Ladies and gentlemen, good day, and welcome to the CDSL Q1 FY24 Conference Call hosted by HDFC Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. Ladies and gentlemen, please note that CDSL does not provide specific revenue or earnings guidance. Anything said on this call, which reflects CDSL's outlook for the future, or which could be construed as forward-looking statements, must be reviewed in conjunction with the risks that the company faces. I would now like to hand the conference over to Mr. Amit Chandra from HDFC Securities. Thank you, and over to you, Mr. Chandra.
Yeah. Yeah. Thank you, operator. Good morning, everyone. On behalf of HDFC Securities, we welcome you all to the CDSL Quarter One FY24 Earnings Call. We have with us today the management team of CDSL, represented by Mr. Nehal Vora, MD and CEO, Mr. Girish Amesara, CFO, and other senior leaders. We will start with a brief on the results from Mr. Nehal, and then we'll start with the Q&A. Thank you, and over to you, sir.
Thank you so much, Amit, for that kind introduction. A very, very good morning to everybody. I hope each of you and your loved ones are safe and healthy. Thank you for joining us today to discuss CDSL's financial results for the first quarter of the new financial year, FY 2023-2024. We posted a detailed investor presentation on our website for your reference. I'm joined by the CDSL's group leadership team. Let me start with the industry highlights and then take you through some of the key aspects of our performance. During the Q1 of FY 2023-2024, the overall Indian capital markets demonstrated a healthy growth. The total market capitalization increased by 15% to about INR 296 lakh crores as on June 20th, 2023, compared to INR 258 lakh crores as on March 31st, 2023.
Furthermore, the daily turnover for Q1 of FY24 witnessed an 11% increase when compared to the Q4 of FY23. The quantity of shares delivered also displayed a quarter-on-quarter growth of about 10%. All these trends indicate a renewed confidence amongst the investors in the Indian capital markets. The numbers also truly underscore the strengthening belief in the potential of our markets. These positive trends are also attributable to the recent industry advancements implemented. We believe that these new implementations will benefit the industry in the long term, as they aim to protect the interests of all kinds of the investors and reduce the systemic risk. Overall, we view these regulatory measures as positive for the industry's long-term growth. This quarter, India further strengthened its retail participation in the Indian capital markets.
The total number of Demat account investors in the country achieved a significant milestone of over 12 crores in July, out of which more than 9 crore Demat account investors are registered with CDSL. Comparing the numbers, the registered investors as on June 30th, 2023, were 8.83 crores, and which shows a remarkable 29% increase, over the, over the same quarter last year. This growth can be attributed to the use, the increased use of digital innovation and also being able to connect to the interiors of India, including the Tier 2 and Tier 3 towns. In terms of performance, our strategy focuses on accelerating core annuity income, simplifying the process for emerging investors, and fostering new developments in the Indian securities market.
It has, and will continue to be, Team CDSL's relentless endeavor to empower the Indian capital markets with innovative technology and tools such as the e-AGM, e-voting, e-DIS, Margin Pledge Mechanism, et cetera, that enhance the experience and security of market participants. As we present another successful quarter in terms of both business and financial performance, we at CDSL would like to express our heartfelt gratitude to our investors and the people of India, whose unstinted faith in us continues to serve as our guiding light. Our focus remains steadfast on building value for our stakeholders while playing our part in enabling and securing a robust Indian digital financial ecosystem for our investors. Before I hand it over to Sri, to our financial, Chief Financial Officer, I'd just like to say that the growth of the Indian securities market is an extremely encouraging sign of India's potential....
I also want to place our appreciation and gratitude to all our stakeholders, our regulators, depository participants, investors, issuers, and all other market participants and employees for their constant faith in us. Thank you for your continued support and trust in us. I would like to hand it over to our Chief Financial Officer, Girish Amesara, for the key highlights of the financial performance.
Thank you, Nehal Vora. Good evening to everyone. The total consolidated income for the quarter ended June 23 has increased by 19% to INR 174 crore, as against INR 146 crore for the same quarter during the previous year. Accordingly, the consolidated net profit for the quarter ended June 23 is achieved at INR 74 crore, as against INR 58 crore for the same quarter during the previous year. Talking on a stand-alone basis, the total income for the quarter ended June 23 is increased by 8% to INR 170 crore, as against INR 158 crore for the same quarter during the previous year. The resultant net profit for the quarter ended June 23 is achieved at INR 92 crore, as against INR 89 crore for the same quarter during the previous year. Now, I shall request Mr.
Sunil Alvares to give an update about the operation of wholly-owned subsidiary, CDSL Ventures Limited. Thank you. Over to you, Sunil.
Good morning, and to everyone in this call. So far as CDSL's income was concerned, total income for Q1 at FY24 was INR 32.07 crore, as against INR 28.40 crore for Q1 at FY23, which was an increase of INR 3.67 crore or 13%. The profit before tax was INR 15.60 crore, as against INR 14.17 crore, which was again an increase of about 10%. The profit after tax is INR 11.90 crore, as against INR 9.92 crore, which was an increase of 20%. With this now we may start the Q&A session.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask questions may press star one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take the first question from the line of Swarnabha Mukherjee from B&K Securities. Please go ahead.
Yeah, thank you for the opportunity, sirs, and good morning. Two, three questions. First of all, if you, if you could, you know, highlight the reason for the jump in the Annual Issuer Charges. Was, was there any particular, you know, thing that drove maybe the increase in number of policies which would have, sorry, number of folios that you have, which, which would have resulted in this? Also, if you could share the number of folios which you, which is there for billing the Annual Issuer Charges for this year. That is the first, and the second is on the cost side.
Yeah, as I see on the standalone, business, the other expenses ahead that you have reported has increased, quite significantly, both, from the last quarter, and, and also compared to the last year's first quarter. If you could throw some light on this, what is happening here?
Yeah. Okay. First question, the number of folios have increased, in terms of the number of Demat accounts also increase, which has happened, and that has kind of led to a consequential increase in number of folios registered with CDSL, as the primary reason for the increase in the Annual Issuer Charges which you've charged the company. Hence that revenue has grown. We don't share the folios in the public domain, so that remains a kind of a consolidated revenue impact, as you will see on a quarter-on-quarter basis. For the second question, I'll ask Girish to answer.
The other admin expense largely has increased due to, you know, certain regulatory expense which we have to incur, which are based on the operating revenue of the company and collects increase in the collection of the Annual Issuer fees. It is consequential to the, you know, increase in operating profits and increase in Annual Issuer fees.
Okay. Okay, just as a follow-up on the first question, as you have mentioned that, I mean, it is understood that the number of folios have increased. I just wanted to check from you that is it, is it something like, say, for example, last year there was the LIC IPO, which brought a lot of new investors to the market. Is it kind of factor of that, or is it a steady state thing that you were seeing leading to this increase? I just wanted to check if there is some one-off in that number.
No, it's a combination. See, with the buoyant market conditions, the participation has grown overall. Therefore, the secondary market participation has also grown, as I had stated as part of my comments in the initial part of my speech. Also because of buoyant market conditions, more, there are also the IPOs which are hitting the market. It's a combination of both these factors which has led to this increase.
Mm-hmm. Just wanted to again, you know, drill a little bit deeper. What we are seeing in the capital markets right now is that the cash delivery part of the market, which I think primarily impacts your revenue side, that is essentially cyclical, that is not expanding that significantly, while the derivatives side is expanding. Any, any thoughts in context of that, in terms of the Annual Issuer Charges?
No, the folios, people are kind of when it's a buoyant market conditions, people want to own a more of the companies, and therefore the folios increase. What you see as the secondary market increase is only quarter- on- quarter, but if you see over a period of time, that is what lets-- leads to higher participation of shareholders and companies, and that leads to increase in folios. That's the point I was trying to really allude to.
Understood, sir. Sir, in terms of the number of folios, you had given some color last time, so even if not the exact number, if you can give us some ballpark, that would also help us in understanding how this overall, you know, issuer charges are evolving. We request some ballpark number.
Typically, we don't give the folios. I just check from the regulatory standpoint, but as of now, we don't do that. In case if we do that, then we'll put it out on our public domain. I think you can take it as a general trend that as the delivery volume, the market volume, the market buoyancy increases, the folios are something which is something in a, in a conceptual sense, is, is a factor of that.
Okay, understood. Okay, sir. Thank you so much.
Thank you.
Thank you. The next question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited. Please go ahead.
Yeah. Thanks, sir. A couple of questions from my end. You know, if I look at our subsidiary KYC Fetch business, you know, five quarters in a row, subsidiary revenues have degrown. You know, can you give us some understanding how much of revenues is from new folio creation? How much is on the fetch side? You know, is there some pricing related pressure which is, you know, causing this degrowth to continue? If you could give us some direction on the subsidiary business. Secondly, you know, on the total other income of INR 24 crore, how much is the mark-to-market gains on debt portfolio and how much is capital gains, if you have that figure ready? Lastly, one data keeping point, if you could share the revenue of e-voting and consolidated e-CAS for the quarter.
Okay. On the first point, I think the extent of degrowth, if you see the quarters, June, in the June ended, April, May quarters were kind of muted. It's only the June quarter where there was basically buoyancy seen, and therefore, that will have a lag effect on CVL's income. I'll ask Sunil to answer that. Before he answers, I'll just kind of pass Girish to answer your second part of... Your second question.
Mark-to-market, gain is INR 13.36 crore in total INR 20 crore, INR 24 crore income.
Okay. Okay. Understood.
Sunil, if you can answer that, though we don't give any specific numbers on fetches on new and versus-
Yeah, I am looking for a direction here also.
It's a kind of a conceptual answer. I'll ask Sunil to clarify.
So like Nehal Vora rightly said, April and May were slightly muted as compared to June. Secondly, this, the question on how many fetches were linked to new folio, that we will not know because, we that, I mean, those are actually fetched by the intermediaries and then it is, you know, whether it is a new folio or an old folio, that, that we really not know.
Okay. Okay. Is there similarly, well, some pricing related pressure because, you know, five quarters, we've obviously degrown? The, you know, pace of degrowth maybe has come off, but still, you know, there is degrowth happening. Is there some competition or pricing related pressure which we should be aware in terms of the degrowth happening?
Not really, I don't think.
Not really. Okay. Okay, fine. In case, Girish, you have those revenue breakups of those two subfields then?
That is, we have provided the slides on break up of income and expenditure, both. That we are doing for last two quarters. If you want, I will repeat it. We have already provided.
I just wanted the e-voting and e-CAS. I have the annual charges, transaction charges.
e-voting, we have achieved at INR 3.40 crore and, cash, e-CAS, we have achieved at INR 8 crore.
Yeah, yeah, fine. Thank you.
Thank you. We'll take the next question from the line of Amit Chandra from HDFC Securities. Please go ahead.
Yes, sir, thanks for the opportunity. My question is on the Annual Issuer Charges. I know that the Annual Issuer Charge is linked to the number of issuers and, you know, it's a, it's a lag indicator in terms of the retail shareholders that increased last year. The impact is in the first quarter. If I see the increase in the total retail shareholding in FY23, that has been in the range of around 18%-20% Y-o-Y growth, and in FY22, it was around, you know, 55%. That is reflected in quarter one numbers. Quarter one, FY24 numbers are much higher than what the actual retail shareholding has increased.
Is there any other thing that we need to know in the Annual Charges that is getting included here?
I think, Amit, the way the charges are formulated is that there is a ceiling, and if the folio increases beyond a certain limit, and it's portfolio-based charges. The holding in some of the top companies has grown higher than overall increase. What you're seeing is an average folio increase, or sorry, the retail participation increase over the entire year. How that gets further fragmented in terms of its holding, in terms of the top companies versus the other companies, is kind of getting reflected in the issuer charges.
Okay. My second question is on the e-voting. We have seen significant traction there. Last year in FY23, it was around INR 25 crore, and, you know, it is an 80% growth. Just want to understand that, have we achieved the, you know, the adoption of e-voting by like most of the companies or the companies which you target? In terms of e-voting, what kind of growth we will see? I know it's a forward-looking, but in terms of adoption, if you can, you know, throw some light, how many companies that we target, you know, have adopted e-voting and how many left?
I think rather than specific numbers, I would say the broad trend is our focus on technology. More and more we focus on technology, the value proposition which the products provide to the stakeholders. There are more and more people who are wanting to kind of really adopt CDSL's platforms. That kind of reflects in how many companies want to really kind of adopt the CDSL platform as we move forward. That is gonna continue to remain our thing, endeavor. Our philosophy as a management team is, rather than going after numbers, you know, go after the value proposition of products.
That will kind of reflect in the renewed participation of more and more people wanting to adopt that, because there is a clear ease of doing business, the clear value proposition and what the products are getting offered. You kind of have your ear to the ground to ensure that whatever the needs of the relevant stakeholders are getting reflected in the products which are getting rolled out.
So you have mentioned a lot of, like, innovative services that you're offering. So out of these services, you know, the, you know, the DLT is one thing which is being implemented across the depositories. So can you throw some more light on what can be the potential in terms of, like, monetization and expanding these services over other known classes?
Again, that's a forward-looking statement, so I'll kind of not give specific numbers. From a reforms point of view, it's kind of leading to a more systematic way of monitoring of the bonds and, yeah, covenants which are there. The intent is that it becomes a systematic solution to ensure that there is more kind of an accuracy as we move forward, and it's a system-driven solution. More and more trust gets built in the system, so therefore, the participation will go up. As the participation goes up, the relevant numbers would... Is at least the hope and prayer as the participation grows, those will get reflected in the numbers also.
Okay. Lastly, on the insurance, insurance repository, are we seeing traction there, you know, in terms of, you know, the participation from more and more companies and more, you know, insurance policies getting demat? Any, any view there?
I think on insurance, it's kind of yet on a voluntary basis. So it depends on the insurance holder and the insurance company on to the extent they would like to adopt the e-Insurance framework. Definitely, there is a proposition for ease of doing business from an insurance holder because custody of the insurance policy, the ease of access, and also basically, the ability to raise funds out of that insurance policy becomes a more sophisticated way than it is in a physical mode. So I think as that benefits kind of gets percolated to the last mile, more and more people are hoping. We hope that more and more people would like to really kind of adopt it as we go forward.
Okay, sir. Thank you.
Thank you. Thank you.
Thank you. We'll take the next question from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Yeah, thank you. Thank you for the opportunity. Sir, just wanted to understand a bit on more transaction income, because cash equity turnover for the country as a whole has done well in the current quarter, even compared to first quarter of FY23. Then we see a bit of weakness or not that much amount of growth in the transaction income. From INR 33 crore, it has grown to INR 36 crore. Just wanted to understand what led to the muted growth in the transaction income, given the cash volumes are doing well for the country as a whole. Second, within the INR 36 crore, if you can give how much is regulated income, it will be useful, sir. That's my first question.
The first question, the first two months of this quarter was kind of a muted growth in terms of delivery volumes, et cetera. It's only in the last month of the quarter where we've started seeing some resiliency. Therefore, what we report is on a quarterly basis, and hence, the muted growth, because it was kind of low delivery volumes in the first two months of this quarter. The second question asked, the CFO to answer.
Sanket, this is INR 3 crore in this quarter. Revenue is INR 3 crore.
Okay. Okay, sir. Thanks. You have said that the exit month, that is June month, has been better, is it fair to assume that compared to April and May, run rate of transaction income is meaningfully better, and July cash volumes or data is much, much superior? You are clearly seeing in numbers the trajectory of better transaction income playing out?
It's a future-looking statement. I'm sorry, I will not able to comment on this.
Okay. Okay, sir. Last, second question on the other cost. Just wanted to understand whether this you alluded to the point that the regulatory costs led to the growth. Is it somewhere related to the impairment cost also? We just wanted to know that, number, has that played any role in increasing the other topics?
I'm sorry, which cost?
No, no, Sanketh, it has not led to impairment. It's as per our regular standard.
Yes, What's the number, sir, if you can, tell that for the quarter?
I will tell you. INR 1.7 crore.
Oh, okay. Okay. This regulatory cost is the only reason or there are some other costs which has led to that growth basically? Regulatory cost, as per the presentation, is only INR 8 crore, but that number which has grown, but the other expenses, between the other expenses seems to have grown. We just wanted to understand that part a bit better.
Regulatory, if you, if you look at the component of regulatory, I had explained in last quarter also, it consists of 5% charge on operating profits. If operating profit is on a higher side, obviously this charge is going to be on higher side. There are other SEBI fees, incentives, which are linked to the issuer fees.
Right.
If my issuer, issuer fees collection is on a higher side, these charges are also going to be on higher side. Whenever we, we see a very good profit number or operating, very good operating margin number, this number would be on the higher side.
Got it, yes. Lastly, on the employee costs, last year, in the same period, we had that one-off with respect to one-off or rather one-time payout to the employees of INR 10.8 crore. This, I mean, if I knock off that number in the base and see the growth, the growth is year-on-year 50% in the employee cost, which is much higher than the top line growth. Just wanted to understand this INR 22.6 crore of employee cost, has any similar kind of a one-off or this is the number what we need to see in subsequent quarters?
This year, 2022 we are showing is consolidated, right?
Yeah, yeah, consolidated, sir. Yeah. Mm.
See, the point is, as the business grows, we are in an infrastructure, financial infrastructure company, and there are 2 critical inputs. One is technology, and second is the human resource.
Right.
This is the specialized human resource. It needs very, very pertinent to this line of business. Also there is increased regulatory expectations as we move forward, so that regulatory staff footprint also has to grow with the risk, also has to grow. Since there is exponential growth, it has to kind of be hand in hand with the control functions of the business also. Besides the business as well as the op, you know, operations human resource, to kind of support the renewed growth, to ensure that our services don't continue to remain top class and grow as we grow.
Got it, sir. But this number is going to remain, right? At around INR 22 crore.
Yes. Yes.
Okay. Okay, perfect, sir. That's it from me, sir. Thank you.
Thank you. A reminder to all the participants, anyone who wishes to ask questions may press star and one now. We'll take the next question from the line of Jeet Suchak from Nuvama Wealth Management. Please go ahead.
hi, good morning for this opportunity. I'm Adi Barak.
Yes, yes, please.
Okay. Okay, I have two questions, starting with first one. Out of the total issuers registered, how many have unlisted registers from the total?
I'll ask, CFO for to answer this.
423.
Okay.
During this quarter.
You are asking for the during this quarter, right?
Yeah, yeah, for this quarter, end, yeah.
Okay. Unlisted, admitted is 423 companies during this quarter.
400 and?
Twenty-three.
It is incremental. What is the closing figure as it's total issuers at the end?
We'll give you during the course of our this discussion.
Okay, okay. Other question was, can you give me any idea, out of the INR 630 million revenue from annual issuers, how much can be from unlisted issuers and out of the listed issuers? Any idea about that?
We generally don't give that, the breakup.
Okay.
-kind of, consolidated number.
Mm. Okay, okay. That was from me. Thank you.
Thank you. We'll take the next question from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah, hi, good morning, everyone. Just one question on the issuer charges, that is, you know, every INR 11. Time and again, you have told that there is that you will consider going to the regulator for an increase. What has been the thoughts around it? With your investments into the businesses increasing with regards to your employee expense or with regards to your tech expense, do you think it would be the right time to go back to the regulator and ask for an increase in the issuer charges?
It'll be little, I think we're not able to answer that in a specific format because it's, again, a culmination of various factors. The overall growth which we are seeing in issuer income, because the regulator is also seeing all of this.
Mm-hmm.
The regulator will feel would be an appropriate time for the increase to take place, is something which I will not able to answer. We continue to being engaged with them to give them the relevant numbers and where the growth is seen. You'll have to see in the, in basically the overall scheme of things, that how and when, if at all, they permit an increase.
Mm-hmm. Got it. Secondly, the investments, you know, with regards to tech, in particular, and I assume both would be the tech expenses would be between employee and, the, the tech expense that you report separately. I know it's a, I'm asking a forward-looking statement, and I might not get an answer for this, but still, I'm trying my luck with regards to this. As to what kind of increase we should, start look, look from, because it's been some time that you've been investing into, employees and the tech part. Do you think that the rate, or the run rate, increase in that run rate could slow down going ahead?
Difficult to answer that question, because in any in-infrastructure business, the quality of, and the value proposition of the product is of prime most importance, and technology is the DNA with which our business functions.
Mm-hmm.
We need to not only be up-to-date and up to speed with the latest changes in tech, in the tech field, but also ensure that it is kind of comprehensive and very relevant to our line of business, and continue to provide a value proposition to ensure a loyal customer base not only is retained, but enhances as we move forward. I think that's our ethos, which we work. I think, whilst the tech expenses, human resource expenses are growing, but as we can see that that has been able to support the renewed participation in the securities markets, and that is kind of our main focus as a management team.
On the insurance repository business, apart from account opening and annual charges, I think these are the two heads where you earn income, if I'm correct?
Yes, yes.
Yeah. Apart from that, any other new line items that have emerged recently with regards to loan against loan against insurance policies or any other servicing that would have emerged, say, in the last some time, or we could see in the next few next, say, two quarters or years?
I don't know whether it'll emerge in the next couple of quarters or years, but as the participation grows, probably the market will also come to, to realize that this could be another use case for that platform to be used for, for loan against the insurance policies.
Mm-hmm. Mm-hmm.
As of now, we have seen kind of a muted response, at least where our subsidiary is concerned. How that will pan out as we move forward is something which we all will have to wait and see.
Go ahead, Daniel. Thank you so much. Wish you all, all the best.
Thank you so much.
Thank you. We'll take the next question from the line of Devansh Nikotia from SIMPL. Please go ahead.
Yes, sir. Thanks for the opportunity. Sir, insurance repository, I mean, you gave some initial remarks and also clarified now, but, and we also mentioned in the PPT that there are no charges to our customers. I mean, if you can just elaborate a bit more that what can trigger the revenue from this line item?
I'll just ask the CFO to answer that.
The charges are not levied to the end policyholders. These are paid by the insurance companies.
Okay. What is the current revenue mix, or the current revenue from insurance repositories?
We generally don't discuss this mix of the revenue of annual maintenance and addition. 34. Currently, the income from operation in this quarter that we have achieved is roughly INR 16 lakhs, is against INR 12 lakhs of the previous quarter.
INR 16 lakhs.
Yes.
from insurance repositories?
Yes, sir.
Okay. What is the underlying user base? Number of customers who have the policies.
INR 40 lakh, INR 40 lakh, INR 40 lakh. We generally, and we don't give the number of customers and all that, but because this is not available in public domain.
Got it. Okay, thank you.
Thank you.
Yeah.
We'll take the next question from the line of Amit Chandra from HDFC Securities. Please go ahead.
Yeah, thanks for the follow-up. Sir, if I see, like, most of the business lines for us has recovered, but if I see the Online Data Charges, that has been flat for almost five quarters now. Now, if you can share some views, what is the mix in terms of fetch and creation, and what part is getting impacted there? You know, are you seeing any late recovery, as you said, in transaction, there has been only one month of, you know, higher activity. Are we seeing similar activity, you know, change in Online Data Charges as well?
Again, really, basically, Amit, as the charges, as the renewed activity grows, there is obviously a lag effect on the CDSL in terms of fetch and all that. I think we should just wait and watch for one or two quarters as to how this will pan out. It may be early to predict based on the 1st quarter impact, because as I have said earlier, that it was the June quarter which showed some renewed interest. April and May were kind of muted. Obviously, the lag effect will continue. We should wait for one or two quarters and see how this goes.
Why I'm asking this, because generally, with the increase in the account additions, because we have seen that the account additions has actually picked up in Q3 now. I know there is an account opening KYC that some that comes in. That, you know, generally follows that. It is not getting reflected. I'm wondering if there is, you know, a bigger like, you know, a bigger, you know, in terms of leakage, in terms of anything that is happening in the base.
It's difficult to predict at this stage, but I think, as I said earlier, there is obviously a lag effect which continues. I think we should wait for one or two quarters and see whether this is a real impact or just obviously a lag effect.
Okay. You know, one question to the CFO. Sir, the, the facility expenses, in terms of the new expansion that you have done, so, have we incorporated, you know, the higher facility expense charges? Is it in the base or is it yet to come?
Facility, facility charges in the, in the sense?
It will be like new, you know, like new property that you have bought. In terms of depreciation and in terms of, the, expenses that goes out generally, right, in terms of expansion.
Their work is still going on, so it's shown as an capital work in progress in the financial statement as of now. As, as and when we capitalize it, the depreciation will start.
Okay. Thank you.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask questions, please press star and one. We'll take the next question from the line of Franklin Moraes from Equentis Wealth Advisory. Please go ahead.
Yeah, sir. Thanks for taking my question. In this quarter's employee cost, what percentage would be on account of variable payouts?
We generally don't give out these the breakouts. It's kind of. See, I think from a organization point of view, total compensation is more critical. How much is variable, how much is fixed, is kind of a function of various market conditions, et cetera. I think that's how we kind of been very reporting.
What I was trying to understand is, you know, we had made a change, wherein, you know, the variable will be more, amortized now going forward. Whether that has already, you know, gotten implemented, and, this would kind of, be amortized over the entire year?
I think we continue to work on basically, basically accounting standards and advice given by basically the, basically the statutory auditors. That is in line with what we have been doing. We will not able to answer specifics on this because this is not in basically public domain.
Fair enough, sir. Thanks a lot.
Thank you. Participants, who wishes to ask questions, please press star and one. We'll take the next question from the line of Santosh Kataria from Keshri Wealth. Please go ahead.
Hello, am I audible?
Yes.
Yes.
Yes, please.
Yeah. Okay. I have two questions. One is that the technology investment that we started on around four, five quarters back, is that done and are you done with that, or we have some more plans to expand on technology? That's my first question.
Technology is something which is continuously has to be kind of really kind of assessed and the latest changes, updates. Also, there are newer products, platforms, and regulatory requirements which are getting rolled out on a month-on-month basis, which also requires the technology to get kind of really upgraded and to ensure that it all goes seamlessly. Also, the participation of newer Demat accounts also leads to a potential capacity, kind of an assessment, which has to be done to ensure that there is no service standards continue to remain very, very high even as we see a growth. Technology is something which is our core input, as I said earlier, and the human resource is our core input. These are, are two critical expenses to ensure that the business continues to run seamlessly.
Right. Then we need to distinguish between the technology expense that is a maintenance kind of expense, maybe to take care of the increased Demat additions or increased volume of the business. The expense, which is to bring an altogether different technology paradigm, and I believe that four, five quarters back, you spoke about, about INR 10 crore being spent on the new technology platform. My question is more in with, with regard to, are we done with the new technology platform or it is all the maintenance cap, expense that we are incurring now?
What we have done earlier has been completed, but there is continuously a proactive assessment being done, whether the technology platforms needs to get further kind of upgraded, the applications need to get further kind of upgraded in line with the latest trends to ensure that the people who are basically the relevant, the stakeholders, be it the issuers or the retail, basically investors and the depository participants, continue to see that, renewed technology platform being kind of really up to speed with what their requirements are. It'll be difficult to give a very, straightjacket answer because the continuous assessment is being done, and we are bringing in more and more, changes, which is more maintenance-oriented also, but also even the newer way in the basic technology platform is done.
Your specific question about what had spoken for five quarters earlier, that process has been...
Okay. Okay, makes sense. secondly, my second question is regarding the recent notices to the stock exchange that you made on 3rd of August, wherein the SEBI did an instruction and they had an observation. My question was that, did it involve any penal implications for the company?
There was.
What is the amount of penalty, if there is any?
In fact, there is no penal, it's basically a warning which we issued, and that is more from a process point of view, which is in the process of getting done.
Okay, thank you so much, and wish you all success for future.
Thank you.
Thank you. Anyone who wishes to ask questions may please press star and one now. We'll take the next question from the line of Jeet Suchak from Nuvama Wealth Management. Please go ahead.
Hi again. You told me over the call that a total number of unlisted issuers will be described during the call, so is it?
We'll send it to you in email. If you can just email it to our CFO.
Okay.
his, email is on the... And we will send you the numbers.
Okay. Okay, thank you.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Nehal Vora for closing comments. Over to you, sir.
As I wish you all the very best, and thank you for all your questions. I would, want you all to continue to remain loyal and, to CDSL. As a management team, our constant endeavor is to ensure that CDSL continues to remain, more and more tech-savvy, to ensure more and more stakeholders continue CDSL and its platforms. Thank you, everyone. Stay safe, stay healthy.
Thank you, members of the management. Ladies and gentlemen, on behalf of HDFC Securities, that concludes this conference. We thank you for joining us. You may now disconnect your lines.