Ladies and gentlemen, good day and welcome to CDSL India Limited Q4 FY 2020 investor conference 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 statement must be reviewed in conjunction with the risk that the company faces. As a reminder, all participant lines will be in 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. Thank you, and over to you, sir.
Thank you, Nirav. Good morning, everyone, and thank you for standing by. On behalf of Axis Capital, a warm welcome to the Q4 and financial year 2020 earnings call of CDSL India Limited. These are challenging times and during this crisis, we hope that you, your families, and colleagues are well and healthy. On the call today, we have the management of CDSL represented by Mr. Nehal Vora, Managing Director & Chief Executive Officer, Mr. Girish Amesara, Chief Financial Officer, Mr. Sunil Alvares, Chief Operating Officer, CDSL Ventures Limited, Mr. Swaroopkumar Gothi, Senior Vice President, and Mr. Nilesh Kittur, Assistant Vice President. I shall now hand over the phone to Nehal, sir, for his opening remarks, after which we'll open the floor for Q&A. Thank you, and over to you, sir.
First of all, I would really like to thank Axis Capital for this call. I would basically like to wish everybody basically a very good morning and a good afternoon wherever you are. I welcome you all to the quarterly conference call for the year ending and the fourth quarter ended March 31, 2020. I trust really basically each of you and your loved ones are safe in these extremely difficult times. The depository services was categorized as an essential service. These testing times, CDSL and its employees have represented strong resiliency and ability to adapt to the changing circumstances. The health and the well-being of our employees, investors, and all our stakeholders is of utmost importance to us, along with the business continuity. CDSL has continued to perform all its operations under these very difficult circumstances.
Basically, our effort in these challenging times has to grow and strengthen our business. We request all our investors to move to a digital mode where the transactions can go through even in these times. CDSL's easiest continues to operate without compromising on the health or security of the DP operations. Basically, in our effort to support the country in its battle against this novel pandemic, CDSL has contributed a sum of INR 6.8 crore towards the ongoing relief efforts by the central government and the state government. On the business side, during the last financial year, the number of active beneficial owner accounts with CDSL has increased to INR 2.12 crore as on March 31st, 2020, from INR 1.74 crore as on March 31st, 2019, which indicates a growth of around 22%.
During the quarter ended March 31st, 2020, the active beneficial owner accounts of 14.96 lakhs were added as compared to 9.2 lakhs for the quarter ended December 31st, 2019, and 6.61 lakhs for the quarter ended March 31st, 2019. Basically, as on March 31st, 2020, CDSL has 599 depository participants offering depository participant services from over 20,000 locations across the country, representing about 94% of the PIN codes. These depository participants comprise of clearing members, banks, custodians, and non-banking finance companies. The securities of almost all listed companies have been admitted with CDSL for Demat. Further, a large number of private, limited, and unlisted companies are also admitted with CDSL. As on March 31st, 2020, the securities of 14,762 companies have been admitted for Demat with CDSL. During the last 12 months, the volume of securities under custody has increased by about 26%.
I now hand over the call to the Chief Financial Officer, Mr. Girish Amesara, to take you through our financial performance. Thank you.
Good morning, everyone. Good evening, wherever you are. I will just brief through the financial performance that we have gone through for the year ended March 2020 and quarter ended March 2020. The total income on a consolidated basis for the year ended March 31st, 2020, has increased by INR 38.80 crores, which is representing 16%, to INR 284.25 crores from the previous year income of INR 245.45 crores. The net profit after tax on a consolidated basis for the year ended March 31st, 2020, is INR 106.72 crores compared to INR 114.83 crores for the year ended March 31st, 2019. Total income on a standalone basis for the year ended March 31st, 2020, has increased by INR 22.92 crores, representing 12% increase to INR 211.39 crores from the previous year income of INR 188.47 crores.
The net profit after tax on a standalone basis for the year ended March 31st, 2020, is at INR 77.32 crores compared to INR 84.38 crores for the year ended March 31st, 2019. It may be noted that the consolidated and standalone profits have decreased mainly on account of provision for a non-recurring previous year's anticipated statutory liability of INR 10.56 crores, contribution towards CSR expenditure of INR 6.80 crores, which includes INR 4.17 crores of unspent amount of previous years, and a legal provision of INR 1.79 crores pertaining to an outcome of previous year's legal matters. The consistent income growth is a reward for the core values that the company believes in, of being convenient, secure, and dependable. The dip in the net profit is a result of non-recurring expenses arising out of legacy issues.
We want to send out a very clear message that we are strongly committed to the core principle of transparency and good governance as per the framework prescribed by the government and the regulators. I request Sunil Alvares to give an update about operation of our wholly owned subsidiary, CDSL Ventures Limited. Over to you, Sunil.
Hello. Good morning, everybody. As far as CDSL Ventures is concerned, the total income was INR 68.81 crores as against INR 51.58 crores. That is an increase of 30% of INR 15.22 crores in this. However, the overall expenses increased from INR 15.5 crores, an increase of almost INR 13 crores. That is up to 90%. Based on this, the profit after tax works out to INR 36.42 crores as against INR 35.78 crores. The increase in expenses were mostly related to the increase in the KYCs processed, so the charges towards that. Secondly is the inter-KRA charges, that is whatever we fetch from other KRAs, the expenses towards that. Third is the expenses towards the PACL project. The PACL project, there was a provision made of about INR six and a half crores.
We'd also like to mention, so far as the KYC registrations are concerned, in this financial year, as of 31st March, it was INR 2.16 crore as against INR 1.88 crore. That was a growth of 29 lakh KYCs in this calendar year, which is a growth of 15%. We are also doing the CKYC processing for other companies so that they can submit their KYCs where this year we processed 11.42 lakh KYCs as against 2.29 lakh KYCs last year, which was a growth of 291%. So far as the RTA business is concerned, we have been registered with 402 RTAs as of 31st March, as against 121 companies as of 31st March 2019, which is a growth of 281 companies or 230%.
Far as the GST, that is the GST Suvidha Provider is concerned, we have processed INR 277 lakh transactions as against INR 259 lakh transactions, which is a growth of 7%. Finally, coming to the NAD project, we have registered 619 academic institutions as against 527 academic institutions as of 31st March 2019. Also, we had a good number of awards which were uploaded, about INR 2.83 crore awards uploaded into the system as against INR 1.04 crore awards uploaded last year. As of 31st March 2020, 13.27 lakh students were registered as against 2.7 lakh students which were registered as of 31st March 2019. One adverse news is that the NAD project has been handed over to DigiLocker and both the depositories will no longer be handling it going forward. That is all from my side. If there are questions, we'd like to take them now.
Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question, you may press star and one on your touchtone telephone. 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'll wait for a moment while the question queue assembles. Anyone who wishes to ask a question, you may press star and one.
[John].
First question is from the line of Prakash Kapadia from Anived Portfolio Management Service. Please go ahead.
Yeah. Thanks for taking my question. Couple of questions. If I look at our financial performance for FY 2020. This is the second year in a row where EBITDA growth is negative. Even if I adjust for some of the expenses, which Girish mentioned in terms of increased CSR contribution, legal provisions. We've seen a decent revenue growth this year. Going forward for FY 2021, will revenue and EBITDA both be positive for us? What is our sense, and what will drive this? On the unlisted space, if you could give us some insights into what were one-time activation fees, recurring revenues, and the revenue breakup for Q4 in terms of our major heads, that would be helpful.
Let's see. Can I take the question? I'll hand it over to Girish.
Yeah, sure.
In terms of, as we are aware, we have a new management team which has joined around the half-year mark. Around October, we have a new board. The entire management structure has changed. If you add back the legacy items to the expenses, it has a twofold impact that had those been incurred in those years, the profits comparison would have been lower, and if you do a what if, the profits for the current year would be higher than the previous years. That's number one. Number two, I think the important metrics which should be seen is the number of accounts which are getting enrolled. This year has been a landmark year for CDSL on two counts. One is that basically, we have crossed our competition number of payment accounts opened, and there seems it continues to be a robust growth there.
The second is basically, we are the only depository in the International Finance Center which has been permitted to start a branch. There is definitely growth, and as this pandemic is basically coming, there is going to be new paradigms of doing business. The online digital mode is going to be the way forward. That's where we see a lot of our core business, which is basically expected to grow. The other important thing is that we have 599 depository participants. In terms of the distribution reach, we are at 94% of the pin codes. Our competition has around 280 depository participants. I think that distribution reach is also going to be extremely critical. We have a lot of connectivity and volumes coming from Tier 2, Tier 3 towns where there's expected to be more growth.
Therefore, in these times, we would really hope and expect that the growth will continue. However, this is based on a lot of extraneous factors also on how the pandemic really pans out in the country. At least from the way things have been going on at the securities market has continued even despite the pandemic, and it's considered to be an essential service. We expect this growth to continue. The second part of the question, I request our CFO, Girish, to answer that.
Nehal, when you are referring to some of the management changes, it is the employee structure and revision is what you are hinting at, which is also a big contributor to costs in this year?
That had happened prior to me joining. This was in the first of April. It was with effect from first of April 2020. I joined in September end. What I was referring is to, we have a new CFO, COO, and MD, and CEO. Three core management team members have changed in the second half of this year. The entire board composition has also changed. There has been a significant management change which has happened at the CDSL end.
To the point of which, obviously you've been leaders in terms of the account opening, and we've overtaken NSDL also. When do some of these changes translate into more steady state revenue? What I'm trying to understand is the activation cycle. What will kickstart some of these accounts? Because we've been very aggressive and kudos to the management team for adding so many accounts in such a time period. Will it be some kind of an IPO? Because what we read is volumes are going up in capital markets. When the typical activation cycle would be what, six months, one year? When do some of these initiatives lead to more steady state higher revenues for us?
See, I think this will be dependent on the market, on how they are going to use it. Our expectation is that as more and more people are going to enroll themselves into the Demat mode. There are more and more assets which are expected to move into the Demat mode. There is obviously going to translate into more amount of transactions being done through the Demat.
How that will transfer is a futuristic statement, and I would really not like to comment on it at this point of time. Our core is to present the facts the way they are and the hope in which we really expect this to grow going forward. Whether this will translate or not is basically something which you and I, we both will have to see as the situation unfolds.
Sure.
Girish, yeah, just to answer your question on the EBITDA margin. If we were to add back those earlier year expenses, which are debited to this profit and loss account this year, I think then you will see a positive EBITDA.
If I adjust that INR 68 million and the legal provision, it still comes to negative.
I will just give a breakup. If you remember, in December quarter, we had charged off INR 10.56 crore towards earlier year service tax payment. Right. We have paid earlier year CSR expenditure of tune of around INR 4 crore and legal provision of roughly around INR 2 crore. You add up all this expenditure and add back to the EBITDA, you will see a positive EBITDA. These are all non-recurring expenditure, which has to be incurred during this year, to sort out old issues.
Yeah.
Yeah.
Could you give us the revenue breakup of the major heads for this quarter?
Sure. You want quarter or you want-
Whatever is available, right.
I will give you quarter-wise revenue breakup for the March quarter on a consolidated basis. Our annual issuer charge income is 33% of our total operating income. Our transaction charge is 21% of our total operating income. Online data charges, which are largely from our subsidiary, is around 19%. IPO corporate action charges is around 12% of our operating income. Statement that we deliver to the investor BOs is around 4% of our total income. Document storage and eKYC each contribute 2%. If you add up all these things, it will constitute to around 94% of our total operating income. This is the constituent of our main operating income. I hope I have answered your query.
Sure. The last question from my side is, the NAD which is being transferred to DigiLocker, were we paid any one-time revenue by the government on this? What is our government business contribution to these revenues on an annual basis? Are we still continuing with the government project or not? That's the last question from my end.
On NAD, I doubt government had not paid any revenue to us. On that operation question, I will ask Sunil to answer those questions.
Yeah. Just a minute.
So far as the NAD is concerned, the government, we had to provide the services free of cost up to November. That was in the contract. Post that, they had reviewed the contract and then award it to DigiLocker. I do not think the government will be paying us anything for executing the project. So far as the government project is concerned, if you consider the current project which we are doing for the regulator for processing of returns for the company, then that is about INR 9.5 crore. That was income in that project in this particular year. As again, the expenses are for
Sorry, your voice was cracking, Sunil. INR 9.5 crores you said is the contribution for the whole year?
That's right.
Yes.
INR 9 and a half crores. You incurred an expense of around INR 6 and a half crores over there.
INR 6.5 crore. Yes, that's true.
Thank you. All the best.
Thank you.
Thank you. Next question is from the line of Mr. Varun Goenka from Reliance Nippon Mutual Fund . Please go ahead.
Yes, good morning, sir. I have three questions. First, on this NAD project, could you help us understand under what circumstances or what decision backdrop was it transferred from the depository? Are there any other projects which are under consideration to receive or to be transferred?
Basically, could you ask all the three questions? It'll be easier to answer them.
Okay. Secondly, on the eKYC that we have received, how does that change our business or how does that impact us? Third, I think every five years we receive some kind of a issuer charge hike, and we have to go to SEBI. If you could help us with where does that lie today? What's the status of that?
I think first two questions, Sunil, could you answer? Basically, I'll take the third question.
Yeah. So far as the NAD is concerned, we had a contract for three years from the government. Post the contract, rather the MHRD was supposed to review the performance of the
After they did a review of the depositories, it was done by an IIT professor. Based on which there were 32 subcommittees appointed by the
Sir, sorry to interrupt you.
Yeah.
Sir, sorry, your voice is breaking. Just a moment, sir. Participants, please stay connected. Ladies and gentlemen, please stay connected while we join Mr. Alvares to the call. Thank you.
Hello.
Mr. Goenka.
Am I audible now?
Yes, sir.
They recommended that DigiLocker should come in as a third depository. When the final statement was given to us, we were informed that DigiLocker will be the only depository. Far as the eKYC business is concerned, we were already providing the services prior to the Supreme Court verdict. Post that, services were suspended. We had almost 250 odd intermediaries who were availing of the eKYC services. Far as the eKYC business is concerned, we are one of the intermediaries who have been permitted to take up the eKYC license. We have, at the same time, also received an eSign license from the CDSL. Both of these put together will definitely facilitate the online account opening as well as add to the number of KYCs.
Hello.
Hello. Both the eKYC and the eSign will definitely facilitate online account opening and add to the number of accounts in CDSL as well as the KYCs in CDSL.
As regards the third question about the issuer fees being increased every five years. Yes, five years have lapsed, but given the pandemic, I don't know what's going to be, because the charges have to be approved by SEBI. Given that there are a general mode of reducing charges all over, I don't know how that's going to pan out in terms of the increase of charges. That is something which we'll have to wait and watch. It will be a joint application made by both the NSDL and CDSL to SEBI, and based on that, they will take a call whether it should be increased or not. We can go on to the next question, please.
Hello.
Mr. Goenka, yeah, go ahead, sir.
Yes. The question on NAD project, the voice was not clear. Just to circle back once more on that. Are there any other projects also where the government feels that the output or delivery is probably suboptimal, that we need to increase any kind of volumes there? If you could help us on the same measurement there.
I think basically the government's push is to move towards a digital mode, basically the depository is the best equipped to kind of take forward this particular thought of the central government. There are various areas which they are looking at, it's all at the planning stage. It's not yet been firmed up. Given this particular issue about the virus which has happened, it's only businesses which have been able to move an online mode have continued to have their business going on while the virus is gone. I think that's a clear-cut indication that the push is going to be to move really more and more into this kind of a mode.
Fair enough. Any major CapEx plans or investment plans for us, sir, that is on the board?
The software technology is one area which we would continue to grow because the backbone of CDSL is its technology. Cybersecurity also continues to remain an area of focus for us. We will continue to basically invest in technology as we go forward. We'll see how it pans out, but this is going to be a focus area.
Any quantification of how much amount are we looking to invest the next two years, sir?
We have not yet firmed up. That is yet under being discussed and deliberated at the level of the Board. We have not firmed that up. As soon as we firm that up, whenever it is due, we will surely be informing people.
Sure. Thank you, sir. I'll come back with you.
Thank you.
Thank you.
Thank you very much. Next question is from the line of [Rajesh Baheti] from Lucky Investment Managers. Please go ahead.
Yeah, thank you for the opportunity. Sir, on that one-off charge or one-off expenses which have flowed in FY 2020 and Q4, I just want to clarify a couple of things. We have mentioned that for FY 2020, there is an INR 10.5 crore on service settlement, INR 7 crore on CSR, and a legal provision of INR 1.7 crore. Until Q3, there was a bad debt provision also which was taken and was classified as one-off. Just want to clarify, is that number, and whatever that number is it a one-off or it is no more a relevant one-off for FY 2020? What is the one-off in Q4 expense because the number for your other expense shoots up from-.
Sir, are you there?
From INR 10 crores-INR 20 crores.
I would just request the CFO, Girish, to answer that.
What we have informed in the presentation is that service tax and unspent amount of CSR of previous year are one of the items which we had to spend during this financial year. On provision for bad and doubtful debts. That is a function of collection mechanism and it is also depending upon the market scenario at the customer end level. During this pandemic situation, the overall collection is not that fast as what each and every company must have desired. You must be also experiencing that payments are coming with a delayed timeframe.
I just want to intervene here.
I'm answering your question. I'm coming to that only. When we say bad debts, bad debts would be required to be provided for based on the criteria specified in the accounting standard, based on the collection history. If there is an overlapping collection, suppose our collection is delayed, there will be provision prescribed under the accounting standard. That's how it works. Yes, on an average, our provision will work out to around 8%-9% of our total invoicing that we do for any financial year because it is based on our recovery ratio that we have right now. Provision for bad debts will continue to happen on a quarter-to-quarter basis. That's the reason we have not said that it is a non-recurring expenditure. I hope I have answered your question.
Okay. Is it possible to just mention then what was the bad debt number, provisioning number for FY 2020 and what is it for FY 2019? If you have the two numbers.
You want financial year-wise, right?
Full year. I'm asking all full year.
Just a moment. Let me give you that number.
For quarter four, what is the specific one-off? That CSR spend number flows in in quarter four, the entire one-off number in quarter four.
Yes. One off is CSR is totally in quarter four.
That's about INR 7 crores, right? It's about INR 7 crores you mentioned.
Yes. Roughly INR 7 crore. To answer your question on provision, the provision for bad debts is around INR 7.5 crore in the financial year 2020, ending March 2020. Correspondingly, the provision made during last year was roughly around INR 3 crore.
This explains one thing.
Yeah.
Is there any other one-off in quarter four, barring the INR 7 crore CSR?
You are asking for quarter or full year?
Quarter four.
In the March quarter, the one-off is CSR spent and a provision made towards legal matter of earlier year.
Okay. Even that flows in in quarter four.
Yes.
This explains one part. Another question, I want to know the FY 2020 absolute revenue mix, if you could give, which is your transaction charge, issuer charge, corporate action, KYCs for full year.
Okay. Full financial year, the annual issuer charge-
Consolidated full financial year. I'm sorry.
Sure. I will give. Annual issuer charge income for the full financial year March 2020 is INR 77.5 crore. Transaction charge is around INR 43 crore. Online data charges is around INR 37 crore. IPO and corporate action charges is around INR 23 crore.
Sorry, online data and then you mentioned?
IPO corporate action charges.
That is how much?
INR 23 crores.
Okay.
SEBI project on PACL is around INR 9.5 crore. Statement that we deliver cash charges is around INR 9 crore. eKYC charges is around INR 4 crore. Document storage charges is around INR 5 crore. e-voting charges is around INR 3.5 crore. I think this covers almost 94% of our income.
Perfect. Additionally, the corporate action is the only revenue item which gets influenced for FY 2021 as of now?
Yes.
Right. That is linked to your IPO and all.
IPOs. Yes.
Will this be largely IPO corporate action or it will be IPO splits and all those things?
It would be a mixture of all the effective corporate action that a company does.
Okay. As of now, what gets affected as a line item is basically the corporate action, right?
Yes.
Because transaction charge is linked to market volume. Issuer charges.
is linked to the number of companies that you probably add in the system as well.
Yes.
KYC is linked to your financial instruments, the mutual funds and insurance.
Yes.
All those, right?
Yes.
Okay. Do you have any outlook on how much reduction the corporate action might take in FY 2021, if there is no corporate action?
No, we don't give any futuristic numbers. This will be again dependent on the market. It'll be difficult to predict.
In a market year like this, does it go down by half and so on?
Again, I'm telling you are asking the same question in a different form.
Okay.
The point is that it's basically a futuristic question. It'll be difficult to answer that.
Okay. Thank you very much, and all the best.
Thank you.
Thank you very much.
Thank you.
Thank you. A request to all the participants. Please restrict to one question per participant. If time permits, please come back in the question queue for a follow-up question. Next question is from the line of Yash Nerurkar from PPFAS. Please go ahead.
Hello.
Yes.
Yes, hi. I hope everyone's well and safe. I just had a couple of questions. Firstly, I just wanted to get proper sense about the NAD project. We spent almost a year spending the expenditure and doing everything, building up that whole network of institutions, registering the students, and then the entire project moved on to DigiLocker. It was expected that that will generate some revenue, it will be open additional lines of revenues for the company. Since that entire project, it has moved to DigiLocker, that revenue chunk will just be gone. Is there anything else on your mind, going forward, which would open the revenue lines, any other product, any other strategy which is in the pipeline?
Yeah. We are.
One minute, Sunil. Just Sunil, one minute. Just can you finish all your questions so that, as the person said, we would like to restrict it to one question per person.
Sure.
Everybody has a fair chance.
Sure. Secondly, I just wanted to get a clearer sense about the KYC thing. I just missed it in your opening remarks. What was it about the CKYC which you were talking about, that you are proceeding for other companies. These are the only two questions, [Chad].
Can you come again on your second question?
It's about the Yeah, go ahead.
Yeah. In the opening remarks, you mentioned something about the CKYC or the eKYC. Just had to clear out whatever the numbers were.
As far as anyway, there was no income generated by books by NAD last year. We were expecting some income to come in from the NAD project this year, till the project went to DigiLocker. To compensate for that, we are looking at the project from eKYC, where we'll be registered as an AUA, KUA with the UIDAI, where we will enable investors through online KYC. The second project we are looking at is becoming an eSign service provider. As you are aware that the SEBI has made it mandatory for all investors to eSign their documents when they make an online application for either Demat or stock Demat. The third part is we also have an online account opening service which we will be providing.
We hope that once licenses are in place, that it will make up for the income, what we would have got from the NAD project.
Okay. Any expenditure done, that will just be kind of a sunk cost.
Far NAD project is concerned, yes. There is already a sunk cost coming for a period of 10 years, so maybe our CFO would handle that question better. Most of the expenses have come over the last three years.
To answer your question head on, it's just that all the costs have been done. It's a sunk cost. It was just a revenue which was expected and now that would end. I think that has been answered by Sunil in terms of how we are proposing to go forward.
Right. Okay.
Thank you. Next question is from the line of Kunal Sanghi from Banyan Tree Advisors. Sorry, Banyan Tree Advisors. Please go ahead.
Yeah, hi. Thanks for the opportunity. In terms of that price hike from the SEBI board depositories were expected to apply this year. Just wanted to have a historical background on previous increases. I understand that last increase that we took was in 2015. Can you quantify for me what kind of increase were taken, say, in 2005 and 2010? That would be my first question. Second question would be on the opportunity in the unlisted security side. I had two questions there. One is, what is the opportunity left in terms of unlisted public companies? What is the target market left? Second is, I understand there was some incentive structure where NSDL was better than CDSL, and that resulted into NSDL gaining market share.
How we are placed with RNTAs in terms of the incentive structure and what we think about it, like how we plan to gain market share there.
Basically, the first one I'll answer. Second one, I'll request Yogesh to answer that question. The first question on when on 2005, 2010, 2015, is where this price increase has happened. I think there is no particular trend in which that increases, so I don't think that's going to really matter in terms of going forward. What SEBI sees is the current market conditions before they approve on any kind of increase in the charges. As I've stated before, the virus conditions is something which we'll have to see how it pans out, whether SEBI will be agreeable for that price increase to happen. It is not a trend which can be put in that every five years, so much % increase has happened.
It depends on the facts and circumstances which have been presented, therefore, it is also not put down that every five years the increase would happen. It could happen in three years, it could happen in more than five years. It is basically on the facts and circumstances which are there at that point of time when the particular thing is put up to SEBI. On the second part of the question, Yogesh, if you could answer those.
This one.
Yeah.
Yogesh here. There are close to about 80,000 companies in the unlisted space. Out of that, approximately 11,000 have been admitted till now. The balance are to be admitted. What MCA guideline says is that if there is corporate action or any transfer, then it is mandatory to do it in the Demat form. That is first part. The second part which you asked was of the incentive or the referral fee structure. We have actually matched the referral fee structure of the other depository, and now we are also offering the same referral fee to RTAs, as well as to the practicing company secretaries also. That is what it is. I hope I have answered your question.
Sure. Thank you.
Thank you. Next question is from the line of Kushil from JM Financial. Please go ahead.
Yeah. Hi, this is Ashutosh. Wanted to know how is the business been during the lockdown, both in terms of revenues and whether we have taken any special cost line items also during the lockdown, especially in terms of IT spends.
I think I will have to restrict it to up to 31st March, because the lockdown has continued after that. The purpose of our call is to discuss the results up to 31st March. Up to 31st March the business has really been the way it has been going on so many months. There has been no major impact seen in the month of March, as can be seen from our quarterly results also for the Q4. In terms of the technology cost, it continues to remain within our standards. There is nothing which is coming really basically out of tune. It is in line and in sync with what we normally spend.
Sure. Thank you.
Thank you.
Thank you. Request to all the participants, please restrict to one question per participant. Next question is from the line of Amit Chandra from HDFC Securities. Please go ahead.
Hello. This is A mit Chandra from HDFC Securities. Sir, thanks for the opportunity. Sir, my question is related to the annual issuer charges. In FY 2020, roughly we had the rate of around 170 companies per month. Now this is half of what the competition was adding. As you explained that we have the incentive structure in place, maybe we can see some increase there. My question is related to what has been this rate in the last two months during the lockdown period. Have you seen significant drop in this number? Also for FY 2020, if you can state the contribution from the unlisted companies in the annual issuer charges, and if you could break up between one-time execution charges and the annuity part, it will be very useful.
The second question is on the approval that we got from SEBI for the Aadhaar-based e-KYC. What is the change in the process post this for onboarding of a client, and to what extent it could boost the KYC volumes? Thank you.
On the first one, we'll have to restrict it again up to March 31st. I'll ask Yogesh to just give a sense. Second part in terms of the transaction charges makeup, to the extent I'll ask the CFO, Girish, to reply to that. On the third one, Sunil, if you could answer on the eKYC. Basically, Yogesh, could you answer the first question?
Yeah.
Up to 31st March.
Yeah, correct. Up to 31st March, as I answered the previous participant's query also, last year also we have also started the referral fee structure. Due to the registrar and transfer agents as well as the practicing company secretary. We have been also gradually gaining market share. It's close to about 30%.
That companies we have also admitted. That is till 31st of March. What was your other question, please?
Sir, the contribution from the unlisted companies to annual issuer charges for FY 2020.
Yeah.
That's your focus.
Yeah.
Amit, roughly around INR 16 lakhs has been contributed by the unlisted company during the quarter ended March 2020.
No, sir, for the full year, I meant, FY 2020.
Let me come back on this, Amit.
Okay. Sir, this contribution would also include the one-time registration charges and the annuity part also, right?
Yes.
Yeah. Okay, sir. I will get back to you.
Yeah.
For the Aadhaar-based eKYC.
Yeah.
Sunil, you could answer that.
So far as the Aadhaar-based eKYC is concerned, we are fairly bullish on that because in the last couple of months, what we are seeing is most of the accounts are getting opened online. Once the Aadhaar-based eKYC is in place, it will make it much more easier for an investor to open an account. We are fairly bullish that it will add to a substantial number of accounts through this vertical, especially when we have eSign as well as our own online account opening product in place. Does that answer?
Okay, sir. Thanks.
Amit, for the full year, the income is around INR 2.24 crore.
Okay. 2.24?
Yeah.
Okay. Okay, sir. Thank you.
Thank you. Next question is from the line of [Charu Damania] from Kotak Securities. Please go ahead.
Good morning, sir, and thank you for the opportunity. Sir, just wanted to carry on with the question the earlier participant asked regarding the number of companies. If you can help us in understanding what was the number of companies that has been added in the unlisted space in entire FY 2020, and what the total count stands as of now for us?
Okay. Sir, I think the CFO, you would have the numbers. Girish, can you just give that number, how many have been added in the-
During the financial year ended March 2020, the number of companies added is around 2,120 companies. Total, I need to get back on the total companies.
Sir, during this financial, what will be the annuity charges that has been recovered or the one-time register entry that could have been recovered from this 2,000 odd companies that has been added?
Okay. I had answered that to earlier question. It is around INR 2.24 crore.
Okay. The 2.24.
Yeah.
No problem. Thank you, sir. Just need that total number of companies that has been admitted. That's all from my side. Thank you.
Thank you very much. Next question is from the line of Gautam Gupta, [BaNaxim]. Please go ahead.
Good morning, sir. Thank you for the opportunity. First, let me thank you also for the investor presentation. I think we've been asking for it, and this is the first time it's come up. A lot of useful data that gets answered. I hope we can see this maybe every quarter. I think that will also save time on the call. Thanks for that.
Yes. Yeah.
The question that I had was, one, on the commodity repository side, if you could give us any color in terms of progress, how that is panning out. Two, on whether that government project, whether we are seeing a phase two happening or not. That's it.
On the commodity repository, it's currently and basically aggregates commodities is where it has been permitted. I think there are discussions with the government to move to the non-aggregates also. That's something we'll have to wait and watch how it moves forward. There we feel we can really contribute a lot more than what we have been contributing. We have to wait and watch how the rules change. On the second query, I'm sorry, your voice broke off. What was the second query?
We had the government project, that PACL one. Whether we are going to see a phase 2 of that project or not, do we have some clarity now or?
See, that is something which continues in terms of an ongoing basis.
Okay.
There are a lot of circumstances. It is difficult to give you a firm answer on that because there are a lot of conditions, ifs and buts, et cetera.
You don't have a direction essentially yet, I mean, a clear direction in that sense. It's an ongoing process.
Yeah.
Year by year, I guess. Okay.
Yeah.
Fair enough. I appreciate that. Thanks a lot for your time.
Thank you. Next question is from the line of Sriram Srinivasan from [KSMA]. Please go ahead.
Sir, this is Sriram Srinivasan. First of all, congratulations for your numbers. Almost posted 16% of growth in this very tough times. My hearty congratulations to you.
Thank you.
My queries will be on annual issuer charges side, sir. Actually, we have added almost 2,100 companies during this fiscal. The average run rate will be around 150 to 180 companies that we have been keep on adding every month, right? Is this the trend we can expect to continue along for FY 2021?
Again, it's a futuristic question. If I can just answer in a broad basis, that as Yogesh had mentioned earlier, that there is a significant portion of companies which are yet to be enrolled under Demat mode. Whenever a transfer are required to be done or they want to raise capital, they will have to come into the Demat mode. The way I would look at it is that there's a significant opportunity of growth, and difficult to predict how FY 2021 is going to pan out because of the virus issue. Looking at the core numbers the way they are, I would see that really we should see some growth coming in, whether that will be more or less in this financial year or it'll turn out in the next financial year is something which we'll have to see how that goes.
Okay. Almost 60,000 unlisted companies, are they right?
Yeah, they're around 73,000 companies.
73,000 companies. It's a big opportunity we are looking forward, right?
Yeah.
In terms of national academic certificate, that we have been get approval to get charging for that. We have been expected in September, we have got in the end of March, actually. Sir, can you give me the revenue idea or revenue breakup idea for this? How we are going to charge and how we are going to record the revenue for this? Can you brief about that?
Sunil, can you answer that?
Yeah. The latest update on this project is that the government has taken the project from the depositories and given it to the DigiLocker. the depository-
Okay
will not be handling this project.
Okay. For every login that we have been charging, is there any recurring revenue?
What I mean to say is that depositories will not be handling this project going forward, as per the
Okay. Going forward, we are not going to handle the National Academic Certificate charges.
That's right.
Okay. Fine, sir.
Thank you.
Thank you, sir.
Next question is from the line of Neeraj Kamble from Prosperity. Please go ahead.
Hello.
Go ahead, sir.
Thank you for the opportunity. Sir, currently PAN is not compulsory for CKYC, but the securities market require PAN number, and therefore broker and mutual fund use KYC data stored by CVL KRA. However, if CKYC makes PAN number mandatory in their data, then who will use CVL KRA? That is my first question. Second, other than securities market intermediaries, who will use CVL KRA? Last question is, how much CVL KRA will charge for one-time fetching data?
Sunil, can you answer that?
Yeah. So far as CVL KRA is concerned, it's only the securities market intermediaries who can use the CVL KRA. Point number two, what you mentioned is if PAN number is made mandatory in the CERSAI database, who will use the CVL KRA? The point is that it is not only the PAN number which matters here, it also matters on the quality of the data. Today, what is happening, the intermediaries are able to fetch data, but they are not confident with the type of data they are getting from CERSAI because there is no verification done at the CERSAI end. Okay? Because of that, many of the intermediaries depend on the KRA data itself. Okay? What was your third question, sir?
CVL KRA will charge for one-time fetching data.
Yeah. We charge INR 35 for fetching a record.
Okay.
Does that answer all your questions?
Yeah.
Okay, fine.
Thank you. Next question is from the line of Ashish Sood from Vishuddha Capital. Please go ahead.
Sure thing. Sir, I want to ask question regarding outlook on your insurance business, because we are seeing that around 43 crore insurance policy are currently with DigiLocker. Is the reason that there is a pricing difference between the price charged by you from the insurance companies or the price charged by the DigiLocker. In the forward, can the same thing happen that government can make DigiLocker mandatory as a one-time entity for all storing the all insurance policy record? Outlook on this business going forward.
Basically, the insurance repository as of now is not a mandatory. I'll ask Mr. Ramkumar to just give a reply to your answers.
Yeah. Ramkumar here. If I may take forward the answer. The first part of the question was, the DigiLocker is having X number of policies. As per the present IRDA regulations, only an insurance repository is allowed to hold electronic policies through electronic insurance account. That is one part of the answer. Second part is that in the DigiLocker, what generally people do is they store their policies. It is not known whether it is really true or not. In case of some companies, DigiLocker has got a back-to-back arrangement, but not in case of all the insurance companies. That is for the first question. The second question you asked was whether government will switch to DigiLocker. That is only time will tell. We'll not be able to comment on that as of now.
Okay.
Hope that answers your question.
Okay. Is there pricing difference between the price charged by DigiLocker from insurance company and price charged by you, or the pricing is same?
My understanding Sir, Mr. MD, if I may just continue with the answering.
Yes.
My understanding is, DigiLocker doesn't charge anybody for anything, and they can well afford to do so. We are a commercial organization. To that extent, we'll not be able to give anything free. Point number one. Point number two is, if you compare our cost with the cost of printing a policy and dispatching it or handing it over to the policyholder, ours is much less than that. That, I hope, answers your question.
Okay. Sure. Thanks.
Thank you very much. Ladies and gentlemen, due to time constraint, that was the last question for today. I will now hand the conference over to Mr. Aditya Bagul for closing comments.
Thank you everyone for taking out the time and attending this call. Special thanks to Nehal sir and the entire team at CDSL for patiently answering our questions. Nehal sir, I'll hand it over to you for any closing remarks.
I would sincerely thank all of you for your questions. One comment which, or rather compliment, which we got that we have put in our numbers in form of a presentation. We shall be doing that going forward in every such quarter. You all can look forward to that. We are hopeful that with these current tough times, our business continues to grow. Our effort is there of all the stakeholders to ensure that the business of CDSL continues to grow going forward. Thank you, sir.
Thank you very much. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your line.
Thank you.
Thank you.
Thank you.
Thank you.
Thank you.