of viewers, where do you want to see this as a ratio of your total
18:09 book?
18:10 If I see that in 2026, we are looking for the total exposure of our secured retail product
18:17 in the range of around 30-35% of the total balance sheet.
18:21 We will be having around 23-25% will be in the credit card and 8-10% microfinance.
18:26 Another 30-35% will be commercial banking, wholesale banking, our MNCs, new economy,
18:31 and our IFI and MDFC business.
18:33 This is how it will be looking like in 2026.
18:36 You would have seen that last quarter, we are moving in the right direction.
18:44 Our total advance growth was 20% and our retail growth was 33% and our retail secured growth
18:50 was 50%.
18:51 The tractions are on the same direction and we are confident having established or invested
18:58 in the manpower as well as the systems and procedures, systems and processes, we are
19:03 pretty confident of maintaining it for one or two quarters.
19:05 Thereafter, it will moderate.
19:06 Going forward next year, our advances will be growing in 20+ range and within that, retail
19:12 secured will be growing in 25+ range and within that, the secured will be growing at 30+ range.
19:17 I want to ask you one question around the operational side of the portfolio and the
19:22 advances and deposits.
19:23 Advances, you have seen strong growth on the retail portfolio, commercial banking, the
19:28 wholesale banking is up about 6% or so.
19:31 I want to understand from you where you see this going forward because you said that secured
19:38 retail as well as commercial banking is mostly going to be comparable in terms of the size
19:43 by 2026.
19:44 So, you would have to increase the pace of growth on that, on the wholesale portfolio
19:48 as well, if I am not wrong.
19:50 Yeah, correct.
19:51 If you look at it, we have been growing our total wholesale business in the range of 6%
19:56 because it is mostly the corrections are happening within that.
19:58 The correction in a sense that the one which is giving a less yield or the moderate yield
20:03 or giving way to that of the retail secured product which is able to give me a mid-range
20:07 rate.
20:08 This correction is happening now.
20:09 That is why you are seeing it in the corporate.
20:11 But going forward, when the balance sheet grows, proportionately there will be a growth
20:16 in wholesale business also.
20:17 But within the wholesale business, our focus will be on the commercial.
20:21 When I say commercial, it is our medium-sized industries and SME segment which are having
20:27 a turnover in the range of around 100 to 200 crores and which will be requiring a bank
20:32 finance to the tune of around 50 to 100 crores.
20:34 Why we are looking at it is that we will be moving down to tier 2, tier 3 locations.
20:38 For the reason that we will be able to single banker for that kind of exposure.
20:43 We will be in a position to get all the allied activities on trade finance and forex and
20:47 import and all the activities will be routed to us.
20:50 This is going to increase our fee income so that the margin which we earn from the wholesale
20:55 book, which is the range of around 0.8 to 0.9 today, will go up to 1.3 to 1.4.
21:01 So that when the margin moves up, you have to have the combinations and the corrections
21:05 going to take place which will help us to kick up the business as well as the profitability.
21:09 The entire focus is on the bottom line, which you would have seen it.
21:14 We are able to throw, other than the AIF, if you put it, our PAT growth this time is
21:19 53%, which you will appreciate that it is one of the finest.
21:22 Although you can't have that 53% in every quarter on quarter.
21:26 But however, the directionally we are in the range of increasing that PAT multifold.
21:31 AIF is again not a provision which is an impairment.
21:34 We are confident that we will be in a position to get the best out of it as we move forward.
21:39 It's a provincial one.
21:40 So the primary focus of PBT and operating profit focus.
21:47 So if you look at that operating profit, it has also grown by 35%, which is a clear indication
21:51 that we are in a position to leverage our investment, which we have been making it in
21:56 the last 12 to 18 months.
21:58 First is that our other income is almost equivalent to that of our operating profit.
22:04 The second, the nine months operating profit increased by 33%, whereas the advance is increased
22:09 by 20%.
22:10 That means we are able to leverage.
22:12 Operating leverage is something which you are seeing it.
22:14 And going forward, we are pretty confident that we will be able to maintain the momentum.
22:18 Okay.
22:19 The last question I wanted to talk about is the liabilities question.
22:22 Of course, for banks, that is the most sort of the crucial question for at least during
22:27 this financial year.
22:29 Your liabilities growth for you as well as the system has been slower than the advances
22:35 growth.
22:36 I am trying to figure what the outlook is like because yes, there is a CASA component
22:43 that needs to also grow.
22:44 You are one of the few lenders which offers a higher rate of return for savings account
22:50 rate.
22:51 But what is the outlook looking like?
22:52 Are people going to use?
22:54 Do you think that going ahead, you will be able to attract depositors just with the rate
22:57 question?
22:58 Or is there anything else that you would like to focus on?
23:00 As far as our bank is concerned, we are in a very, very special zone in the sense that
23:05 we have around 530 branches only.
23:07 So our ability to reach out to the customers in that range is restricted to 538 locations.
23:13 First focus will be that how do I increase these locations?
23:17 Multi-fold, that is the first step.
23:19 So we just in this side, we found out, we have just looked inward and saw that around
23:24 1200 BC branches are operating with the tag of RBL.
23:28 So we are already doing a business there and which is in the range of around 6,000 to 7,000
23:32 crores of the loan has been disbursed through this 1200 locations.
23:36 Now, we have created a footprint for us.
23:39 Why can't we leverage those locations for accumulating or augmenting our liability was
23:44 the first thought we did.
23:46 If we operate that, the cost of operation should not be prohibitively high.
23:50 So we need to, already we are paying a high rate of interest as you rightly said.
23:54 So we started looking at what are the alternatives.
23:56 Then we developed the concept called the digital banking for them.
23:59 The digital journeys for accounting savings for the company, engaging with the customer
24:03 and servicing the customer and managing the requests of the customer, everything has to
24:07 be a digital journey.
24:08 So the digital journey for term deposit is ready and tested and it is being piloted and
24:13 savings from the account has been ready and piloted.
24:15 So these 800 out of 1200, we have narrowed in for 800 locations.
24:20 So 800 plus 538, we'll be getting 1300 locations as a start of the Q1 of next year.
24:28 So this 500 locations augmenting X amount and the 1300 will definitely augment in the,
24:33 if not 2X or 3X, it will be definitely X plus Y.
24:37 I give a simple example.
24:39 If these branches are able to augment just 10 lakhs per month, 800 into 10 lakhs for
24:45 one year, they will be adding 4% of the total deposit, which we will be able to add up to that.
24:50 So our ability to source, even with the minimum sourcing, 4% increase is going to happen because
24:55 of this increase in the number of touch points.
24:58 The second, we already have a very good customer base in terms of credit card, MFI, liabilities
25:06 and our commercial and other activities, but we have never leveraged them beyond that one point of product.
25:14 Now we have started the cross-functional sales.
25:17 Already the digital journey has been started for CC customers to open a sale because one KYC
25:23 we are very, very clear about that we don't want to get into the same customer to ask him for this KYC
25:28 or opening savings account.
25:29 If he's already a credit card customer or a microfinance customer or a savings customer,
25:33 he can get other products in the same KYC unless otherwise any other additional information is
25:38 required as per the regulator.
25:39 We will be in a position to bring them on board quickly.
25:42 The digital journeys regarding this are ready.
25:45 And in fact, during a pilot, we were able to open 50,000 accounts of our credit card customers
25:51 into savings fund.
25:52 So this is the ability we have just created, and this will also facilitate us to increase our liability.
25:58 The third is that this liability product, which we have been giving it as part of the loan,
26:03 for example, tractor loan.
26:04 We saw that 400 crores of disbursement in one quarter and a total 6,000 crores of disbursement
26:09 in retail assets.
26:10 All these assets are mostly secured and they are the housing loan lab, which are going to have a long-term
26:16 relation with the RBL.
26:17 So we are creating a co-origination journey for all of them so that all of them will be start using
26:23 our liability accounts and the EMIs will be made through the liability account.
26:27 The moment we have started funding their account because to meet the EMI,
26:30 our ability to engage with the customers goes up.
26:33 So to meet our requirement of the growth, we will be able to mobilize sufficient amount of deposit.
26:40 If you look at the philosophy on balance sheet management, we said we will be granularly looking at
26:47 both assets and liability for the growth.
26:50 And as far as asset is concerned, I already shared with you and you are also well aware that how
26:55 granularly we are going in respect of the asset growth.
26:58 In liability, again, we have done 23% growth is seen by us in the retail space of the liability.
27:06 That's a retail deposit.
27:08 So less than 2 crores, we are able to mobilize 23%, whereas our advance growth is in 20%.
27:13 So incremental advance growth will be met by this granular deposit itself, which is stable in nature.
27:20 So the entire philosophy is working well and we are confident it will work very well as well.
27:25 All right, Mr. Kumar, we leave it at that.
27:27 Thank you so much for taking time out on a Saturday and joining us on this conversation.
27:30 And thank you so much for watching our viewers.
27:32 You're watching the Small and Mid-Cap Show.
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