Highlights:

The company is excited about rural turnaround story much faster than the urban markets and the company being a very rural-focused company with a very deeper penetration.

Almost all branches are up and working. The company has 1,100-plus branches and employees are in action and footfalls from the consumer have also improved. The company has 300 plus smart branches operating,

The dealerships are all open and operating with improving footfall at the dealerships.

The company had about Rs 500 crore collections in April 2020, which doubled in May 2020. The company collected Rs 2200 crore which turned out to be roughly around 72-73% against monthly demand of Rs 2900 crore.

The company also saw some marginal improvement to business volumes. But June was a great month with 30,000 vehicles that were transacted. The company collected about Rs 2200 crore from various consumers.

About 75% plus consumers have taken moratorium, but 40% of those customers have actually repaid installment.

The company sees buoyancy continuing even in July out of the farm cash flow. So definitely, things are changing for good from rural perspective, both from business and collection point of view.

The company did make some aggressive provision, and that comes from analysis of area, certain locations, certain products, certain profile of consumers. The company is adequately covered for any exigency that may come through if there was another lockdown to happen in some of these locations.

From a product perspective, tractor is something that definitely reflected phenomenal buoyancy, and followed by the pickup kind of vehicles, small cars, pre-owned vehicle, small LCVs are the segment where the company saw good traction, but heavy commercial vehicle could take much longer than the other products.

The taxi aggregators are returning back to activity, but the volume of business for them is insufficient and therefore, they could take a little longer than expected.

There is production constraint from OEMs and if enough of supply was made available to the dealers in the month of June, the volumes could have looked even better. In case of pre-owned vehicle too, the demand is definitely high, but because of not too much of exchange program that's happening therefore the supply side for pre-owned vehicle is a little subdued.

The company is continuing to see traction in the rural market and post October with the festival season onset, the company believes there would be lot of buoyancy.

From the liquidity perspective, the company is extremely comfortable. ALM is perfect match on an every-bucket basis to be able to meet all liabilities and meet the interest servicing requirement as well as fixed cost necessities.

The company is confident and very confident about at least a 15-20% drop in the overall cost, as the company has taken very strong and specific initiatives like branch rationalization, rent renegotiation, security services, BPO services, branding and advertising cost and even using technology more efficiently and bringing down the people cost in terms of traveling etc.

The company has not reduced employee cost reduction, but it is not recruiting new employees until things completely normalize. The company has taken a view on the increments to be deferred for the first quarter or second quarter and then a view would be taken only post thing starts to happen.

The company has moved about 5% of fixed cost into variable that would bring about some change.

The company is confident to reduce cost to asset ratio from around 3% to 2%.

While the capital adequacy is adequate at this stage, the company believes that if there is pick-up in activity then consuming of capital would be at a much faster pace and therefore there was need to raise adequate capital and be ready to embark on that opportunity that emerges from the rural market.

The company is doing rights issue with deep discount at price of Rs 50 just to reward shareholder in 25th year Silver Jubilee year

The moratorium in tractor segment is lower at 52%-56% and there also 40% of them have paid. So effectively, just about 30% of the customers are now enjoying or wanting to enjoy the moratorium.

Overall, the loan under moratorium would be around 48%, which would further decline in July and August 2020 with the visibility of cash flow.

The company is sitting on more than Rs 8,500 crore of liquid investment pool plus the sanction line. With the current collection trends and drop in the business volume, the company should be good enough from the point of view of the current liquidity position.

Out of total 20 lakh customer in the cars segment, the total aggregator volume is 80 thousands. The company is seeing at least about 30-40% of them again are on the street, but the earning is lower.

The company do not expects any jump in the NPAs level after the end of moratorium. If the underlying cash flows of consumers return back to even average, there would be rise in NPAs. So in the changing scenario of the rural market cash flow improving and consumers back on the street earning their money, the company sees already that the customers are willing to repay, and don't see the situation deteriorate substantially from here.

The digital repayments have increased from a normal 35%-40% to 50%, which would automatically mean little less travel required for collections and whatever.

The company is seeing a definite reduction that is sustainable is the legal cost. The company was using arbitration, notices to be sent and other stuff, and all of that has also been renegotiated.

The 2 segments under moratorium and not paying and will take longer are commercial vehicle and taxi operator segment. And therefore, out of the 75% of the customers under moratorium about 20% of the portfolio would require a longer time to be able to start servicing. But they, again, post October would start servicing their contract.

The company has taken a view for at least 2 or 3 years requirement for capital raising. The company has rural housing subsidiary, which is showing a lot of traction. Their asset quality is definitely beginning to improve and they will also require capital support. The company is definitely seeing rural turnaround and the growth story returning, and it will absorb a substantial portion of this capital.

The company also wants to remain a little high on the capital side in the current scenario that the rating agency, lender and everybody would feel comfortable about being adequately capitalized.

The overall cash flow in MP, Chhattisgarh was phenomenal. South has been a little low performing.

The company would endeavor to work hard to take the net NPA levels to 4% in next 9-12 months.

The company is very sure that it will maintain market share and there may be even some improvement to market share. Post October, the company expect volumes to stabilize and disbursements to keep growing.