Ladies and gentlemen, good day and welcome to the CDSL Q1 FY20 investor Conference Call hosted by Axis Capital. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal for an operator by pressing star and 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.
Thank you. Good evening, ladies and gentlemen, and a warm welcome to the CDSL Q1 FY 2020 Earnings Call. From the management, we have Mr. Bharat Sheth, CFO, Mr. Gaurang Shah, Vice President, and Mr. Nilesh Tiku, AVP. Without further ado, I'll hand over the phone to Mr. Bharat Sheth for his opening remarks. Over to you, sir.
Yeah. Thank you, Aditya. Good evening to everyone. With me, Mr. Sunil Alvares is from CDSL Ventures Ltd is there, and Mr. Gaurang and Nilesh is also there. I welcome you all to the quarterly conference call for discussing the standalone and consolidated results of CDSL Group for the quarter ending 30th June 2019.
Due to various uncertainties in the economy like election, budget, et cetera, and global factors like Fed interest rate movements, oil prices, et cetera, the Indian stock market was in turmoil, which resulted in not many IPOs entering the market, and overall sentiment was negative.
This resulted in the CDSL top line showing a marginal uptrend on quarter-on-quarter basis. However, there was a healthy growth of top line year-on-year basis. In case of subsidiary, CDSL Ventures Ltd, the KRA performance is linked to the stock market, which remained weak, resulting in lower KYC generation and fetching.
However, compared to 1.88 crore KYC recordings on March 2019, CDSL has 1.93 crore KYC recordings on June 2019. Other subsidiaries, CDSL Insurance Repository has gross file e-Insurance accounts and e-filing policies. CIRL has also started to offer its services to health insurance companies. Regarding CDSL Commodity Repository Limited is also making steady progress with 970 registered warehouse service providers, 1,000 clients and 5,500 eNWR generated as on 30th June 2019.
The numbers stack up as follows. Consolidated results on QoQ basis, that is quarter ended June 2019 to quarter ended March 2019. Operational income up by 15%, that is from INR 50.94 crore - INR 58.40 crore. Whereas other income down by 15% due to higher gain in March 2019, that is from INR 14.74 crore - INR 15.02 crore. Total income altogether up by 7%, that is from INR 68.68 crore - INR 73.42 crore.
Whereas total expenses, that is from INR 25.54 crore - INR 38.44 crore, that is up 51%, mainly due to increase in employee cost, salary risen by approximately 30%-32% across the board to bring the salary levels to market levels and corresponding gratuity and leave actuarial provisions and other expenses. Projects that pertains to a committee appointed by Supreme Court, we are doing that and expected credit loss provisions , that is provision for doubtful debts, post-paid and telephones, etc.
Profit after tax on consolidated basis on QoQ is down by 18% from INR 34 crore - INR 27.91 crore. Major head of operational income on consolidated basis, where annual issuer charge is up by 7% on QoQ basis, that is INR 17.91 crore - INR 19.23 crore. Transaction charge is hardly any negligible due to market competition from INR 9.84 crore - INR 9.86 crore.
Consolidated account charge is up by 25%, that is INR 1.89 crore - INR 2.37 crore. IPO corporate action charge is up by 28%, that is INR 4.16 crore - INR 5.31 crore. The committee appointed by this project we have taken, it has increased from INR 2.83 crore to INR 6.90 crore, that is up by INR 1.43 crore. That is first phase we have completed as such.
On year-on-year basis, that is quarter ended June 2019 to quarter ended June 2018, figures are as follows. Operational income up by 28%, that is INR 45.52 crore - INR 58.40 crore. Other income up by INR 4.22 crore - INR 15.02 crore. That is 188% that is higher mark-to-market gain and interest on IT refunds, what we have received. Total income up by 45%, that is INR 50.76 crore - INR 73.42 crore on year-on-year basis.
Total expenses up by 72%, that is INR 22.38 crores - INR 38.42 crores, mainly due to increase in employee cost, salary revision by 30%-32%, and corresponding impact on gratuity and leave encashment and other expenses like postage, ECL provision, etc. For PAT, that is profit after tax, up by 27%, that is INR 22 crore - INR 27.91 crores.
Major head of operational income, that is annual issuer charges up by 23%, that is INR 15.66 crores to INR 19.22 crores. Transaction charges up by 2%, that is INR 9.66 crores to INR 9.86 crores. Concluded account charges from INR 2.03 crores to INR 2.37 crores. Online data charges, that is KYC fees, that is INR 6.84 crores to INR 7.64 crores. That committee appointed by Supreme Court in which what we give it is INR 6.93 crores, that is up by 100%. I'm going to stand-alone results.
On QoQ basis, that is quarter ended June 2019 versus quarter ended March 2019. Operational income up by 7%, that is INR 37.88 crores to INR 40.34 crores. Other income down by 14%, that is INR 13.10 crores to INR 11.31 crores due to lower mark-to-market gain. Total income from INR 50.99 crores to INR 51.55 crores, up marginally by 2%. Whereas total expenses INR 20.25 crores to INR 26.34 crores, that is up by 33%, mainly due to increase in employee cost.
Salary revision by 30%-32% to bring the salary levels to market levels and corresponding impact on gratuity and leave encashment provisions and other expenses like provision for doubtful debts, postage, and telephone expenses. Profit after tax down by 17% from INR 24.53 crores to INR 20.35 crores. Major head of operational income, that is INR 17.92 crores, up by 7% to INR 19.23 crores. Transaction charges marginal, that is INR 9.83 crores to INR 9.86 crores.
CAS charges, that is INR 1.8 crores-INR 2.37 crores, that is up by 25%, and IPO corporate action charges up by 28%, from INR 2.16 crore to INR 5.32 crores. On standalone results on year-on-year basis, that is quarter ended June 2019 versus quarter ended June 2018, operational income up by INR 36.37 crores, up from INR 36.37 crores to INR 40.53 crores.
Other income up by 181% due to interest on IT refunds as well as higher mark-to-market gain, that is INR 4.02 crores to INR 11.31 crores. My total income up by 28%, that is INR 40.4 crores to INR 51.85 crores. Whereas total expenses up mainly 35% due to increase in employee cost, that is INR 18.5 crores to INR 26.84 crores.
Whereas PAT, profit after tax, up by 25%, that is INR 16.32 crores to INR 20.34 crores. The major head of operational income, that is INR 15.67 crores of corresponding period to INR 19.23 crores, that is up by 23%.
Transaction charges from INR 9.66 crore to INR 9.86 crore. Case charges from INR 2.04 crore to INR 2.37 crore. Foreign investment monitoring, last year it was not there during the corresponding year. This year it is INR 54.7 crore. With this, I leave the floor open for questions and answers.
Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. The first question is on the line of Prakash Kapadia from Anived PMS. Please go ahead.
Thanks for taking my question. If you could give us the status of the appointment of the new MD and CEO, where are we in that phase? I think we had suggested one name and then SEBI said, give us more names, and those were to be approved by shareholders. Is that the status? By when do we see this closure?
Yes. Mr. Prakash?
Yes, sir.
When we gave one name to SEBI, they told us to give at least two names. Our board has given three names, panel, without any preference.
Yeah.
SEBI's first one, that is, you have to get shareholders' approval. In June 2019, we have started postal ballot, and July 2019, it has got over. Today, we have received the results. We have updated SEBI about it. Means shareholder has to approve panel of names, panel of three names, and then SEBI is going to decide about it. We have submitted to the SEBI panel of names. Now, ball is in the court of SEBI to decide about it.
Understood. Sir, on the Aadhaar status update, I think Supreme Court came out with.
Ruling. Is my understanding correct, you can use online Aadhaar as you were doing earlier for KYC, but you have to do physical verification in one year. Is that the right way to interpret the law? My colleague Sunil is from CDSL Ventures. He will tell you about it.
Far as online Aadhaar is concerned, it can be used only for direct benefit schemes, okay, which is remaining out of the Consolidated Fund of India. All other private parties, except for telecom and banks, because recently the Aadhaar Act was amended permitting telecom and banking investors KYC to be done.
For all other parties, they have to do an offline e-KYC, which Aadhaar has come out with the guideline, and we are currently doing offline e-KYC for some of our projects. In case we want to continue doing online e-KYC, we have to approach Aadhaar through our regulator. We have approached SEBI to approach Aadhaar and permit us to do online e-KYC as well for the industry.
Once SEBI approaches Aadhaar, then there will be some act changes in the UIDAI Act or a permission given by the central government, after which we will be permitted to do online e-KYC.
Okay. We have to do offline.
Currently, all private parties can do only offline e-KYC.
Except you said banks and telecoms.
Except banks and telecoms, because the law was recently amended.
Cool. I had one more question.
Bharat, what is the market impact of gains on the investment book in the Aadhaar? If you can quantify that figure.
Yeah, one minute.
On quarter on quarter basis, quarter ended March 2019, we have got a gain of INR 9.73 crore against with June 2019, INR 8.97 crore. If you compare it with year on year basis, that is June 2018, gain was only INR 1.9 crore against with INR 8.97 crore is there.
Lastly, Bharat, you mentioned about that INR 6.93 crore revenue stream, saying, "We've completed the first phase, the committee, this thing," and there were some expenses pertaining to that. Is it a government project, and how much of that is in other expenditures? If you could just explain that, the last question.
The INR 6.93 crore is government means Supreme Court-appointed committee. That project we are doing. That is refund of-
Investors fund.
investors fund, refund of investors funds. INR 6.93 we have booked during this quarter.
Is it IEPF related work?
Investment education fund or is some other scheme?
Other. Some other things. That is confidential. We can't divulge it exactly.
Okay.
Against INR 6.93 crores what we have booked as income during this quarter, we have booked expenses also. We have provided for it. That is INR 5.48 crores. That's why other expenses are mentioned.
Share goes up, right?
Yeah. Because of that mainly.
This is a lower margin business as compared to some of our existing businesses, but because it is a government booking, we are doing it because they're like mandatory.
Yeah.
Okay. Few quarters ago, there was a revenue stream of INR 2.5 crores, which we had said it was our government order. This is the same or that was separate?
Same thing only.
Fine. Thank you and all the best. I'll come back if I have more questions.
Thank you.
Next question is from the line of Harit Shah from Reliance Securities. Please go ahead.
Yeah, thank you for the call. Sir, I just had one clarification, just one small data point. This year, ECAS revenue this quarter was INR 2.37 crore, and the year ago figure was what, INR 1.88 crore?
One minute. One year ago, INR 1.89 crores, and now it is INR 2.37 crores.
Okay, sure. Secondly, pertaining with your data regarding the incremental market share on the beneficiary owner account versus your main competitors and approximate number of accounts that are there at the end of the quarter.
As on June quarter, we have added net 6 lakh 38,000 new accounts.
Okay.
Other depository has added 217,000 accounts. That is our incremental market share is 75% for this quarter.
Right. Finally, the figure for the number of unlisted companies under demat, I think it was about 1,400 as of the last quarter.
In this quarter, 633 companies we have added. It comes to around 2,037 such companies.
Okay. Wonderful. That's it from my side. I'll come back if I have any follow-up. Thank you.
Thank you.
Thank you. Next question is from the line of Ajay Mehra from Motilal Oswal AMC. Please go ahead.
Yeah, hi, sir. Good evening, thanks for the opportunity. What led to this doubling of other expenses in terms of INR 9 crores lastly versus INR 18 crores for the current year?
Yeah. I can tell you. Major expenses in other expenses due to this government project in which we have provided around INR 5.48 crores. Again, INR 6.93 is our income.
Okay. INR 6.93 in terms of income for the current quarter?
Yeah.
Impairment loss on financial assets that is now we have to provide for doubtful debts, very first quarter only. Around INR 1.62 crores we have provided for that.
Okay.
That is a major, then in the TR it has it for the INR 60 lakhs as well, and system maintenance cost increased by INR 71 lakhs. These are the major areas.
Got it. During this quarter, sir, you also had some recovery, right, from the past? I think in the press note you mentioned you had a write back of INR 1.8 crore.
No, that is for the assessment year 2012, 2013, Income Tax has given us a refund with interest. That is around INR 2 crore interest amount is there, INR 2.2 crore. INR 2 crore and along with that, INR 2.23 interest on refund.
Totally you have another INR 2 crore of receivables which have come this quarter, right?
Yes. INR 2 crore of written back amount for the quarter.
No, INR 2.23 and INR 1.74 is the write back amount.
Yes.
Overall negative of course, whatever you are telling is negative. Aggregate INR 2 crore. Correct.
Sir, the other increment is probably a function of different capital gains, right?
Yes.
Probably a function of that, right?
It includes INR 2.23 crore of income tax refund.
That is interest on income tax refund.
Okay, sir. Thanks. Wish you all the best.
Thanks.
Thank you. The next question is from the line of Nitin Agarwal from JM Financial. Please go ahead.
Yeah, thank you for giving the opportunity. Sir, can you please shed some more light on what exactly is this committee appointed by Supreme Court and how is it functioning and how are we earning revenue from that? Going forward, what is the revenue potential from this or is this just a short span when we have earned revenue from this stream?
Yeah. First and foremost, this is a one-off assignment. This is a committee appointed by Supreme Court to ensure refund to investors in a particular company, okay, who are defrauded by the company.
Okay.
We have been appointed to create a database of these investors, call for their certificates and receipts. Based on that, we will decide on the refunds and then we will credit the refunds to the investors account. Once this is done, it is a one-off event.
Okay. Till when is it expected to continue for next how many quarters do we see?
See, the contract is for one year.
Okay.
There are large number of investors, about four and a half crore investors. We expect it to spill over maybe to the next year as well.
Next year as in FY 2021?
That's right.
And so-
Only because of the numbers involved.
Okay. What is the potential revenue which we can get in this year and next year from this stream?
That depends on number of applications received. Yeah. See, we will be billing based on a per application basis. It will all depend on the number of applications which come in. Because it's an old matter, many of the applicants don't have their certificates, they don't have their receipts. Those type of challenges remain.
What is the fees on per application?
Everything we cannot divulge.
Okay.
That is all.
No problem. Which entity are we recording this? This is not share and standard on technology, some other entity?
CDSL Ventures.
CDSL Ventures.
Ventures.
Sir, my second question is regarding the employee cost increase. There is a 30% increase across the board. This is coming after how many years, like such kind of increases? Do we have a set pattern that every after these many years we'll be increasing our employee cost base for?
Last increment is when in October 2016 we did it. Every two to three years we are doing it.
Okay. This time it was for this particular. This 30% increase will be with us like throughout going forward in next quarters also you are earning an increase?
No, no. See, there is a one-time impact before this leave encashment and actuarial valuation of leave encashment in gratuity. Around approximately INR 3.5-INR 4 crores impact was there in first quarter, but it won't be there in next quarter.
Okay. If we remove INR 3.5-INR 4 crores, we are still getting around INR 10-INR 11 crores of quarterly run rate. That run rate should continue going forward for employee cost?
Yes, that much. Additional INR 1.5 crore-INR 2 crore, it comes to this much only.
Okay. Thank you, sir. That's the thoughts from my side.
Thank you very much. Next question is from the line of Priyesh Babaria from Kotak Securities. Please go ahead.
Good evening, sir. My question was regarding, I didn't catch the numbers of revenue bifurcation on a year-on-year basis for the transaction charges, IPO, annual issuer, et cetera. Could you share the same?
Yes. Year-on-year basis you wanted to say.
Yes.
That is annual issuer charges from INR 15.66 crore - INR 19.22 crores.
Okay. IPO?
IPO corporate action from INR 5.55 crore - INR 5.32 crore.
Okay. Transaction charges?
INR 9.67 crores - INR 9.86 crore.
Okay. What about online income?
Online income from INR 6.84 crore - INR 7.64 crore.
INR 7.64 crore. E-voting?
E-Voting from INR 57.85 lakhs - INR 44.86 lakhs.
57.85 to 46?
44.86 lakhs.
Okay. My second question is regarding what was operational income from the government subjects with regards to document verification in the second quarter of financial year 20.
See, phase I was over. We have already booked the income for that phase I. When phase II is going to start that time we have to see.
Okay. What could be the possible time horizon for the phase II?
See, contract is for one year.
Financial year.
Financial year only it will get over.
Okay, thank you. Also, could you please tell the number of cash at the end of first quarter financial 20?
It would be INR 715 crores. Altogether, INR 715 crores. Against it, we have to make payment for INR 50 crores dividend.
Okay.
INR 50 crores to DP that refund is, not refund, refundable deposit charges. Around INR 650 crores.
INR 650 crores.
Yes.
Also that DP share the information regarding the number of new universities and those which are in the academic depository and the number of records updated on the same.
See, year-on-year basis, that is June 2018 versus June 2019.
335 academic institutions we have signed agreement. It has went up to 515.
Okay.
Universities.
Okay.
Number of academic records loaded from 40.47 lakhs to 1.71 crore records.
44 point?
40.47 lakhs means 40 lakh 46,000 records. It went up to 1 crore 71 lakh records.
INR 1.70 crore. Okay. Are you not able to generate revenue from September 2019 onwards also?
Yes. MHRD is to notify what will be the charges, once they notify, I think we should be on track. They have not indicated that the free period has to be increased or anything like that. What signals we are getting is that they will be notifying this.
Okay. Can you share the information regarding how the pricing is decided on the same?
There are two types of charges. One is for upload of records and second is in case any record is verified, a charge is levied by the verifier. You have the verifier charges as well as our charges. Like I said, there are two charges, one for upload of the records by the university and one for verification.
Okay. Fine, sir. Thank you so much, sir, for the opportunity.
Thank you.
Thank you very much. The next question is from the line of Ashish Sood from Vishuddha Capital. Please go ahead.
Hello, sir. Thanks for the opportunity. My question is regarding insurance policy business. As on date, how many health insurance policies are you doing online and life insurance policy? Can you give breakup and charges for the same?
2.5 lakh policies raised. One minute.
Okay.
Around 5,000 health insurance policies added into the system.
Okay. This is the first time health insurance policies have been added?
Yes.
Pricing, what is the pricing on them, INR 50 or it's different?
No, it is different. That is around INR 30-INR 35.
INR 35.
INR 35.
INR 35. Okay, sure. Thanks.
That answers your question, Ashish?
Yes.
Thank you. Next question is from the line of Sriram Srinivasan from Care PMS . Please go ahead.
Good evening, sir. First of all, congratulations for the result. Hello?
Mr. Srinivasan, can you speak a bit louder? Your voice is a bit faint.
Are you getting me, sir?
No, sir. You'll have to speak a bit louder.
Are you getting me right, sir?
Yeah.
Yeah. Okay. When you were stating unlisted companies have been added during the quarter, right?
How many companies?
Last quarter it has been added by around 893 companies. 533 companies in last quarter.
533 companies have been added, right?
Yeah. Against it, now it is 333.
What about other capacity have been added?
Those details we don't have.
Okay, thank you. In terms of insurance capacity, have you been doing this capacity, have you been getting into that business?
Come again?
In terms of insurance capacity, you're already.
Your voice is breaking.
I'm sorry, Mr. Srinivasan, but your voice is not clear.
In terms of insurance capacity, you're already engaged in that business, right?
That is right, yeah.
What is the breakup that we can get now in insurance capacity added?
There are 250,000 policies as on 30th June against 225,000 on March 2019. 25,000 additional policies.
30,000 additional policies have been added, right?
Yeah.
How we can see the set of unlisted companies, sir? Last time you have been saying that almost 200 to 250 companies we can see every month on a month-on-month basis. I see we can see the same trend?
Yeah, same trend. 33 companies in one quarter, it comes to clear.
Yeah. That's what. We can see the similar kind of things, right?
Yeah.
As well as in terms of other expenses, because the Supreme Court have been order us to do some specific project for investor protection, right?
Yes.
In such case, you have been made it INR 5.48 crores as a provision for that business, and you have been mentioned that INR 6.93 as an income. That right?
Correct.
Yeah. If this INR 6.93 may be, it reduces to the income range, but this INR 5.48 will be provisioning at every quarter or it's a one time?
It's a one time.
One time.
One time.
For one of the project. For the phase 2 of the project, we again will have some income and some expenditure also.
What will be the expenses that we can expect, sir? Actually, we can make assumption on this?
No, we cannot. We are actually in the process of finalizing the vendors and all so that we will not be able to disclose anything at this point in time.
Okay, fine. It will be much helpful. Sir, in terms of the market share that you have been saying, transfer question of the incremental business that they are holding, right?
That's right.
Yeah. In number of beneficiary accounts, sir. Total number of accounts.
Around 338,000 in this quarter were added by us.
2.18
2.18 lakh was added by NSDL.
Thank you, sir. In terms of university business, we have been seeing that the same set of law firms plus 300 from the universities, which was almost INR 14.5 lakh of rebates have been awarded. 550 means INR 1.72 crore of rebates have been awarded, right?
That's right, yeah.
Yeah. Such business we have been expecting from the next two to three quarters starting from this financial year, right?
We are permitted to charge from September 2019. That's what our MoU with the MHRD says. MHRD has to come out and specifically issue a circular to all the universities saying that going forward, they will have to pay this charge.
Okay.
That is how things stand currently.
One last question, sir. In terms of the transaction charges, we can see that the total number of turnovers at the exchange was low even in the last two quarters because of the reflecting of the market condition, sir. How often inter-exchange have been placing this quarter? From June 1, we can do the interoperability.
There is a buying in NSE, even if it includes BSE, it has to be on one side, right? That is correct. As it does not matter, if somebody has sold his securities, there will be a debit in one account and a credit in the other account. Our charges are based purely on the debit into his account, irrespective of where he is doing his settlement from which clearing corporation. This inter-clearing operations does not impact our business. It does not impact our business much. Okay. This one, I already my question.
Thank you.
Thank you.
The next question is from the line of Hiten Jain from Invesco AMC. Go ahead.
Sir, I would like to understand this other expense better. If I look at it, so last year in Q19, the expense was INR 9.5 crore. It has now become INR 18.4 crore. Approximately an increase of INR 9 crore. Out of that, if I remove this INR 5.5 crore, which is, you are saying one time related to this specific project that we have signed up. Still, despite that, this 19.5 has gone up to 12.9, which is an increase of 36% year-on-year.
I wanted to understand, normally, historically, I see you don't have other expense growing at this scale. What has exactly happened this quarter?
Other expense is, if you remove that INR 6.23 in employee expenses, that is INR 16.06, other expense. See, apart from this INR 5.49 crore in this government project-
Other than that INR 1.62 crore we have provided for doubtful debt.
Sir, you would have also provided those provisions for doubtful debt in Q19 also, right?
No.
Okay. Why this INR 1.6 crores? What has changed this quarter?
No. See, last year auditor was different, this year auditor was different. For the current year income also, they told us to provide that is Expected Credit Loss. Previously, ours was just implicit approach. At present also that, Expected Credit Loss for the current year income also, only on third and fourth quarter we were provided. Auditor insists from this first quarter also we have to provide for it.
Okay. If I remove that also, still it is up 19% year-on-year, other expense.
Correct.
Normally, we see 10%-15%.
Certain expenses like cost of telecommunication increased by INR 62 lakhs. That is because of the government project. Of the government project, all communication was by way of SMS. There was a steep increase on the SMS charges.
Sir, is this project loss-making for us?
No.
Okay.
Very low margin. It's very high volume and low margin.
Okay. No, because if I look at the revenue contribution is INR 6.93. Expense, you are saying INR 5.5 plus INR 70 lakhs increase due to electricity cost rate, further INR 70 lakhs.
Those are reimbursable expenses basically. Basically I incur those costs, and those are reimbursed to me on actual.
Correct. Understood. My second question is, if I heard you correct, you said you made the salary hikes after three years. Is it so?
That's right.
If I look at your employee expense over the last three years, even in FY 2019, employee expenses grew by 13%. FY 2018 also, employee expense grew by 22%. FY 2017 also it grew by 16%. Always it has grown more than around 15%-20%. Why would that be then?
That is on total expenses you are converting that is 13%.
Yes
14% and like that.
Yeah.
Here, see, for the new project, number of employees also, if you see in March 2019, June 2019, 2018, 235 employees were there. Now it has increased to 253 employees. All these promotions, annual increments, that also you have to consider it.
You have annual increments, right?
Yes.
Sir, what is this three years hike?
That is to compare with the market.
Okay. Every year you give a hike, but after every three years.
The earlier annual increment was 2%-3%. Which was not keeping in pace with the inflation as well. That is why every three years we look at having a revision of the pay scale itself. We don't have DA allowance.
Okay. You are saying the employee expense growth that we are seeing is because of addition of new people.
Yeah. Addition of new people. As the projects have increased, people have increased. Unlisted company, we have required more people. Overall, the number of people are increasing.
Do you envisage to add more people? This is a new opportunity which we are getting revenues from unlisted shares. Do you expect addition of more employees going forward?
No. See, if the volume increases substantially, I think employees also, number of employees will have to keep in pace with as the business increases. It cannot be that the business increases and the number of employees remain the same. Plus, as we get into new projects, obviously there will be some additions there as well. Or say, as the academic depository team and MHRD permit us to levy a charge, we will require people to market the product. These things will happen. It's not that it will remain at a constant.
Oh, okay. All right.
Okay. Thank you.
Thank you. Next question is from the line of Anup Chakraborty from HDFC Securities. Please go ahead.
Yes, sir. Thank you for your opportunity. My question is related to the unlisted opportunity. We are adding around 200 companies monthly, whereas the competition is adding around 500 companies on a monthly basis. I was trying to understand is that these 500 companies or 200 companies are all incoming or are we incurring any cost or sales cost to get these 200 companies? If you want to completely frame in terms of adding more companies, can you say increasing cost and sales cost related to the unlisted company?
There is some incentive we pass on to the RTAs to admit more companies into CDSL.
Okay.
As we get more aggressive, that cost could go marginally up.
Okay.
I would look at it more as a promotional expense.
Okay. We are providing incentives to the RTAs for.
We just started doing that, yeah.
Okay. These incentives are included in other expenses. What is that?
No. That is business promotion expenses. At present, hardly anything. Recently only we have introduced this thing.
Okay. Sir, in terms of the government study that we're doing, as it has already been discussed that the margins are very low in that. Can you quantify what exactly the margins are, and can these margins increase with scale or just the starting point where the margins are lower? As we reach scale, the margins can increase or how to say it. If you see from a total point of view, the margins look lower. If you see from a unique point of view, what would be targeted margins that you look at?
No, I think the margins are pretty okay. It's around 30% or 30-odd %.
Okay.
We have already booked some income in the last quarter is there, not only this previous quarter, but quarter previous to that as well.
Okay. The 30% margin is 30% of it can be for the full year, right?
Yes. It's for the full year.
Okay. Sir, the last question would be of the salary cost. When we have secondly incremental market share 30%, this includes increase that we are seeing in salary cost. Includes only impact of three months or is applicable previous also there or it's applicable from January or six months impact is there or some three months impact?
It's only one permanent impact, one temporary impact. Now, as on 31st, whatever actuarial valuation on leave encashment and gratuity was there, that has come into picture in this June 2019. Means around INR 4 crores we have impacted during this quarter. It won't be there in second or third quarter.
Okay.
Whatever increase is there, 100 becomes 130, then 30 becomes my permanent one as such.
Okay. Next quarter the impact would be in the range of INR 10-11 crore.
INR 10-11 crores. Whatever you say.
Okay.
Okay.
Thank you.
Thank you. Next question is on the line of Nitin Shakdher from Green Capital. Please go ahead.
Hi. Good evening. My question pertains I'm trying to understand the cash and investments and general reserves are around INR 650 crore-INR 670 crore is what you've highlighted. My question is it possible to deploy a certain amount of reserves from the treasury in terms of creating a buyback for the shareholders or improving the dividend yield? Isn't that a better use of the cash rather than deploying it at a yield of seven, 8%? Just want to hear the management viewpoints on that.
See, management about our dividend policy is consistent, that is around 60% payout ratio is always there, and on consolidated basis, around 44% payout ratio is there. Regarding buyback of shares and all, now in this budget, everything has gone. Now it is equal to whatever dividend you are giving, it comes to same only. Definitely near future. Near future means depend on you and me to come, and then we'll review it, and then we'll come back to share that about it.
Okay. Thank you. That's it.
Thank you.
Thank you very much. Next question is from the line of Gaurav Lohia from Bowhead Investments. Please go ahead.
Hi. Have you approached SEBI for a revision in annual issuer fee?
Not yet.
Not yet. Are we looking in the near run or probably it will spill over?
No, in 2015, we have revised the tariff. Now this year or next, we will do.
Okay. Sir, what was the revenue from these unlisted public companies in Q1? The issuer charge of INR 19 lakhs.
It would be around INR 12.
It would be around INR 75 lakhs.
75 lakhs. Okay. How much of that would be one-time admission fee? That would be much higher, right, out of the INR 75 lakhs?
There is 500 companies. Around INR 15,000. INR 600 lakhs. INR 19 lakhs around.
19 lakhs or INR 90?
Not nine zero.
19 lakhs. Okay, understood. Sir, you had mentioned that around 65,000 public companies are there, and out of that, about 5,000-6,000 companies would have the demat listing. How many companies would be left if the run rate that we are going with our competition is adding companies?
Of unlisted companies?
Yeah.
Around 65,000 unlisted companies are there.
Yeah.
Out of which, 2,000 odd admitted over a year. Whatever you see, which is around 4,000 at NSDL. Still 60,000 companies to come. It is not mandatory unless and until they issue shares or some transfer of shares takes place. That time it's mandatory.
Yeah. Any word on the private companies as in this is only for publicly listed companies, but any word on private companies?
No, there is a phase II that MCA is going to come out.
Okay. There is no clarity as of now when that would happen.
Not yet.
Okay, understood. Sir, what was the ECL provision last year? Was there any provision last year, or there was no provision, it was only in Q3 or Q4?
That is Q3, Q4 mostly.
Okay. There was nothing in Q1.
Yeah.
Okay, understood sir. Thank you. Understood.
Thank you. Next question is a follow-up from the line of Priyesh Babaria from Kotak Securities. Please go ahead.
Sir, just one more question with regards to, I didn't catch the number of revenue contribution from unlisted base of the company. Could you please share the same?
Previously, I made a mistake, but in this quarter, 643 companies added, and we have earned income of INR 99.63 lakhs.
99.63 lakhs.
Yes.
Okay. Thank you so much, sir.
Okay.
Thank you.
Thank you. As there are no further questions, I now hand the conference over to the management for closing remarks. Over to you.
Thank you very much to all of you, and keep faith on us. We'll definitely give you a good result. Thank you very much.
Thank you very much, members of management. Ladies and gentlemen, on behalf of Axis Capital, that concludes today's conference call. Thank you all for joining us and you may now disconnect your lines.