Welcome to the CDSL India Q2 FY21 earnings conference call hosted by Axis Capital Limited. Please note that CDSL does not provide specific revenues or earnings guidance. Anything said on this call which reflects CDSL's outlook for the future or which could be construed as forward-looking statement 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, 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Aditya Bagul from Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Sanford. Good morning, everyone. On behalf of Axis Capital, a very warm welcome to the Q2 FY21 conference call for CDSL India Limited. At the very outset, let me just take this opportunity to congratulate the entire team of CDSL for a spectacular Q2 performance, and consistently so. To take us through the nuances of the results, we have the senior management here represented by Mr Nehal Vora, Managing Director and CEO, Mr Girish Amesara, the CFO, Ms Nayana Ovalekar, COO, Mr Sunil Alvares, Chief Operating Officer, CDSL Ventures Limited, and Mr Nilesh Kittur, AVP. Now, without taking too much time, I will hand over the call to the management for their opening remarks, post which we will open the floor for Q&A. Thank you, and over to you, Nehal, sir.
First of all, I would like to thank Axis for setting up this call. I would like to wish everyone a very good morning. I welcome you all to the CDSL quarterly conference call for the quarter ended September 30th, 2020. I trust that all of you and your family members are safe and sound and secure. I am joined on this call by the other senior members of our executive management team, who would be all happy to address any questions that you may have. For the call, I would like to first start at really at the macro theme. CDSL continues to promote the idea of Atmanirbhar Bharat India, which is a self-sufficient India investor. The increase in the number of Demat accounts created in this quarter is the highest in the history of the company.
We are happy to be the place as well as a market infrastructure institution from a depository standpoint, where the investors prefer to go. That is driven by two key things. One is that we would like to focus on the software and technology. We would like to make it as easy, secured for all people to connect. The second big theme is that our systems and our platforms would like to make it as easy for the users so that they can do it themselves. For us, these are the two key themes on which we would be building our future business. As we all know that financial numbers is something which is a kind of a by-product of the work, the platform, and the services which we are doing.
Our constant effort and endeavor is to ensure that our technology is new, is kind of sound, safe, and secure, for which more and more people, I think we have just really scratched the surface where more and more people are wanting to join the securities market ecosystem. We believe that our main effort is to create a safe, secure, and convenient platform. Our hope is that our financial numbers continue to grow. Our main focus or our main theme is more than the financial numbers, is to provide a sustainable, consistent, safe, and secure platform where really the people at large can come to and really create that trust among the securities market ecosystem. In terms of talking about CDSL's business in the last quarter. CDSL has seen a buoyant increase in the number of Demat accounts.
We have added around 29 lakh Demat accounts in the last three months, taking the number of Demat accounts to 2.61 crore. We've become the largest depository for some time now in terms of the number of Demat accounts. We continue to grow. Our effort and endeavor is, again, to create a safe, secure, and convenient platform for which more and more people would find it very easy to link themselves with our depository. In terms of our distribution platform, CDSL has around 593 depository participants, which are readily available in around 20,500 locations which are across the country. This represents around 95% of the PIN codes, and this is steadily growing even though we have practically covered the entire span of India.
These depository participants consist of all parts of the securities market ecosystem, be it clearing members, banks, custodians, and non-banking finance companies. We have also continued to bring in new services in line with the requirements which are there in terms of the current COVID-19. We have been successful in creating a service where all the Annual General Meetings can be held through the video conference facility, and CDSL is very proud to announce that a large number of companies have used our services and continue to use our services for creating the Annual General Meeting platform through the video conference facility. Besides that, the subsidiary service of vote to an e-voting service is also growing with each passing day.
With this, we have also created some kind of value-add services for the company, where we help companies communicate with their shareholders by providing an email service where they can forward their requisite documents to the shareholders in a safe, secure, and convenient manner. With this, these are my brief comments. Just before I hand it over to the Chief Financial Officer, I would like to thank basically all the stakeholders, be it the existing customers, be it the issuers, regulators, as well as the entire CDSL team of the employees who have worked very hard during these unprecedented times and ensured that the company continues to grow. With these words, I hand it over to the Chief Financial Officer to take us through the financial report. Thank you.
Thank you, Nehal. Good morning, everyone. Speaking on our financials, we have seen a healthy growth in this quarter with a year-on-year increase of 68% in our consolidated net profit. Total income on a consolidated basis for the quarter, September 30th, 2020, has increased by INR 32 crores, which is 46% at INR 101 crores compared to INR 69 crores for the quarter ended September 30th, 2019. Similarly, the net profit after tax on a consolidated basis for the quarter ended September 30, 2020, is increased by INR 19.81 crores, which is 68% at INR 48.87 crores from INR 29 crores for the quarter ended September 30, 2019. Now talking about standalone results. Total income on a standalone basis for quarter September 30th, 2020, has increased by INR 26 and a half crores, which is 51% at INR 79.15 crores from INR 52.58 crores for the quarter ended September 30th, 2019.
Similarly, the net profit on a standalone basis for the quarter ended September 30th, 2020, increased by INR 16.11 crores, which is 73% increase to INR 38 crores from INR 22 crores for the quarter ended September 30th, 2019. With this, I will hand over to Mr. Sunil Alvares to give an update about the operation of our wholly-owned subsidiary, M/s CDSL Ventures Limited. Over to you, Sunil. Thank you.
Hi. Am I audible?
Yes, sir. You are.
A very good morning to all of you and a warm welcome to all the participants this morning. I'm Sunil Alvares, Chief Operating Officer of CDSL Ventures Limited. We are very happy to inform that due to the extremely buoyant market condition, CVL's KRA volume increased by 117% as compared to the first half of FY 2020. The number of KYCs-
Can you just speak up a little bit? It's a little soft.
Yeah, sure. The KYC records in CVL increased, oh, sorry. To INR 14.57 lakhs from INR 6.7 lakhs to close at INR 243 lakhs as on 30th September 2020. Records which were fetched increased by 26.11%, sorry, to INR 35 lakhs from INR 28 lakhs. The CKYC record what we processed, there was a marginal dip to INR 5.84 lakhs from INR 6.74 lakhs. The number of RTA companies which we have serviced on a cumulative basis has increased to 539 as of 30th September as compared to 296 companies as on 30th September 2020. We are also processing the death claims of the PMJJBY scheme, which has increased by 109%. That is, this year we processed for the first half, 50,910 records as compared to 24,350 records. Coming to the financials of Q2 FY2021 as against Q2 FY2020.
The revenue from operations in Q2 FY2021 increased to INR 18.65 crores from INR 13 crores. That was an increase of INR 5.65 crores or 43.46%. The total income increased from INR 16 crores to INR 21.08 crores. That was an increase of INR 4.97 crores, or overall, 30.97%. The overall expenses, which were INR 5.98 crores increased to INR 7.18 crores in this quarter, and the profit after tax for this quarter was INR 10.54 crores as against from INR 7.61 crores. That was an increase of almost 39%. With this, I'd like to hand over the mic back to Axis Capital to take the meeting forward.
Shall we open up for Q&A?
Sure.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star then one. The first question is from the line of Kunal Thanvi from Banyan Tree Advisors. Please go ahead.
Thanks, Nehal, for the opportunity and many congratulations to the entire team for a very good performance. I hope everybody is safe and fine. My first question relates to, I just wanted a sense on granular revenue breakdown. I understand that we have put in this time around in the presentation between, say, transaction charges and annual issue charges. I wanted to understand more in terms of how much it came from, say, IPO and how much was from pledge. Specifically in the pledge business, what was the contribution of one-time pledge revenue and what is something that is a recurring revenue that occurred in the quarter? Second question is on, if you look at the presentation, we have talked about increase in the debtor provision.
Can you just throw some light and give some color on how should one read into it, whether it is one time acceleration and what would be the normal run rate for that? The third question is on the National Academic Depository, NAD, which we had dropped. We were not given that project from the government in last financial year. However, I hear that CDSL still is trying to monetize the same project. Any thoughts on the same would be really helpful. Thanks.
Okay. Thank you for the question. On your first question, I'll ask the CFO to answer. Before I go on to him, I'll just give you a broad perspective that the new system of the margin pledge is not very one-time income. It's a new way of where the securities market.
Sorry to interrupt, your voice is breaking.
You can hear me now?
Yes, a little okay.
One minute. Yeah. You can hear me now?
Yes, sir.
Yeah. In terms of the new system, it's a new way of doing business in the securities market in terms of the way the securities would be pledged. This is expected to go on as a normal routine income basically every month. Because these are just very basically the early times as to how much would be the trends on that. It's part of the overall income which we are taking. That's the first. Before I hand it over to the CFO to give you more of the details, I'll answer basically the other question you had in terms of the provision. I think on the whole, the provisions we've had are reasonably, in terms of the times which we are in.
There has been some amount of a slowdown in terms of the corporates in which they have to pay the fees to us. We are very hopeful because as we have seen towards the later part of the quarter, that a lot more companies have actually come back and paid to us. There is really a standard operating process that if you don't pay the fees, there are certain kinds of basically the actions which would be placed. We are hopeful that probably it'll be slightly late.
In terms of ensuring that our financial statements are true, we have increased the provision. We are hopeful that by the end of the year, we should be able to be at the same levels as seen in the previous year. The first query, I'll hand it over to the CFO, and then after that, on the 11th, I'll ask Sunil to answer the question.
Sure. Thank you.
At the outset, I had informed that the total income is INR 101 crore. Out of which, INR 89 crore is our total operating revenue, which is 88% of total income. The breakup of operating revenue is a transaction charge of INR 31 crore, which is 34% of operating revenue. Annual issuer charge of INR 22 crore, which is 24% of our total operating revenue. Online data charges, which is pertaining to CVL, which is INR 13 crore, 15% of total operating revenue. IPO protection is around INR 7.8 crore, which is 9% of our total operating revenue. e-voting charges are INR 4.38 crore, which is 5% of our total operating revenue. The CAS statement that we send, which is around INR 1.85 crore, which is 2% of our total revenue. This covers almost 90% of our total revenue, and remaining are other charges. I hope I have answered your question.
Sure. That is answered, yes. If the third question be answered by Sunil.
Yeah. So far as the National Academic Depository project is concerned, you may be aware that the MHRD and UGC have now appointed DigiLocker to implement this project. Both the depository will not be handling this project anymore. Since we already have some cost and we have a domain expertise of almost 10 years on this project, we decided to offer our services as a private service provider to many of the academic institutions. Primarily because when we used to visit these academic institutions to admit their awards into the academic depository, we found that many of them required help in creating the awards, et cetera. We are looking at it as an opportunity to provide our services as a private service provider.
So far, we have about 10 academic institutions have shown their interest and signed up with us, which we think is a good beginning on this.
How many academic institutions? Sorry, I missed that.
So far, about 10 have signed up.
Okay. Basically, we'll be charging for it, whereas DigiLocker and the government won't be charging it. It would be the service.
Yeah
that would differentiate us from them.
That's right. In case we sign up anybody, they have to accept our charges, only then we will be onboarding them.
Sure. That is really helpful. I'll get back with you. I have a few questions but I'll get back to you.
Sure.
Thanks.
Yeah.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to one per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Varun Goenka from Nippon India Mutual Fund. Please go ahead.
Yes. Good morning, everybody, and heartiest congratulations for such super set of numbers for last six months. I mean, for both the quarters. I had two questions. One, if you could again come back to the same answer we've been asking you for last so many quarters, but why is CDSL really accelerating its market share versus our peer? What is it that is working for it? Maybe some comments on the systems, or where is the market share coming from? Maybe some of the newer age brokers, are we gaining share there? Your comments will help. Secondly, our annual issuer charges. I think they come up for revision every five years, and that is next year. Some comment there will help.
Sure. On the first one, as I answered in the last investor call, we are a market infrastructure institution. Our intent is to create more sophisticated technologies that are easy-to-use services and platforms. How many people would like to use would be the value add or the value which they see in our platform vis-à-vis basically the other platforms. Where we see ourselves is our focus as well as is to ensure that we give the most sophisticated services and platforms at reasonable cost, and try to create more of a value proposition for anybody who's wanting to come within our platform. That is, in my considered opinion, and this is a personal opinion, is the reason why more and more people are wanting to come onto the CDSL platform. Our focus is
Not to increase the number of people, but to ensure that our platforms remain safe, secure, and basically easy to use. What has happened in terms of volume of people wanting to is kind of leading on because our intent is to create the safe, secure platform which we have. That's number one. In terms of the issuer fees, this is something which SEBI would have to take into consideration. Yes, we are due for an increase. I don't know whether, given the circumstances which we are in, where most of the companies have not really grown to the extent that they should have, whether SEBI would want to increase it in this year or we'll have to see whether it will postpone it by some time. That is something which we believe is not within our control. It's within the control of SEBI.
However, our focus as well as our main intent is, and continue to basically more and more companies onto our fold, so that even if the rate remains constant, the total income would continue to grow.
Right. Just to clarify on the first point of CDSL gaining share, are there any particular measurements that you benchmark against? For example, turnaround time in account opening. Is yours significantly better versus the peer? Or the downtime in systems much lower than the peer?
There are-
KPIs?
Yeah. Basically, there are various means in which we will be constantly seeing the systems are really creating the value for the person using it. It will be difficult to really list down each one of them. It's more of creating a platform and an ecosystem which constantly creates value for the person at a low cost. I think that's really our focus as well as basically our endeavor. We have an inclusive approach. The number of depository participants, for example, at CDSL are far, far higher than our competition. Our intent ecosystem, and then we see.
I'm sorry, your last point was not completely audible. Your voice was cracking. If you could repeat that, please.
I'm saying the number of depository participants which we have.
Right
at CDSL is far higher than our competition. We have basically an inclusive approach. Again, our focus is to ensure that we create a technology platform which is easy to use, safe, and secure. Then kind of leave it to the market to really figure out where they will find more value in going.
Sure. I'll come back in the queue with more questions. Thank you so much.
Thank you.
The next question is from the line of Anand Laddha from HDFC Mutual Fund. Please go ahead.
Sir, am I audible very well?
Yes, you are.
Okay. Just wanted to understand on the transaction revenue, if you can give some color like what was the number of transactions we had this quarter and vis-à-vis the number of transactions that the overall market has reported. How has been our trend in number of transactions? Like, what was the number of transactions we did in Q1? What was the total number of transactions in the market? Is there any way can we capture this data in terms of number of transactions happening in the market? First thing was that. Second, of the 2.6 crore Demat account holders, what is the active Demat accounts we have? How this number was in Q1 and same quarter last year, how this number was?
Okay.
Lastly, on the pledge revenue, sir, if you can quantify how much was the pledge revenue this quarter?
Yeah.
Sorry, sir.
mixture of many things. It's not only the amount of transfers which take place. It'll be difficult to quantify and put it as one single number because that will not lead to the proper conclusion in terms of the growth, because it's a mixture of many such variables which are out there. In terms of that. In terms of the number of Demat accounts, we grew around 29 lakh this quarter. Around 19 to 20 lakh was in the previous quarter. In the same quarter last year, it was basically, I think around seven to eight lakhs. There has been a significant number of Demat accounts which have been opened during this previous quarter. As I mentioned in my speech, this has been really the highest number of Demat accounts which have been opened in a particular quarter.
And sir in terms-
Yeah. Your third question on the revenue of the pledge, margin pledge, I think as I said, it will be really early times. It will not be fair to really put out those numbers because this has only started on the 1st of September. It is one month into this particular. What we give is kind of a picture in terms of the transaction revenue. However, I hand over to the CFO, if he can give any further details if we have given out.
Okay. Sir, in terms of active Demat account, you didn't indicate that. Of the 2.64 Demat accounts we have, what proportion is the active Demat account from that?
I think a significant portion would be really active Demat accounts. Significant portion. We don't have an actual number which we put out, but it's a very big, high number, which is really active.
Sir, on the transaction charges, does the transaction charges also include your pledging charges?
I'm sorry, can you come again? Your voice was not clear.
The transaction charge of INR 30 odd crore, sir, which we have reported, does this include the pledging charges as well? What are the other variable charges in the transaction charges? Apart from the transfer charges, pledging is included.
I'll ask the CFO to answer that and give an answer.
The margin pledge charges are included in the transaction charges revenue that I had shared earlier. If you look at our website on the charges, you will come to know what all are included in the transaction charges. It's a quite long list, so I would request you to go through the website.
I think he can just name two or three maybe ones which are there, so that at least we have a clear picture. I think the main one or two.
Hello?
Yes.
That's okay, sir. That's from my side. Thank you.
Thank you. The next question is from the line of Prakash Kapadia from Anived Portfolio Managers. Please go ahead.
Yeah.
Thanks for taking my question. Congrats to the entire team for the good work which has been continuing for last many quarters. I had two questions. One, if I look at our OPEX, it is down around 3% in the first half. Apart from employee cost, any major items which are seeing a downward trend and where we've negotiated some of the cost due to the COVID-19, if you can share some insights. Second half, how do these costs look like? Secondly, despite we seeing a robust 67%, 68% profit growth, our cash flow from operations in the first half is just up 28%. Any specific items which are seasonal in nature and will reverse in the second half and cash flow also should improve in the second half or by the year-end?
Yeah. I would just ask CFO Girish, if he can answer those two questions.
With respect to the six months expenditure that you are comparing, if you recall, last year we had a SEBI PSAL project done in the subsidiary, CDSL Ventures Limited. The cost towards that was around INR six and a half crore, which is compensating, which is not there during this quarter.
Okay. In the entire second half, it's not there, right?
Yes.
Okay. Assuming that that doesn't come, this muted cost should continue in the second half as a trend?
That would be a.
Yeah, we don't give any future listing. I think as an overall theme, our basic effort is to ensure that we keep our costs under control. However, there will be certain increased costs as we go forward, we'll see how it goes.
Sure. On the cash flow, Girish, if you can give some color.
Basically, during this first half, cash flow-wise, we have not incurred any major capital expenditure. It may remain at this particular level.
Okay. I was looking at operating cash flow, not just CapEx or investing or free cash flow. I was just looking at operating cash flow.
Let me come back on this. Sure.
Sure. Lastly, Sunil mentioned there was eKYC, there was some increase and KYC also seeing an increase. Is eKYC an ancillary to KYC? For growing eKYC businesses, KYC business the right matrix to look at or eKYC is a separate business model and a potential revenue by itself?
It is basically a part of one thing. It's a way of doing it. You have a physical way of doing a Know Your Customer, or you have an e way of a Know Your Customer. This will become kind of easier for it to open. I'll ask Sunil to answer that question, though.
To answer your question, eKYC would be a separate business head by itself in CDSL, and it will facilitate the number of KYCs which ultimately get added to the KRA. If somebody does an eKYC or he does a physical KYC, ultimately it has to get added to the KRA. The way the world is moving towards digital mode currently, eKYC will definitely facilitate the number of KYCs into the KRA. That is how we are looking at it. I hope that answers your question.
Yeah. Is, Sunil, a possibility of tapping or cross-selling this business to banks or other financial institutions, given the way the world is? Is that a business opportunity which can be thought of?
It is a business opportunity on paper. Right now, as per the regulations of UIDAI, if I onboard anybody, the entity, I have to recommend that entity to SEBI, and SEBI will recommend that entity to UIDAI and UIDAI to DFS, and that's how they will get the registration. Given that sort of a situation, if that entity is not registered with SEBI, I will not be able to recommend it to SEBI. I think right now it will be limited only to capital market intermediaries.
Okay. Thanks a lot. I'll join back.
Yeah. Thank you.
All the best.
Thank you. The next question is from the line of Hiten Jain from Invesco Asset Management. Please go ahead.
Yeah, hi. I had a question on your other expenses. Admin and other expenses are up sequentially by 26%, and tech expense is up sequentially by 42%. Can you just explain what is driving this?
I'm sorry, Hiten, your voice was not clear. Can you repeat the question?
Yeah, sure. Am I audible now? Hello?
Yeah, you're audible, but your voice is not absolutely clear. Some parts of your questions were not really understood. Yeah.
Yeah. My question was on other expenses. From your presentation, where you are giving the various heads of expenses, the tech expense is up sequentially by, I think 20%, more than 20%, and same as admin and other expenses. Can you just explain this cost expense? Are they linked to some revenue sources?
Yeah. I think, as I said earlier, our entire depository operations is going to be based on enhancing our sophistication and basically our IT and technology. There is going to be a constant endeavor to ensure that our platforms become easy to use. Therefore that is going to translate into some amount of the expense being spent on the software, hardware, as well as basically the applications which we have. That's why there is an increase. It's done in a manner so that it will give a long-term play in terms of ensuring the speed of the operation. As well as the admin cost includes also some of basically the SMSs, which we are required to send. These are the new kinds of platforms which are going to come up.
SEBI has asked both the depositories to send basically the SMS for each transaction which is going to be done. Now it's being mandatorily done through this particular system. That has caused a slight increase in terms of the admin costs.
Understood. Another question was, while you answered that, just wanted some more clarity on these provisions for doubtful debt. While that is up 100% year-over-year, you also said that it will reverse at the end of the year. I mean, I'm assuming that accounting is a way.
It's not going to reverse. I'm saying we are hopeful given that the situation is such that most companies, because of the national lockdown, there are most companies which were not working, were shut down. Slowly they have started to open up, and we are hopeful that these fees would get.
Sir, even sequentially, the number is quite high. Even in one quarter, first quarter 2021 also, lockdown was there. Is it that there was some seasonal element here?
Yeah, the fees are charged for the entire year for the company. That happens in the end of the first quarter and beginning of the second quarter. There will be in terms of how much payment people are making, in terms of that we start seeing. As the year progresses, this is what we have seen in the past, that normally companies do pay off. We come down to kind of a steady number in terms of basically the amount which we are able to recover.
Understood. This is quite clear. Thank you so much.
Thank you. The next question is from the line of Yashodhan Nerurkar from PPFAS Mutual Fund. Please go ahead.
Yeah, hi. Thanks for the opportunity. Basically, I just had to get a clarification on the point which you mentioned earlier about the DigiLocker and the NAD which you guys are running. Since the project is handed over to DigiLocker, you said you have signed roughly 10 institutions. And DigiLocker won't be charging them, whereas you guys will be charging them. Could you just elaborate on how exactly is it going to work? Because if DigiLocker is running these services without a charge, how would it work for you guys?
Yeah. I'll ask Sunil to answer that.
Currently, DigiLocker is still setting up its infrastructure, and it takes some more time for them to really set up the National Academic Depository, because it took us almost three years and they have to set it up from scratch. That is point number one. Point number two is, while we are offering this service to academic institutions, which basically many of them are still holding their awards in the physical form and all of that. It's like a back office what we are creating for these academic institutions, where they can hold these awards in the digital form. If later on they want to share it with DigiLocker, they can do it. That's not a problem.
In the interim, if a student wants to verify the awards or a verifier wants to verify, it is already available with us, and he has a choice of verifying it through us or through DigiLocker as and when he. If he does it through us, there will be a charge applicable. As of now, the awards what we have are not available in DigiLocker.
Okay. In a way, I think going forward, you'll be sort of competing with DigiLocker.
No, we are not really competing with them. We'll be charging and they're not charging anything. It's not really competing with them. We are basically facilitating academic institutions to convert their award into the digital format. There will always be a phase where we'll be converting and then they will be uploading. During that phase, I think that is where many of the students will be able to access and verify their awards.
Okay.
Ultimately, to give you another example, is between the CKYC and the KRA. The CKYC just charges INR 1 for a record for fetching, and we charge INR 35. Many of the intermediaries are very comfortable, especially from KRA, because they can depend on that particular veracity of the record.
Okay, got it. Secondly, also what I wanted to know about is the infrastructure which you guys are building. Most of that is in-house, right?
You're talking about the Academic Depository? No, it's a separate infrastructure we have built.
No, I'm just talking about the whole general technological piece.
Our entire technology is being owned by CDSL. We have basically the outside software vendors as well as the hardware providers, which kind of link up. The entire technology is owned by us.
Okay. Just a last small question. Because in the past, ever since March, since the lockdown has happened, we have seen this astronomical growth in the number of Demat accounts opened. Has that growth sort of tapered down or you're seeing the same kind of growth even in this quarter and this month as well?
No. See, I will not able to talk about this month. Whatever we will put out, we'll put out on the CDSL website. That is what I said, that second quarter has seen really the highest number of Demat accounts in basically the history of the company. There has been a growth over the first quarter also.
Thank you. Participants, we may request you to please limit your questions to one per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Ashutosh Somani from JM Financial. Please go ahead.
Sir, thanks for taking my question, thanks for incorporating the suggestion of having the revenue breakup in the slide. Just wanted a clarification. Have I heard you correct on the e-voting charges being INR 4.38 crore in this quarter?
That's right.
What was it last quarter?
It was INR 2.48 crore in September 2019 quarter and INR 17 lakhs in June 2020 quarter.
Okay. Sir, there's a clear significant jump from a Y-o-Y perspective in e-voting charges, right? I remember this used to be below INR 4 crore on an annual basis in FY 2020, and now it is INR 4 crore on a quarterly basis. You see a lot more traction in e-voting?
I think this is where we see that because of the virus which has happened, the COVID-19 crisis, more and more people are really using these kind of platforms, as we see. What is seen is that a lot of people are finding basically the ease of doing it from their homes rather than having to come to the physical location. I do expect that once you're used to a certain ease of doing things, it should probably go on even after things really basically open up. What we have seen over the previous years, that there are a number of companies which are doing that service with us has also significantly increased. That is partially because there has been a national lockdown, et cetera.
Also that our systems have been fairly simple to really access, and people have found it extremely easy and secure to use.
Thank you. The next question is from the line of Praveen Guru from ICICI Securities. Please go ahead.
Hello.
Yes.
Thank you for taking my question, and congratulations for this set of numbers. My question is around pledge revenue. Can you give an update that, what are the number of pledges which are getting created in the system right now? By right now, I'm thinking that after Q2 FY21, how sustainable these pledges have been till date. Can you give me a number on it?
We don't have the actual number of margin pledges which are being set out on the website. I'm sorry, I'm not able to give you the number of margin pledges. All I can say is that the system of margin pledges is basically here to stay. It is the way of doing business going forward. There is definitely a value proposition in terms of ensuring that the BO, the beneficial owner, is able to see that whether its shares are actually getting pledged, re-pledged to the trading member, clearing member, or the clearing corporation. It's bringing in a lot of transparency into the system. It's also ensuring that only once the pledge flag has been removed, can you sell the securities. This kind of an unauthorized sale, which could happen, would not happen.
It's making the entire system very safe and secure, and also bringing the transparency. I think, given all these factors, and plus, basically SEBI has mandated that this is the only way of it's basically here to stay.
Thank you.
The next question is from the line of Aalok Shah from Monarch Networth Capital. Please go ahead.
Yeah, thank you for the opportunity. Sir, congratulations on great set of numbers. My question pertains to an extension of your last answer on pledged part. When I look at the first half numbers over, say, for that matter, FY20, there's been a meaningful amount of increase, and that's been a factor of multiple aspects. Trying to sustain this, maybe not FY21, but FY22, what do you see that as a possibility? Would you try and give some thoughts on how do you see the transaction charges line item move forward?
We don't give any future statements on how this will pan out in the subsequent quarters. Our focus and our endeavor is to ensure, as I said, moment the infrastructure of a Demat account is created, and it creates the value proposition. The hope is that the securities market, as the volumes grow, that is going to lead to a significant increase also in the number of Demat transactions. I'm sorry, we would not be able to give any kind of a basic reply in terms of whether this can.
I take that point, sir. At least can you share some thoughts on, while you have disclosed the number of beneficiary accounts which have got added, and somewhere during the conversation you also mentioned the percentage of active clients. Would that also have shown a meaningful increase? You have a 2.6 crore BO accounts, of which say, at any point, 20%, 30% are actively trading. Has that number gone up to the same extent or a higher extent?
Again, it's very difficult to give a overall principle, but I think what has been seen is that a lot of people which earlier used to basically open a particular account and wait for some time before they transact. That overall timeline, basically, the general trend has been that people generally trade as soon as they really open the Demat accounts. That is what we are seeing, that more and more people are, and that can be seen in the overall volumes also in the market, that the volumes in the stock exchanges have also increased significantly over last year. The delivery-based volumes in terms of the value has also gone up significantly over the previous year. These are some of the trends which we see.
Okay.
We are hopeful that this will continue. The important thing is we are creating the sophistication, the structure, and the value so that more and more people will continue to use that platform.
Sure. This is helpful. I'll come back in the question, sir. Thank you.
Thank you. The next question is from the line of Varun Goenka from Nippon Mutual Fund. Please go ahead.
Yes. Thank you for taking my question again. Could you help us understand over the next two, three years, what could be our major investment areas? Both in terms of numbers and also the areas that we're looking to invest in.
I don't think we'll give you the numbers because we don't talk about the future. That's a part of our overall strategy and policy also. In the broad areas, software technologies is going to be our area. Cybersecurity is going to be another very important area because there is a push from SEBI also, we also feel that as the number of accounts grow, this is a very important part to be really continuously being enhanced. These are the two or three key areas, obviously we need the sophistication of the employees. These are very specialized employees which are needed out here. As our key operations grow, we will need that kind. Really, the employee cost, technology cost, and cybersecurity cost are one of the three key areas that we will continue to pursue.
Sure. Because our treasury yields are falling, obviously it's getting lesser and lesser attractive to keep it in fixed income. What are we looking to do towards our payout ratios or as such?
What do you mean by the payout ratio in what we pay the shareholders?
Yes, dividends.
Dividends?
Yeah.
For that we have really an overall policy. I think if things go okay. The other thing which is worthwhile to note, if the percentage of total income which relies on this is very low. The treasury part of the total income is not really significantly high. It's basically the operating income which really is driving that. Our payout ratio is basically based on the percentage of basically the operating income and the operating profits which we have.
Right.
I think we should be able to ensure that we would be able to have the same amount as we go forward. This is something which we'll see in the future.
Okay. Would we have any role in the Account Aggregator Initiative that has been under works that will probably see the light of the day?
That will have to be seen how that really goes forward. It would be very difficult to comment till the formal structure is really approved.
Any movement on the proposed thing of a single account for all financial instruments?
Yeah. It's work in progress.
Okay.
We'll see how it goes forward, but that is yet work in progress.
Okay. Thank you so much.
Thank you.
Thank you. The next question is from the line of Hardik Jain from Whitestone Financial Advisors. Please go ahead.
Yeah. Good afternoon, sir. Most of my questions are answered. I just missed one thing. When you were saying, what is the online data charges for the quarter? I missed that.
Girish is CFO.
Yeah. It is INR 13 crore online data charges for September 2020 compared to INR 8.1 crore in September 2019.
When you see this other operating income of INR 37 crore, other operation income. This INR 37 crore includes online data charges, which is INR 13 crore, and IPO which is around INR 8 crore, and e-voting, which is around INR 5 crore. That totals up to INR 25 crore-INR 26 crore. What would be the other INR 9 crore-INR 10 crore?
Basically we recover other charges from depository participants, like user facility charges, settlement charges, account maintenance charges, then other small charges. All these small charges put together are around 10%, and almost 90% area I had covered in my initial question. Do you want me to again repeat it?
No, that's it. Thank you.
Yeah.
One more question, sir. This e-voting charges that we have, this also includes the online AGMs that we are conducting, that is also part of the e-voting charges which we are charging companies for online AGMs that we are conducting?
Yes.
Okay. Thank you.
Thank you. Ladies and gentlemen, due to time constraints, we will be taking the last question from the line of Devansh Nigotia from SIMPL. Please go ahead.
Yeah. Thanks for the opportunity. Sir, just a couple of questions. Sir, one is, in case of a non-payment of annual issuer charges, can you help us understand how does the compliance work? I mean, let's say after what period of time, what actions happen for non-payment? Second is, if you can just elaborate on the relationship with Upstox and 5paisa. For Zerodha, we know that they are exclusively with us, but the second and third discount brokers, I mean, are they on both the platforms or they are with NSDL? Also if you can help us understand what is our wallet share with both of them.
Thirdly, in case of eAGM, I mean, there have been some AGMs which were supposed to happen in June, which did not happen and then they are postponed to September and which were already supposed to happen in September, they did happen. Any number, like percentage of the AGMs for the quarter, which happened in this quarter? What is the remaining portion? If you can just help us understand these things.
See, we don't comment on specific people, whether they are with CDSL or not on clients and customers, because I think that is privy to basically how we are doing. The important thing is that we are ensuring that we are creating a value proposition for our platforms. I think, basically, each of the people are free to go to whoever they wish to. Where they see value, they are going to come there. It'll be difficult for me to give you that answer whether so and so person is on the platform or not. Sorry, what was your first question? I'm sorry, I've missed that.
I mean, how does the compliance work, let's say, so there has been some bad debt, and these generally happen for standard issues.
That is SEBI-prescribed compliance, is a standard operating procedure, that if you would not pay then there are certain shareholding patterns which they are required to file their compliances would not be available. Hence, to really ensure that they would need to pay up. Otherwise, they would not have the shareholding pattern with them.
Okay.
This is a broad standard operating procedure.
Okay. In case of eAGM, because there have been some pent-up activity which did not happen. If you can comment the percentage of AGMs that we do.
Yeah. They have now further extended it by three months. MCA has extended by three months. Basically AGM season should continue for another three months. This is something which is going to go on till that particular final date is there. Normally our trend has been that most companies wait till the last date in September to finish their AGM. Now since there has been an extension of three months, which has been given, so we should see some more volume coming up this quarter. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Aditya Bagul for closing comments.
Yeah. Thank you. A big thank you to everyone who have participated on the call. Nehal, sir, I'll hand the floor back to you for any closing comments.
No, I think, I have made my comments through various replies. Just stay safe, stay secure. These are some of the times which we don't see it often. It's important to keep yourself safe and secure. I hope the very best to all of you. Thank you, Nehal, sir. Thank you. You can close the call now. Thank you very much, sir. Ladies and gentlemen.
Thank you, Aditya.
Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.