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BSE Ltd
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Ladies and gentlemen, welcome to BSE's Q2 FY '20 Earnings Conference Call. My name is Vasu, and I will be the moderator for today's conference. [Operator Instructions] Please note that this conference is being recorded.I now hand over the call to Mr. Yogesh Joshi, the Head Investor Relation Officer, BSE Limited. Thank you, and over to you, sir.
Hello, everyone, and welcome to BSE's earnings call to discuss Q2 FY '20 results. This is Yogesh, Head, Investor Relations. Joining us today on this earnings call is BSE's leadership team, consisting of Mr. Ashish Kumar Chauhan, Managing Director and CEO; Mr. Nayan Mehta, Chief Financial Officer; Mr. Sameer Patil, Chief Business Officer.Do note that the conference is being recorded, and a transcript of the same will be available on our website. The financial results and investor presentations are also available on our website.I would now request, Mr. Ashish Kumar Chauhan to give a brief overview of the company's performance, followed by a question-and-answer session. Please note that BSE does not provide any specific revenue or earnings guidance. Anything said on this call will reflect BSE's outlook for the future or which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces.With that, I would like to turn the call over to Mr. Ashish Kumar Chauhan.
Thank you, Yogesh. Good morning, good afternoon and good evening to all of you, wherever you are. Let me start with providing you with certain updates on our business and operations. Interoperating among clearing corporations went operational in this quarter, sharing -- starting with Equity segment on 15th July, Equity Derivative segment on 29th July and Currency Derivative segment on 5th August.Interoperability amongst clearing corporations facilitates efficient order execution by enabling any order to be executed at more than 1 exchange, and thus reduces the slippages in execution without the need to maintain margins at multiple clearing corporations. As more and more members of the investment community start insisting on best price execution across exchanges from these trading numbers, a positive impact on our liquidity and turnover of the Equity and Equity Derivative segment is possible over next few quarters.Over the last 2 months, Equity Derivative business has been focused -- in focus linked about 70 trading numbers, trading in SENSEX Futures and average daily traded volume. In SENSEX Futures, contracts in the month of September '19 and October '19 has been 16.5 crores and 71.7 crores, respectively. So the traded volumes have been achieved without spend on Liquidity Enhancement scheme. Company goal is to further increase liquidity in Equity Derivative business towards Liquidity Enhancement scheme.BSE has set up a joint venture with Ebix named BSE Ebix Insurance Broking Private Limited for conducting insurance broking business, where BSE holds equity stake of 40% through its subsidiary, BSE Investments Ltd. We are also glad to inform you that BSE Ebix has recently received an in-principle approval for Certificate of Registration to act as a direct insurance broker under the IRDAI Regulations, 2018. The venture branded as BSE Ebix Insurance Broking Private Limited will enable distribution outlets, wealth management advisers, point of sales to sell life and nonlife insurance products. The actual insurance distribution of BSE Ebix will commence after receipt of certificate of license from IRDAI. BSE will be owning 40% in this venture.During the quarter ended 30th September 2019, ICICI Bank has joined India International Exchange and India International Clearing Corporation, both subsidiary of BSE, has steadily invested through preferential issue of equity shares amounting to 7.71% and 9.90% of their respective enhanced equity capital of India INX and India IFSC.On 17th September, 2019, state-owned Power Finance Corporation listed its global notes on India INX's Global Securities Market. PFC launched issuance of USD 300 million worth bonds at 3.25% due in 2024 and USD 450 million at 3.9% due in 2029 under USD 5 billion Global Medium Term Note Program.As of 30th September, 2019, India INX's Global Securities Market cumulatively established MTN amounting to more than 44.5 billion in contract listed debt securities, including masala bonds and green bonds amounting more than USD 17.62 billion, about 25% of Indian issues of debt securities in international markets have listed on India INX's Global Securities Market.Several large Indian corporate entities, public sector units, bank and financial institutions like Export-Import Bank of India, Housing & Urban Development Corporation, National Highway Authority of India, National Thermal Power Corporation, Rural Electrification Corporation, State Bank of India, IndusInd Bank, et cetera, have established MTNs and are listed debt securities on the Global Securities Market of India INX.Average daily turnover of India INX, the BSE subsidiary at Gift City, Gandhi Nagar, witnessed a growth of 231% to USD 2.08 billion for the half year ended 30th September 2019 from USD 630 million for the half year ended 30th September 2018.Turnover comprises of significant contribution by Equity Derivative segment as well as Commodity Derivative segment. Equity Derivatives contributed 91% of the average daily turnover and the Commodity Derivative segment contributed to the balance 9% of average daily turnover for the half year ended 30th September.India INX witnessed an all-time high turnover of USD 4.9 billion on Derivative segment on July 25, 2019. It achieved a major milestone on 7th October. Hence cumulative total tradings crossed USD 500 billion mark, driven by substantial jump in trading volume, which increased over -- to over 37.15 million contracts. India INX's market share for the half year ended 30th September was to 87%. BSE's International Stock Exchange, India INX at Gandhi Nagar district in Gujarat achieved a major milestone on 7th October of cumulative total trading more turnover cost of USD 500 billion mark.India ICC is a Qualified Central Counterparty in the organization of Third Country Central Counterparty by the European Securities and Markets Authority, ESMA, report clearing assessment and risk management services through India INX. CARE Ratings, as we will reaffirm the rating of CARE AAA to the India International Corporation -- Clearing Corporation for the third consecutive year.But statement on development regulatory policy dated October 4, 2019, RBI policy documents, RBI accepted recommendation of task force on offshore rupee markets for allowing rupee derivatives to be trading in International Financial Service Centres. The direction for implementing the above recommendation will be issued in consult with government and other regulators.India INX Global Access IFSC Limited, a wholly-owned subsidy of India INX, towards trading connected to global exchanges, namely London Metal Exchange, ICE Futures U.S., ICE Futures Europe, EUREX, Euronext N.V., et cetera, in addition to CME Group of exchanges, CME, CBOT, COMEX, NYMEX.BSE continues to upgrade and grow its StAR MF platform. This platform has been consistently outperforming with number of order, new registration and SIPs. As of August 30, 2019, over 54,000 IFAs/members can use the platform to efficiently and effectively address their customers' requirements.Exchange launched BSE StAR MF app, a mobile app in May in order to enable mutual fund distribution process. Transaction on-the-go in a span of 3 months, that processed 42,000 transactions. I'm delighted to report that today the BSE mobile app completed 100,000 transactions till now. With no paperwork and the ease of doing business on a smartphone, BSE MF platform has become a one-stop shop for investment in various mutual fund scheme.Platform processed a record 8.56 lakhs transaction on a single day on 13th August, 2019, surpassing the previous best of 7.62 lakhs transaction on 10th June. As you may be aware that the segment enables investors across India to invest and redeem their investment in mutual fund through intermediaries on a fully automated electronic platform. While the intermediaries on their fees commission for their services, the mutual funds, BSE for processing the transactions. The daily amount of orders received on this platform in the half year ended 30th September has increased by 60% to 250 lakhs as compared to 156 lakhs in corresponding previous half year.Platform received a record 46.6 lakh orders in the month of October 2019, surpassing the previous best record of 43.44 lakh in the month of July 2019. The number of registered mutual fund distributors in the Mutual Fund segment increased by 79% to 27,759 as on 30th September as compared to 15,472 as on 30th September 2018. This network is over and above BSE's [ 1,400 ] members, backed by over 2 lakh authorized representatives covering length and breadth of the country.The total number of X-SIPs registered under this segment increased by 27% to 10.42 lakhs for the half year ended 30th September from 8.21 lakhs for the half year ended 30th September 2018. The total value of orders processed in the Mutual Fund segment increased by 38% to 103 -- INR 1,03,865 crores for the half year ended 30th September from INR 70,283 crores for the half year ended 30th September 2018.Further, the total number of orders received in the month of September 2019 is higher by 36% as compared to the orders received in the month of September 2018. The net income earned in the StAR MF segment increased by 58% to INR 20.74 crores for the half year ended 30th September from INR 13.1 crores for the half year ended 30th September 2018.Income earned in this segment has contributed to 11% of the revenue from operations for the half year ended 30th September as compared to 7% of the revenue from operating for the half year ended 30th September previous year. BSE's market share in this segment for the half ended September 30 stands at 72% plus.A continued growth in the Mutual Fund segment is in line with our expectations. BSE continues to pursue the strategy of appointment of distributors and optimal pricing for its services in the segment to maintain the rapid growth in business and revenues witnessed over last few years. For the past couple of years, BSE has tied up with various associations as well as exchanges in the commodities business for growth and development of Commodity Derivatives in India.During the ended -- the quarter ended September 30, 2019, BSE signed a Memorandum of Understanding with the Steel Users Federation of India, SUFI. BSE and SUFI will work towards enlisting steel futures in both long and flat segments. This will bring in stability, avert risks and facilitate a level-playing field to one and all players. Total number of members admitted in this segment is 272. The average daily turnover in Commodity Derivatives segment for the half year ending September 30 was INR 224 crores. BSE securities trading in derivatives of gold, silver, Oman crude oil futures, copper, guar seed, guar gum, cotton futures, turmeric, castor seed, chana and soybean.In a short span of the year, BSE has become the dominant exchange for trading in derivatives on turmeric, with a market share of 31.9%; cotton, with a market share of 30%; and guar seed, with a market share of 26.7% for the quarter ended 30th September 2019.BSE started levying charges in Commodity Derivative segment with effect from October 1 at INR 2 per crore of trade value of all commodity futures contract. BSE SME platform has 317 companies listed on its platform as on 22nd October, 2019. So the number of companies listed on our SME platform have grown by 17% over the past 1 year from 263 companies as of 30th September 2018 to 309 companies on 30th September 2019.The total number of companies listed in BSE SME platform, 69 companies migrate to the main board as at September 30, 2019. Total market capitalization of companies listed on SME as on 30th September was INR 18,348 crores and total funds raised was INR 237 crores by these companies. Number of market makers raised at BSE SME as on September 30 was 128. The companies registered on SME segment have shown outstanding growth over the last 7 years.SME IPO Index, which was launched on 14th December 2012 with 100 as a base, has increased to 164 as on 30th September 2019. BSE's market share in listing of companies in SME segment stood strong at 61% as on September 30, 2019. Being one of the foremost institution for capital formation in India, BSE regularly engages with industry bodies and government to take initiatives for growth of investment in India.In July 2019, BSE signed a Memorandum of Understanding with Department of Industries and Commerce, Government of Haryana, to encourage and support SME in raising capital, gain visibility and credibility with very large corporates.In October 2019, BSE in association with FICCI organized a brainstorming session to identify the gaps in the existing policies and make suggestions for robust policies, besides promoting Udyam Saathi and Udyam Sakhi initiatives to foster the MSME sector.BSE launched platform for Electronic Book Mechanism, BSE BOND, on July 1, 2016. This platform facilitates issuance of debt securities on private placement basis, which is in this segment include renowned corporates from public sector as well as private sector in India. In the quarter ended 30th September, BSE BOND platform grew by 39% to INR 74,945 crores as compared to INR 53,822 crores for the corresponding quarter in the previous year. BSE along with PTC India and ICICI Bank signed a petition with power market regulator, CERC, on September 7, 2018, to grant of license for serving our new power exchange.The CERC approval innovated. This proposed institutional exchange subject to necessary regulatory approvals will leverage on the experience and expertise of its stakeholders, industries, knowledge of the power sector, funding of power projects and associated infrastructure, setting up and running various exchanges and platforms in India and offered the market participants a credible power trading platform. BSE currently has a stake of 41% as of 30th September 2019. In the proposed power exchange, through its wholly-owned subsidiary, BSE Investments, the state stake would have -- will be brought down 29% post receipt of grant for license by adding more shareholders, and there will not be any sale of shares.With respect to listing of securities, the number of companies listed with their equity capital on BSE are 4,064 as of 1st November, 2019, which are also available for trading. BSE has the highest number of companies listed on any exchange around the globe. Market capitalization of companies listed on BSE is above INR 154 lakh crores. The total number of investors registered on BSE exceed 4.13 crores.BSE has been undertaking calibrated increase in listing fees over last few years to meet the same comparable to change charges levied by competitive exchanges as well as to cover increasing costs of compliance. With effect from April 1, 2019, BSE has increased its annual listing fees charged to exclusively listed companies by INR 50,000 in their listed capital is up to INR 100 crores and by INR 25,000 in case their listed capital is between INR 100 crores and INR 200 crores. BSE became India's first-ever stock exchange to get certified with International Standard for Business Continuity Management System, ISO 22301:2012 BCMS. BSE has been accredited with ISO 22301:2012 certification for Business Continuity Management standard.In July 2019, BSE signed a Memorandum of Understanding with Shanghai Stock Exchange, inter-alia, to support the development of small and medium enterprises, dual listing development of fixed income market, development of joint trading platform for offshore RMB products, experience sharing and cooperation on IT system. This quarter also saw the first 2 companies to get listed on BSE Startup platform. Alphalogic Techsys Limited and Transpact Enterprises Limited became the first companies to get listed on the BSE Startup on September 5, 2019.On December 20, 2018, BSE became the first stock exchange to get the approval from SEBI and launch Startup platform. As informed to you in our previous quarter call, BSE has undertaken buyback of INR 67.65 lakhs fully paid up equity shares of INR 2 each at INR 680 per equity share through tender offer route. The buyback commenced on 30th August 2019 and was closed on 15th September 2019. The total amount of buyback was INR 460 crores.Post that, the total paid-up equity capital of the company has reduced by 13% to INR 900 lakhs and the number of shares issued has reduced from 52.569 lakhs to 4,58,04,297. Consolidated and stand-alone network of BSE stands at INR 2,400 crores and INR 2,065 crores as of 30th September 2019, respectively.On a consolidation basis, total revenue for the half year ended 30th September is lower by 1% to INR 325.55 crores as compared to INR 328.25 crores in half year ended 30th September 2018. Profit before tax and exceptional limit items for the half year ended 30th September is lower by 29% to INR 68.5 crores as compared to INR 96.35 crores in half year ended 30th September 2018.Net profit for half year ended 30th September is lowered by 26% to INR 77.59 crores compared to INR 97.35 crores in half year ended 30th September 2018. Decrease in net profit during the first half ended 30th September is mainly attributable to a decrease in revenue growth from operations by 4% to INR 221 crores; decrease in other income by 40% to INR 10.50 crores and increase in operating expenses by 11% to INR 1.26 crores; offsetting the increase in investment income by 16% to INR 94.19 crores; decrease in taxes by 69% to INR 5.3 crores or INR 5.23 crores. The operational revenues to the total revenue has been reduced at 68% for the half year ended 30th September 2019 as compared to 70% for the half year ended 30th September 2018.On a stand-alone basis, the total revenue for the half year ended 30th September 2019 lowered by 4% to INR 286.68 crores that's compared to INR 298.62 crores in half year ended 30th September 2018. Decrease in total revenue during the last year and September 30, 2018 -- 2019 is mainly attributable to decrease in revenue from operations by INR 8.68 crores, decrease in other income by INR 6.8 crores, offsetting the increase in investment income by INR 3.5 crores. The ratio of operational revenues to the total revenue has been constant. It stands at 65% for the half year ended 30th September 2019 as compared to half year ended 30th September 2018.As on 30th September, 2019, the total banking -- total balance lying in settlement guarantee fund maintained by our clearing operation is INR 48 crores. It may also be noted that BSE had made a provision of 50% of its investments made in secured debenture of IL&FS in previous years, and since we are unlikely of receiving any redemption amounting future -- further provision of INR 2.68 crores, as we made in the financial for period ending 30th September 2019.With this overview, let me now welcome you once again, we invite all of you to question and answers. Thank you.
Shall we open the line for questions?
Yes, please.
Yes, please.
[Operator Instructions] First question comes from [ Mr. Neeraj Kamtikar ], individual investor.
Hello? Hello?
Yes, [ Neeraj, ] please continue.
Yes. Sir, why there is a sharp jump in...
[ Neeraj, ] your voice is echoing. Can you do something about it?
Got it. Hello?
Yes.
Sir, why there is a sharp jump in administrative and other expense at stand-alone level?
See, in stand-alone expenses, there are quite a few items, which are onetime in nature just to [ restate ]. They're particularly being the provision which we mentioned, with respect to our investment in IL&FS, but that is around INR 2.6 crores. Then in Mutual Fund segment, we have made a provision for -- with respect to receivables that are amounting to INR 3 crores. So those are the 2 main areas because of which you will just embrace them. That's something that mainly pertaining to certain marketing initiatives which we have undertaken from the Mutual Fund as well as Commodity segment. Under normal consequences -- and then we have had also contribution to CSR which was not there last year. This thing, well, our auditors committed that we should grow it the same under accrual basis for the full year. So our six months period, we have provided INR 1 crore for that also. So these are the win-win reasons for which our admins expenses have gone up.
Hello?
Yes, [ Neeraj. ]
And how much are recurring?
Well, see, the point of license at -- out of that INR 11.87 crores, more than INR 9 crores are extraordinary type of expenses. And the remaining is basically with respect to normal depreciation, which would increase. Then certain receivables on the side with respect to listing fees. So those are the normal expenses, which have increased.
Hello? Hello?
Yes, your voice is breaking.
Hello? From next quarter, it will be INR 33 crores? That's what I'm presuming.
See, the point is that the external part will go and if you remove the extraordinary part of INR 7 crores INR 8 crores, INR 2 crores INR 3 crores will still continue.
[Operator Instructions] Next question comes from Mr. [ Vikas Kasturi ], individual investor.
I had a question. See I use your website almost on a daily basis and since you're making so many investments in technology, would you also consider giving a facelift to your website and make it easy to search through all the filings, et cetera?
Yes. Sure.
Sure.
All right. And sir, the investor presentation on NSE is not available, sir.
So, we have just uploaded because our Board meeting got over just a few minutes before our call. So first, we had to update the exchanges and now -- our team would be -- would have uploaded it by now, if you can log on to BSE website.
Yes. Yes, the link is there, but there is no presentation, sir.
We're going to fix it right away.
[Operator Instructions] Next, we have [ Mr. Kishore Sunekar. ]
Yes, I'm [ Kishore Sunekar. ] When we can expect the power exchange license?
Basically, yes, we have applied to CERC. They have put in certain conditions, which broadly we are fulfilled. So we are going to file the new sort of undertaking sometime this month. And so hopefully, if we get all the hearing rather than done in next 1 or 2 months, probably the license may be there.
In that period.
But again, it's dependent on the regulator, in case, they want to put in some additional conditions, which we need to fulfill further.
Okay. And one more question was that, that year-on-year, our revenue is going down. So we have any plans to how to improve this revenue growth?
Basically, if you look at -- although the total revenues have been going down, certain businesses like mutual funds are doing well. And certain businesses like securities, that is the stock trading has not done well, because markets were bad. Our -- basically 2 large areas where we have had difficulty in the last 2, 3 years, one of them is small stocks. Small stocks used to be the mainstay of BSE's transaction charges. Their values went down by almost 80% on average because of variety of reasons, including the mutual funds not able to invest in so many of them due to the new SEBI regulations last year. But effectively, if the markets do pick up going forward, then you will see much larger impact on our revenues coming out of the transaction charges for small stocks going forward. In 2016, '17, if I recall, almost 50% of our transaction charges were coming from small stocks. Today, they would be less than 10% of the securities transaction charges. So that kind of impact that has been.The second product is basically IPOs. IPOs BSE is much larger than other exchanges, and that also used to give us, on a -- in a good year, almost INR 50 crores to INR 70 crores revenues. Last couple of years, the revenues have dried up on the IPOs because IPOs have not come. And similarly, there have been also lesser number of corporate restructuring or rights issuing and all. So there, BSE earns a little bit. So effectively, these 3 things which are basically market dependent. If markets does well, actually for small stocks and IPO, BSE will do well in those areas.In the meantime, BSE has also developed Mutual Funds business, which is doing well. BSE is also now in the process of developing commodities business, where in some areas, BSE has got some ground over last few months. And also BSE has put in place the India International Exchange, where currently, there are being losses. But in case, larger business starts coming in there, we may have some revenues coming on a consolidated basis from there also.So overall, this is where BSE continues to work. Most of it, in a way, is market dependent, but we will continue to develop newer areas with very low cost of investment. So that the new revenues, which come up, is actually accretive on top and bottom line.
Okay. And now this buyback has happened. Will this -- dividend distribution is -- every quarter, we will be distributing? Or now it is -- some quarters, it is there and it is not there. Why don't we distribute evenly for all quarters, because our dividend is nearly about 5% to 6%. So I was thinking that it will be better if it is distributed every quarter?
Usually, companies do it once in a year, most times, and sometimes twice a year. We'll probably go with once in a quarter or once in a year-only kind of support in going forward.
Well, presently, we are distributing twice, I think?
Please come again.
Presently -- last year, we distributed twice. Thrice, I think? Thrice, we distributed.
Yes. Last year, we distributed twice. Well, that's -- and decided that, -- going forward, we're planning for once in a year.
Next question comes from [ Mr. Neeraj Kamtikar ], individual investor.
Hello?
[ Neeraj, ] I think, only your voice is echoing. Can you do something about it?
Sir, I have 3 questions. Hello?
Yes.
Sir, when INX will achieve the breakeven? And what is the current loss from INX? My third question related to cash market. Which are the steps BSE is taking to increase the equity turnover in cash market?
So basically, INX...
One second. Sorry for the interruption. Hello, sir. [ Neeraj, ] you can mute your line so that you can hear the answer, which you are giving.
Yes, INX trend is around $2 million a day, sometimes it also does $3 million to $4 million a day. Currently, we are not charging, because competition is also not charging. And the government and RBI are in the process of giving approval to U.S. dollar, Indian rupee transactions there going forward in terms of futures and options. So as soon as it consolidates, you see some more volumes, but we do not have yet an idea of when INX will break even in terms of the...
What are the current...
The current losses for the half year is around INR 17.21 crore for India International Exchange and India International Clearing Corporation Limited.For improving the equities market volume at BSE, BSE basically continues to see -- have a lot of innovation other than seminars and also broker meetings to ensure that the brokers end up passing orders to BSE instead of other exchanges. And also BSE continues to create better softwares, better clearing activities and so on and so forth. And so those are the efforts, which continue almost 4,800 investor seminars are done every year in addition to several hundreds of stock broker meetings and so on and so forth.
Next question comes from Mr. Amit Chandra, HDFC Securities.
Sir, my question is related to the license we have got for the insurance distribution. So what kind of investments are acquired here? And by when can we see some traction in this space? And also how will be the revenue model placed here?
So basically, we will have 40% equity stake, and the total capital currently planned is INR 25 crores. So our investment is INR 10 crores. We think we should be able to go live in next 2 months. In this business, the license we have got allows us only to deal with individuals as agents, not, I mean, as sub brokers to our distributed platform. And these are going to be distributed from not an exchange platform. It will have many insurance companies giving their products, which are approved by Ind AS for this particular type of platform called POS platform. Other side will have literally thousands of our agents selling those things. And we will also have the ability to train them on online basis. We have tested most of the software. We have around 10 companies signed up, tested the technology with us, 5 in life, 4 in general and 1 in health. Eventually, we'll have pretty much every company who desire of selling their products through this kind of platform, what we call digital platform. There are not purely digital, not purely physical, but a mix of both. And we think in next 2 months, if everything also goes all right and we get license, we would be ready to go live because we have actually been testing this technology for more than a year now.
Okay. So is this something similar to the PolicyBazaar kind of an arrangement? Or are we looking to get commissions from the insurance there? Or it will be a transaction-based model similar to the BSE StAR MF platform?
It's the second one you said. It's basically distribution platform. It is going to be able to conclude the sale, which doesn't happen in PolicyBazaar. And this will also do post-conclusion activity, including generating customers and also helping them in clean processing in case required. These are much more detailed, much more involved platform compared to just giving them some comparisons.
Okay. So here, we will not get any commissions or from the insurance companies for selling their products?
Yes. No, we will get that. That's why it's a distribution broker kind of a model, and then we will pass on some of that to our...
Sub brokers.
Sub agents.
Okay. And sir, on the investments and on the market share that we have on the commodity side of the business. So it's been a year almost when we have launched the commodity trading. And in last 1 year, we have not seen any substantial increase in the commodity market share, whereas the competition has scaled up the volumes pretty well. So like, how do you see it and will the investments here will continue? Or we have some different strategy?
No, our investments will continue and our hard work will continue. In the last 1 year also, you have seen 3 mid or large tech scandals and catastrophe in gold and in cotton. None of them happened on BSE, right? So you might be able to also check -- and similarly, in few other areas, we are a little more conservative than most other exchanges, and we'll probably continue to remain players who wants to have more trust than anything else, because in the long run, these are business of trust. And if people keep on losing money then they may not come.Similarly, the volumes, as you mentioned, are only in gold and crude, where there was a rally at certain point in gold for some time. And so I don't know whether that will remain for infinity or not, but it remains to be seen. We will continue to work hard on those areas also. We have a brand crude contract in the pipeline, where we have tied up with ICE. We are also tying up with one more Chinese exchange for other gold kind of commodity and so on and so forth. But we think, this is a business where people trust us more, and we'll continue to invest our efforts into that. In terms of the marginal cost, there is no marginal cost because everything has been now settled -- last one year has gone in developing sort of telling the software vendors to develop softwares for the BSE commodities. For that matter, other commodity, new commodity exchanges, and so it's a little bit of chicken and egg. Vendors are reluctant. They want a lot of money and so on and so forth. But slowly and steadily, people are accepting BSE in guar seed, guar gum, we have got very good market share. In cotton, we have started getting good traction. I was with Cotton Association of India on last [Foreign Language] day at their office. Similarly, in turmeric, we are pretty much becoming the large market. So there is some, what I call, interesting development that is happening. And many associations are coming on their own to join hands with us, which is a, what I call, a vote of confidence in us like SUFI, Steel Users Federation and all. And that's what -- we'll continue to be a little more conservative on not changing regulations on run-time basis, not allowing many defaults and hope that markets appreciate not losing money going forward.
Okay, sir. And sir, on the alias investment that it's currently ongoing. So when we can see this alias investment, the Liquidity Enhancement scheme investments going to be there? So it's around INR 4 crore quarterly, right? So till when we have the SEBI approval to spend on alias?
We have RBI and SEBI approval to start alias in the Equity Derivatives. We have recently started that and probably will continue for some time, because we do not have the traction, which we require. Currently, I think we are doing INR 150 crore to INR 170 crore a day over last couple of weeks. It's early days. And the factors just on activity basis, people are spending pretty much 5, 7x more than what our incentives are. And that's what is giving me some area of, sort of, some traction that is coming in BSE SENSEX. In the India International Exchange, the alias will continue to get some traction, get people interested. And once the USD-Indian rupee comes into play, I don't know how far and how fast it becomes successful. But currently, we are pretty much the market there. And that -- we don't know because competition doesn't charge, we can't charge. And that remains to be seen unless we have a very large market power being driven out of BSE there.
So the alias is mostly for the Equity Derivative or for the INX? Or it's both, like combined force, like both the exchanges, right?
Currently, the alias for the Equity Derivative is only recently started. So it wouldn't be even there in sort of result this quarter. But it's largely, alias for the INX what you see in the results.
So this INR 17 crores cost that you mentioned for INX or the loss there in the first half, so that INR 17 crores is excluding this INR 4 crores or including?
No. It's including.
Okay. It's including this. Okay. And, sir, like, we are seeing the revenue decline in the core revenue streams, and I know if I see the cost structure, again, I know the [ various things ] still going on and at the EBITDA level, excluding the investment income, if I see. So at EBITDA level, it's at a loss. And excluding the like one-off also, it's like, mostly like breakeven level. So when do we see the traction coming in at the EBITDA level? Or how do you see the cost structure moving, say, like 1 year from here on? And in terms of the traditional revenue stream, how do we see the traction level is coming back? When you expect that?
So I replied earlier also. That IPO was our last year's number around INR 50 crores to INR 60 crores, which has not happened over last 2 years. So if market does well, IPOs coming, we do 70% of IPOs in terms of the collections and all. And hopefully, we'll sort of -- whenever that market comes up, we'll do well. Similarly, in the small stocks, we have lost, so our revenues, not market share because we are running from a market in that because that those stocks have lost 80% value and the trading has also, as I stated, further. So what used to be 50% of our transaction charges has now become less than 10%. If the small stocks start valuing again you will see traction. And nothing -- none of them has anything to do with our expenses because our expenses generally are fixed, our revenues are variable on that. And so if revenues come up, these all go to top line and bottom line, both. Mutual Fund is doing well, and hopefully that will -- in a way, in last 2 quarters, it has compensated for the fall in the equities side transactions generally. But probably, it will do even further and probably compensate even more. So when the market starts doing well, probably we will see much larger revenues coming to BSE. And it has nothing to do with our -- many times, we may have variability kind of concept in our lives, in our mindset. If the volumes go up, the cost will also go up. It's not that kind of business probably here. The costs are fixed broadly, very little -- variable -- regulatory charges are variable. Other than that, very little is variable.
And sir, my last question would be on the other operating expenses. So I just have actually missed the initial commentary. So out of the INR 49 crores that we have in other operating expenses, which is up around 25%, how much of that is one-off, if you can mention that?
One-off -- you'll see that, I think I had mentioned already earlier on this that we have actually provided for about INR 3 crores on Mutual Fund receivables. Then there is another provision for listing fee, which is around INR 2-odd crores. We also made a provision for IL&FS impairment for INR 2.6 crores. So this is the time which has more precautionary and especially this Mutual Fund dividend provision which I made is precautionary listing fund. Listing is also precautionary. As MD said earlier, you know that we follow our policy of pretty conservative accounting just to ensure that at no point of time, we give you a different picture than more optimistic picture. So we give you a picture, which is -- which cannot go -- really we should not go further down from that. Probably, we should actually end up having some positives on that. Then -- yes, tell me.
Sir, this INR 50 crores Mutual Fund receivables, what exactly is the nature of this? Is it related to be receivables or the like provisions you've done with the StAR MF, [ indiscernible ] like what exactly is that from?
Yes. So this is something which -- because that -- we are still consolidating our position here, and we do get request for that renegotiating certain terms and finalizing -- and when we are finalizing certain terms, obviously, we have to consider the other net sensitivity also. So we have kept the provision of pre-close for the timing. And I think this is the end of -- we think that is more than sufficient to meet any possibility where we have to actually recover less from them.
Next question comes from [ Mr. Neeraj Kamtikar ], individual investor.
Sir, as on Q1, BSE StAR MF Mutual Fund revenue was INR 11.9 crore, and for H1 '20, INR 20.7 crore. That means for Q2 FY '20, revenue from StAR MF is INR 8.8 crore. In spite of increasing number of transactions in MF, any reason why?
[ Neeraj ], when we have done this presentation, we had actually reduced that INR 3 crores from the top line so that when we come again next time, there is a continuous -- there's consistency of the amounts. Otherwise, what will happen is that we'll share you basic readout. And then again, next time, you'll again ask us why there's so much of difference again. So the provisions go into accounts, we have to meet the provision in our bottom line -- in our expenses. For the purpose of presenting to our investors, we have reduced it from the top line.
Did you reduce the transaction charge?
Hello?
We have not reduced the transaction charges, we have just reduced the provision which we have made. So that's why we're showing the net number there.
[Operator Instructions] Next question comes from [ Mr. Kishore Sunekar. ]
Hello? Hello? Hello, can you hear me?
Yes, [ Kishore. ]
Yes, go ahead. Go ahead.
Once we get the power exchange approval, sir, what will be the time frame to execute this? And what time it will take for our revenue generation?
As of now, our estimate is that it will take a quarter to start, once the license comes in. And revenue generation should start immediately because that business is pretty much sort of non-discount basis. So actually, we'll start generating revenue immediately after the license.
Do we have advantage with other players because in India, only 4% of power generation is being traded. So how we will get business shares?
Basically, I mean, today, you may see differently tomorrow, it may happen differently. Like in 2004, India had 4% telephone penetration. That is out of 100 people, only 4 people had phone. Today, probably out of 100 people, 110 people have phone, right? So it happens pretty soon, pretty fast. It seems to go different. And that's what basically one plays for at low investments.
Because of the PTC, we have a collaboration with them, we will be -- we will have some advantage of it then?
Hopefully. Hopefully.
Hello?
Yes, please. Hopefully, we will have, yes.
Next question comes from [ Mr. Deepak Malhotra ] from TPG Consultancy.
My question, while you already alluded to what you're trying to achieve on the commodity front. I think you have only seen 1 year and the results haven't been really up to the expectations to see an impact. Could you kindly elaborate going forward, I mean, how much kind of market share you're really targeting in order to strategize with these approvals?
See, target, we don't work on that kind of numbers. We work on more on how to do better regulations, lesser defaults and things like that. And I hope that people will finally appreciate better technology, better risk management and all. In terms of how much time it will take, I don't know, but we'll continue to work hard. And the results come from sometimes unexpected areas. So like turmeric or cotton, which we had not expected frankly, which has come, but as gold and sort of crude have not yet come. And crude, we are going to relaunch with a ICE collaboration, International Continental Exchange, where we have 3 brands. We are going to trade on that basis. And so it's a -- what I call, we'll continue to try various things. There is no additional cost to that. And now I think a new regulation has come in, actually, there has been a change in SCRA to allow options on spot market. Till now, options and futures were allowed. And we -- there are minimum liquidity requirements for those futures. So we couldn't launch options. Now with the new SCRA's amendment, we might be able to launch options also very soon. So for the -- we'll continue to basically provide a more safe, better technologically-oriented solution to the market and hope that someday people will come to sort of be it. And in some ways, what they have seen in castor seed, oil or cotton has made them come to BSE in recent times. And so that you will see the impact -- larger impact of that in the current quarter going forward.
Okay. Maybe in the -- you had been in the past, very, sounded very optimistic for the MF platform going forward. So would you again like to elaborate on how do you see 3 years down the line?
So basically, the way I look at that is today, we have become 15% of all the funds going into Mutual Funds, including the past SIPs and whatever. We do around 46 lakh transactions a month. Even if the market doesn't grow, which it has not over last 4, 5 months, because market has been bad, the Mutual Funds also didn't grow so well. But we have been, in a sense, a large provider of new orders to the mutual fund industry in last 5, 6 months. And over a period, if the mutual fund market grows from say, 3 crore transactions a month to 6 crore transactions a month, then it will become 50% of that, then we basically will grow almost 6, 7x of current and in terms of volumes, and then you might be probably again 50% to 100% larger. So that's how I would put it that there is enough and more scope for growth of this platform. And it has sort of helped us conceptualize a new -- completely new platform in the insurance because this has some -- like a bit of fresh air not only for us, but also for the distributors that they were searching for something like this, there was nothing which was available. And now suddenly, it is so much more popular that we have like 54,000 or 57,000 people officially sort of there on the platform, right? So that is large.
Just pardon my ignorance that internationally, I think most number of transactions in mutual funds, they do take -- they go -- undergo on online basis, is it?
Internationally, if you look at -- in 1994, New York Stock Exchange was not screen based. NASDAQ was not screen based. They were phone based, also they used to use basically screen-based codes. CME was floor based. London was floor based. Japan was floor based. In 1994, India started screen-based trading. And it became so large that everyone actually followed, right? Sometimes, India doesn't have to be follower-only. Sometimes it can take leadership, which it has done in mutual fund in this case also after 25 years of automation of screen-based trading.
Just one bookkeeping question. While you already explained the rise in the admin and other expenses? There's also some rise on employee benefit expense. Could you kindly elaborate on that?
Pardon me, can you just repeat it, please?
On the employee benefit expense, there has been a rise in this quarter.
So there are a few things generally. First of all, it's that, that we are processing a lot of activities, with -- we are processing Ebix, we are processing provisions booking, we are processing exchange commodities. So obviously when we are processing a lot of initiatives, there is a cost to it. And obviously, year-on-year also, we have to -- there is a particular increase in expectancy of every employee. So that has to be met. So basically cleans up in excess of 100, rise by 8% or 10%. That is basically because obviously it's a initiative, which are coming up as well as the nominal incremental which everybody should get when you're in a fast growth pace.
Yes, but would this be a recurring trend going forward? You cannot say that?
See the number of transactions has been not increased much in this company on stand-alone, but they will continue to have some sort of inflection adjusted expenses on employees going, and that will be recurring. There is no way you can tell employees to stay in the same salaries for years together.
Now I would like to hand floor back to Mr. Yogesh Joshi for the final remarks. Thank you, and over to you, sir.
Thank you all for joining the conference call. Thank you so much.
Thank you.
Thanks, everyone. Have a great evening.
Thank you, sir. That does conclude our conference for today. Thank you for your participation on Reliance Conference bridge. You may all disconnect now. Thank you, all.