Q3 20/21

Feb 3, 2021

Quarterly report

Ladies and gentlemen, good day and welcome to the Q3 FY 2021 Results Conference Call of CDFL India Limited, hosted by Axis Capital Limited. Please note that the CDSL does not provide specific revenues or earnings guidance. Anything said on this call, which reflects CBSL's outlook for the future or which could be construed as a forward looking statement, must be reviewed in conjunction with the risks that the company faces. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Baghul from Axis Capital Limited. Thank you and over to you sir. Thank you, Margaret. Good morning, ladies and gentlemen, and a warm welcome to 3Q FY 'twenty one results call for CDSL India Limited. At the outset, let me just congratulate the management for a spectacular Q3 performance and wish them best of luck for the coming quarter as well. From the management team, we have Mr. Nehal Hora, Managing Director and CEO Mr. Girish Amirthara, Chief Financial Officer Mr. Sunil Alwaris, Managing Director and CEO, CBSL Ventures Limited Mr. Swaroop Kumar Gotti, Vice President Mr. Nilesh Chitoo, Assistant Vice President. We'll begin with a short chat of opening remarks from the management. Post which he will open the floor for Q and A. Without taking too much time, let me hand over the floor to Nehal sir. Thank you. Over to you, Nehal So first of all, I'd like to thank really Aditya for that kind compliments and thank you for your wishes for the coming quarters. I wish you all a very good morning, and I hope all of you are safe and secure. I welcome you all to the CDSL's quarterly conference For the quarter ended December 31, 2020, and I trust each of you and your loved ones are safe and healthy. I'm joined on this call by other members of my management team, which includes the Chief of Business, the Chief of Regulation, the Head of Business and the MD and CEO of our subsidiary, material CDSL Ventures, who will then address your questions later in case if you have any. At the beginning of the financial year, we have stated our vision and our mission to promote the ethos of Atmanirbhar Nivesha or the Self sufficient beneficial owner or basically the investor. As we reached the 2 crore milestone last year in January 2020 And with 2.9 crore investors as on December 31, 2020, is that testimony of the growth of capital markets and a reward for the convenience and security offered by CDSL and its subsidiaries and its services. It also testifies that we're building an authentic and consistent Capital market ecosystem with good governance. We hope that with the changing times, individuals and companies continue to start availing digital solutions and online services and grow to be self sufficient and an Atmanirbharani nivesha. We will continue to innovate and offer e services and digital solutions to all capital market participants. Speaking on our business update, during the last 3 months, the number of new active beneficial owners account with CDSL has increased by approximately 28 lakhs, taking the total of active beneficial owners to INR 2.89 crores. The comparative number of new beneficial owners for the quarter ended September 30th was about the same level at around 29 lakhs. So as on 31 December 2020, CDSL has around 589 depository participants offering depository Services from over 20,500 locations across the country covering about 96% to 97% of the pin codes. These depository participants consist of clearing members, banks, custodians and non banking finance companies. We have also initiated new services In line with transformation and requirements of the current times to promote the initiatives promoted by the SEDARIAN government. So basically, in addition to our e voting services, we also offer services to hold the annual general meeting to video conferences. To make an Annual General Meeting, it is a hassle free event, but more importantly, a safe event for the shareholders and the company. We also provide email updation services to companies to update their shareholders and to ensure that a determination Auto communications to the shareholders valid, sufficient and productive. To also add, another important is basically the international finance center, where CDSL remains as the only As there are a lot of initiatives in the current finance bill, this is going to be an interesting opportunity going forward. Before I hand it over to our Chief Financial Officer, I want to take a brief moment to place our appreciation and gratitude to All our stakeholders, the beneficial owners, depository participants, issuers, regulators, employees and other market participants for their constant faith in us. With this, I would request our Chief Financial Officer to speak through our financial performance. So over to you. Thank you, Nehal. Good morning to everyone attending today's call. On speaking on our financials, we have seen a healthy growth this quarter with an YOY increase of 150% in our consolidated net profit. The total income on a consolidated basis for the December quarter ended 2020 has increased in rupee terms by INR34.71 crores, which is 51% compared to last year's similar quarter. We have achieved a total profit of INR 103 crores compared to 38.49% growth during last quarter. Net profit after tax on a consolidated basis for the quarter ended December 31, 20 20, it has increased in value terms by INR 32.42 crores, which is 150 percent. And we achieved a profit of INR 54 INR0.03 crores from last year's same quarter of profit of around INR21.61 crores. Total income on a stand alone basis for the quarter ended December 31, 2020 has also increased by 29.08% gross in value terms and 56% compared to last year. Total profit has total income has increased to INR 81.25 crores from INR52.70 crores during last quarter. Net profit after tax on a standalone basis for the quarter ended December 31, 2020 has increased by INR 28.96 crores, which is 206 percent INR 2.0 2 crores in December 2020 compared to INR 14.06 crores for the quarter ended December 31, 2019. With this, now I'll request So, Suneel Alwarik, the MD and CEO of CBSL Ventures Limited to give an update on the operations of the wholly owned subsidiary. Thank you very much. Good morning and a warm welcome to all of you. I'm Suneel Alvaris, MD and CEO of CBSL Ventures Limited. On the back of a very violent capital markets, CDSL's performance For the period April to December. So far as the KYC business was concerned, We added 42.74 lakh KYC records during this period as compared to 18.21 lakhs in the same Last year, which was a growth of 134%. In terms of the RTA business, we added another 193 companies, Taking the total number of companies to 625. We were doing some processing for BPM JJ BY And the number of records processed out there as well has jumped by 106% from 66,000 to 28,000. On the GSP business side, there was a slight dip in the number of records processed from 1 point from sorry, from INR2.31 crores to INR1.88 crores, a slight dip of about 16 lakh record. But we are likely to see these numbers increase in the coming quarter. On the income side, for the period April to December 2020, the operational income was INR48.69 crores as compared to INR 41.40 crores For the same period last year, it was a jump of 7.29% or 18%. The total income was INR58.92 crores as against INR 49.77 crores, which was again a jump of 18% or INR 9.15 crores. On the total expenditure side, For the period April to December 2020, the expenditure was INR 21.17 crores as against INR 22.86 Last year, which was a dip of INR 1.68 crores or a dip of 7%. The profit before tax was INR 37.74 crores as against INR 26.90 crores and the profit after tax was INR 29.33 crores as against INR 20.01 crores. So with that, we could I'll start off the Q and A session. Thank you very much. Thank you very much. We will now begin the question and answer session. The first question is from the line of Prakash Kapadia from Anavek Portfolio Managers. Please go ahead. Thanks for the opportunity and congrats to the team on continuous good performance. Couple of questions from my end. If I look at 9 month revenue for our subsidiary, We are at around $490,000,000 as compared to much higher revenue in the depository segment. So I wanted To know, Sunil, is it the SEBI project was there in the base and in the 3 month, 9 months, what is the SEBI project Revenue for this year and ex of that is the growth much higher? Well, actually the SEBI project did not contribute much in terms of the income last year. So whereas we got about INR 9 crores last year from the SEBI project, It was about a crore of rupees in this financial year. So it's basically the KRA business, which has done exceedingly well, Okay. As compared to the previous year. Okay. Okay. So ex of that, the growth looks okay? That's right. And this INR 9 crores was more like annual number and this INR 1 crores is 9 months, if I were to compare? Last year, the income from the SEBI project was about INR9.49 crores, okay, that was for the full year. And in this year, they had planned to open those the site again for To investors once again, but because of the pandemic, it got postponed. So it will happen, but we don't know That's helpful. And on the Other income part, what is the fall in yield as compared to 9 months of last year? Because I look at other income, it is up around 9%. Any mark to market gains or losses in this figure if Girish you could? Yes. So the investment income comparatively if you see it has increased Yes, by 19%. So basically this is all mark to market gain, which has accrued during this 9 months. I hope I answered. I didn't quite get it. You said investment The increase, but the mark to market gain should translate into mark to market losses because overall 9 months, The income is other income is up around 8%, right, around €498,000,000 Yes, yes. I'm sorry, I was looking at the quarterly numbers. The other income has increased by 8%. And last year, we had an income of INR 46 crores and this Yes, we have increased income of INR 49.75 crores. So basically, we don't have any mark to market loss Overall, it's all Macomapaic gain and this is the incremental gain amount. So yields would have fallen by around 80 to 100 bps overall yield? Overall yield on corporate band One sector, yes, it would have fallen, but our investment in corporate bond is negligible. And most of our investments are contributing into fixed deposits and debt scheme of mutual funds, largely F and Ps. So that's about it. Fine. And a couple of data keeping Points if you could give the revenue guidance in terms of the key revenue charge in transaction. So you Should I give it on 9 months basis or you want it quarter to quarter? If you have quarter, it's better. Otherwise, we can take here to take whatever is readily available. Okay. No, I have both. I can give you both. So, first, I will give you quarterly details. The quarterly Income on operation level, the transaction charge income has contributed around 30.90 that is roughly INR 31 crores, which is 30 percent of our operating income. Annual issuer income has contributed around INR 21 point INR69 crores, which is 21%. Online data charges, which is income mainly the income of the CDSL Ventures has contributed around INR 13.10 crores, which is 13% of our overall income. IPO Corporate Actions has roughly contributed around INR6.95 crores, which is 7% of our total income. Cash statement charges is around INR 4.45 crores, which is 4%. And rest So further operating income are minuscule. We are contributing in a range of 1% like user facility charges, settlement charges, account maintenance charges, e voting charges, foreign portfolio monitoring. So these are all this is a breakup of overall income on quarter to quarter basis. Sure, sure. That's And the last question from my end. Nehal, there was a mention in the budget about regulations being taken by the government to consolidate Some of the 3 bills. So what kind of an impact do we see going forward? And does this lead to a common demat account and more financialized and depository role getting more and more crucial in the coming Yes, in India. So the regulatory framework is kind of On a as is, whereas basis, but SEBI is the core regulator. What they are doing is kind of combining the SEBI Act with the Depositories Act and the Securities Contract Regulation Act, which has references of stock exchanges in the SCRA, which is of 1956. SEBI Act of 1992 and Depositories Act of 1996. So they are kind of combining these 3. The other one is the security, the Government Securities and the Spot Exchange, the Gold Spot Exchange. These are 2 other interesting Announcements made. So till now, government securities was kind of in a combined role of RBI and SEBI, So that they are kind of moving it towards more towards a steady kind of a role. So it will have the same reforms as other securities market Instruments which are there can be extended for government security. And the Gold Spot Exchange is Another interesting announcement made, which will now be regulated by SEBI. So we'll have a national Gold Exchange. So the settlement process, etcetera. So these are some of the interesting kind of the announcements which are made. And we'll see how it is actually panned out further. Great. I'll join back the queue if I have more questions. All the best. Thank you. Thank you. The next question is from the line of Suresh from Klap Mellanet. Please go ahead. Hi, Liam. Congratulations on wonderful performance again and congrats to the entire team members as well. Trust all of you are healthy and safe. My question is largely on 2 counts. One is, Mayank, for the first time, I see you've added a new slide called new services or which are under the CDL. Just wanted your perspective on which other services that were very promising that can be added to the existing nuclear products, both on the CBL side as well as the corporate side, Right. And the second question is on we are doing phenomenally well as far as the retail accounting concerns. And what is interesting is we're beginning to see some traction on the corporate side as well. For example, I understand that last quarter we had about 15,455 companies that's now scaled to almost 16,000. So we had good traction over there. What would be the strategy and how do we kind of get high incremental market share on the corporate side? Thanks. Okay, Kunal. Thank you. I think I'll before I hand over to Sunil to answer the question on CDL on a broad Strategic basis, we are kind of focusing more on the digital footprint of ensuring that more and more companies get The government has designated CDL and CDSL to use directly the Aadhaar based authentication. So that is moving towards an online opening of DMAT accounts where we will be authorized to use Aadhaar after the Supreme Court order. So we are waiting the final round of the approval. Everything has been completed. But from an overall strategic standpoint, it kind of makes it the ease of doing business when it's through an electronic Digital mode. So be it the RTA services, the e voting services, the AGM services, As well as basically the new BMAT accounts which are getting opened, it becomes kind of easy for them to do it. So it's an all around performance, which is done and that's our focus at Our 3 key stakeholders, be it DPs, the deposit participants, issuers and basically the investors, Find it extremely easy to manage the CDSL services to an online mode. That brings in the Transparency and our key theme or motto as I stated in my opening remarks is making the investors self sufficient or really, really ask whenever So that they can do it themselves rather than really relying on people. That brings in their trust into the system at a higher scale. And thereby, kind of physically encouraging more and more people who can join the fold of the ecosystem. As we've seen during the national pandemic, we've opened around a significant amount of demat accounts coming from Tier 2, Tier 3, Tier 4 towns also. They have an opportunity of coming into the mainstream market. And similarly, the issues also I have been able to link up despite the national pandemic, we have been able to grow our them because we are focusing more and more on a platform companies to join. I'll ask Sunil to add 3 points. Yes. So far as the CDSL Venture Limited services are concerned. We've focused on trying and tightening up the existing processes in the Since that there was a lot of manual verification required on the KRA processes, we've tried and automated that as much as possible. And this service should be launched shortly by us. They will be automating the KRA service and reducing tax Significantly. So far as the other businesses are concerned, what we see is that you would have Seen the consultation paper put out by Sebi on the KRA part recently. And there is basis that we are working towards that And what we see is that most of the KYC, etcetera, would be an online or a digital process. And we've already applied for a Adar based license from UIDIA and are in the final stage of Okay. Obtaining the same. We have also registered with UIDI sorry, with CCA for e sign license. And we've also launched an online account opening application. So with the combination of these 3, we see larger number of intermediaries can use the online piece As well as use Aadhaar as well as Ethane and open more accounts and add to the KRA business. So that's in a nutshell what we are looking at in the next quarter. Sure. So then on the TRA consultation that you just referred to a clarification on that, you said you said that there will be a one time exercise where we would reverify all the KRAs. Okay. Resurification would include even the KRA that we have done or it's only KRA which are done by others for instance? Yes, it is all the records which are there in the KRA, whatever KRA records I am holding. Okay. We want those records to be Re verified. But as I see it is that currently in CVL, we have a process of verifying all the records as well as There is an audit done separately and this audit report is placed every quarter to the Board. So to that extent, I think we will not be required to do that. Okay. And just may have one clarification as well. In your opening remarks, you mentioned about being very bullish on the prospects Being there on the gig circuit, why would that be such a big game changer, Nehal, from a 3 to 5 year perspective or even longer? Yes, I think the government focus is creating a Hong Kong in India and this is like a regulatory sandbox where the regulatory regime is a lot more relaxed. There is everything is in U. S. Dollars. So it's a Capital account convertibility issues are not there. So since India is now becoming a go to destination As we've seen in the vibrancy of the FBI investors investing in the securities market despite it not being capital account convertible. I see that kind of becoming an interesting market for the FPIs to see where we can become a hub for the entire basically the Very Asian market, where really the production and consumption is focused in the world. A lot of the price discovery is going to move Towards Asia from the west over a 3 to 5 year time in horizon. So if you have an ease of doing business, it's Kind of easy way of really, basically accessing India as a jurisdiction and not having the risk For the rupee out there. This can be an interesting proposition for a lot of people. Neil, any figures in terms of how large opportunity can be any rough figures It is difficult to assess at this point of time, but I think what you should look at how well has Singapore, Dubai, etcetera, grown. We can probably kind of Really, basically, overtake that. So Hong Kong, Singapore, Dubai are the 3 markets which have grown in, basically, Asia. And this can become an interesting opportunity. And also the current volumes on the Exchanges in the gift city are seeing a real vibrancy in terms of volumes. So as things start getting to the ease off, you're going to have more investment related products coming in. And that's going to be more of the The volume which is going to remain. Okay, thanks. I'll get back to the queue. I appreciate these answers. Thank you. Thank you. The next question is from the line of Aditya Bakhul from Axis Capital. Please go ahead. Hi, sir. Thank you for giving the opportunity. Just wanted to ask a couple of questions. One is on our transaction revenue, right? We've seen a steady pickup, which was a run rate of about INR 9 crores to INR 10 crores a quarter last year. We moved to almost a 34 croresort of a run rate. I understand that there is a fair bit of revenues coming from pledge and pledge of shares as well. So can you probably help us understand how much of it comes from that piece and how much is a pure increase in Base transaction revenue segment. So I'll ask this here from Girish to answer that. Aditya, can you repeat your question please? Yes. I just wanted to understand There will be some component of revenues, which are coming on account of pledge and unpleasure shares and a few new The regulations that have come into place within the transaction revenue segment. Just wanted to understand of the 34 revenue that we made, 21 about the revenue that we made in this quarter. How much of that would be attributable to those segments or those new revenue highlights? And how much would be our core transaction business? So, if you recall, last Quarter reported while in this call that around from the transaction charge of last quarter, we had around roughly INR 1.75 crores or around that we had earned from pledge, we pledge margin pledge, etcetera. In this year, we have total in this quarter, we have recorded transaction charge income of INR 30.94 crores, out of which Roughly, you can consider that there is an income on account of pledge margin, margin pledge, pledge, etcetera of Around INR 2, INR 2.5 crores. That is it, isn't it? I mean, there is only INR 2 crores of INR 2. So annualized number will be INR 8 to INR 10 crores on a steady state basis? Yes, yes. Okay. Understand will be difficult to predict, Aditya, because as the number of accounts grow, the transactions also grow and The margin pledge abilities also grow. So if you say that it won't be a simple Kind of basically an extrapolation of 1 quarter into another quarter because the number of accounts also are growing every quarter. Understood, sir. Understood, sir. Very, very helpful. Just a second point, again, I think also you highlighted that we've seen a reasonable increase in accounts from Tier 2, Tier 3 locations. Can you probably help us understand a little more as Whether this is in your opinion, whether this is a sustained trajectory, where or is there a geographical The concentration of the customer concentration of these accounts that are coming from the tier 2 tier 2. So I think it will be difficult to predict whether it will be sustainable or not, but it is expected to be sustainable. The reason is that it has not fallen off on every quarter on quarter. It has been growing. So the reasonable expectation is that today around 7% to 8% of the Indian population is only kind of accessing the securities market. There's a huge potential and we have a huge young population coming into the workforce. And with the government guarantee Teams becoming a thing of the past. The only access for wealth creation for your planning for that old age and Retirement is the securities market. And the first point of call for any Exposure in the securities markets will be opening a DMAT account. So I see there is a huge Penta potential, which can be tapped in. Whether that will translate in the next quarter or next year or next 3 years or next 5 years is something which we'll have to wait and watch. But I think the important thing is that the Entire paradigm of doing things is doing it yourself, give as much information to each of the investors And that brings in trust and security into the system. Great. That is very, very helpful. Margaret, can we go back to the queue? Thank you. The next question is from the line of Kunal Kanvi from Valliantree Advisors. Please go ahead. Hi, Naehli. Good morning and congratulations on the good set of results and stellar performance in last 1 year. So I had few set of questions like, just wanted to understand, this year has been an aberration of the year for us and the securities market as such. Yes. We have seen a flush of new demat accounts coming in. So if you look at it like the number of demat accounts that have come this year are larger than it's a 3, 4 years growth that has come in 1 year. How should one look at it in terms of next 3 years in terms of the settlement values, Settlement market for the entire capital markets in India, and that is truth number 1. 2nd is, if you look at our profitability, we are in a way thinking in terms of our historical levels. As a management, how do you look at it? Because one understands the fact that it is A high employee cost business where the operating leverage could be higher than what we have seen in the study. So how do you as a management look at That particular aspect of profitability. And my last question is on the As a company, we have been very vibrant in the past 1 year in terms of capitalizing the opportunities that come our way In all the businesses that we are present in. So apart from already disclosed things like this new K by C The array, aviation that is coming. Any other avenues that we see are interesting and we are looking to invest in the thing? I remember you mentioning about pre entering the MAD last quarter. So any interesting thing that we should know? Thank you. Yes. So I think growth of DMAT accounts this year has been kind of Very high growth year. Whether it sustains at the same levels or it is at a Lower level is something which we'll have to wait and watch. I think our core focus as a management team I know my focus as GMV is to create a sustainable solution, which is safe, secure, convenient And creating that trust in the ecosystem that people want to come back to it India, again and again. And for me, the biggest success would be that my own clients and customers become My own people who will kind of spread the word around that CDSL is a good platform to go to. So I think that is our focus. We are whilst it is important to increase the demat accounts, But our focus is to create a safe, secure and convenient solution platform. And whether that translates into numbers or not is It's really by product, it's not the main focus of the management team. Your second question, I'm sorry, can you repeat your second question? Systeming of the profitability and operating leverage in the business. Yes. So I think we are in for us the 2 main Raw material and work in progress and finished goods are our people and the technology. So obviously, technology also needs to be Constantly updated, upgraded information security is going to be another important component of our business, which needs to be constantly updated and Upgraded. And the people is something which we need to because these are highly specialized people required in this line of business. Our endeavor is going to be to keep the costs under overall control. However, not compromising on the quality of the people, the technology, etcetera, which is getting used. And hence, we will have to kind of go forward wherever are the important aspects of Employee, which needs to be increased or enhanced in terms of both quality and quantity, as well as our technology interface and prowess both in hardware, software as well as information security It's going to be our prime focus going forward because this is like building, as I've said in my previous call, We are in the financial infrastructure space. So we are like it's like building a road. The road needs to Kind of upgraded in terms of its quality of service, at the same time the security. And third is obviously the people who are really doing the operational tasks. And that is going to be our focus. So that would kind of lead to some amount of an operational leverage as we go forward because these are kind of Fixed costs which you kind of invest in and hopefully that translates into higher revenue, which may not translate into a commensurate increase The costs as the revenue increases year on year. So there is an element of operational leverage, but how that title pans out, Whether it is every 3 years, 5 years or every year, because it's a combination of various costs Which are across the board, both in technology as well as the employees. And I'm sorry, I have missed the third question. Could you repeat the third question? So my question was on the new revenue platform, what we've already discussed. Is there any update on the NAND? Yes. So NAND is something which we are continuously working. In the Indian scenario, the government has decided to take it over and give it free of charge To that, but this is something we continue to focus on as Phase There are a lot of other countries who are kind of interested in this kind of similar kind of ecosystem. So we'll see how it goes forward in terms of Being able to roll out. And secondly is the university is to comply with what the government has done. We are kind of really helping them also to kind of comply with The interface which is required for that. So these are some of the other initiatives. And I think as the financialization of markets is happening, more and more commodities are entering the financial markets. I think that safekeeping custody is going to become the most important driving force of this Financialization of the market. And pledge, re pledge, for example, gives an interesting feature to the entire suite of products, which can add the financing piece also to the securities market. These are some of the important building blocks where CDSL is kind of literally in it and it will continue to grow. Sure. Thank you. And last, if I can squeeze some bookkeeping questions on, if, Denise, if you can help us with Quarterly breakup for last year same quarter for the revenue. And Nehal, if you can talk to us through our dividend policy Any thoughts on with the improvement in the profitability and the scale, any thoughts on improvement in the dividend payouts? Thank you so much. Yes. So I will first provide the details of the income breakup. I'll start with the annual issuer income that we achieved during this quarter is INR21.9 crores compared to INR 19.48 crores during last quarter. Transaction charge income we have achieved is INR 30 point INR95 crores compared to INR11.17 crores last quarter. Another major source of revenue is online data charges, Which we have achieved is INR 13.10 crores compared to INR 9.39 crores during last quarter. Another major source of revenue is IPO corporate action charges of INR6.95 crores compared to INR5 crores last year. Cash statement, we have contributed around INR 4.45 crores during this quarter compared to INR 2.51 crores during last quarter. And this constitutes the major portion of our operating income and the remaining portions are Contributing roughly in a range of 2% to 1%. So What about the e voting, e voting, e voting this quarter is around INR 1.6 crores compared to INR 44 less during last same quarter last year. The key voting major income was already recorded in the Q2, which we had discussed during last year's call. I hope I answered. Thank you. I would request Mr. Tanvi to rejoin the queue for follow-up questions. We would also request participants to please limit your question to 2 at a time. The next question is from the line of Gokul Maheshwari from Auriga Capital. Please go ahead. Yes. Just two questions. One is on the payout policy, if you're looking at any change, which was asked the previous part of this. And secondly, on every few years, you get a hike on the annual residual Charges and I think there is already 5 years elapsed. Is there any update or engagement with the regulators on why this is an update? Thank you so much. Yes. So on the dividend policy, we are kind of it's a long term sustainable policy. We've been fairly liberal In terms of our current dividend policy, we are also building our balance sheet in terms of its financial strength. Also, there are going to be newer projects coming up both on technology, which I mentioned earlier and also the What is it really the IFSC centers, which will need some amount of money going forward. So we will see, we'll wait and watch how this stands out. But as of now, I think it's a fairly liberal dividend policy and we there are no plans of any changes For the annual issuer charges? Yes, the annual issuer charges, SEBI has we have not really engaged because is both NSP and CDSL doing it jointly together because of national pandemic, there has been an overall request to bring down the charges. So we have not yet we have not really approached it. We'll see how this goes out within this year. Okay, great. Thank you so much. Thank you. The next question is from the line of Adesh Mehta from Muthulu, Oswal AMP. Please go ahead. Hello, sir. Thank you for the opportunity. I just wanted to understand the unit economics of your annual issuer business. What is the variable cost and the fixed cost which goes behind it? Thank you. Yes. So it is the amount of securities which are dematerialized. It kind of becomes an annuity charge, Which is annual charges which we charge, which is kind of an annuity which is there. And if there is any Capital infusion or capital creation, there is a charge for the action, Corporate actions, etcetera, which get created like a bonus or a rise, etcetera. Then there are separate charges for that. For any voting, which is done e voting, again, there is a separate charge, which is for that. So It's basically a host of depending on the circumstances of capital confusion that kind of becomes So variable costs, but then that kind of adds into basically the annuity which is charged in terms of the total number of shares which are under us? Right. So just to paraphrase the question more accurately, let's say, a corporate like Reliance or Infosys, it comes for the annual issuer business to you. What kind of variable cost will you incur in converting those folios into your database? No. So there is no variable in terms of it is kind of a function of The number of folios, so if the shareholders increase in a particular company, then the folios increase. But the charges on the annuity have a ceiling also. So beyond a certain level, it is a fixed charge, which is there on a yearly basis. Okay. So there is no variable cost? Yes, at the ceiling. Most of the large companies would be at the ceiling. Because my question was more from the cost side that I just wanted to understand the cost side better. Okay, Salvator. Kind of that technology costs which are there and the operational costs Okay. But finally, the passive share capital, if there is no further corporate There are no additions in terms of capital infusion. It remains in the system, but that is paid to ensure the security of that particular thing. Okay, sir. Wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Sameer Shah from TurtleStar Portfolio Managers. Please go ahead. Yes. So thanks for the opportunity. So my question was more on understanding how we can increase the total market Size of the opportunity. So right now, we are into depository for share, But how about other alternates like getting the insurance policies also in the Demat form or maybe work towards getting the bank deposits also into the Demat form? So if we can have some subsidiaries which maybe report into IRDA or RBI, but that could help Really increase our opportunity size tremendously or increase our market size altogether because we have great credibility on the share de platform. And we are as a country, we are going digital and we are completely on clean, secure and convenient mode of Okay. So the other opportunities on insurance or bank deposits, if you could give me some understanding as to that is possible Or it can be evaluated, it can be thought upon, just going something off in terms of what we are doing right now? There is a process of deliberations that's happening called a single demat account, where all financial assets come under 1 demat That is under active deliberation at the ministry level, but it will require creating a framework where all the regulators Need to come on the same page. We'll see how that goes because each of these products like insurance policies and Bank deposits will be driven by differential rules by their sectoral regulator. And that has to kind of come to a common minimum program to Sure that it becomes like a single PMAT account. So whilst the idea is being thought through, the operation modalities, Etcetera will have to be worked out. We'll see how it goes. Yes. So just to understand, so We think that anything will progress in this direction in the next coming 2 years or it will take some further time than More than 2 years for this to be I'm going to take the timeline because till the proof of the pudding is in the heating. So till it is actually rolled out and operationalized. However, in the insurance sector, there is a voluntary DMAT, which is continuing to exist and CDSL does have a subsidiary which does that. But I think your question is more to do with a We'll be in that account where everything comes under one fold. So that is something we'll have to see how it works out. Difficult to predict that timeline, how much time it will take? Thank you. I would request Mr. Shah to rejoin the queue. The next question is from the line of Amit Chandra from HVAC Securities. So my question is related to the annual lease charge. So, if you can provide what is the revenue contribution from the unlisted companies in this quarter? And also if you can provide the split of folio based billing versus Flat based billing in the annual escrow charges. And is it fair to assume that with increasing market share, The share of the folio based billings should also increase, but the same is not reflected in the annual issue charges as of now. So have you witnessed a similar basically folio based billing Or it actually follows after some time. So it's my first question. And second question is On the debtors provision. So we have seen a sharp decline in the debtors provision in this quarter. So how do we actually see this moving? And do we need to provide more provisions for the full year? Thank you. So answering your first question on unlisted revenue, we have In this December quarter, we have a revenue of INR1.12 crores from the unlisted company's revenue. And for the 9 months, we have an income of around INR2.82 crores for unlisted revenue. As far as the debt provision is concerned, our collection efforts for the 9 months ended December 31st were Hope that is well beyond the expectation compared to what it was during September 30 September quarter of this year. During if you recall, lots of lot many companies were not operating during the first half of This financial year and due to that the payment that were forthcoming were not received on timely basis. Due to this increase in collection ratio more efficiently during the last quarter, this December quarter. The overall provision that we had made during September has reduced drastically in the quarter ended 30th December 2020. If we are able to maintain this Collection ratio during the full financial year, this would be the picture that you will have and later as of now, it's fully provided as per the Recory effort and as per the expected credit loss method provided in the Inde. This is generally because we see a rise in the data provision in the Q4. Yes. So on an average, our collection efforts were very good during this December quarter and that has resulted into lower For provision for latest provision. Let's see for the March, we'll see we'll be able to We'll try to maintain the same collection effort and we'll see what happens in March. And sir also on the folio break, meaning of the flag based Liena will issue So if you can provide a break up and also I was actually mentioning about the increasing market share that we have with the accounts In the existing payment accounts, so we have translated into higher annual issue charges or maybe sometime laterize the This increase in I think this increase in folio No prediction would be very difficult at CDSL's end because that is depending upon the corporate action that comes that is decided by the company. And with respect to the breakup that you intend to have for Income based on folio basis and income based on flat basis. Can I come back on this because I need to check up on this detail? Yes. Normally, I think Amit, we don't provide that level of detailing because it's finally a Culmination, it's a combination of portfolio based as well as slab based. I think the important thing is the overall revenue growth, which is happening in that. Thank you. I would request Mr. Chandra to rejoin the queue. The next question is from the line of Alok Shah from MNCL Group. Please go ahead. Just two quick questions from my side. One is on the margin front. So how do we look at Overall EBITDA margin with every passing quarter, we've seen improvement there led by cost efficiency. So not maybe specific to a quarter, but on an aggregate basis, how do we look at margin as a whole? And 2, on the last question, which got discussed in terms of connection efficiency between September December, You had talked about some element of provisions being created. It then got reversed now and what is the stock of provisions now on the balance sheet? So on the first question on the EBITDA margin, I think it would be more or less at these levels Given but again, see again, it's a function of the overall buoyancy and volumes in the market, which will also drive a Part of the revenue. Our cost as I had earlier explained is kind of a fixed cost. So there is a level of operational efficiency, is built in. But depending on our revenue is kind of some part of it is limited to What some part of our revenue is limited to how the markets as a volume perform And some part is kind of an annual activity. So it is kind of a function of both these factors and it will be At least our endeavor will be to keep in this broadband or broad range of the EBITDA margin. But each quarter on quarter will be a function of many such factors that I have to take it into consideration. As regard to your second question, ask the CFO Girish to answer that. Yes. On the dispersion for the Bad and doubtful debts, for 9 months ended, we have made a provision of around INR 7.34 crores compared to last year's Provision of around INR 5.81 crores. I hope I answered your question on provision. Was this provision number in Q in H1 FY21? If you could help me with that number, please. Half year, half year, just a moment, I will give you that. Our fear was around INR 6.20, INR 6.20. This helps, sir. Thank you. Yes. Thank you, sir. Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Aditya Bakhil for closing comments. So just wanted to say thank you to the entire management Thank you for taking all the time and sharing your thoughts and commenting on the results. Nehal, sir, I'll hand the floor back to you for any closing remarks that you may have? Yes. So I think closing remarks is that we'll continue to remain kind of keeping Our cost is under control, but what is required to be done, we will have to be done, as I mentioned, the technology costs as well as the employee Our intent is to make this investor self sufficient And we hope that this will continue to ensure higher trust and growth in the CDSL system in terms of business. Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us and you may now