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Central Depository Services (India) Ltd
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Ladies and gentlemen, good day, and welcome to the CDSL Limited Q1 FY '19 Investors Conference Call, hosted by Axis Capital Limited.[Operator Instructions]. Please note, this conference is being recorded. I now hand the conference over to Mr. Aditya Bagul, of Axis Capital Limited. Thank you and over to you sir.
Thank you, Vikram. Good evening, ladies and gentlemen, and a warm welcome to the 1Q FY '19 Earnings Call of CDSL India Limited. We have with us the management of CDSL, represented by Mr. P.S. Reddy, Managing Director and CEO; Mr. Bharat Sheth, Chief Financial Officer; Mr. Gaurang Shah, Vice President; and Mr. Nilesh Kittur, Assistant Vice President. I'd request Mr. Reddy to take us through the results highlights and then we shall open the floor for Q&A subsequently. Over to you, sir.
Thank you, Mr. Aditya. Good evening, everybody. Thank you for your continued interest in this talk. And this quarter, maybe, it's a mixed signal there for us in the sense the operation income has gone up, but in terms of the other income, substantially the investment income, has -- substantially has come down, because the returns are low. In any case, on all these, line item-wise, Mr. Bharat Sheth will take you through. But I will give you the long view as to how we are doing and what is the roadmap in the sense what we expect year to be like.In the -- in -- if you see the Depository business, currently, we have a 70% incremental market share -- 71% rather, to be precise, in this quarter, and we have currently about INR 1.55 crores demat accounts that we have. Now that's a good growth, reasonably good growth, I would say. And the aggregate, about 47% market share we have. On the IPO front, the [ volume ] number of IPO corresponding to the -- compared to the corresponding quarter are more, but then the size is not really big, so the number may be looking big, but then the number of investors, who have applied a number of times, these issues got low subscribed, did not get it as much as we thought it will be, yield in the income. So that's one area probably we have not got as much as we thought we should be achieving.In terms of new businesses that have come -- in terms of new activities rather, of course, you are aware that IEPF has been there for the last 6 months, Investor Education and Protection Fund activity. There we started charging the companies annually. And the latest, too, edition for the income stream is the Foreign Portfolio Investment Monitoring. So that's also, again, our tariffs are there in the public, about 25,000 for the top 500 companies and the rest will be paying INR 10,000 annually. It's another -- of course, it's not going to be very big, but then that's another source of revenue that we are expecting in this current year -- current financial year. When it comes to the new initiatives, come to the CDSL Ventures Limited, there again, we have done reasonably well. Although the new creations are slightly lower as compared to the last year, the number of hits have -- definitely have gone up and there we have done reasonably well. And the most of the mutual fund investments, of course, all the investment portfolios have gone up. To some extent, the KYCs have gone to the competition, especially the CAMS, which have got a cap to service centers where they are uploading the data. So not so much has come from that part. But then still, some mutual funds are going with CDSL Ventures Limited, so we have done reasonably well out there as well. The third area is the National Academic Depository. This National Academic Depository is being -- picking up, gaining momentum and as I said last time also, and each I have been -- whenever I meet investors, I do tell them that till September 2019, we were told not to charge, so there won't be any much revenues except from verification. Verification will happen if the number of records increase substantially. So that is where the government and the -- as well as the depositories both are fast working to bring in as many academic records as possible into the depository network current portfolio. So that will help us to increase the number of verifications. At this point in time, again, it's minuscule. It's a project. As I said, it's about -- around 2019 or 2020, '21, we should be able to reasonably say that we are doing well in this space. Then the commodity depositories, one which we have recently launched. I believe the -- I know some people, again, in private express their concern that there is risk on the depository in terms of commodity. They are guaranteeing, as if the commodity repository is guaranteeing quality and quantity of the stock that is in the commodity warehouses. I think that's a -- that is completely a wrong notion that they have. The regulations itself stipulate what the repository will do and what is not its responsibility, especially in terms of quality and quantity, that's very specific -- expressly stated in the regulations. So in that field, NMCE, that is the commodity exchange, based in Ahmedabad, has issued a circular saying that the eNWRs, electronic negotiable warehouse receipts, kept in the depository are -- rather repository, are eligible for delivery on the commodity exchange. Similarly MCX has issued a circular just a week -- not even a week old, okay, informing that the CCRL-held eNWRs are valid for delivery. So although it's not going to a very big business, because the deliveries and commodity exchanges are small, we expect it to grow as we go along. But more than that, what we are looking at is the pledge by the -- are the low [ negatives ] to these commodities by pledging the stock -- or eNWRs in favor of banks. And that is where we are working, all of us, including the regulators are working day in and day out to convince banks as to why they should go for it. And discussions are also on with the RBI, especially the banking regulator to push for such kind of operational -- to enable eNWR-based pledging and then lending. Then comes the other -- the, what they call insurance repository and you all know that the insurance repository has not taken off, but we're all waiting for the single demat account to come and then phase out the insurance repository, which is not doing so well. And in the demat account itself, we are expecting the investors to hold all of their assets. Probably that will take some more time. Although, maybe on a month-on-month or once in 2 months, they take -- the meetings have taken place at the highest level, wherever this needs to be pushed. I can -- I expect in the next 2, 3 months some kind of changes to happen. And this is my belief, of course. I'm not holding any promise, but then these are all regulatory changes. But we expect some movement to happen in this front, especially in the form of regulations. Then comes the RTA business, which we have taken. You are aware that, in the press, of course, MCA proposes to admit all the unlisted companies, maybe in phases, okay, into demat. That's what their desire or roadmap is. But to begin with, all the public limited companies will be told to -- or maybe told, not that I can guarantee, again, to dematerialize their stock and keep them with either of the depositories. So that is going to be a good business opportunity to -- both for CDSL as well as for CVL under the RTA. So CVL can cater to them as an RTA and CDSL can be a depository. So that line of business also is expected to come, and we are developing an online system for these companies to be admitted seamlessly. And hope that will happen by the end of August, September, okay? That's what our thinking is. But again, it has to be enabled by way of regulation or circular from the MCA, Ministry of Company Affairs. Hope that will also happen within the time frame that I'm talking about. With these words, I will now give it to Bharat Sheth, for discussing about the financials.
Good evening, ladies and gentlemen. Very warm welcome to CDSL con call. First time giving you June '18 versus June '17, that is the year-on-year basis consolidated results. The consolidated total income is placed, that is 0.24%, that is from INR 50.45 crores in June '18, as compared to INR 50.33 crores in June '17. The operational income increased by 12% from INR 40.55 crores to INR 45.29 crores, which was offset by reduction in other income, where the mark-to-market gain in June '17 was INR 520 lakhs, that is INR 5,20,00,000, which reduced to INR 1.94 crores on the current quarter. However, the reduction in PAIT is 14%, that is from INR 25.47 crores to INR 22.02 lakhs, which was mainly on account of increase in depreciation due to purchase of new KYCs and reduction on deferred tax assets. The expenditure was higher by 18% on -- year-on-year basis, that is an INR 18.64 crores for June '17, increasing to INR 22.07 lakhs for June '18. For the -- excluding other income, the PAIT improved by 6% over June '17. Whereas -- sorry, PBT is improved by 6% over June '17. Now consolidated results on quarter-on-quarter basis, that is June '18 to March '18. Although the consolidated total income is down by 18%, that is INR 50.45 crores in June '18, as compared to INR 61.65 crores in March '18, mainly on account of overall weak markets on income and reduction in other income, where the mark-to-market gain in March '18 was INR 6.4 crores, which reduced to INR 1.94 crores on the current quarter. However, the reduction in PAIT is 15%, that is from INR 26.09 crores to INR 22.02 lakhs, which was controlled by expenditure. The expenditure was lower by 11% on Q-on-Q basis, that is INR 24.9 crores for March '18, down to INR 22.07 crores for June '18. Whereas on stand-alone basis, on June '18 versus June '17, stand-alone total income up by 2%, that is INR 40.4 crores in June '18, as compared to INR 39.52 crores in June '17. The operational income increased by 12% from INR 32.48 crores to INR 39.52 crores, which was offset by a reduction in other income, where the mark-to-market gain in June '17 was INR 3.5 crores, which was reduced to INR 1.02 lakhs and -- INR 1.02 crores on the current quarter. Also the dividend income is lower by INR 73 lakhs, however, the reduction in PAIT is 15%, that is from INR 22.73 crores to INR 21.9 crores, which was mainly on account of increase in depreciation due to purchase of new KYCs and reduction on deferred tax credit. The expenditure was higher by 18% year-on-year, that is INR 16.79 crores for June '17, increasing to INR 21.9 crores for June '18. For the excluding other income, the PAIT -- [ PBDIT ] improved by 14% over June '17. Whereas stand-alone on the basis of quarter-on-quarter, that is June '18 to March '18, the stand-alone total income is down by 17%, that is INR 40.4 crores in June '18, as compared to INR 48.85 crores in March '18, mainly on account of overall weak market conditions and reduction in other income, where the mark-to-market gain in March '18 was INR 3.76 crores, which was reduced to INR 1.03 crores on the current quarter. However, the reduction in PAIT is also 17%, that is from INR 19.5 crores to INR 16.3 crores, which was concluded by controlling the expenditure. The expenditure was lower by 12% on Q-on-Q basis, that is INR 20.96 crores for March '18, down to INR 18.51 crores for June '18. Now I open the forum for the question-and-answer session.
[Operator Instructions] We have our first question from the line of Atul Mehra from Motilal Oswal Asset Management Company.
Sir, could you talk about the incremental revenue streams that we would expect given some of these changes, like the unlisted companies coming about and 1 or 2 other things that you spoke about? So can you broadly talk about what the numbers could be like with these new revenue streams?
Well, we were given to understand that there were about 65,000 unlisted private limited -- public limited companies, which are expected to come into the stream. Now yet, how many will be mandated to come in, we do not know at this point in time.
65,000 public limited companies.
65,000 unlisted public companies.
Unlisted. Right.
Okay? Now it's an approximate figure. It could be 1,000 more, 1,000 less or whatever it is. And now it was, expect -- I don't know how many will be mandated to come into the stream, into the dematerialization. If you mean that all of them will come, okay? Then if it is not mandatory to admit with both of us, then they choose between CDSL and NSDL, okay? So again, it depends on who will go where and if you mean that it is with 50-50%. That's one variable. The second variable is the tariff. Now tariff is going to be decided by MCA. Obviously, this is something on a major scale. They wanted to do it and nobody should complain that's what their desire is. So they will keep it at a very -- obviously, it's a new tariff plan, will not be applicable, that is for sure, okay? During the course of discussions that they have suggested -- hinted rather, I would say. But what tariff they will decide, I'm not too sure about that at this point in time. So I will not be able to say what will be the revenue that we'll accrue out of this business.
Right, right. Sure. And any other revenue streams that you would expect? You spoke about insurance, you spoke about a couple of others things...
I just -- as I said, a corresponding theme to the unlisted companies is RTA business that CVL has expected. Again, it depends on those numbers only, okay? And there won't be any much transfers in this area, because they are all unlisted. And how many people will choose CDSL RTA versus many other big ones, okay? We do not know, again, at this point in time. I will not be able to give you unless that particular activity started. And coming back to the -- we are also trying to diversify the e-Voting system into where -- other types of activities, okay? For all these years, we have been doing only with the companies and shareholder meetings, et cetera, et cetera. Now we have also now started with the information utility -- insolvency professionals. So they are another set of customers who are using it, okay? Now we are also moving into the academic institutions where the elections can be held, okay? So we have already done Tata Institute of Social Sciences, the student union elections, we've done that. So we are trying to see how we can put to you multiple uses. So [indiscernible] I, again, -- as I said, acceptability is important. Thanks to the brand name that CDSL has, so acceptability comes automatically.
And secondly for the quarter, sir, could you give the mix of individual line-wise growth? So if you were to look at either, say, a transaction business or corporate actions, so could you give the split of the INR 50 crores of number?
On a year-on-year basis, I am giving you...
On a year-on-year basis growth and also the absolute numbers.
Right. The year-on-year basis, on consolidated account, annual issuer charges is increased by 17%, that is June '17 versus June '18, I'm talking about. June '17, INR 13.44 crores is my annual issuer charges, it is increased to INR 15.67 crores. Transaction charges from INR 9 crores to INR 9.66 crores, that is 7% increase. I am giving major items only. Then consolidated account statement charges from INR 1.66 crores to INR 2.04 crores.[Audio Gap]And IPO corporate action charges from INR 5.11 crores to INR 5.55 crores, that is increased by 9%.
INR 5.9 crores, right?
Yes. Then online data charges from INR 6.15 crores to INR 6.84 crores, that is 11% increase. Now these are the main...
Major line reductions.
Yes, major line reductions.
And during this period, the total demat account increase has been how much, sir? On a Y-on-Y basis, say, over 1Q to 1Q?
Yes. Well, last year, we have opened approximately 25 lakh accounts and 24 lakh less accounts -- one minute, do we have the number...
See, in this quarter, means June versus -- 511 -- yes -- March '18 to this -- [ 511,368 ] accounts were opened.
Right. And the numbers [indiscernible]
Overall 1,53,51,426 accounts were there compared to 1,22,67,432 on year on...
1 crore 22 -- about close to 20% to 25% increase on Y-on-Y basis?
Yes. And overall incremental markets there if you see, that is number of accounts opened for this quarter, 71%.
Right. And for the last 12 months, would be also similar -- quite similar?
Yes.
We have next question from the line of Pritesh Chheda from Lucky Investment Managers.
Sir, I wanted to know the status on price increases, which come to you on a regulated basis on some of the revenue line items. So what is the status there for FY '19?
There are no price increases as such. It is as -- same as of last year. There's no price increase.
Okay. And what part of your revenue, which you gave out issuer charges, transaction charges, would be linked to the market activity?
Definitely. See, issuer charges, number of folios are going to increase, because last year was a good year, then more number of IPO and corporate actions were there, there my income has increased 17% compared to last year.
And in transaction charges also similar, it's linked to market activity?
Yes, definitely, it's linked to market activity.
Lastly, I wanted to know the status on new licenses for getting new depositories.
That is [ third ] depository, you are talking?
Yes, yes. There is on and off news flows, which come across where talks are there to invite a new depository or issue licenses. So what is the status there?
No, it is like this. What you read may be in the newspapers based on the Gandhi Community recommendation. Now that board has -- board means city board, has considered the Gandhi Community recommendations. They are doing it with the concept of a sponsor. In olden days, the sponsor meaning, must be All India Financial Institutions, stock exchange, et cetera, et cetera. Not everybody and anybody qualifies to promote a depository. Now that, what should I say, entry barrier in the form of sponsor requirement has been [ demerited ]. Now this is yet to come into regulation, which -- regulations have to be amended, and it will be made, maybe in the next 2, 3 months' time. Now once that is made, anybody can set up a -- set up eligible investor. They would replace it with the eligible investor, now -- who is allowed to have a maximum of 15%, so nothing more than 15%. The regulations are going to be much the same way as far as the stock exchange, like other market infrastructure institutions, you call them. So even if the third depository come -- I have always been saying, even if the third depository comes, it's not for them plug and play. The reason is, they need to have the depository participant network. Without depository participant network, they cannot operate. Now today itself, if some of the depository participants feel, 2 itself is a crowd. So if the third one will come, what will it be called? I don't know. So it is -- even if a third depository comes, what is that -- the competitive advantage that they have? Is the pricing is more between the depositories, for which reason they will come? My answer is no. Today my average transaction charges are INR 5, okay? So there's not much room for them -- any new entity to come. Even if as I said, new entity comes, the depository participants are needed. Then each one has to, again, invest in a third depository also, because there is a cost associated with the back-office software development, et cetera. So why would anybody -- when the product is by and large identical, so why would anyone choose a third depository is the question. But still, if somebody comes, they're welcome. We are not worried in that sense.
Okay. Initially in your opening remarks, you mentioned about CAMS uploading the KYC data, which led to slower growth. So that you're referring to the online data services revenue stream of yours?
That's right. Online data, the -- essentially the KYC. They service the mutual fund investors, isn't it from -- they will accept the investor's request for buying the mutual fund units, et cetera. So when a new investor come, probably, they may be uploading it directly into their KYC, CAMS KRA.
This revenue stream is reported in CDSL Ventures, which is a subsidiary of yours, right?
That's right. That's right.
So could you just elaborate a little bit more what exactly has happened in this revenue stream and industry dynamics actually with CAMS?
No, no, it's still we are the market leader. We have INR 1.75 crores in what you call the KYCs, okay? And the KYC uses also increased. It's not that we have fallen short. But what I'm saying is, we are always there to capture the growth that is happening in various segments. One segment that has grown substantially well is the mutual fund industry. So -- but that is more, what should I say, skewed in the sense that only 2 of the major RTAs are managing that and the substantial parties, the CAMS. So to that extent, some KYCs have been challenged into the transfer [ CAMS KRA ]. But from -- to the extent, only the mutual funds KRAs now, mutual fund KYCs, not otherwise.
So your observation is that bulk of the growth was in MF KRA and in mutual fund KRA, CAMS has a slightly better dominance, and hence, the growth was with CAMS, we had a slightly lower growth. That's how it is, sir?
That's the way I read it. That's the way I read it. But still, we are #1. There's no -- they are still far behind, okay? It's not that they have, well, taken out any room.
What is our market share and the size of this market?
Well, what I learned, it's about, we have INR 1.75 crores and maybe the NDML has got 1.7 -- so simply 70 lakhs and CAMS have got maybe INR 50 lakhs, INR 60 lakhs, something like that. Lakhs, INR 50 lakhs, INR 60 lakhs of KYC.
Okay, okay. And what total revenue potential is this, revenue recorded in last year for the whole market, sir? So for our sizing, it was, I think it was about INR 29 crores last year. So what it would be for NDML, CAMS and...?
We will not be able to tell anything about that.
We have a next question from the line of Prakash Kapadia from Anived Portfolio Managers -- Management Services.
Yes, I wanted to get some sense from you, last year, you added around INR 25.1 lakhs in demat accounts. Typically, what is the time line for revenue of these accounts? Is it immediate? Is it with a lag? And they start with transactions or IPO, what drives these accounts in terms of that?
IPO is the driver for these accounts to get opened. IP -- that's why we, most of the time, we depend on IPOs. And if IPOs come and more and more, then we will get a good number of...
Incremental.
Incremental. At the same time, we will also have a good issuer income also. Full year basis will increase. In fact, this year -- this quarter rather, full year basis, more than what it was in the corresponding year -- I mean, last year, rather. So you can say that...
17% versus 18% is the full year.
Yes, in FY '17/'18, we have won around INR 30 crores from -- -- full year basis, which has increased to INR 37 crores for '18/'19. So against 58% of total issuer charges, from full year basis, it has increased to 63% from full year base income.
Okay, understood. Sir, you mentioned the mark-to-market impact was INR 1.94 crores in this quarter, right?
Correct.
For the investment. What was it last June? I missed that number -- on a consolidated basis?
On a consolidated basis, it is from INR 520 lakhs to one point -- INR 194 lakhs.
Okay, INR 5.2 crores, okay.
Basically, it's INR 3.4 crores...
Yes, this is temporary basis, right. And that [ temporary ] other income due to the [indiscernible].
Okay. And assuming interest rates remain this, you think second half onwards other income should normalize, because then the base of interest rate will not be that adverse as we have seen maybe this quarter? Another quarter of other income cannot [indiscernible]?
Yes, there is an income percentage growth will be more as compared to the first one.
Okay, going forward it should be better, understood. And I also missed the figure of online data charges, if you could give me. I heard 6% of revenues, but if you could give me the absolute number.
Yes, yes. Again, June '17, INR 6,15,00,000, against it, INR 6.85 crores.
INR 6.85 crores this quarter, okay. And lastly on the unlisted set of companies, would there be clarity in terms of onetime charges, recurring charges? So will it be just, as the MCA says, there will be recurring revenue? Or there will be a onetime charge to port them, to take data from them? Any clarity there?
Yes, it will have both the segments. One is the application for sync fee, so it is a onetime charge. And then on an ongoing basis, year-on-year, they have to pay.
Okay. So there will be some onetime charge.
Some onetime charge and some recurring charge.
Annuity-based.
And any thoughts on the regulatory or the MCA side to get, say, maybe the private -- public companies first and then the private set of companies on the unlisted space by the year-end? Or anything which they have shared? So by when do we get clarity on this?
In 2 months' time, we should get good clarity. That's what my view.
So in case the regulator mandates this, we will see revenue stream maybe in the third quarter, I would say?
That's...
Third or fourth.
Yes, third quarter, yes, it should be. You are right. That's the way it is. You're right.
We have next question from the line of Amit Chandra from HDFC Securities.
So my question is related to the annual issuer charges opportunity. So like currently, we have around 10,000 issuers. Out of that, 4,000 insurers are the unlisted ones. So what is the tariff plan for the unlisted companies that we have now? So is it also regulated, where say we are -- like if this is the slab basis, so it would be INR 9,000 per issuer is the lowest slab. So are we charging these unlisted companies lower than that? And how it is now? And what do you expect the charges to be for the upcoming opportunity?
We are charging the same single tariff, we are applying this. We don't deviate from that, okay? So that's the way it is after all. Currently, we are doing it. And going forward, what will be the tariff for upcoming opportunity? I will not be able to comment at this stage, okay.
Okay. So like you're saying the tariffs for the listed and the unlisted and all the companies are the same. So like there is no issues...
As far as we are concerned, we are applying the same tariff, okay? And so much. That's it.
Okay, because if you see for NSDL, the number of unlisted companies and demated in NSDL is around 10,000. So there are also the -- the tariff structure is around the SEBI, or there is some kind of leeway wherein you can charge based on your own discretion?
There is a leeway to charge based on our own discretion, but the unlisted companies are not regulated by [ SEBI ] . So -- but then for us to give a justification, we are simply saying this is a SEBI tariff we have to pay. So those who saw it and are interested will come and don't come, it's okay. Because there are no transaction charges. Please understand that there are no transactions in these unlisted companies. Whereas, as we understand from the market sources and then from the, what you call, from the tariff card that NSDL has put up on their website also, they charge only one time and then there are no annual issuer fees. But in the current year, or in the last year campaign, they started charging annual issuer charges also, okay? And only just now they have started it. But for all these years, there was no [ structural ] annual issuer charges. So it's just like that.
Okay. And sir, on the announced transaction charges, so how many number of transactions we had, so if you can give a comparable figure Y-o-Y? So the number of debits this quarter, then the comparable figure for the last quarter, same year?
I think it's generally the confidential information, but it is, as compared to the immediately succeeding -- preceding quarter, it is much lower, no doubt about it, okay? And -- but as compared to the corresponding quarter, it is slightly higher.
Okay, and sir, on the mutual fund KYC business, you said that a lot of business is shifting to CAMS, KRA and the eKYC...
I'm not saying shifting. I think there is a wrong notion probably I communicated. Not shifting. The new KYC is going there because the -- that is -- they are integrated, in that sense, the CAMS and the [ services ]. RTA services are integrated, okay? So that is the reason. And there is a growth in the mutual fund industry, that's why it has gone more there, okay? That doesn't mean we are lagging behind. I'm sure we will also get that piece as we move forward.
Okay, sir. So as far as my understanding of the strength of CVL KYC was the in-person verification and the original document verification. So that still persists with CAMS, also provides these kind of services or it's like largely online-related, on eKYC and online submission of documents in CAMS?
Online, we are also providing -- we are providing eSign, we are providing online account opening, et cetera. So there are a lot of people are also using this here, an Aadhaar-based account opening, yes, in here, too. We are providing it. By the way, CDSL has been recognized as a global AUA by the Aadhaar, okay? And there is a notification issued by the government, okay? Aadhaar has issued it. So there are many issues around Aadhaar number storing, and number usage, et cetera, et cetera. So not that everybody can do this kind of thing. Now that gives you extra strength to the CVL to open more and more KYC records, to build up more and more, KYC records.
Okay. Our order of -- or we can say that the pricing is also a factor there, because CAMS is charging less per KYC than...
Yes, you are in the industry, so you are very much -- they may be doing it, all that, but then it's fine, it's fine. I have to be fair to my conscience also. Depository participants are doing also a good amount of business. Depository -- in fact, I'd say Depository -- I would say the capital market intermediaries are doing good amount of business. I can't discriminate, and I don't think anybody is doing [ bad ]. And the capital markets intermediaries, some are doing it in these registrars and transfer agents, as much as they are with us. So that's why we just....
Like, do you think that this StAR MF platform, like with this StAR MF platform coming and the role of RTAs coming -- is like coming down, so that also could be a reason?
Well, I would not be able to comment on somebody else's platform and then its impact on their business. It's not fair. And yes, multiple channels are available for investors to apply for mutual fund investments. And so much, the more the better it is. That's the way I conclude this.
So how do you see it, sir, like the online data charges going forward? So you expect a further drag in the revenues from here on, or like do you expect to stabilize?
I can only see growth, but not even stability, or not even a drag. I would say that.
We have next question from the line of Hiten Jain from Invesco Asset Management Company.
Sir, what percentage of our KYC business comes from the mutual fund, and which are the other major segments?
Well, we will not be able give you that breakup. It's not in the public domain.
Okay. But which could be the other areas? Maybe not the percentage...
I just said the capital market intermediaries. The stockbrokers, the -- all stockbrokers, some are -- not by DPs, but every stockbroker has to upload the KYC and one KRA if they have that [indiscernible]. So we have about 1,200 to 1,500 or even more, I don't have exact figure immediately. These market intermediaries are uploading data that are in the KRA.
Okay, okay. And my second question is on a sequential basis, your employee cost is down by 16%. So what explains this drop?
One minute. See, always -- for the March quarter, what we are providing all the provisions on the basis of actual liability as well as a performance-linked bonus and all is placed in the month of March. So that's why there is a sequential gap.
So are the salary hikes also given in fourth quarter?
No salary hike.
The performance-linked bonus is decided in the month of April, which we will -- we -- when the accounts are being getting finalized in the board meetings of the April, they decide. When they are considering the annual accounts, they will decide all these benefits.
Sure. And which quarter would see the wage hike impact?
No, there is no wage hike. During every 2 to 3 years, we are doing wage hike as such. In October 2016, we did it.
We have next question from the line of Deepan Shankar from Trustline Portfolio Management Services.
Sir, just want to understand what are these motivation for these unlisted companies to -- for joining this demat without even regulation? So we currently, we see a lot of unlisted companies have come in. So what are the motivation for them?
Well, many of the promoters may decide to do it voluntarily, that's one. Second, when they go and then raise the capital from a bank for some -- and when they go to place their stocks and offer loans and other, so the banks insist that you please go to these depositories and then dematerialize. That's the second reason. Third reason is some of these, the PE investors and others, they insist that you must go for dematerialization, then only will invest in it. So -- and this is kind of the reasons for doing all this.
Okay. So currently, are we focusing on this segment to add as a new client, even before regulation?
Yes, we have been aggressively pursuing the companies. But as somebody was pointing out in the meeting, until recently, there is attraction of the tariff on the other side. So a lot of companies were going there, because they were charging just one-time fee. And there is no annual issuer charges that they were doing it. And we have been insisting on annual issuer charges. Annuity is important for me also. And now that by end of the tariffs are now on the same footing. There is no competitive advantage in that sense so -- for them in terms of tariff. So now they are aggressively building this up.
Okay, okay. So any status update on this monetization of academic depositories and insurance depositories?
No, insurance depository is a non-starter. In fact, the major insurance, major share is by the LIC, who is having about 70-plus percentage of the market share, 75% maybe. And they have not joined in this initiative as yet, okay? So that's why it is not taking off. And when it comes to the National Academic Depository, as I said already, till 2019 September, we are not allowed to charge because that is what the MHRD directive is. And more than the payments from these universities and academic institutions, we expect a lot of academic institutions start uploading the data, then the verification takes place. That is where we expect the revenue streams to come. So the academic institutions are slowly uploading the data and that is where we have -- are doing a lot of education, both -- for all stakeholders. And government is also actively pursuing it. They are calling for a lot of seminars, meetings, et cetera, and that's how they are trying to popularize it.
And then this revenue stream might start before September '19 itself?
Come again?
These revenue streams, you were talking about verification of...
No, no, no, as I said that, maybe till 2020, we have to wait for these things to take off in a reasonable sense.
We have next question from the line of [ Gautam Gupta ] from [ NRC ].
I just want to know, do we have any idea by when will the tariff structure for NAD be decided?
Tariff structure for NAD will be decided only in sometime in July 2019, or something like that.
Okay, okay, okay. As for the prior question regarding -- you said, we have around INR 1.55 crores accounts on the demat side. How much will be BSDA out of this?
So BSDA accounts, it's about 50% of the accounts, 55 lakhs accounts, are approximately BSDA accounts. But they generally -- they don't affect us, in fact. BSDA means that you don't charge the AMC, okay? You don't charge the AMC, that's what it means. And we don't lose anything, because we are not charging anything.
Sure, sure. That is through the DPs, I understand that. Yes, yes, yes. Sir, last question, slightly speculative, if you will permit me. But we had a lot of questions here in terms of e-governance, land record digitization. So anything that we see coming up in the next 2, 3 years for us in terms of new revenue streams?
We have been constantly pursuing at various levels for new businesses, and it takes time to fructify. And another important thing is there are a lot of stakeholders, and when you say stakeholders, I would also include vested interests also in that stakeholders, okay? So sometimes they don't allow the things to digitize. And non-transparency helps some of these projects. So that's why there is something holding back. And then NAD upload, NAD records are getting uploaded in academic institutions because there are some forces, which do not want this to be completely digitized. If everything is digitized, who will go to the university and then ask them for these certificates, right? It's like that. So it will take time. It is the transformation that we are a -- is a challenge for us, and we are in that business of transformation. And we will do it.
Your next question from the line of [ Minesh Doshi ] from First [ Pillar ] Invest.
Sir, my question is related to CVL. When RTA activities will be commercially started, and how big is this activities?
I can say that it will be commercially started -- in fact, we have a soft launch, and we have not actually -- we have not done anything at this point in time, but we are expecting these unlisted companies to be admitted into demat. Now this will happen parallelly along with that. Now how big is the opportunity? Probably, I will not be able to hazard a guess in here, it's not fair. And -- but I would only say that it's a good opportunity that we can take up. It will add some revenue, a reasonably decent amount to our line of business.
And then, so my second question, how many companies have been appointed CDSL as dedicated depository for monitoring the FPI limits?
Okay. I can only, because it's not in the [ par ] I would say that it is in the -- on our website. We can see that how many companies for which we are doing it. There are about 1,700-plus companies are the ones, which are doing it, okay? And almost all of the 3,500 companies have so far -- or less than that, 3,200 companies only have given this kind of mandate. So almost all, or all [ companies ] are with us in that sense.
Okay, also -- which is with the CDSL. Sir then, last question. How much KRA is registered in the Q1, and what is the growth rate?
One minute, I will -- essentially, KYC, it was [indiscernible]. March '18 quarter, [ INR 1,70,00,000 ] KYC was there. It has increased to INR [ 1,74,40,722 ], so that was 2 point...
So INR [ 4,40,000 ] we have had.
INR [ 4,40,000 ]. Sir, and in KRA business, the CDSL -- CVL is #1 in the market. Am I right, sir?
Absolutely right.
Ladies and gentlemen, that was the last question. I now hand the conference over to management for closing comments. Over to you, sir.
Yes, thanks to all of you for sparing your valuable time and showing your interest in the company. And I hope you will continue to show this interest in the company. And we will continue to improve our performance, and we will strive to do better each quarter, God willing. Thank you. Thanks to all of you.
Thank you very much, sir. Ladies and gentlemen, on behalf of Axis Capital limited, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.
Thank you.
Thank you.
Thank you.