Central Depository Services (India) Ltd
NSE:CDSL
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Central Depository Services (India) Ltd
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Ladies and gentlemen, good day, and welcome to the CDSL India Q2 FY '21 Earnings Conference Call hosted by Axis Capital Limited. Please note that CDSL does not provide specific revenues or earnings guidance. Anything said on this call, which reflects CDSL's outlook for the future or which could be construed as forward-looking statement must be reviewed in conjunction with the risk that the company faces. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aditya Bagul from Axis Capital Limited. Thank you, and over to you, sir.
Thank you, Stanford. Good morning, everyone. On behalf of Axis Capital, a very warm welcome to the Q2 FY '21 conference call for CDSL India Limited. At the very outset, let me just take this opportunity to congratulate the entire team of CDSL for a spectacular Q2 performance and consistently so.So to take us through the nuances of the results, we have the senior management here represented by Mr. Nehal Vora, Managing Director and CEO; Mr. Girish Amesara, the CFO; Ms. Nayana Ovalekar, COO; Mr. Sunil Alvares, Chief Operating Officer, CDSL Ventures Limited; and Mr. Nilesh Kittur, AVP.Now without taking too much time, I will hand over the call to the management for their opening remarks, post which, we will open the floor for Q&A. Thank you, and over to you, Nehal sir.
So first of all, I would like to thank really Axis for setting up this call. I would like to wish everyone a very, very good morning. I welcome you all to the CDSL's quarterly conference call for quarter ended September 30, 2020. And I trust that all of you and your family members are safe and sound and secure. I'm joined on this call by the other senior members of our executive management team, who will -- who would be all happy to address any questions that you may have.So for the call, I would like to first start at really at macro theme. CDSL continues to promote the idea of Atmanirbhar Niveshak, which is the self-sufficient Indian investor. The increase in the number of demat accounts created in this quarter is the highest in the history of the company. We are happy to be the place as well as the market infrastructure institution from a depository standpoint where the investors prefer to go. And that is driven by two key themes. One is that we would like to focus on the software and technology. We would like to make it as easy, secured for all people to connect. And second big theme is that our systems and our platforms would like to make it as easy for the users so that they can do it themselves. And for us, these are the two key themes on which we would be building our future business.So as we all know that financial numbers is something which is the kind of a by product of the work, the platform and the services which we are doing and our constant effort and endeavor is to ensure that our technology is new, is kind of sound, safe and secure, for which more and more people -- I think, we have just really scratched the surface where more and more people are wanting to join the securities market ecosystem. And we believe that our main effort is to create a safe, secure and convenient platform.Our hope is that our financial numbers continue to grow, but our main focus or our main theme is more than the financial numbers is to provide a sustainable, consistent, safe and secure platform, where clearly, the people at large can come to and really create a trust among the securities market ecosystem.So in terms of talking about CDSL business in the last quarter. CDSL has seen a bouyant increase in the number of demat accounts. We have added around 29 lakh demat accounts in the last 3 months, taking the number of demat accounts to 2.61 crore. We've become the largest depository for some time now in terms of the number of demat accounts. And we continue to grow. Our effort and endeavor is, again, to create a safe, secure and convenient platform, for which more and more people would find it very easy to link themselves with our depository.The -- in terms of our distribution platform, CDSL has around 593 depository participants, which are really available in around 20,500 locations, which are across the country. This represents around 94 -- 95% of the PIN codes. And this is steadily growing, even though we have practically covered the entire span of India. These depository participants consists of all parts of the securities market ecosystem, be it clearing members, banks, custodians and nonbanking finance companies.We have also continued to bring in new services in line with the requirements which are there in terms of the current COVID-19. We have been successful in creating a service where all the annual general meeting can be held through the video conference facility. And CDSL is very proud to pronounce that a large number of companies have used our services and continue to use our services for creating their annual general meeting platform through the video conference facility.In terms of -- besides that, the subsidiary service of -- to vote through an e-voting service is also growing with each passing day. With this, we have also created some kind of value-add services for the company, where we help companies communicate with their shareholders by providing an e-mail service where they can forward their requisite documents to the shareholders in a safe, secure and convenient manner.So with this, I would like to give the -- these are my brief comments. So just before I hand it over to the Chief Financial Officer, I would like to thank basically all the stakeholders, be it the existing customers, DPs, issuers, regulators as well as the entire CDSL team of the employees who have worked very hard during these unprecedented times and ensured that the company continues to grow.So with these words, I hand it over to the Chief Financial Officer to take us through the financial performance. Thank you.
Thank you, Nehal. Good morning, everyone. Speaking on our financials, we have seen a healthy growth in this quarter with an year-on-year increase of 68% in our consolidated net profit.Total income on a consolidated basis for the quarter September 30, 2020 has increased by INR 32 crores, which is 46%, at INR 101 crore compared to INR 69 crore for the quarter ended September 30, 2019. Similarly, the net profit after tax on a consolidated basis for the quarter ended September 30, 2020 is increased by INR 19.81 crore, which is 68%, at INR 48.87 crore from INR 29 crore for the quarter ended September 30, 2019.Now talking about standalone results. Total income on a standalone basis for quarter September 30, 2020 has increased by INR 26.5 crore, which is 51% at INR 79.15 crore from INR 52.58 crore for the quarter ended September 30, 2019. Similarly, the net profit on a stand-alone basis for the quarter ended September 30, 2020 has increased to -- has increased by INR 16.11 crores at -- which is 73% increase to INR 38 crores from INR 22 crores for the quarter ended September 30, 2019.With this, I will hand over to Shri Sunil Alvares to give an update about the operation of our wholly owned subsidiary, Messrs CDSL Ventures Limited. Over to you, Sunil. Thank you.
Hi. Am I audible?
Yes, sir. You are.
Yes. A very good morning to all of you, and a warm welcome to all the participants this morning. I am Sunil Alvares, Chief Operating Officer of CDSL Venture Limited.We are very happy to inform that due to the extremely buoyant market conditions, CVL's KRA volumes increased by 117% as compared to the first half of FY 2020. The number of KYC...
Sir, can you just speak up a little bit? You're little soft.
Yes, sure. The KYC records in CVL increased from 14.57 lakh to -- sorry, to 14.57 lakhs from 6.7 lakhs to close at 243 lakhs as on 30th September, 2021 -- 2020. KYC records which we've filed increased from 26 -- increased by 26.11% from 35 lakhs -- sorry, 235 lakhs from 28 lakhs. The CKYC records what we processed, there was a marginal dip to 5.84 lakhs from 6.74 lakh.The number of RTA companies which we have serviced on a cumulative basis has increased to 539 as of 30th September as compared to 296 companies as on 30th September 2020 (sic) [ 2019 ]. We're also processing the DDO claims of the PMJJBY scheme, which has increased by 109%. That is, this year, we've processed in the first half, 50,910 records as compared to 24,350 records.Coming to the financials of Q2 FY 2021 as against Q2 FY 2020. The revenue from operations in Q2 FY 2021 increased to INR 18.65 crores from INR 13 crores. That was an increase of INR 5.65 crores or 4-point -- 43.46%. The total income increased from INR 16 crores to INR 21.08 crores. That was an increase of INR 4.97 crores or overall 30.97%.The overall expenses, which were INR 5.98 crores increased to INR 7.18 crores in this quarter. And the profit after tax for this quarter was INR 10.54 crores as against from INR 7.61 crores. That was an increase of almost 39%.With this, I'd like to hand over the mic back to Axis Capital to take the meeting forward.
Shall we be open up for Q&A?
[Operator Instructions] The first question is from the line of Kunal Thanvi from Banyan Tree Advisors.
Many congratulations to the entire team for a very good performance and I hope everybody is safe and fine.My first question relates to -- I just wanted a sense on a granular revenue breakdown. I understand that we have put in this time around in the presentation between, say, transaction charges and annual issuer charges. I wanted to understand more in terms of how much it came from, say, IPO? And how much was from pledge? And specifically in the pledge business, what was the contribution of onetime flat revenue? And what was -- what is something that is a recurring revenue that occurred in the quarter?And second question is on -- if you look at the presentation, we have talked about increase in the bad debt provision. So can you just throw some light and give some color on how should one read into it, whether it is onetime acceleration? And what would be the normal run rate for that?And the third question is on the National Advocate -- NADs, which we had dropped -- we were not given that project from the government in last financial year. However, I hear that CDSL still is trying to monetize the same project. Any thoughts on the same would be really helpful.
Yes. Okay. Thank you for the questions. On your first question, I'll ask the CFO to answer. But before I go on to him, I'll just give you a broad perspective that the new system of the margin pledge is more -- is not really a onetime income. It's a new way of...
Sir, I'm sorry to interrupt. Your voice is breaking.
So can you hear me now?
Yes, a little okay.
One minute, 1 minute. Yes. So you can hear me now clearly?
Yes, sir.
Yes. So in terms of the new system, it's a new way of doing business in the securities market in terms of the way the securities would be pledged. And these -- this is expected to go on as a normal routine income basically every month. We do not provide -- because these are yet very -- basically the early times as to how much would be the trends on that, so it's part of the overall income which we are taking. That's the first.So before I hand it over to the CFO to give you more of the details, I'll answer your -- I'll answer basically the other question you had in terms of the provision. So I think on the whole, the provisions we've had reasonably -- in terms of the times which we are in, there has been some amount of a slowdown in terms of the corporates in which they have to pay the fees to us. But we are very, very hopeful because as we had seen towards the later part of the quarter that lot more companies have actually come back and paid to us.So there is really a standard operating process. And if you don't pay the fees, there are certain kinds of vis-à-vis actions which would take place. So we are hopeful that probably it will be slightly late. So in terms of ensuring that a financial statement [Technical Difficulty] we've increased the provision. But we are hopeful that by the end of the year, we should be able to be at the same levels as seen in the previous year.So the first query, I'll hand it over to the CFO. And then after that, on the NAD, I'll ask Sunil to really [Audio Gap] answer the question.
Sure. So at the outset, I had informed that total income is INR 101 crore, out of which INR 89 crores is our total operating revenue, which is 88% of total income. The breakup of operating revenue is transaction charge of INR 31 crore, which is 34% of operating revenue, annual issuer charge of INR 22 crore, which is 24% of our total operating revenue. Then comes online data charges, which is pertaining to CVL, which is INR 13 crore, 15% of total operating revenue.IPO corporate action is around INR 7.8 crore, which is 9% of our total operating revenue. E-voting charges are INR 4.38 crores, which is 5% of our total operating revenue. And the statement -- cash statement that we sent, which is around INR 1.85 crore, which is 2% of our total revenue. This covers almost 90% of our total revenue and remaining are other charges. I hope I have answered your question.
Sure. That is helpful, yes.
So the third question will be answered by Sunil.
Yes. So far as the National Academic Depository project is concerned, you may be aware that the MHRD and UGC has now appointed DigiLocker to implement this project, so both the depositories will not be handling this project anymore. But since we already have a sum cost and we have a domain expertise of almost 10 years on this project, we decided to offer our services as a private service provider to many of the academic institutions, primarily because when we used to visit these academic institutions to admit their awards into the academic depository, we found that many of them required help in creating the awards, et cetera. So we are looking at it as an opportunity to provide our services as a private service provider. And so far, we have about 10 academic institutions have shown their interest and signed up for that, which we think is a good beginning on this.
How many academic institutions? Sorry, I missed that.
So far about 10 have signed that.
Okay. So basically, we'll be charging for it, whereas DigiLocker and the government, they won't be charging it, so it would be the surplus -- service that would differentiate us from them?
That's right. So in case we sign up anybody, they have to accept our charges. Only then we will be onboarding them.
[Operator Instructions] The next question is from the line of Varun Goenka from Nippon Mutual Fund.
Heartiest congratulations for super set of numbers for last 6 months, I mean, for both the quarters. I had 2 questions.One, if you could, again, come back to the same answer we've been asking you for the last so many quarters that why is CDSL really accelerating its market share versus our peers? What is it that is working for it? Maybe some comments on the systems? Or where is the market share coming from? Maybe some of the newer age brokers? Are we gaining share there? Your comments will help.And secondly, our annual issuer charges. I think they get -- they come up for revision every 5 years, and that is next year. Some comment there will help.
Sure. So on the first one, as I answered in the last investor call, we are a market infrastructure institution. Our intent is to create more sophisticated technology [Audio Gap] easy-to-use services and platforms. So how many people would like to use would be the value-add or the value which they see in our platform vis-à-vis the -- basically the other platforms.So where we see ourselves is we are -- our focus as well as is to ensure that we give the most sophisticated services and platforms at a reasonable cost and try to create more of a value proposition for anybody who is wanting to come within our platform. And that is in my considered opinion, and this is my personal opinion, is the reason why more and more people are wanting to come and -- come on to the CDSL platform.Our focus is not to increase the number of people, but to ensure that our platforms remain safe, secure and basically easy-to-use. And what [Audio Gap] is wanting to have is kind of leading one because our intent is to create the safe, secure platform, which we have. That's number one.In terms of the issuer piece, this is something which SEBI would have to take into consideration. Yes, we are due for an increase. But I don't know whether given the circumstances which we are in, where most of the companies have not really grown to the extent that they should have, whether SEBI would want to increase it in this year or we'll have to see whether they'll postpone it by some time. So that is something which we believe is within -- is not within our control. It's within the control of SEBI. But however, our focus as well as our intent is that we continue to basically bring more and more companies onto our fold so that even if the revenue remains constant -- I'm sorry, even if the rate remains constant, the total income would continue to grow.
Right. And just to clarify on the first point of CDSL gaining share. Are there any particular measurements that you benchmark against? For example, turnaround time, in account opening, is yours significantly better versus the peer or the downtime in system is much lower than the peer? Are there any...
There are -- yes, yes. So basically, there are various means in which we will be constantly seeing that our systems are really creating the value for the person using it. And it will be difficult to really list down each one of them. It's more of creating a platform and an ecosystem, which constantly creates value for the person at a low cost. And I think that's really our focus as well as will be our endeavor. We have an inclusive approach. So the number of depository participants, for example, at CDSL are far much higher than our competition. So our intent is to bring in more and more people into our ecosystem. And then we see -- and constantly...
I'm sorry, your last point was not completely, audible. Your voice was cracking. If you could repeat that, please?
I'm saying the number of depository participations which we have at CDSL is far higher than our competition. So we have basically an inclusive approach. So again, our focus is to ensure that we create a technology platform which is easy to use, safe and secure and then kind of leave it to the market to really figure out where that they will find more value in going.
The next question is from the line of Anand Laddha from HDFC Mutual Fund.
Sir, am I audible very well?
Yes, you are.
Okay. Sir, I just wanted to understand on the transaction revenue. So can you give some color, like what was the number of transactions you had this quarter and -- vis-à-vis the number of transactions that the overall market has reported? How has been our trend in number of transactions? So like what was the number of transactions we did in Q1? What was the total number of transactions in the market? And is there any way can we capture this data in terms of number of transactions happening in the market? First thing was that.Second, sir, of the 2.6 crores demat account holders, what is the active demat accounts we have? And how this number was in Q1 and same quarter last year, how this number was? And lastly, on the pledge revenue, sir, if you can quantify how much was the pledge revenue this quarter?
Yes. So in terms of transaction revenue is a mixture of many, many things. It's not only the amount of transfers which take place. It's -- so it will be difficult to quantify and put it as one single number because that will not lead to the proper conclusion in terms of the growth because it's a mixture of many, many such variables which are out there. So in terms of that.In terms of the number of fresh demat accounts, we grew at around 29 lakhs in this quarter. Around 19 lakhs to 20 lakhs it was in the previous quarter. And in the last -- in the same quarter last year, it was basically, just, I think, around 7 lakhs to 8 lakhs. So there has been a significant number of demat accounts, which have been opened during this particular quarter. And as I mentioned in my speech, this has been really the highest number of demat accounts which have been opened in a particular quarter.Yes. So your third question on the revenue of the pledge, margin of pledge. I think, as I said, it will be really early times, so it will not be fair to really put out those numbers because this has only started on the 1st of September. So we're just 1 month into this particular [Audio Gap] and what we give is kind of a picture in terms of the transaction revenue. However, I will hand it over to the CFO, if he can give any further details which we have given out.
Sir, in terms of active demat account, you didn't indicate that. Of the 2.6 crore demat accounts you have, what proportion is active demat accounts of this?
I think a significant portion would be really active demat accounts, significant portion. We don't have an actual number which we can put out but it's a very high number which is really active.
And sir, on the transaction charges, does the transaction charges also includes your pricing charges or this is [Audio Gap]?
I'm sorry, can you come again? Your voice was not clear.
The transaction charge of INR 30-odd-crores, which we have reported. Does this include the pledging charges as well? And what are the other variable charges in the transaction charge? So apart from the transfer charges, pledge is included and what other else?
I'll ask the CFO to answer this [Audio Gap].
So the margin pledge charges are including in the transaction charges revenue that I had shared earlier. And if you look at our website on the charges, you will come to know what all are included in the transaction charges. It's a quite long list. So I would request you to go through the website.
So I think if you can just name 2 or 3 names, the ones which are there [Audio Gap] I think the main [Audio Gap] 1 or 2 [Audio Gap].
The next question is from the line of Prakash Kapadia from Anived Portfolio Managers.
Congrats to the entire team for the good work which has been continuing for last many, many quarters. I had 2 questions. One, if I look at our OpEx, it is down around 3% in the first half. So apart from employee cost, any major items, which are seeing a downward trend and where we've negotiated some of the costs due to the COVID, if you can share some insights? And second half, how do these costs look like?And second, despite we seeing a robust 67%, 68% profit growth, our cash flow from operations in the first half is just up 28%. So any specific items, which are seasonal in nature and will reverse in the second half and cash flow also should improve in the second half or by the year-end?
Yes. So I would just ask our CFO, Girish, if you can answer those 2 questions.
With respect to the 6-month expenditure that you are comparing, if you recall, we, last year, we had a SEBI PACL project done in the subsidiary, CDSL Ventures Limited. The cost towards that was around INR 6.5 crore, which is compensating, which is not there during this quarter.
In the entire second half, which is not there, right?
Yes, yes, yes.
And assuming that, that doesn't come, this muted cost should continue in the second half as a trend?
That would be a forecasting.
Yes, we don't give any future this thing. But I think as an overall team, our basic effort is to ensure that we keep our costs under control. However, there will be certain increased costs as we go forward. So we'll see how it goes.
And on the cash flow, Girish, if you can give some color?
See, basically, we -- during this first half, cash flow-wise, we have not incurred any major capital expenditure. So it may continue. It may remain at this particular level.
I was looking at operating cash flow, not the CapEx or investing or free cash flow. I was just looking at operating cash flow.
So let me come back on this.
Sure. And lastly, Sunil mentioned there was eKYC, there was some increase and KYC also is seeing an increase. So is eKYC an ancillary to KYC and for growing eKYC businesses, KYC business is the right metrics to look at or eKYC is a separate business model and a potential revenue by itself?
No, it is basically a part of one. It's the way of doing it. You have a physical way of doing a Know Your Clients or you have a e-way of Know Your Clients. But this will become kind of easier for it to open. I'll ask Sunil to answer that question.
Yes, to answer your question, eKYC would be a separate business head by itself in CVL. And it will facilitate the number of KYCs, which ultimately gets added to the KRA. So if somebody does a eKYC or he does a physical KYC, ultimately, it has to get added to the KRA. So the way the world is moving to a digital mode currently, eKYC will definitely facilitate the number of KYCs into the KRA. That is how we are looking at it. I hope that answers your question.
And is, Sunil, a possibility of tapping or cross-selling this business to banks or other financial institutions, given the way the world is? Is that a business opportunity which can be thought of?
It is a business opportunity on paper. But right now, as per the regulations of UIDAI, if I onboard anybody, the entity -- I have to recommend that entity to SEBI and SEBI will recommend that entity to UIDAI and UIDAI to DFS, and that's how they will get the registration. Now given that sort of a situation, if that entity is not registered with SEBI, I will not be able to recommend it to SEBI. So I think right now, it will be limited only to capital market intermediaries.
The next question is from the line of Hiten Jain from Invesco Asset Management.
I had a question on your other expenses. So admin and other expense is up sequentially by 26% and the tech expense is up sequentially by 42%. So can you just explain what is driving this?
I'm sorry, Hiten, your voice was not clear. Can you repeat the question?
Yes, sure. Am I audible now? Hello?
Yes, you're audible, but your voice is a little -- it is not absolutely clear. So some parts of your questions were not really understood. Can you just speak -- yes.
Yes, yes. My question was on other expenses. So from your presentation, where you are giving the various hedge of expenses, the tech expense is up sequentially by, I think, 20%, more than 20%, and same as admin and other expenses. So can you just explain these cost items? Are they linked to some revenue sources?
Yes. So I think, as I said earlier, our entire depository operations is going to be based on enhancing our sophistication in basically IT and technology. So there is going to be a constant endeavor to ensure that our platforms become easy to use. And therefore, that is going to translate into some amount of the expense being spend on the software/hardware as well as basically the applications which we have. And that's why there is -- so there is an increase. And it's being done in a very, very -- it's done in a manner that it will give us long-term play in terms of ensuring the ease of the operation.As well as the admin cost includes also some of basically the SMS' which we are required to send. These are the new kinds of platforms, which are going to come up. And SEBI has asked both the depositories to send basically the SMS for each transaction, which is going to be done. And now it's being mandatorily done through this particular system. So that has caused a slight increase in terms of the admin cost.
Understood. And another question was while you answered that, but just wanted some more clarity on this provisions for doubtful debt. So while that is up 100% year-on-year, you also said that it will reverse at the end of the year. So I mean, so I'm assuming that accounting...
They're not going to reverse. I'm saying, we are hopeful, given that the situation is such that most companies, because of the national lockdown, there are most companies which were not working, were shutdown, slowly, they have started to open up. And we are hopeful that this piece would get...
But sir, even sequentially, the number is quite up, quite high. So even in 1 quarter, first quarter '21 also lockdown was there. So is it that there was some seasonal element here?
Yes, the fees are charged at -- for the entire year for the company. So that happens in the end of the first quarter and beginning of the second quarter. So they will be in terms of how much payment people are making, in terms of that we start seeing. But as the year progresses, this is what we have seen in the past that normally companies do pay off. And we come down to kind of a steady number, which in terms of the -- basically, the amount which we are able to recover.
The next question is from the line of Yash Nerurkar from PPFAS Mutual Fund.
So basically, I just had to like get a clarification on the point which you mentioned earlier, about the DigiLocker and the NAD which you guys are running. So since the project is handed over to DigiLocker, you said you have signed like roughly 10 institutions and that DigiLocker won't be charging them, whereas you guys will be charging them. So could you just elaborate on like how exactly is it going to work? Because if DigiLocker is running these services for -- like without a charge, so how would it work for you guys?
Yes. So I'll ask Sunil to answer that.
See, currently, DigiLocker is still setting up its infrastructure, and it may take some more time for them to really set up the academic depository because it took us almost 3 years and they have to set it up from scratch. That is point #1.Point #2 is why we are offering this service to academic institutions, because basically, many of them are still holding their awards in the physical form and all of that. So it's like a back-office what we are creating for these academic institutions where they can hold these awards in the digital form. And if at all, they want to share it with DigiLocker, they can do it. That's not a problem. But in the interim, like if a student wants to verify the awards or verify -- wants to verify, it is already available with us, and he has a choice of verifying it through us or with DigiLocker [indiscernible] but if he does it through us there will be a charge applicable. As of now, the awards what we have are not available in DigiLocker.
Okay. So in a way, I'd say, going forward, you will be sort of competing with DigiLocker?
No, we are not really competing with them. I mean we'll be charging, and they are not charging anything. So it's not really competing with them. We are basically facilitating academic institutions to convert their awards into digital format. And there will always be, what to say, a phase where we'll be converting, and then they will be uploading. So during that phase, I think that is where many of the students will be able to access and verify their awards with us.And ultimately, the way -- like to give you another example is between the CKYC and the KRA. The CKYC just charges INR 1 per record for searching and we charge INR 35. Many of the intermediaries are very comfortable searching it from KRA because they can depend on that particular -- the veracity of the document.
Okay. Got it. And secondly, also, what I wanted to know about is the infrastructure which you guys are building, so most of that is in-house, right?
So you're talking about the academic depository or it's just the infrastructure we're building?
No, no, no. I'm just talking about the whole general technological piece. So everything...
Yes, yes. Our entire technology is being owned by CDSL. We have basically the outside software vendors as well as the hardware providers, which kind of link up, but the entire technology is owned by us.
Okay. Okay. So just a last small question because in the past, ever since March, since the lockdown has happened, we have seen this astronomical growth in the number of demat accounts opened. So has that growth sort of tapered down? Or you're seeing the same kind of growth even in this quarter and like this month as well?
No. So yes, I will not be able to talk about this month. Whatever we will put out, we'll put out on the CDSL website. But that is what I said, that second quarter has see really the highest number of demat accounts in basically the history of the company. So there has been a growth over the first quarter also.
[Operator Instructions] The next question is from the line of Ashutosh Somani from JM Financial.
Thanks for the suggestion -- incorporating the suggestion of having the revenue breakup in the slide. I just wanted a clarification. Have I heard you correct on the e-voting charges being INR 4.38 crores in this quarter?
That's right.
And what was it last quarter?
It was INR 2.48 crore in September 2019 quarter and about INR 17 lakhs in June '20 quarter.
Okay. So sir, there is a clear significant jump from a Y-o-Y perspective in e-voting charges, right? I remember this used to be below INR 4 crore on an annual basis in fiscal '20. And now it is INR 4 crore on a quarterly basis. So you see a lot more traction in voting?
No. I think this is where we see that because of the virus which has happened, COVID-19 crisis, more and more people are really using these kind of platforms as we see but what we've seen is that a lot of people are finding basically the ease of doing it from their homes rather than having to come to the physical location. So I do expect that once you're used to a certain ease of doing things, it should probably go on even after things really basically open up. So -- but what we have seen over the previous year is that there are a number of companies which are doing that service with us has also significantly increased. And that is partially because there has been a national lockdown, et cetera. And also that our systems have been fairly simple to really access, and people have found it extremely easy and secure to use.
The next question is from the line of Ravin Guru (sic) [ Ravin Kurwa ] from ICICI Securities.
Congratulations for a good set of numbers. My question is around pledge revenue. So can you give us an update that what are the number of pledges which are getting created in the system right now? So by right now I mean that's after Q2 FY '21. And how sustainable this pledges have been till date? Can you [Technical Difficulty]?
So we don't have the actual number of margin pledges which are being set out on the website. So I'm sorry, I'm not able to give you the number of margin pledges. But all I can say is that the system of margin pledges is basically here to stay. It is the way of doing business going forward. And there is definitely a value proposition in terms of ensuring that BO, the beneficial owner, is able to see that whether its shares are actually getting pledged, repledged to the trading member, clearing member or the clearing corporation. So it's bringing in a lot of transparency into the system. It's also ensuring that only once the pledge flag has been removed can we sell the securities. So this kind of an unauthorized sale, which could happen, would not happen. So it's making the entire system very safe and secure and also bringing the transparency. So I think given all these factors and plus there is a -- basically, SEBI has mandated that this is the only way of doing things. So this system is basically here to stay.
The next question is from the line of Aalok Shah from Monarch Networth.
Sir, congratulations on great set of numbers. My question pertains to an extension of your last answer on pledge part. While it might be difficult for you to really break down the numbers and guide us with transaction charges ex pledge revenue. But when I look at the first half numbers or, say, for that matter, FY '20, there's been a meaningful amount of increase. And that's been a factor of multiple aspects. Trying to sustain this maybe in not FY '21 but FY '22, what do you see that as a possibility? And would you kind of try and give some thoughts on how do you kind of see the transition charges line item move forward?
So we don't give any future statements on how this will pan out in the subsequent quarters. Our focus and our endeavor is to ensure, as I said, the moment an infrastructure of a demat account is created and it creates a value proposition, basically, the hope is that the securities market, as the volumes grow, that is going to lead to a significant increase also in the number of demat transactions. But I'm sorry, we will -- we would not be able to give any kind of basically reply in terms of whether this can...
Okay. So I take your point, sir, but at least, can you share some thoughts on -- while you have disclosed the number of beneficiary accounts which have got added and somewhere during the conversation, you also mentioned the percentage of active clients. Would that also have shown a meaningful increase? I mean, you have a 2.6 crore BO account, of which, say, at any point, 20%, 30% are actively trading, has that number gone up to the same extent or a higher extent?
So again, it's very difficult to give an overall principle. But I think what has been seen is that lot of people, which earlier used to basically open a particular account and wait for some time before they transact, that overall time line has basically, the general trend has been that people generally trade as soon as they really open the demat accounts. So that is what we have seen that more and more people are -- and that can be seen in the overall volumes also in the market, that the volumes in the stock exchanges have also increased significantly over last year. The delivery base volumes in terms of the value has also gone up significantly over the previous year.So these are some of the trends which we see. And we are hopeful that this will continue. The important thing is we are creating the sophistication structure and the value so that more and more people will continue to use that platform.
The next question is from the line of Varun Goenka from Nippon Mutual Fund.
Yes. So could you help us understand over the next 2, 3 years, what could be our major investment areas, both in terms of numbers and also the areas that we're looking to invest?
See, I don't think we'll give you the number because we don't talk about the future. That's part of our overall strategy and policy also. But in the broad areas, software technologies is going to be a core area. Cyber-security is going to be another very, very important area because there is a push from SEBI also and we also feel that as the number of accounts grow, this is a very important part to be really continuously being basically financed. These are the 2 or 3 key areas. And obviously, we'll need the sophistication of the -- basically the employees. So these are very, very specialized employees which are there, which are needed out there. So as our key operations grow, we will need that kind of -- so really, the employee cost, technology cost and cyber-security costs are key -- 1 of the 3 key areas that we will continue to chase.
Sure, sure. And because our treasury yields are falling, obviously, it's getting lesser and lesser attractive to keep it in fixed income. So what are we looking to do towards our payout ratios or -- as such?
What do you mean by the payout ratio in what we pay the shareholders in terms of dividend or...
Yes, dividend.
For that, we have really an overall policy I think if things go okay. And the other thing which is worthwhile to note, if the percentage of total income, which relies on this is very low, the treasury part of the total income is not really significantly high. It's basically the operating income, which really is driving that. And we are -- our payout ratio is basically based on the percentage of basically the operating income and the operating profits, which we have. So I think on a -- I think we should be able to ensure that we would be able to have the same amount as we go forward but this is something which we'll see in the future.
Okay. And would we have any role in the account aggregator initiative that has been under works, that is probably -- that would probably see the light of the day?
That will have to be seen how that really goes forward, it would be very difficult to comment till the formal structure is really approved.
And any movement on the proposing of a single account for all financial instruments?
Work in progress. We'll see how it goes forward, but it is yet work in progress.
The next question is from the line of Hardik Jain from White Stone Financial Advisor.
I think most of my questions are answered. I just missed one thing when you were saying. What is the online data charges for the quarter? I missed that.
I'll ask the CFO, Girish, to answer that.
Yes. As it is, it is INR 13 crore online data charges for September 2020 compared to INR 8.1 crore in September 2019.
Okay. So when you see this other operating income of INR 37 crore, other operational income. So this INR 37 crore includes online data charges, which is INR 13 crore and IPO, which is around INR 8 crores and e-voting, which is around INR 5 crores. So that totals up to INR 25 crores, INR 26 crores. So what would be the other INR 9 crores, INR 10 crores?
See basically, we recover other charges from depository participants, like user facility charges, settlement charges, account maintenance charges, then other small charges. So all these small charges put together are around 10% and almost 90% area I had covered in my initial question. Do you want me to again repeat it?
No, no, that's it. And one more question, sir. This e-voting charges that we have, this also includes the online AGMs that we are conducting? That is also part of the e-voting charges that we are charging companies for online AGMs that we're conducting?
Yes.
Ladies and gentlemen, due to time constraints, we will be taking the last question from the line of Devansh Nigotia from SIMPL.
I just had a couple of questions. Sir, one is, in case of a nonpayment of annual issuer charges, can you help us understand how does the compliance work? I mean, let's say, after what period of time, what actions happen for non payment? Second is, if you can just elaborate on the relationship with Upstox and 5Paisa? So for Zerodha, we know that they are exclusively with us. But the second and third discount brokers, I mean, are they on both the platforms or they are with NSDL? And also if you can help us understand what is our wallet share with both of them?Thirdly, in case of eAGM, I mean, so there has been some AGMs which were supposed to happen in June, which did not happen. And then they are postponed to September and -- which were already supposed to happen in September, they did happen. So any number like percentage of the AGMs for the quarter which happened in this quarter? So remaining -- what is the remaining portion? So if you can just help us understand these things.
So actually we don't comment on specific people, whether they are with CDSL or not, on clients and customers because I think that is privy to basically how we are doing. The important thing is that we are ensuring that we are creating a value proposition for our output ad firms.And I think basically each of the people are free to go to whoever they wish to. And wherever they see value, they are going to come there. It will be difficult for me to give you that answer, whether so and so person is on the platform or not. Sorry, what was your first question? I'm sorry, I've missed that.
I mean, how does the compliance work, let's say, so there has been some bad debts and we really...
Bad debts, SEBI-prescribed compliance, there is a standard operating procedure. That if you would not pay, then there are certain shareholding patterns which they are required to find their compliances would also would not be available. And hence, to really ensure that they would need to pay us. Otherwise, they would not have been shareholding patterns with them. This is a broad standard operating procedure.
Okay. And in case of eAGM, I mean, if you -- like, I mean, because there has been some pent-up for June which did not happen. So if you can comment the percentage...
Yes, they have now further extended it by 3 months, MCA has extended it by 3 months. So the -- basically, AGM season should continue for another 3 months. So this is something which is going to go until that particular final date is there. And normally, a trend has been that most companies wait till the last date in September to finish their AGM. But now since there has been a extension of 3 months which has been given, so they will probably -- we should see some more volume coming up in the quarter.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Aditya Bagul for closing comments.
Yes. Thank you. So a big thank you to everyone to have participated on the call. Nehal sir, I'll hand the floor back to you for any closing comments.
No, I think I have made my comments through various replies. Just stay safe and stay secure. These are some of the times which we don't see it often. It's important to keep yourself safe and secure. And I hope the very best to all of you.
Thank you, Nehal sir.
Thank you.
You can close the call now.
Thank you very much, sir.
Thank you, Aditya.
Thank you, Aditya.
Ladies and gentlemen, on behalf of Axis Capital Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.