My first question is on the annual issuer charges growth. We have shown Y-o-Y growth of 12.3%. But seeing the IPOs that we have received, the IPOs that had come last year, the expectation of growth here was much better versus what we did last year in terms of Y-o-Y growth for the first quarter. So, any reasons why this growth is lower? And also, if you can give the number of folios this year versus last year, that would be helpful.
It's a formula-driven charges or issuer charges. And it's based on the folios which are actually there. So it is what it is in terms of what the numbers are in terms of the folios. The folio is INR38.73 crores.
In terms of technology expenses, we have seen the technology expenses going up every quarter. But in this quarter, we have seen some kind of stability there. So is it fair to assume that most of the heavy lifting in terms of the technology spend is behind. And from here, we can see a steady-state increase in technology expenses.
We don't give future statements, which look into the future, forward-looking statements. We are an infrastructure company. So, technology and human resources are the 2 key components, which is, in a way, the raw material work in progress and finished goods. Important thing is to ensure the value proposition continues to remain. And rather than seeing it as a quarter-on-quarter, you have to see in terms of the stakeholder interest growing, number of accounts growing and that value proposition should remain intact. Whatever it takes to ensure that the value proposition would continue is really our effort and our intent in taking this forward. So, it will be difficult to comment whether the technology spend will grow or not grow in future.
Whatever we had in terms of our plan for technology spend, is it already done? Or most of the advancements have been done as per the regulatory requirement?
The regulatory requirements keep on changing as per the needs of the market. Also, technology is also changing rapidly. The intent is that we have to be nimble as well as very, very active in ensuring that the best-in-class technology continues to remain active on the CDSL platform. So, it's difficult to answer this question whether it has reached it or not because the environment itself is changing so much. So based on that, we'll have to wait and observe how that will impact in the quarters to come.
Competition has mentioned that they have seen more traction with fintech brokers after they have made some tech changes, which have sort of reduced onboarding friction. Also, while we have maintained our market share in terms of total demat accounts, for our incremental demat market share, we have lost about 420 bps since close of March. We're standing at 81.4% in June '26. How are we viewing this in the light of how fintechs interact with depositories?
I think again I'll repeat what I said in the reply to the first question, we are an infrastructure company. And our intent at least CDSL is not a quarter-on-quarter growth. It is a long-term sustainable growth, which creates value proposition for the market. Growth in demat accounts is a function of various functions on how the market perceives, what is the total growth. The important thing is that the intermediaries and the investors should continue to believe and feel the value proposition of the CDSL platform. So, I would see this as more of continuous work in progress quarter-on-quarter that how do you make our systems better in terms of value proposition.
For employee costs, they were up around 30% Q-o-Q. So, in case this consists of some bonus provisions, if you could just give us a broad split between the underlying increase and the bonus increase?
We don't give these numbers out in public domain. But typically, it's the year-end appraisal process, which constitutes this number.
The Search API-led revenue, will this continue henceforth? And can you share maybe a proportion or a quantum of that?
Yes, it will continue, but right now, I will not be able to give you the overall details as it is included in the overall income of KRA.
Compared to the rack rate going down in KYC, the actual eventual chargeable that you are charging, has it gone down by a similar quantum?
Obviously, we have to follow SEBI's directive. It's industry-wide circular. So, everybody has reduced their charges accordingly.
In unlisted, that opportunity what we had last year and maybe changing some threshold levels, the numbers what you mentioned in the current call are likely to remain going ahead. Maybe not the exact number, but that's the new normal we need to understand. Is it fair?
Again, it's difficult to give a forward-looking statement, but it is all driven by overall regulatory intent of ensuring that more and more companies come into the fold of depositories. So, we'll see how and in which manner, in a phase-wise manner, this will increase.
What is the folio count for last year? Second, we were also in the process of being able to issue the ISINs. I wanted to just get an update on that - have we got that capability right now? Third, on employee expenses that have gone up materially both on a year-over-year and on a quarter-over-quarter basis. Should we expect this number to be our run rate for the rest of the year?
Year-on-year has increased with the number of employees have grown. And that is a function of as the complexity and the scale of operations grow and whatever is required, we are very mindful of that. The answer to quarter-on-quarter because this is the end of the year appraisal, we follow a financial year appraisal cycle. So, the appraisal has got done in this quarter, which has just ended, and all the variable pay, et cetera, is paid in this quarter. So, you can check out the trends of the previous year's quarters to understand how the employee cost trend works. The folio that we achieved this year is INR38.73 crores. In terms of the ISIN, it's again, we are in active engagement. It's not yet gone live. It needs to go through its processes. So as and when it goes live, we will definitely be making the necessary announcements.
Again on the KYC, on the Search API, if you can give more color on what particular PANs this applies to. Also, how much volume it can generate every quarter - what would be the run rate? And how much benefit we have received because of this to offset the rack rate impact.
It's very difficult to actually pinpoint on that because many of the intermediaries, after this rate was levied on them, have started fine-tuning their systems and we've seen a considerable drop in the second and third month. We are waiting for it to stabilize to have a fair idea. Earlier people were doing searches for 1 PAN multiple times a day, which has come down significantly. We will have to wait for one more quarter to really see where it actually stabilizes.
In terms of understanding any other further measures to reduce the impact on the rack rate, like the agent took charge and all, any other charge? Plus unified KYC also if you can touch upon that?
So far as unified KYC is concerned, we are in the process of getting integrated with CKYC. And we are in the process of testing their systems. That will happen, but, I cannot give you an exact date. It all depends on when their systems are available and when we actually go live. These discussions are again happening between the regulator and CKYC. Once we get a very clear picture of the process we should actually follow, though it is more or less defined, and once we test the system to see whether what has been decided is being followed in practice, we'll be able to actually tell you with greater clarity.
Does the rack rate will sustain or further go down once the unified KYC is implemented? And any other measures to make up the loss in the rack rate beyond the Search API?
We don't give any future and forward-looking statements. It's a measure which has just kicked in from this quarter. So, you may like to observe it over quarter-on-quarter how the volumes go forward. We are a market infrastructure company. It's overall creating a value proposition through CDSL and its subsidiaries and giving the customer continuous value proposition because this is a way of life in terms of going forward.
In unlisted revenue, the issuer revenue is INR0.3 crores. Last quarter, it was INR3.5 crores and for the processing fee last quarter was INR3 crores, which is around INR2.3 crores now. So just wanted to understand if the universe of this unlisted has changed because of the regulation. Why are we seeing an impact on the issuer revenue?
So normally, we get a question in earning calls about revenue from admission of unlisted companies during the quarter. I've given that figure. Normally, we do not give breakup of listed and unlisted annual custody fees because we do not track that way.
Just on computer and technology-related expenses, after a few quarters, you've seen stability in that number. Is it fair to think that we are closer to now peeking out at our investments in this piece. And from here on, it will be more of an inflationary spend and that would allow us to see operating leverage benefits coming out.
Technology is something which continues to evolve and it's very difficult to predict whether you reach the top end of the technology spend or not. The important thing is about the intent of ensuring the value proposition to all the stakeholders and ensuring that the newer products and platforms which are being introduced is being incorporated into the CDSL ecosystem. It is a function of the overall products which are going to be introduced in future and the newer products on the technology side, which are getting introduced, how much of that could be implemented at CDSL.
Could you give us a breakup of your cash investments as to how much is in equity, how much is in debt instruments? And could you explain the reason for the sharp jump in the other income.
We have an internal investment policy. We follow that policy. And normally, we don't discuss the breakup of various instruments in which we have made investments. So, what I can tell you is that we do not make investment in equity schemes of mutual funds. Rest all available whatever is available in the market, we make investment as per the investment policy. Mark-to-market gain during the quarter drove the jump in other income.
On the KYC income. We had the pricing reset in this quarter. Based on the basic reset maths, the impact would have been in the range of 20% only on pricing, but the impact here is lower than that. Is it offset by volumes? Or there is some other things to read into in terms of the pricing impact that you had in the KYC?
There are 2 things which really offset that. One was the higher fetch volumes. Further, when the charges were reduced by SEBI, they had allowed us to charge on the Search API, which again gave us some revenue, which reduced the overall impact.
If you could just help us understand the movement in other income in this quarter. If possible, could you just provide a broad split across eCAS, e-voting, income from unlisted companies and pledge income and also any one-off? Also, how much of this was driven by MTM gains?
Breakup of other income consists of consolidated account statement related fee, which is around INR14.80 crores, e-voting income of INR6.32 crores, Investment-mark-to-market related gain and other income accrued on investment is INR43.8 crores. We have other operating revenue of INR6 crores, which largely includes user facility accounts, maintenance charges, document storage charges, foreign investment limit monitoring charges etc., and other income, INR3.94 crores. This totals INR75 crores on a consolidated basis.
On the KYC revenue in a little bit more detail. You mentioned there was a dispensation by SEBI, if you could explain what exactly this was and till what time was this allowed so that we can get a sense for a normalized run rate. Also in terms of higher volumes, was this more on the fetch side? And if you could give some color on the blended realization on new and fetch towards the end of the quarter.
As per the directive, the charges were earlier INR35 on fetch. It was reduced to INR28, which was a decline of 20%. So far as the charges on creation were concerned, it was around INR20 and reduced to INR5 which was a decline of 75%. But overall, during the quarter, the volumes we re good. And that's how we more or less we could maintain our performance as compared to Q1 of last year. In terms of the other charges, SEBI allowed the KRAs to charge was on a Search API so that every time somebody searches for a particular PAN which is not created, fetched or modified during the month, there is a small charge of INR0.25 every time. So that resulted in some income.
On the treasury book, if you could share what proportion of the asset is in equity or equity oriented mutual fund. And also, in the annual issuer charges, if you could give us the amount of unlisted related revenue and if you could break it up between processing and recurring fee and also the pledge income.
We do not make any direct investment in the equity schemes of mutual fund. We generally invest in debt schemes. We have a small portion of ETF investment, which ranges from 5% to 7% of our investable portfolio. Margin Pledge income in this quarter is INR6.19 crores. With respect to your question on unlisted revenue, we have achieved unlisted revenue of INR0.30 crores, and application processing fees of INR2.32 crores in this quarter. So, majority income, if you look at ACF, annual custody fees, is all listed companies.
On annual charges again, the way you said the INR38.73 crores account, actually, the folio count seems to be growing at 17% year-on-year compared to the last year, but the overall growth is just 12%. So, the relatively lower growth is largely because of unlisted piece. That's a fair way to understand?
If you compare on quarter-on-quarter basis, yes.
On CVL business, you said Search API for PAN card is INR0.25 if I understood right, that's the charge you earn, right? And on CVL, could you give any breakup of the INR45 crores broken down into pure KYC income and other sources?
Yes, INR0.25 is the Search API charge. The impairment cost, i.e. debtors' provision is INR2.22 crores in this quarter. And what Sunil had explained about CVL-related income is purely KYC-related income, which we explain every quarter to you. It is part of the online data charges that we normally provide as a disclosure.
Last year, the number was INR33.2 crores for the folio count right?
Yes.
Why is the tax rate so high in this quarter?
Tax rate. We are having a tax rate of 25.17%, so we are within that.