Refused to commit on full year tax rate.

So, my first question is on employee expenses. There has been a sharp rise on QOQ basis. So, what was the reason for this and what kind of growth are we expecting for the full year? Second question is on what kind of IT spends are we looking for the full year and is it going towards any new products or like it is mostly maintenance? Are we looking for some innovative products which are coming in the market?

So, one is at the outset, we do not give forward-looking statements. So, I will restrict my comments to the current expenses and what the overall theme and intent is. See, the two important inputs for CDSL as a market infrastructure institution is the technology spend and the human resource spend. So, as we are growing in size, and I would urge you to even look at the market infrastructure institutions with regulations which SEBI have mooted. For depositories, there is a separate regulation and separate for exchanges and clearing corporation. It constitutes into vertical 1, vertical 2 and vertical 3, where the IT and critical operations form a part of vertical 1, regulation risk and control functions form part of vertical 2 and business and others form part of vertical 3. So, as per that, the requisite focus needs to be given for continuity of critical operations and technology and as we are growing in size and sophistication, we need the people to get recruited in all these three verticals at the paramount form. Also, the year-end performance appraisal variable payouts have been reflected in this quarter. So, that is the other thing which you will need to factor in. Our intent is to build a more long-term resilient infrastructure institution as I have been saying in all my past investor calls. On the technology front, on all the four components of infrastructure, application, security and network is where we are continuously innovating as per the new products which are getting initiated. This is to bring in a lot of nimbleness in our systems but at the same time bring in the best-in-class products. So, it is a combination of building newer platforms and also enhancing the efficiency and the sophistication of the infrastructure.

Thank you for the opportunity. And for the quarter, it was almost 32. So, is it fair to say that for the future, it will rise back to 25 at the console level? Just one thing on KYC. I think KYC income, we all know that there is a bit of slowdown in Demat account opening incrementally compared to what we witnessed in the past. So, is it fair to say that our KYC income will also see a bit of slowdown? Last two more. If you can give a pledge income data and impairment data for the quarter. And lastly, just again on this employee cost - is variable pay one time which is getting reflected in the current quarter or this variable pay in subsequent quarters.

That will be difficult to predict. We don't give forward-looking statements. So, we will have to wait and watch as each quarter unfolds. [On KYC slowdown]: Yes. So, I think it's a combination. It will be difficult to create specific contributors on a consistent basis. It depends on that market dynamic, as well as the environment. Demat accounts slowing down may not only be because a lot of them added, because lot of people are using. [Girish Amesara on data points]: So, the margin pledge income for this quarter is INR5.05 crore. And there are no onetime costs as far as employee cost is concerned. [Nehal on variable pay]: No, no, he's asking. So, your question if I've understood is right that the payout happens in the first quarter, but the accrual for all of that happens equally as per the accounting standards in each quarter. Payout happens for the entire, like in any other company variable pay is getting paid out based on the performance at the end of the financial year and is therefore paid out. [On impairment]: It is a INR3.69 crores.

Sir, personally on, if I look at your EBITDA margins, we were on a console basis, we are running at 60% thereabouts in most part of last year. And now that you know, it's being at about 50% in the past couple of quarters, any pricing action or either on issuer charges where you are going back to the regulator for a price hike, or for that matter, even transaction charges, you plan to increase or anything of that sort that is there in the offing? And sir, any strategy that you can talk about with respect to 3-in-1 accounts, wherein if the ASBA is implemented across various aspects of the business, how well we are versed or how well we are positioned to kind of do the 3-in-1 accounts for particularly for discount brokers? And the last question on insurance repository, what's happening there?

So, the price for issue for the investors or transaction was that that one charge with the circular requires. So that time we had factored in certain economies of scale and made it at 3.5. We are about INR0.50 cheaper than our competition. This is to factor in the economies of scale. And there was an additional INR0.25 discount given for female investors in the first to encourage a lot of diversity in the holdings. For mutual funds and for bonds individually, there's another INR0.25 discount again to kind of encourage more and more people to hold mutual funds and bonds through the Demat holding. Issuer charges has been increasing on a periodic basis. As you know, depository charges have to be approved by the regulator. So, this is something which is a continuous process of work in progress and as we factor in. So, as and when the necessary approvals come in, it is, I would be able to disclose it only once it comes out in the public domain. [On regulator application]: Again, we do not generally discuss our conversation with the regulator in the public domain. Confidentiality. So, but as and when the process is approved, we will make sure that it is put out in the public domain. [On 3-in-1 accounts]: So, I think 3-in-1 accounts is a methodology for each of the DPs to offer. We have the necessary technology APIs and solutions for them to kind of factor that in. It's a bank account versus Demat account. So, we are responsible as a depository for the Demat account and ensuring that the necessary technology enablement's are already in place. [Latesh Shetty on insurance]: Yes, the LIC integration is work in progress. We are expecting the integration to happen soon. Out of the four repositories, three have participated and we are one of them. We have crossed 18 lakhs policies overall cumulatively. E-insurance accounts is also in the range of 20 lakhs.

Firstly, I just wanted to understand on this unlisted space, what would be the total number of companies which are eligible to be converted to be dematerialized? And how much of that would have been done by the end of say FY '25 or 1Q FY '26? And the other question is on Demat account, would you say that the proportion of the Demat account where there are no folio holdings that has been increasing in the system or for you over the last, say, two years, three years?

So, that will be difficult to assess because there are various conditions. And as and when those conditions get fulfilled, they become really eligible. So, there is no fixed number as such because that's a dynamic condition. And once that condition gets fructified, they are required to open the Demat accounts. So, I think make it compulsory Demat. So, I think that is something which is not fixed for any period of time, etc, because it's a condition that keeps on changing and evolving. [On count of dematted unlisted]: It will be difficult to assess that, because if you read the conditions then this question would be answered by itself. [Girish on number]: In this quarter, we have admitted 3,486 companies in unlisted space. I don't have that number ready, but it would be in the range of 20,000 plus. [On zero-holding demat accounts]: No. It's more or less remaining at the same constant percentage. But again, see, people have holdings, then they sell off those holdings, so they become zero. Then again, it's a constantly dynamic concept. So, I don't think there is any numbers to it. We don't give that number. We are finally an infrastructure provider. We provide roads, cars will ply on that road like a normal road, as and when there is a value proposition or there's an intent of going from one car to another.

Sir, I have one question regarding technology expenses. Like we have been seeing for the past 2, 3 years, technology expenses have been rising. And we also have been seeing that the number of Demat accounts have been rising exponentially for CDSL. That's a good thing. But what are we doing to, we can also see that technology expenses has given rise to reduction in the EBITDA margin. So, are we planning to arrest our EBITDA margin and bring it back to the levels that we saw 2, 3 years back? Or we want to operate on this level only? And the guidance on technology expenses, it may not be futuristic, but we want to know that what is the end plan we have? Is it going to recur forever or it is something that we have reached a plateau and it will go back to 2, 3 years back level?

So, I think you need to understand the nature of technology. Technology is something which constantly evolves. And as and when newer technologies will come, I think CDSL aspires to be on, at least on the sophistication front, ease of doing business and better way of operating. Everything goes through a process of evolution. Our journey has always been that we don't give shocks to the market. It's a constant process of gradual changes which are happening. So, it ensures that there is efficiency which is constantly being experienced by the relevant stakeholders. And also, there is a process of innovation which happens because as the number of Demat accounts grow, they have to have the number, the necessary technology controls, the technology efficiency. So, to answer your question, I don't think it is basically a start and stop kind of technology expense. It's a constant process of evolution as we embark on a journey. [On EBITDA margin recovery]: So, I think I have always gone on my previous interactions also. Our intent is to provide a long-term proposition. Whatever EBITDA we earn, our intent is not to earn a particular EBITDA margin, either high or low. We ensure that the right platform is provided to the market, to the ecosystem. EBITDA margin is the byproduct of that because I think it's the intent is the long-term intent to ensure that the value proposition continues to be enjoyed by the ecosystem.

Yes. So, just a clarification again, sorry on harping on this employee cost front. So, if in a hypothetical situation, if we are not adding any employees in the remainder of the fiscal, this INR39 crores quarterly run rate will continue? That is the fair way to think, right? So, if you would have provided for INR100 of variable pay that will come INR25, INR25, INR25 and 4 quarters. That is a fair way to think?

We don't give forward-looking guidance. So, that's the call which you will have to think and your hypothesis is also I think not fair, because employees are going to enter and exit both sides. So, it's not going to remain fixed. So, I don't think in terms of future, we don't give forward-looking guidance. So, I'm sorry, I actually would not be able to answer. [On variable pay accrual]: Yes.