Ladies and gentlemen, good day and welcome to the Central Depository Services (India) Limited Q3 FY 2023 investor call hosted by Axis Capital Limited. 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 risk that the company faces. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touch-tone phones. Please note that this conference is being recorded. I now hand the conference over to Mr. Praveen Agarwal from Axis Capital Limited. Thank you, over to you, sir.
Thank you, Darwin. Good afternoon, everyone, and welcome to the earnings call of CDSL Limited. We have with us, Mr. Nehal Vora, MD and CEO, along with his other team members, to be answering your questions. I would request Mr. Nehal to share his initial highlights for the results, post which we'll open the floor for Q&A. Over to you, sir.
Thank you so much. A very good afternoon, and welcome everyone. 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 third quarter of the financial year 2022, 2023. As in previous quarters, we have posted a detailed financial presentation on our website for your reference. I'm joined by the CDSL group's leadership team. This quarter, India further strengthened its retail participation in Indian capital markets. The registered investors that available with the stock exchanges stands at INR 12 crore +. The total number of demat accounts investors with CDSL as on December 31, 2022 reached INR 7.78 crore demat accounts. The same number as on December 31, 2021 was INR 5.56 crore, an increase of about 40%.
The new milestones that India has achieved are due to a combination of two factors, growth of the digital online movement and the empowerment of investors, the convenience and ease of doing business. Digital services such as online account opening, EDS, margin pledge and repledge mechanism, EAGM and e-voting, et cetera, in the hands of the investor in various corners of the country has translated into the growth story for the Indian retail investors. Having said that, we believe that this is just the beginning. Our primary focus remains on the continuous improvement of the financial ecosystem by making it more efficient and transparent. Speaking further on our performance, CDSL has been following its strategy to keep the business growing on a sustainable foundation with a diversified revenue while investing in advanced technology and its people.
For the quarter, number of active accounts admitted with CDSL as on December 31, 2022 stood at 19,724, an increase of 12% from the number of active companies as on December 31, 2021. Furthermore, the value of securities in demat custody with CDSL stood at INR 41 lakh crore as on December 31, 2022, an increase of about maybe 11% from the value of securities held as of the previous year. Our ability to understand the requirements, innovate and build on technologies and to deliver diversified experience, this continues to drive strong value for our stakeholders and investors. Before I hand it over to our CFO, Girish Amesara, I would just like to say 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, regulators, depository participants, investors, issuers and other market participants and employees for their constant faith in us. I would now hand it over to our CFO, Girish Amesara.
Thank you, Nehal. Good afternoon to everyone. On a year-on-year performance, the consolidated total income for the December 2022 quarter is at INR 160.87 crore compared to INR 162.93 crore for the December 2021 quarter. The net profit on a consolidated basis for December 2022 quarter is achieved at INR 74.737 crore as against INR 83.63 crore for the December 2021 quarter. The total income on standalone basis on a year-on-year basis for December 2022 quarter is at INR 132.94 crore as against INR 121.55 crore for the December 2021 quarter. The net profit on a standalone basis on a year-on-year basis is at INR 62.71 crore as against INR 63.77 crore for the December 2021 quarter.
I shall request Sunil Alvares to give an update about the operation of fully owned subsidiary CDSL Ventures Limited. Thank you. Over to you, Sunil.
Good afternoon everyone, and welcome to the CDSL earnings call. I would like to present the results of CDSL for the quarter ended December 31st, 2022. On the quarter ended December 2022, the operational income was INR 23.07 crore as compared to INR 25.82 crore for the quarter ended September 2022, which was a drop of about 10%.
The other income was at INR 4.05 crore as against INR 2.89 crore, which was a jump of 40%. The total income was at INR 27.13 crore as against INR 28.71 crore, which was a slight drop of 5%. Total income, total expenses dropped by 3% from INR 10.92 crore to INR 10.54 crore during this quarter. The profit before tax was INR 16.58 crore as against INR 17.78 crore, and the profit after tax was INR 12.59 crore as against INR 13.44 crore. During this period, we saw a slight dip in the KYC creation from 27.91 lakh to 26.86 lakh.
The KYC fetch was at INR 5.76 crores from INR 65.06 lakhs... Sorry, INR 58.76 lakhs from INR 65.06 lakhs. I'd like to open the call for any questions now. Thank you.
Thank you. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone phones. If you wish to remove yourself from the question queue, you may press star and 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. The first question is from the line of Prakash Kapadia from Anived Portfolio Managers Private Limited. Please go ahead.
Yeah. Thanks for the opportunity. Two or three questions from my end. If I look at, you know, the subsidiary, the CKYC business, it's I think the third quarter in a row where the revenues have, you know, de-grown for us. If you could give us some sense what is, you know, impacting revenues, because, you know, revenues are not so large, but still we are de-growing. That's the first question. Second question is, you know, what kind of CapEx we've done for the current year and what is the likely CapEx for next year? Lastly, you know, out of the total demat account, if you could give us some sense of, you know, what are the unique, or you know, active demat accounts, because, you know, we've grown rapidly in the last 2.5 years.
If you could give us some color on that. Those were my three questions.
Yeah. I'll first answer your third question, and I'll refer your second question to the CFO, Girish, and the first question to Sunil. On the first and third question, I think CVL's measure of the total volumes in the market, and there has been some muted volumes over the last few months due to the, basically the geopolitical issues, the war-like situations, etc. The market, basically the interest rates firming up, etc. In terms of, we don't give out the numbers from a privacy point of view as to how much is active, inactive. It's kind of given what has been given out is basically the total number of in demat accounts.
It shows that, whatever is our, basically transaction-based income has also, kind of, been in the about the same levels over the last, three to f our months. That kind of gives you a kind of an indication of, what has been basically the market, participation. I'll hand it over to Girish to answer the CapEx question.
Till December, we have incurred a capital expenditure of roughly INR 17 crore. This is in line with our overall budgetary approvals that we do every year. About future, I will not be able to make any comments about the future because we don't do any forecasting. I will hand it over to Sunil to answer your next question.
Yeah.
As Nehal has just pointed out that for the nine-month period, December 31, 2022, the markets have been very muted. If you, the number of KYC records which are fetched or created are intrinsically linked to the number of demat and broking accounts which are added. With the drop in the demat and broking accounts, it has also impacted the KYC records. I hope that answers your question.
Okay. Yeah.
Thank you. Thank you. All the best.
Thank you.
Thank you. The next question is from the line of Homer from Kotak Mahindra. Please go ahead.
Yes, hello. I have just one question for you. What is the number of delivered, I repeat, deliverable trades that take place on the CDSL accounts? Number, because that is what affects our revenue. The number of accounts is inconsequential. What is the number of deliverable trades on a weekly or a monthly basis?
You should look at the exchange website on the delivery-
It can give the volumes and volume total volume per share. For each share it gives volumes. It doesn't give the total number of trades that take place. Because volumes are not this. As you said, that you charge a particular fee on each trade irrespective of the volume of the trade. If a guy can sell you one cross trade also, but the delivery that takes place is only one delivery, you will be charged one time fee.
Yeah. We don't give that information out so that-
Why is it... what is so private about number? I'm not asking for a person.
I think
I'm not asking for a person. I'm asking the total number of trades that take place. There's nothing private about it here. What is it? Whose privacy is gonna affect? I'm asking for total number of trades that take place. I'm not asking for individual or this person or this share or that share. Total number of trades that take place.
We have taken your point on record. There are certain regulatory frameworks which we are working for many years. We will kind of assess it and examine. Whatever is possible, we can put it out.
You can at least share this with the shareholders, yeah. This is nothing to do with privacy, yeah. It's just total number of trades that take place.
Total number of trades have never been put out for so many years. Anyway, we have.
Why? I don't get it. That is what.
You're repeating your question, so I told you that we will, we have taken your questions down. You can send us an email and we will send you a reply also on that.
Okay. Well, can you confirm the email address please?
It is there on our website. You can take it from there.
Okay. Thank you very much. It was nice talking to you.
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah. Hi, everyone. So the question is more on, you know, the industry outlook and not specific to CDSL. If you look at the kind of measures the regulator has implemented, you know, one, not the regulation but, you know, the showcase that only 10% of the active traders on F&O actually make profits. By line of business does not impact your business. There it does impact the sentiments on the street and that will eventually re-lead to an impact on the number of demat accounts that get opened. Apart from that, you know, other regulations that have come through.
Do you think that, you know, the pace of demat account addition is kind of, you know, it has slowed down obviously in the last three to four quarters. Do you see any pickup that can happen or what could trigger the pickup of demat accounts again?
I think it's a good question, Prayesh. I think what the SEBI study from an industry outlook is kind of showcasing is that investors should be aware about their suitability norms and their objectives before kind of really attempting in complex products like futures and options. This business is a business of faith and trust. I think and it is a long-term play, which is more importantly, which creates wealth typically. I think the important thing is that as a market infrastructure institution, our intent and our focus has been and will continue to be to ensure more and more transparency from investor point of view. He or she should be able to do it himself or herself. That brings in the trust factor.
It brings in basically the responsibility in terms of how one trades because it is your own wealth which is your creating. That's where I see the key driver, is that when there is a clear focus on ensuring transparency as well as, you know, basically allowing people to really understand, more and more people will able to participate in the securities market. Today, we're at about 6%-7% of basically the population. We have an Indian, we have a population which is very young. Hence, it is really important that we continue to embark on this in this reform journey of ensuring more and more transparency in the way we conduct ourselves.
That you leave it, you know, more and more people are gonna be joining into the fold, which is a hope. It is not a short-term play or a quarter on quarter play which we look at. It's more of a long-term foundation which we are looking at. That's how I would really basically approach this question.
e is, you know, the ASBA thing, what has been spoken about, that, you know, ASBA kind of thing to be implemented for the secondary markets. Now that, you know, kind of takes how is the float income of brokers. But does that, you know, really increase the compliances from your end? Or what is the kind of impact that CDSL will have to go through in case that is implemented?
That is not really majorly applicable from a depository point of view.
Mm-hmm.
It's more from the clearing corporation point of view because for funds. Anyway, securities, there is a kind of a reform which has already been put in place where Basically, investors' shares are blocked and only once the obligation translates into a transfer which happens.
Mm-hmm.
I think the general move in which we are moving towards. Hence, this is something which is may not be really applicable to CDSL as a deposit switch.
Okay. Okay. Last question, Nehal. Could you talk about what are the new avenues of revenue that you are looking at to garner, say, in the next three to five years? I know not forward, we don't give forward-looking statements, but from a strategy perspective, if you could give us some thoughts as to, you know, what are the aspects that you're looking at that would be helpful.
I think, CDSL as a generic without giving into any forward-looking statements, and, I'm very conscious about that.
Mm-hmm
... principle, is that we'll continue to embark upon our journey of making it on technology, where we would like to focus more and more into technology and a more of B2C kind of information flow, where more and more investors are able to observe, see their demat accounts, operate their demat accounts themselves. That's the entire ethos with which we are working. As more and more kind of, basically, asset classes are gonna come into play, there is gonna be more and more people who are joining into it, and that is where our focus is gonna continue to remain. Because that is what is basically the society would want that kind of ease of doing business, the transparency factor and the security factor.
These are some of the key aspects in which we will be working.
Okay. Sir, I'll just keep in one more. Any thoughts on the insurance repository business as to how that shaped up and what is the status from IRDAI on this?
I think it's going through its own process of basically the implementation. It's a big reform, and all the insurance companies are kind of gearing up towards that. Yeah.
Any data that you can share as to what is the size that has happened? Currently how many accounts are there in the industry and what is the kind of number of policies that are covered in the EI so far?
As of now, there are no specific numbers we have put out on basically the public domain. It is going through the process of the reforms in terms of this entire move which is kind of happening. Girish, Ramkumar, you want to add to anything to this?
Okay.
No, sir, you have covered it. Only in the annual report we give the yearly figures as is required, but otherwise generally we don't put it in the public domain as far as me.
Yeah. Thank you.
Thank you. All the best.
Thank you.
Thank you. The next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Yeah. Yeah, thanks, sir, thanks for the opportunity. My first question is on the ransomware attacks that we had. Can you please provide some more update on, you know, on what actually went wrong there? Also, you know, like more from a technology perspective. What kind of investments are required in terms of our, you know, technology infrastructure? Is it, you know, a total revamp is required or are we going to expand the technology team? This is the first question. Second is in terms of the investment in the office space that we have done, around, you know, capital INR 163 crores, 46,000 sq ft.
You know, it's a, it's, you know, like massive investment, at least like 2.5 x like bigger than the last office space we bought. What is the reason behind buying such a, you know, large office space? Also, in terms of the impact in the other, you know, stream that we had, because of, you know, drop in e-voting. If you can quantify what is the exact drop in e-voting that we had prior to last quarter. Thank you.
On the first question on malware, we've put out a detailed press release. It was a CDSL securities operation system. It was one of the first major expenses which CDSL has embarked upon in the new management team. We have basically state of art. So it itself basically detected this. We see that this is a trend in one of the large companies also. Be the global companies also face these kind of basically outages. The important thing is how far you're able to basically restore your operations. CDSL was very quick in ensuring basically the restoration. The regulatory requirements on filing of reports, etcetera, will continue to happen in as and when we are supposed to do it, and that's outside basically the public domain.
The important thing is that CDSL is able to basically restore its entire in operations, in terms of, after this episode has taken place. We continue to embark upon. There is no revamp required. I think the system was sophisticated enough to basically detect it. We'll continue to, it's a kind of a science and an art, security. We continue to ensure that the top-class consultants and the people are part of our. Hello? Hello?
Hello.
Hello, operator.
Yes. Sir, the music is from the line of the management. I have. Should I redial the number, sir?
Hello?
Yes, sir. Please go ahead, sir.
Yeah. Amit, are you online?
Yeah. I'm there, sir. Yeah.
That's what I'm saying, that we will continue to embark upon the sophistication of our existing framework to come in line with what are the best international practices, cutting-edge in terms of ensuring. That is going to be our focus. Your second question on the property. The intent is we are embarking upon sophistication of technology and people. These are the two key aspects. It has gone through a rigorous kind of processing at the board level to assess what will be the requirements, both from a regulatory side, because the regulatory responsibility is also increasing, the technology responsibility is increasing, the subsidiaries are growing.
The important thing is to have a one CDSL as a focus, where all subsidiaries are working within the same building, so that there is a kind of built-in integration which is continuing to really embark upon. The third question, I'll ask the CFO, Girish, to answer that question.
Hi, Amit. If you look at our historical data, traditionally, e-voting business has been on maximum in the second quarter. Second quarter, we had a clocked income of INR 14.18 crore. However, in this quarter also, we have achieved an income of INR 3.78 crore. I hope this answers your question.
Yes, sir. Thank you. I will look into it.
Thank you. The next question is from the line of Madhukar Ladha from Nuvama. Please go ahead.
Hello, am I audible?
Yes, you're audible.
Yes, please.
Thank you for the opportunity. I wanted to get a sense of, you know, what were the KRA records at the end of the period and how many got created and what were the fetches. You used to give this number on calls. It will be good to sort of get this detail right now.
I don't think we used to give these numbers, as per my recollection, and I have confirmed that with my CFO also. Sunil also, I don't think I can confirm. I don't think we used to.
No, you used to say it on the call, sir, two questions. I think Sunil used to give these numbers. I have the previous year's numbers with me.
Okay. Sunil, I'll just ask Sunil to respond to this.
Yeah. for the nine-month period,
No, do we, do we give these numbers out, Sunil? That is the question first.
It's not there in the public domain.
Yeah. Do we give these numbers? That's what is the question.
On the previous call, we had given these numbers.
We should put it out. If we are giving it on the call, going forward, we should put out these numbers then.
Sure.
Yeah, you can go ahead and answer.
For the quarter end?
Yeah.
Yeah.
Yeah, for the nine months, FY 2023, we did INR 85.72 lakh records, as against INR 1.11 crore last year. From the fetch side, we did INR 1.9 crore as against INR 2.51 crore last year. In both cases, it was a dip of about 23%-24%.
Understood. You know, because of, I understand the KYC business, If I recollect correctly, we make around INR 20 per record creation and about INR 35 for per fetch. Has there been any change in the economics? That's part one of the question. Part two was also the adoption of Aadhaar-based KYC could actually impact these revenues. Any comments around that will be helpful in terms of where the competing technology is and whether that will be used in financial services. Yeah. Yeah.
Two things. One is the Aadhaar-based technology is already being used by most intermediaries. After the KYC is fetched from Aadhaar, okay, the record is then uploaded in the KRA. In a way, it has actually facilitated the online journey of customers and has increased the number of KYC records in the KRA.
Yeah, I didn't get your first question. Sorry, sir.
I understand in that Aadhaar-based technology, the realizations could be lower from the current realization. Has that changed?
This will be a more futuristic question, so I would recommend that let's kind of remain because we don't give a future outlook. It'll have to be seen how it'll pan out as we move forward. What we're able to kind of focus on is what is happening as on today.
Understood. Currently we are still realizing, INR 20 per record created and about INR 35 of HS. Is that understanding correct?
That understanding is correct so far as our rack rates are concerned, but there are certain discounts...
Understood. Yes. Understood, sir. That's helpful. Thanks a lot. I'll come back in the queue.
Thank you. The next question is from the line of Sanket Godha from Spark Capital. Please go ahead.
Yeah. Thank you for the opportunity. I have two questions and a couple of data keeping points. On... First one is on insurance repository. I just wanted to understand, or if you can give a color, whether we have already started in intense discussions with the insurance companies and what charges we are charging and whether entire industry is thinking to outsource it to the repository, or they intend to do it in-house and where the charges will settle. Just if you can give a little bit of color, how it will play out in since from next fiscal year. That's my first question on insurance repository.
Second question is with respect to this KYC itself. Yesterday in the budget or day before in the budget, finance ministry has spoken about digital lockers or the public infrastructure and KYC linkage. Just wanted to understand whether this will have an any impact on the current CVL KRA business. Or how it will compete with the KYC income.
Both questions, I think, are more futuristic. Insurance, something which will have to wait and watch how it'll play out on how they will be, kind of putting it, whether charges will basically, stabilize, et cetera. The teams are going ahead with their normal process of reaching out to the insurance companies, and we'll have to wait and watch.
Sir, on this one, just a small follow-up. Is there any pushback from insurance companies that they want to do it in-house or they are okay to outsource it to the repositories?
It's difficult to kind of gauge at this stage because they are all going through their own process of kind of really assessing the situation. The regulations require it to have a kind of an account, I don't see that. I think the rules are pretty clear as to how it needs to be done, they'll have to follow that.
I'm asking is that even the KYC thing has gone live from 1st April. Sorry, 1st January for the insurance, every insurance product. Any color there because it has already gone live.
Yeah, that is for the new, and that also is going through a process of, basically the evolution. It's for the new insurance companies, the new insurance policies.
Yeah.
Again, that's going through its own process of how it will basically stabilize, 'cause each one has its own way of ensuring its technology also is in compliance with all these requirements. As regards your second question on the KYC also, this will have to be just an announcement made. There is no formal process. I think there are certain nuances and value adds which the KRA has a process is involved in. I think those are expected to continue. I don't think there is going to be any change which is expected at this stage.
Got it, sir. Probably a few data keeping questions. If you can let us know the pledge income, annual income broken down into listed and unlisted, and cash income. If you can provide data provision also, it will be great because I think we used to disclose all these numbers in the past.
The income from unlisted company in the quarter is at INR 89 lakh, and for nine months it is at INR 3.66 crore. With respect to margin pledge, the income for this quarter is INR 3.27 crore.
Okay.
Third you had said about what?
cash income.
Cash is at INR 5 crore.
Finally, data provision?
Data provision is at INR 3 crore.
Okay. Okay, sir. Thank you. That's it.
Thank you. The next question is from Pranav Mashruwala from Reliance General Insurance. Please go ahead.
Hello.
Yes, go ahead. You're audible.
Yeah. Sir, thanks for the opportunity. Sir, two quick questions. First, the question that I had is, sir, if you could give any guidance on the CapEx that we intend to do in terms of the technology cost for forthcoming year.
Yeah. For now, normally we don't give any future outlook, so that we're not able to give any specifics.
Okay. Sir, because we've talked quite a lot about the technology, so it will be much more helpful to understand or The management could give a retrospective guidance or a ballpark % of top line which could be earmarked towards the technology costs in terms of an investment.
We will not able to give any specific numbers. As I told you, we continue to ensure that technology is going to be our key driver in terms of our main business. As a policy, we don't give any future outlook.
Okay. My second question is: In this financial year, as we speak, have we revised or has there been any revision in terms of prices in transaction charges or annual issue charges?
No, not yet.
In FY 2024, since this is being duopolistic, are we envisaging any upward revision in either of these, charges?
That will be driven by basically the regulator. We'll have to see how that pans out. That's again futuristic, so we'll have to wait and see.
Have we taken it up with the regulator? Have we put in an application for upward revision in the charges for the same?
Yeah. Again, there are various points. It is, I don't think, these are really put out in basically the public domain on our conversation with the regulator. All as I can say is as and when, if at all it is approved, it will be put out in the public domain.
Fair point. Fair point, sir.
Thank you.
That's it from my side.
Thank you.
Thank you. The next question is from the line of Paresh G. Sangani from Club Millionaire. Please go ahead.
Hi. Good afternoon, Nehal.
Good afternoon.
Yeah. The first question is, you know, we have seen a big jump in the employee cost, almost towards more than 30%, on YoY basis. Wanted to know how many people have been added, and in which divisions or functions have these people been assigned to?
Yeah. I'll we generally we don't give the count out, but I am saying the areas which are going to be in focus is basically the regulatory area because there are gonna be a regulatory focus. Technology are the two key areas and obviously overall basically the operations also as our number of demat accounts and our size of the operations grow. These are the three principal areas in which we are growing. However, there is an overall increase in our operations, so the ancillary support functions will also continue to see a growth.
Okay, noted. Nehal, has there been any increase in our repository business in terms of people being added over there? Because KYC is coming to being just through the first of January, and even digitization announcement have come through from November. Have you added headcount over there, and how are we well-positioned on that?
We are going through our own internal process of kind of, it's a continuous process of basically assessing the requirements, as per the business opportunities. That is again futuristic, so we will have to wait and watch how that pans out. We are fully aware of the business opportunity and we'll continue to kind of embark upon putting the right kind of people there, to ensure that we are able to really, explore and execute, basically the business opportunity which is there.
Nehal, I understand. I don't want any futuristic guidance there. I'm referring to the expenses that have been incurred for the past quarter, you know, in terms of employees or manpower that you have added on the insurance side. I mean, is there a headcount or, you know, is there?
It is going through its own, process of, recruitment, et cetera. That is something-
Okay.
in process, so.
Okay. Generally, Nehal, it's been now almost 8+ years, right, that we have not had a price increase. I know discussions have been on and sometimes not been on as well. What is your take on it? Because, you know, if you see the costs have actually gone up in terms of technology, as you mentioned, regulatory costs have gone up, compliance costs have gone up, operational technology, manpower costs have gone up, right, with regard to IT salaries. What is your take on that?
Again, there are two ways of looking at it. On one side, there are certain costs which grow up, grow on a certain year-on-year basis or after a period of time. Sometimes the costs are even expected to go down. That is what is the expectation. Where this particular thing will fall, we'll have to wait and watch. The important thing is that, as ethos again and as a focus, is that we want to have as many more people joining our fold, make it easier for them, because any sales is a function of two aspects. One is the rate we charge and also the number of people who are joining the volume of business.
Mm-hmm.
What the rate is basically what basically the regulator will decide, and they will take into consideration a lot of points before it moves forward. At least where the volume is something, we want to create that value kind of proposition so that more and more people can join us.
Sure. Has there been any discussions with the study on this Nehal, in terms of giving a price hike?
Sorry, Paresh. I'll have to kind of, you know, we don't discuss our regulatory conversations in basically the public domain. Would really request. Can keep that.
Okay. That is it from my side. Thank you so much.
Thank you.
Thank you. The next question is from the line of Ravinder Singh Sikka from GSS. Please go ahead.
Good afternoon. My question is relating to the malware attack. I think somebody had already brought this subject up. Was any data compromised? Considering that you are doing KYC, isn't it something that should be on updates given to shareholders and the public more frequently than just a one-time press release?
It is going through its own process of the regulatory interactions. At a suitable time, we will be giving out whatever is required to be done. It is a process of certain amount of confidentiality which has to be maintained from the overall scheme of things and the regulatory kind of regulatory interactions which we are going through. I would like to kind of really assure you that the highest level of security has been imposed and there will not be any situation to really think about that there are any compromise which has happened in terms of in that, but we continue to work on ensuring that the security is at its highest level.
I would request you to that we are, going through a regulatory process in terms of once at an appropriate time, we will be able to give that out.
Second, follow-up question would be, how do you benchmark the technology that you're using? Do you compare it to what is used and what is comparable in, say, the United States and Europe, more developed economies? Are you benchmarking it against something or is there an OS that you're using? Secondly, your password, considering you say that you are, you know, you're investing heavily in technology, have you seen the password that you use is only alphanumeric? It doesn't allow you to use special characters. Isn't that something that you should be concerned about? Or has no one looked into this?
No. We will take that because there are multiple ways of security. Password is just one angle. There are other ways in which it is being done. However, I'll ask my security teams to look at that going forward. I'm sure there we have other mechanisms in which also the things have been made secure. In terms of how we benchmark ourselves, India is at a very unique position where we have. Most of the Western world is on the depository space is on a B2B business. There is no client-level visibility which is given. It's the intermediary which gives the visibility to the client. Whilst in India, we have more of a where the customer is able to view his or her demat account directly with the CDSL.
In that sense, we are far superior. Even basically the authorization of one-time passwords, et cetera, directly happens with the customer with CDSL, which is kind of unique to the world in terms of, with the security.
No, are we, are we using an OS that is globally acceptable? Is this a home-developed operating system? Is it updated? Because the app or the website never asks for any updates, any security updates ever. I've never, as a user, I've never, ever had to update my the website or the app and I use an Apple phone. On the Apple, there's no update on the on the app. What is the OS that we're using or that you're using for this? The password is the only access that a customer has to enter the site. What is the... When you said multiple means of securing the account, password is the only entry into the website, into a customer's system?
What are the multiple points that you are referring to?
Whenever there is a transaction which has to be conducted, there is a transaction pin, and there's a one-time password.
Correct. Mm-hmm.
which is required mandatorily.
Mm-hmm.
Which is the additional forms of security, and that keeps on changing. This is, it goes through a two-factor authentication. Besides that, over and above that, every transaction is mapped with the obligation with the clearing corporation also at an individual level before the transfer takes place.
Mm-hmm.
That's why there are multiple forms of checks which are taking place before these things move forward. Even on basic, the pledge mechanism, basically the margin pledge mechanism also, there's a one-time password to be inputted before the transaction moves forward. It is not just basically the password, but there are various modes in which the transaction is getting secure.
Okay, I don't know if anyone is actually following your Twitter feed. There are so many complaints every day on the lack of response to customer queries. Has anyone audited how your customer representatives actually interact with the individual customers? Is there any audit on that? I mean, do you actually you know, dispute resolution.
Absolutely.
If you look at your Twitter feed, it is full of people, complaining and comparing. I know it's not a good thing, but, one you need to be aware of the people comparing your, comparing CDSL with NSDL in terms of response, in terms of, customer, query resolution. Is anyone auditing this? Has this ever been discussed by anybody?
Yes, this is closely being monitored. I, as far as my review and reporting goes, most of the queries have been satisfactorily resolved and replied to. The continuous growth in demat accounts of the new demat accounts testifies that this is something which the market at large has been fairly satisfied with.
Yeah. The last point, you made a comment saying that, you know, you have, in your opening remarks, working towards, you know, building wealth for investors. Market cap has eroded by nearly 70% in the last year or, about a year and a half. What value are you creating?
See, I think, the point is that it's important to ensure we're in a market infrastructure institutional business. This is a long-term play. We are creating the infrastructure for the country as a whole. These are the lines of business which has to be seen in that perspective and in that context.
Mm-hmm
... rather than on a quarter-over-quarter basis.
No, this is over a year, right? I mean.
Just hear me out.
Yeah, sure.
You will need to see what has been the market conditions at large. There are basically other extraneous factors which have taken place, be it, basically the geopolitical issues, the interest issues, which have really impacted the market. I think every stock is kind of being mapped to the overall market conditions and not in its, basically, isolation. The important thing as a focus for a market infrastructure institution is to ensure that the company is focusing on building the right building blocks so that as and when the business opportunity is growing, it has the right toolkits within itself to ensure that that growth is basically executed.
Thank you. I take this with the spirit in which you have answered, because, I'm a very, very long-term investor. I've been investing in this stock from the time of the IPO. My only only request is that the security aspect be, you know, strengthened and we get a little more detail on what exactly we're using. I mean, is it absolutely safe, for? You know, we don't want to be taken by, you don't want to be blindsided by another malware attack or something that we read about only in the press.
The other thing is that please, whoever's handling your Twitter feed, please hand it handle it with a little more sensitivity because the responses just do not match up to what you've just said over the telephone. It just does not match up. So some, say, if someone deals with this a little more, with a little more eye to detail, it would be nice. Anyway, thank you so much for your time, Nehal.
Thank you.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone phones at this time. The next question is from the line of Pritesh Bumb from Asian Markets Securities. Please go ahead.
Yeah, hi. sir, just wanted to know, from a data keeping perspective, what is the split of annual issuer charges from the slab and folio based method? That's the first. Again, in terms of annual issuer charges, what would be the split between listed and unlisted? Because this is something you used to provide earlier.
The first charge we don't provide in the public domain. I'll ask, second one.
Second, the split, the unlisted, the income from unlisted is at INR 88.65 lakhs during this quarter.
Yes.
INR 3.66 crore for the nine months.
Okay. Because, I think one of your, pre, Q1 2019 calls, you've given the split between the slab and folio-based. If you could just give any color of it, like, your total income, which, how the growth has been from either the slab, from both the slab and folio-based, and as a mixed-house that would have, possibly moved as well.
If we look at our annual issuer income, if you look at last year, it was at INR 29 crores. However, this quarter, if you look at our income, it is at INR 47 crores. It has moved positively. The increase is almost 57%.
I was asking more from perspective of, how much the growth would have been driven from folios and how much would have been driven from slabs.
We don't give that part as part of our disclosures.
Okay. Okay. Fine. I think... Sure. Okay. I think that's it from my side. Thank you.
Thank you. The next question is from the line of Hemant, an individual investor. Please go ahead.
Thank you for providing me the opportunity. Sir, the first question which I have is, we have basically seen the revenue declining over the past few quarters, maybe two to three quarters. What is the reason behind the decline in the revenue? From, when we can expect an upswing?
Revenue is a function of, again, as I said earlier, it's a function of the overall market volumes, to some extent, and to some extent is kind of really an annuity. To the extent of the impact of the overall markets have seen. As and when we see the markets picking up on its volumes and the level of activity, at that point of time, we'll able to see that. Again, that's a futuristic question, so I'll not able to give a specific answer on that. Thank you.
Sir, the second question is you have given the split between the annual issuer charges of the unlisted and the listed. I think you've mentioned INR 89 lakh on unlisted. What is what is it from the listed company?
I had. See our total annual issuer income for the quarter is at INR 45 crore, okay? Unlisted income from unlisted is INR 89 lakhs. Remaining is from listed company.
Okay. sir, just a basic question from my end. that KYC part which we are doing it from a subsidiary, is it only related to the mutual fund KYC or is it across? It may be a basic question to you.
No, it is, it is across. It is across.
Across. Okay. Okay. Thank you a lot, sir.
Thank you.
Thank you. The next question is from the line of Rahul Aggarwal, an individual investor. Please go ahead.
Hello.
Yes, you're audible, sir. Please go ahead.
I had a question regarding the EGR. Could you please comment about the EGR revenue?
We don't give us product specific revenues.
Understood.
It is in the process of, it will start going forward. We don't give any product specific revenues.
Okay. Thank you.
Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yeah. Thank you. to that one query on the Twitter feeds, I have just got an update from my team. I just thought I'd give it. That we do a weekly review of all the Twitter feeds and, whether they have been replied. So far we found basically satisfactorily it has been replied. However, we will take your feedback on record, and we will see if there have been anything which has not been replied to. In terms of overall, I would like to request all of you all to remain safe and sound, and continue to be happy shareholders of CDSL. Thank you.
Thank you. On behalf of Axis Capital Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.