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Central Depository Services (India) Ltd
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Ladies and gentlemen, good day, and welcome to the Central Depository Services (India) Limited Q4 FY '23 Earnings Conference Call, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded.Ladies and gentlemen, please note that CDSL does not provide specific revenue or earnings guidance. Anything said on this call, which reflects CDSL's outlook for the future or which could be construed as forward-looking statements must be reviewed in conjunction with the risk that the company faces.I now hand the conference over to Mr. Praveen Agarwal from Axis Capital Limited. Thank you, and over to you.
Thank you, Rihan. Good afternoon, everyone, and welcome to this earnings call of CDSL. We have the entire management team of CDSL with us, led by Mr. Nehal Vora, MD and CEO. We'll start with a brief on the results from Mr. Nehal and then we'll move on to Q&A. Over to you, sir, for the opening remarks, please. Thank you.
Thank you, Praveen. Good afternoon, and welcome, everyone. I hope each of you and loved ones are safe and healthy. Thank you for joining us today to discuss CDSL's financial results for the fourth quarter and full year financial year ended March 31, 2023. As in the previous quarters, we posted a detailed financial presentation on our website for your reference. I'm joined by the CDSL Group's leadership team. Let me start with the industry highlights and then state and then take you through some of the key aspects of our performance. To begin, let me highlight the industry trends and then discuss some of our key performance aspects.During the financial year 2023, the capital market industry experienced a mixed performance, while certain sections continue to show a growth momentum. Retail market participation remained muted as compared to the financial year 2022. The business environment in the Q4 was similar to the full year trends described above. In addition to these industrial developments, several new regulations were introduced during the year. We believe that these regulations will benefit the industry in the medium term as they aim to protect the interest of the retail investors as well as the investors at large and reduce the systemic risk. Overall, we view these regulatory measures as positive for the industry's long-term growth.This quarter, India further strengthened its retail participation in Indian capital markets. The total number of demat account investors in India touched a new milestone of more than 11.3 crore in quarter 4 of FY 2023, of which 8.3 crore demat account investors are registered with CDSL. The registered investors as on March 31, 2022, was 6.3 crores, which shows an increase of 32% over the last year. We are harnessing the benefits of the digital innovation and the presence called out across tiers, especially in the Tier 2 and the Tier 3 cities. The availability of digital services such as eDIS, eMargin Pledge and Re-Pledge mechanism, eAGM and e-voting and online account opening has had a significant impact on the growth of Indian retail investors. However, this is just the beginning and our primary goal is to continuously enhance the financial ecosystem by making it more efficient and transparent.In terms of the performance, our strategy focus is on accelerating the core annuity income simplifying the process of emerging investors and fostering new developments in the Indian securities market. CDSL is committed to growing its business sustainably by diversifying its revenue, investing in advanced technology and cultivating its people. As we celebrate our 25th year of operations, our focus remains on improving the financial ecosystem by enhancing its efficiency and transparency. We would like to prioritize and focus our Atmanirbhar Niveshak approach while striving for innovation resulting in consistent and a healthy financial performance. We are dedicated in curating a secure financial ecosystem and providing a differentiated experiences that create value to our investors and stakeholders.Before I hand it over to Girish Amesara, Financial -- our Chief Financial Officer, I'd like to say that the growth of the Indian securities market is an extremely encouraging sign of India's potential. I also want to place our appreciation, gratitude to all our stakeholders, our regulators, depository participants, investors, issuers and other market participants and employees for their constant faith in us. With this, I would like to hand it over to our CFO, Shri Girish Amesara.
Thank you, Nehal. Good afternoon to everyone. Speaking on the yearly performance, total annual income has increased by 13% for the year ended March 31, '23 at INR 544 crore as compared to INR 490 crore from the previous year. The net profit on a stand-alone basis is up by 3% to INR 272 crores as compared to INR 264 crores during last previous year. On a consolidated basis, the total income has increased by INR 15 crores to INR 620 crores for the year ended March 31, '23, compared to INR 606 crores for the previous year. The net profit on a consolidated basis is down by 11% to INR 276 crores as compared to INR 312 crores.Speaking on quarterly performance, the stand-alone total income for the March quarter -- March '23 quarter, has increased by 3% to INR 112 crores and against the previous same quarter previous year of INR 109 crores. The standalone net profit on a quarterly basis for the March quarter is at INR 52 crores as against INR 58 crores for the previous year same quarter. On a consolidated basis, the total income for the March quarter has decreased by 3% to INR 144 crores as against INR 148 crores for the same quarter previous year. The consolidated net profit on a consolidated basis is at INR 64 crores for the March quarter '23 as against INR 78 crores for the same quarter previous year.Now I shall request Shri Sunil Alvares to give update about the operation of the wholly-owned subsidiary, CDSL Ventures Limited. Thank you. Over to you, Sunil.
I would request that in case I think the numbers have already shared, so that in case there are -- we can start off with the Q&A session directly.
[Operator Instructions] Our first question comes from the line of Prakash Kapadia from Anived Portfolio Managers Private Ltd.
Yes. A couple of questions from my end. If I look at CDSL Ventures, we've seen a revenue degrowth for almost all quarters during the year. So can you explain what is happening at a time when SIP flows are strong, new demat accounts are strong? So is there pricing pressure? Is there some change in the business model? Is it competition? What is leading to this fall in revenues?
So you want to finish both your question?
Sure, sure. And of the employee cost, we've seen a 60% increase in '23. So if you can share the fixed or variable nature of this to understand how would this move forward on a going-forward basis? And lastly, what is the CapEx and technology spend done in '23? These were my 3 questions.
Okay. First one, I'll ask Sunil to answer and remaining to allow the CFO, Girish, to answer.
Yes. If you see the KYC business, okay, there are 2 major sources of income, one in the creation side and the second is on the Fed side. Now the KYC business, a lot depends on the state of the primary as well as the secondary market. If you see last year, the number of IPOs reduced substantially as compared to the previous year. So it had an impact on the number of new accounts being opened, that is demat accounts and broking accounts.So if you see overall stats, I think around the demat accounts was impacted by about 35%. So to that extent, I would disagree with you that though the monies are coming in SIP, but those were accounts which were already opened and for which KYC is already done. So to that extent, the KYC part would have not got impacted. But so far as new accounts are concerned, yes, definitely, it has got impacted because the number of broking and demat accounts has [indiscernible].
So you are saying the pace has slowed down, Sunil. What you're saying is if they were growing at 6%...
What I'm saying is if the demat accounts have gone down by about 30%, 35%, then the broking -- the KYC also has got impacted by about 25%, 25% to 35%. So it goes hand in hand. So you can't have more KYCs unless demat account openings. So it's directly a function of the demat accounts or the broking accounts which are open. So that has impacted the number of KYCs and that has impacted the overall revenue.
Okay. And this Fed thing because incrementally, you're saying the flows are coming in the same folios in mutual fund and folio addition is not so strong. So the Fed business also gets affected?
Absolutely, because we charge only a onetime on the Fed side. So once a record is set, it is free for the lifetime. So even if you're doing a SIP, then even if you Fed it, say, 12 times a year or 24 times a year, I have already charged you once and that is the end of it.
Okay. So there is no real pricing change or competitive intensity which is leading to this fall? It is just...
There are pricing pressures on the creation side because so long as there is competition, they will try to pull your customers by offering lower charges. So that's a part of market competition. So that will go on anyway.
So in terms of employee costs, if you look at historically, CDSL employee cost was in single digit, if you compare previous year's expenditure to total revenue. And now it was 8% last year. This year it is 13%. If you recall, previous 2 years, 2 years were a high-growth year and our operations has almost increased compared to what it was prior to 2 years. And in terms of that, we had to -- we had plans to increase manpower there.So current year, we have net -- on a net basis, there is an increase in the employee strength of roughly 35 people. And typically, if you look at the SEBI regulations also, the bonus is 1/3 of fixed costs. So basically, that's how the categorization of the combination works. The addition of 33 employees during this quarter and...
Yes. And to add to what Girish said, the regulations don't allow any ESOPs to be granted. So obviously, to retain talent, you need to kind of appropriately compensate them to get the best of people and to retain them. As compared to our comparison of employee costs as a percentage of revenue to other market infrastructure institutions, we are one of the lowest. So I think that continues even after this, but we need to continue to retain talent to ensure that we get the best in class as a part of our structure.
Sure, sure. And Girish, you mentioned employee cost. I think if I look at consolidated, they are almost 15% of sales. So is it some operating deleverage because subsidiaries have not grown? So that is why also on a consolidated basis, it looks higher than the stand-alone basis. Is that right?
I gave you the details of consolidated basis. We always speak on consolidated basis.
But then a INR 550 crore -- INR 555 crore revenue, employee cost INR 480 crores. So that's 15%, not 12% or 13%, which I think you mentioned.
No. If turnover on a consolidated basis is INR 620 crores.
Okay. I think you are adding other income. I'm just taking income from operations, maybe that's why.
When I'm comparing -- I will always compare with total revenue. I will not compare it with operating revenue.
Okay. Okay. Understood. And on the last question on the CapEx side, if you could give some idea, what has been the CapEx trend in '23?
The CapEx expenditure that we have incurred is in line with the implementation strategy that we had implemented, and it is also driven by the regulator. We are...
I'll just take that question. I think it's driven more with the new age regulatory reforms, which we are bringing into place, where there is -- basically, the authorization happens at the depository and directly with the customer and also bringing in sync with new hardware, servers and the new tech infrastructure as our volumes are growing, it has to kind of be in sync with that, the new edge technology. And also as our people are growing, we need more space. So this is the 2 broad areas in which we are going to be spending money [indiscernible].
Right. And if you would quantify that amount, what we've spent in '23?
I will come back on that during the call.
Our next question comes from the line of Swarnabha Mukherjee from B&K Securities.
So 3, 4 questions from my side. Firstly, on the employee expense, the discussion just happened. So wanted to understand that this bonus cost that you have mentioned, which is around about 1/3 of the fixed cost. So is this going to -- is this provided or provisioned over the years, over the fourth quarter or will it come in disproportionately in the first quarter because I think last year, first quarter also, there seems to be a bump in the employee expense. That is the first question.Secondly, I wanted to understand, so in the KYC business, what proportion of it will be coming from the demat account opening and what proportion will be coming from [indiscernible] for other financial products? Thirdly, if I were to understand if I can make some color on how would be the number of folios that you have say at the end of FY '23 for an average of over FY '22 vis-a-vis what it was over '22 in the demat accounts? Just to have an understanding of what -- how the annual [indiscernible] this could move, not looking for a forward-looking statement, but since the year is over, you must already be having the details about number of folios that you have. So some ballpark number about growth will also be. That is the third question. And take expenses, then are we kind of hitting the peak? Or should we see kind of continue to increase here also? So do you have the focus?
Yes, I'll answer the first and fourth question first. On the employee cost, last year, it was done in 1 quarter, based on bonus which the Board had recommended. This year, it is each quarter-wise, it has been prorated. So that will -- how it is done. On the tax cost, it is a constant -- because see, we are in the business of providing infrastructure and technology is the key driving course and the fee maybe differentiator. So -- and technology is something which needs to continuously evolve as we move forward. So based on that, this will be a process which we will continuously kind of assess and see as and when it's required, we will be putting it in place. There is an entire release structure in place before we kind of go into play. But there will be a continuous focus on ensuring that the technology is really up to speed with the latest and so that the ease of doing business as well as basically the efficiencies of business continue to remain with CDSL.I'll ask the second question -- on the KYC, I don't think we give that detail between the mutual fund folios as well as that because it's kind of a consolidated number and it's kind of pretty difficult because they could be a single investor doing both in terms of direct equity and mutual funds. As regards the folio last CFO, what has been the increase over the last year as compared to. It's part of the presentation, but I think he'll just pull it out then.
So the number of folios previous year, it was 7.8 crores. And this year, it is 13.72 crores. I'm saying '21, '22 compared to '22, '23.
Okay. And sir, this growth, is it fair to understand that if I only were to look at the recent corporates, this growth will be fairly similar to what we have seen vis-a-vis 2021?
No, no. This is kind of a combination of both listed as well as unlisted space. So this will continue to embark upon as we move forward. Maybe listed space or new kind of investors. And unless the space the companies are coming up with the folios.
But in terms of overall paid as share, would we expect the number of folios in the listed space dominate in the number of folios in the listed part of the company? Because I think number of number of shareholders [indiscernible].
Yes, folios obviously would dominate in a listed space because the number of investors by its very definition, it has to be more than 250. In unlisted, it's lower than 250 investors. So obviously, by that very definition, the termination would be in the business.
Sure, sir. So just, I mean, a quick follow-up on the QIP numbers, I understand that you don't give a growth details, but would it be fair to some kind of ballpark, 80% or 90% coming from demat so that we can understand [indiscernible].
It would be s kind of difficult to assess because there are a lot of common ones, which could be across both the asset classes. So it will be difficult to come to a ballpark number on that.
Yes. I can -- can I take that question? See, what happens is some of these stretches we only track that intermediary. Now that intermediary may be opening in protecting it for a demat account or for a broking account or for what do you say, the investors having some mutual fund investment. We only have a tag of the intermediary. So it's very difficult for us to figure out for what particular purpose eKYC has been fetched.
Our next question comes from the line of [ Senthil Kumar ] from [ John Reiss Capital Services Limited ].
I could see capital work-in-progress of INR 173 crores. Can you please elaborate on that? What can that investment [indiscernible].
Yes. I'll ask the CFO to answer that.
So last year, we have purchased 2 floors at the Marathon Futurex building. That represents the capital work-in-progress.
The whole INR 73 crores, right?
Yes. Yes.
Okay. And my second question is on insurance repository business. Why don't we -- we will compare to the last year, even though in the last -- in [indiscernible] we are in the early stage of implementation. So any strategies to improve -- gain market share in that?
Yes. So there is a move towards -- we have already recruited a professional MD and CEO. He's in the process of joining. And there will be a management team which will get created. But however, the regulatory changes are also at a cost of change. It's yet on a voluntary basis has yet not been converted into a mandatory basis. But there is definitely a value proposition, both from a investor as well as from an insurance company point of view. So as the market evolves and matures, they will understand the key benefits to it and that will move towards that. Also the regulator is also looking at it very closely and is going to come out with the necessary policy formulations as soon as it is required.
Any timeline for that? When can we expect?
I can't predict how that regulator will come out with a policy formulation. So we are in constant touch. Whatever inputs they need, we are giving them, but that is up to them to finalize when they will come.
Our next question comes from the line of Karthik Chellappa from Indus Capital Advisors, Hong Kong Limited.
I have 3 questions. The first one is, despite the strong growth in our depository accounts, the revenue growth still seems to be challenged, especially on the transaction charges side. Apart from lower retail participation, which you alluded to at the beginning of the call, are there any other factors at play which is impacting revenue growth?
Yes. So basically, the delivery volumes of the exchanges, which drives our market base in transactions. And over the last financial year, there has been a reduction at about 33% of the delivery-based volumes on the exchanges. And that kind of explains the reduced charges or the revenue for the depository because it's only when it culminates into a delivery, that is when the charges are paid to the deposit.
Got it. So apart from that, there is really no rate reduction or any sort of competitive pressures which are at play, which is causing this. It's just purely volume-driven?
Yes, yes, it's purely volume-driven. Exactly.
Okay. The second question is on the technology expense, which you alluded to, where you are saying you are continuously you need to assess the volume and the requirement and enhance the spends. If you were to bifurcate the spends between those which are directly related to higher volumes, what is a different kind of technology, what would that split be if you were to do that for your total spends?
So we kind of -- we have already created that framework which makes the infrastructure really scalable. And it is done with the exponential growth, which we have seen in the number of demat accounts over the last 2 to 3 years. So from that end spend is more or less done. But however, there is a constant assessment done in bringing in value proposition more at really the application stage on how basically the transactions are getting reprocessed, so that there is a throughput time comes down, it can handle scale.So there is a complex web of various kind of technological inputs which are put into place, which kind of really assess that there we need to spend on the application side or on the hardware side, depending so that the -- basically, the stakeholders will continue to enjoy ease of doing business and a value proposition with remaining CDSL.
To ask it in a different way, if I just look at the fourth quarter exit number of about INR 10 crores to INR 11 crores of computer-related OpEx, would annualizing that be more or less in line with, let's say, what you're thinking, subject to volume changes?
Future, it will be difficult for me to predict that. But I can assure you that there is a very robust process of spend which is done in terms of what is absolutely essential is getting spent. And there is a framework. As a company, we don't give future kind of guidance. So I'll have to kind of not be able to answer that question.
Got it. The last question, sir, is you mentioned that you've now reached about 83 million accounts out of, let's say, about 130 million, which implies a market share of somewhere close to 72%, 73%, which means on incremental market share basis, it's even higher. Would it be fair to say that with growth more or less moderating or normalizing, the market shares have more or less peaked for you?
Difficult to again say about the future because 3 years ago, we were at 46%. And at that time also, somebody could have said that this is kind of an optimum level at which both -- if the market will function, but there has been a surge which has happened. So again, market is a dynamic place. Difficult to really predict whether you've reached or not. My intent is -- and I think overall the ecosystem is about 6% to 7% of the population is only yet in the securities market.So the market at large has a huge potential to grow. Whether that growth happens in the next 1 year, 2 years, 3 years, 5 years, 10 years, that is for something which we will have to see. But there is a potential. And I am not looking at what is the current trend. It's more of the potential which has yet not come into the market. India is a young population and we are adding youngsters and large middle class into our population every year. There is a huge potential which is there.
Just one follow-up, sir, based on the response that you gave. If you were to look at new accounts at a household level, what will it be on a household penetration level?
That again will be a little difficult to answer because people sometimes have more than one account also which is permissible under the law. And sometimes they are in basically -- they are a joint holder with a family member. So again, each household is depending on how many people are there also. So it's difficult to really assess how much will be the penetration from a household level. But I can say that today CDSL is about 98% of the pin codes of the country where the demat accounts is there. So there's a fairly comprehensive spread in where the CDSL demat accounts are.
Our next question comes from the line of Prithvish Uppal from AMSEC.
The first question I had was just a follow-up on the transaction income that we report. So again, for this quarter, we've seen that for demat account, realization has -- it was roughly averaging close to about INR 24 and has gone down substantially. So I mean I understand, one is -- one reason you mentioned is the fact that there has been lower -- there's been lower retail market participation. But despite a higher increment in terms -- especially in this quarter in incremental demat accounts, so is it fair to assess that the amount of floor demat account transaction has also reduced substantially? And do we expect this kind of number to sort of be the kind of new normal because last 2 years, the floor account, number of transactions would have obviously peaked for us. So have you seen that this has come back to sort of pre-COVID levels? That would be my first question.Second question is in terms of the uses of cash. So apart from the investments that we make and the dividend that we've been declaring, any other cash uses that you see in terms of from a growth perspective, any color on that you could give? And third, it's been talked about on previous calls, which is the pricing on insure charges from INR 11. So any discussion that from the regulator where this is how the conversation is? So these are my 3 questions.
On the first one, it's not only, as I said in my earlier reply to an earlier question, is the delivery-based volume. If you see the delivery-based volume has seen a reduction of about 31% over the last year. And that is really this is a key reason. Whether we have reached a peak or not, it's very difficult to assess because it's your market functions as to what is the volumes which are going to -- it's very difficult to predict volumes in the coming years. And therefore, the important thing is create the right toolkits, right value proposition so that it is there to support any as we move forward.Your Second question was -- I'm sorry, could you repeat your second question?
Yes. So it was to do with the operating cash flow that we're generating, so -- yes, so on that.
Operating cash flow is -- we are finally an infrastructure company. So the strength of the balance sheet, which sounds very critical as more and more assets and more and more demat accounts are added to your fold, it kind of gives that comfort factor. There are areas of growth, both in the securities markets and in the other markets where we have our subsidiaries.There is a constant endeavor as India embarks upon its journey of digitization. More and more products and platforms are going to come into force, which will require that kind of investment, both in terms of systems, technology and people to ensure that we are kind of basically in sync with what the reforms are getting in this.Also we have just added our -- basically the account aggregator model where we have gone live as a financial information provider, that's a new line of business which CDSL has recently -- and it's the first depository to go live. So that's one. Second is also the other sectors like the commodities, repository and the insurance sector. So this is something which we continuously kind of would need to assess as we move forward. And we have had a consistent dividend payout which has been consistent over the years, 60% of -- about 60% of the operating profit, which gets -- is it a net profit, which gets paid out as dividend.
Yes. And so on the last question, the pricing?
It will be difficult to comment because normally we don't disclose the SEBI conversations. It's kind of confidential. But that's the kind of process which we will follow in as and when in whichever form it gets approved, that we get promptly communicated to the market.
And sir, just lastly, just a detail question. You mentioned the folio number to earlier participants. So just use a number, so if you can just repeat that, please?
It's part of the presentation is uploaded on our website. It will become easier. We can repeat it, but I think it will be easier for you to just look at that.
In financial year '21, '22, we had a full year account of INR 7.68 crores. And for financial year '22, '23, we had account of INR 13.72 crores.
Our next question comes from the line of Parimal Mithani from Credential Investments.
Sir, I just wanted to know, recently, you came out and you mentioned in your previous statement about account executive model. Can you explain me in detail how do you plan to go and how does it benefit CDSL?
No. So the account aggregator model is where basically the information flow from various sectors, be it banking, insurance, securities, market can be accessed based on client consent and given to a information user who can curate the data and give it to him in a structured format. There is -- so this is -- and there are various components which are expected to be added to it, be it basically the income tax, GST, et cetera. So it's a common information flow framework which is client consent base and that's where we are part of the larger ecosystem.
And does it have a asset -- this is data monetizable? Or how it is? How does it help us in terms of the future like?
It's kind of really early days as to how the commercials will get factored in. But there will be some amount of commercials which will come in at some stage.
Our next question comes from the line of [ Vivek Setia ] from HDFC Securities.
So in our last call, you had mentioned some numbers about CDSL Ventures, their financials, the creation factor. So if you could just help me with those numbers for Q4 or FY?
So total income -- annual issuer income that we have cropped during this financial year is INR 183 crores as against previous year income of INR 115 crores. So in case of CVL, we have [indiscernible] income of INR 87 crores during this financial year as compared to INR 120 crores of previous financial year.
And the profitability?
It's actually all there on our website. You may actually look at them.
We put all the numbers on the presentation also.
The presentation, I don't think there is -- there are new numbers in the presentation, neither creation or [indiscernible]. I have been looking at the presentation, so.
Yes. in terms of presentation, we have creation facts, normally, we just give us a broad trend. Finally, it has to culminate into revenue and that is more critical. So from -- again, our financial disclosure point of view, we are more focused on how it culminates into the revenue. So I think that would be a fair reply to your question.
Okay. And so the other components of other income like e-cash, e-holding, if you could give out the number of those?
Yes, there is still repeat. Do you want on quarterly basis or you want full year?
Anything would do.
Okay. So on a quarterly basis, we have closed transaction charge at INR 33 crores. Online data charge, which is CVL income at INR 22 crores. IPO corporate action at INR 7 crores, annual issuer income at INR 47 crores. Cash and e-voting put together at INR 9 crores. This constitutes almost 96% of our total operating revenue.
Okay. And the pledge income?
I don't think we gave that pledge income separately, right? It is part of the transaction.
Okay. And just wanted to understand about your outlook like going forward, like, are we completely dependent on growth in the retail participation or like how are we planning to grow our business? And will it be purely volume-driven going forward? Or are we looking into other avenues as well, so what's the outlook like?
No, I think -- see, again, future outlook, we don't give as a policy, but I can just give you a...
Not the numbers, but just a strategic...
Yes, I'll tell you, it's important that we are going to continue to invest in technology because the entire digital journey is something which is going to grow as we move forward. And CDSL is going to be at the forefront of that journey, both from a ease of doing business from a investor protection point of view, making investors self-sufficient, so giving more to the investors to take decisions themselves. That's going to be our cornerstone of our entire focus.Obviously we will be kind of part of the market infrastructure institutional framework, which SEBI has prescribed. So that is something which we'll continue to really embark upon. And as more and more new policies, products and platforms get permitted by SEBI, CDSL would be as a part of that framework.
Our next question comes from the line of Sanketh Godha from Avendus Spark.
Sir, just 2 data points. If you can give the [indiscernible] costs in the current quarter? And second, just wanted to understand that the corporate action income is really weak in the fourth quarter. Is that a fair assumption to make, sir?
Yes. So I'll answer the second question first and I'll ask the second question -- the first question to be answered with the CFO. Normally, the AGMs technically occur in the second and third quarter. It means if it gets extended otherwise, it's the first and second quarter. So it is kind of connected with the AGM. So you -- it's kind of a broad trend that you see major income happening in the first, second and when it gets extended like it has been done in the past 2 years to the third quarter also. I'll request Girish to answer the first question.
In terms of data explosion, there is a reversal of INR 2.14 crores.
Okay, sir. And 2 questions with respect to the business, sir. This KYC for the insurance companies, especially the [indiscernible] company was made mandatory from January 2023. And just wanted to understand that this revenue is somehow going to be our insurance repository business if we are doing the KYC for insurance company or is it done through e-KYC predominantly and therefore, we are not excreting any revenue with respect to KYC on insurance, which has been made mandatory from '23?
No. This has -- there was a draft circular which was proposing to make it mandatory. It has not converted itself into a final circular. So it yet remains in a draft stage. So as of now it is not mandatory. It is optional.
Sir, conversion into a demat format, it is voluntary yet. But the KYC has been made mandatory from 1st January, sir. So just wondering the KYC income flow is somehow getting accepted in our insurance repository income or not?
Sir, this KYC that you're talking about is for the policy for the creation of the policy for the existing quality which is handled by the insurance companies themselves because bulk of the policy has [indiscernible] the physical cost. So it doesn't come to the depository in terms of our group company CVL for the reason that we have start -- CIL or CVL because it is a physical form. So this KYC is done by the insurance company's internal.
Okay. So sir, you mean to say that when it becomes -- when the depository -- or demat format becomes a reality, compulsory, not voluntary, will then you have a 2-revenue status. One is KYC income probably and secondly is the targets with respect to the repository income, right? Or...
That is normally how this business works. So there is both sides business which is potentially expected to flow. But it depends as and when it is made mandatory.
Got it. And sir, last one from my side. Is that the accounts are at [ FIC ], what are the charges we are going to charge for FIC as it -- information provider? And then finally, do we want to get into [ PSU ], the security service provider or we just wanted to remain at providing a financial information to the part of the price who ask for it?
So the commercial, as I said earlier, it's early days. It's yet not yet finalized. It's in the process of us really establishing the framework and then the commercials will kind of follow. So that is for us to wait and watch in the future. CDSL will continuously assess which part of the account aggregator model, the FIC was mandated by the regulator and we are kind of the first depository which have done it. Whether we are part of the account aggregator model and the FIU, that the financial information user model is something which we will have to really assess as the system really grows and matures.
Our next question comes from the line of [ Sujal Azare ], an individual investor.
My first question was that the IRDA mandated the dematerialization of new insurance policy. I guess that you have answered in previous questions.
Yes.
So that's not an issue. I just wanted, I'm a naive investor. So I just wanted to ask you what are the key revenue drivers in your company of CDSL?
Okay. So basically, there are 3 principal revenue drivers. One will be for demat accounts, the transaction revenue. So every debit is charged, it's depositories. So that's a revenue charge. Second is the companies which are dematerialized or whose shares are dematerialized as an annual fee. So that's a second charge. And the third is know your customer. There's a repository in which are CDSL Ventures is there.So that's the third source that for every creation of our know your customer or a fetch by anybody in the system has a charge with CDL again. So these are the 3 principal charges. Besides that there is -- for the annual general meetings, we conducted through online more. So we charge companies for that, the value-add service. There is a key voting platform which we have. So that is the other area where we charge. So these are principally the broad areas of revenue for CDSL.
So which is the most revenue-gaining like [ factor ] of all of this, which you have stated?
So I would recommend -- there is a fairly easy to comprehend presentation on our website. It will give you not only what is the comparison, how has the growth been over the years. It's a fairly pictorially represented presentation. It'd be easy for you to understand. If there any follow-on questions, feel free to e-mail us, we will give you a reply.
Our next question comes from the line of Prakash Kapadia from Anived Portfolio Managers Private Ltd.
Yes, if that CapEx figure is available, I just wanted to know that.
So on a consolidated basis, we have capitalized INR 35 crores on capital expenditure. On a stand-alone basis, we have capitalized INR 22.5 crore.
Our next question comes from the line of [ Anita Sagar ] from Infosys. Anita, your line is unmuted. You could speak your questions. Since there's no response [Operator Instructions] Our next question comes from the line of Anita Sagar from Infosys. Since there is no response, we move on to our next question, which is from the line of Rajesh Gajra from Informist.
My question is with regard to the Q4 transaction charges trend in that. You mentioned that it is based on the debits that take place and it's linked to the delivery volume obviously. So I wanted to understand 2 things from this. One is key, what was the trend in the delivery volume in Q4 versus the year-ago quarter?And secondly, I wanted to understand if the -- is the per debit charges that are applied, is it based on the value of the trade which is where the debit is taking place? Or is it based on a debit that is going on a fixed charge? Or is it based on the number of shares that are getting debited? So just wanted a clear understanding of that.
Yes. So the first question is there's a 31% reduction in the year-on-year delivery volume across exchanges over the previous financial year and as compared to this financial year ending. So that has given overall trend at why there has been a lower transaction revenue. The second question is that we charge on a per debit basis. However, it's really a slab-wise approach.So a person who is a frequent user of the system has to pay a per debit lower charge compared to a infrequent user of system. So it ranges from INR 5.50 per debit to INR 4.25 per debit depending on the number of transactions which you are doing. It is not linked to the number of shares or the value of the number of shares. It is per debit instruction, where those charges are done.
Our next question is from the line of Sanketh Godha from Avendus Spark.
Sir, in the past, you have disclosed the annual issuer charges broken down into listed and unlisted. And similarly, you used to give the pledges margin income or pledge income in the transaction side. It will be great if you can share this time too?
The first one, we never used to do it, listed and unlisted. I think pledge is what the CFO has been that -- to disclose...
This quarter, we have done a income of INR 3 crores.
As there are no further questions, I would now like to hand the conference over to Mr. Nehal Vora for closing comments.
Now I would like to thank you for all your questions and continue to remain safe and secure. Take care. Thank you.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.