My first question is on the cost side. So the technology cost for FY '25 in the fourth quarter was similar to what you had spent on an annual basis in FY '23. So could you help us understand where is this technology spend really going towards? What proportion of this would be recurring versus what proportion of this would be onetime? The second question would be on the KRA business. Now recently, the SEBI Chief had indicated that a centralized KYC system is being implemented, and it could be in practice pretty soon. In that scenario, what is the benefit of a KRA system? Or would the KRA system get consumed within this CKYC, which gets implemented across the board? And hence, how would that impact CDSL's pricing ability? And lastly, on the dividend payout. Now the dividend payout ratio was around 50% versus 55%, 60%. Any reason for a reduction there given you are not using that much of cash?
Okay. Thank you, Supratim. First, on the technology spend, I have been saying that we are in the process of building and consolidation. It's on all the core aspects. It's the hardware, the infra, the applications, the security and the connectivity. And that's a process which we are going through to obviously bring in newer tools and techniques so that the market can really benefit from better tools and technology, speed would go up, etcetera. But the intent being is that we are market infrastructure company, and technology is one of the key building blocks. And it would need a continuous assessment of newer tools and newer techniques so that the market will benefit from that. I don't think we gave out in the public domain as to what is a onetime versus a recurring expense. But we have kind of maintained a steady percentage as part of the revenue on the technology costs. As regards to the second question on KRA, it's a process, which is the same interview of the SEBI Chair also. It talks about the efficiency of the KRA. We will have to wait and watch how that really pans out because it's yet not come out. It is all work in progress. And the third one on the dividend payout, I think there has been a calculation error at your end. We are about 61.3% payout. So, we've continued to maintain our policy guidance on dividend payout at 60% of our operating profits. In fact, it is slightly more than that this year. [Follow-up on tech split hardware vs application]: We don't give that because, see, I'll tell you why we don't give it, Supratim, because it's a combination of fusion costs. So, you cannot segregate what is infra versus application. There is some, which is mixed cost. So, it would not create a right differentiation, and it is not right to even differentiate. The important thing is to ensure that the systems remain strong and the systems remain modern.
Just extending the question of the previous participant on technology. So how much of it is going towards capacity buildup and how much of it is towards efficiency buildup? So generally, the reason I am asking that is the capacity buildup spend would probably be like a onetime spend or a spend that would get added and then probably will come again once you have reached those thresholds. So is there a spend towards capacity buildup or it's purely efficiency buildup?
So Prayesh, the way I look at it is that there's a popular Hindi saying that, eat fruits, why count the trees. (translated) The intent is efficiency. Whether that is due to capacity buildup because efficiency is also a function of ensuring adequate capacity. But it's not only capacity, it's about ensuring how the application works. It's how the security works. So, it's a combination. The intent is ensuring efficiency, modern infrastructure. and the modern tools. So that the market and the stakeholders are always subject to the newest form of technology. And it's a process of really evolution. [Follow-up on % of revenue]: So, you should look at our past and then take a call. I actually would not be able to give you the future because we don't give future guidance. On that, apologies. [Follow-up on KYC demat vs non-demat split, Sunil Alvares]: See, if you really look at the KYC business, for us, it is very difficult to say what pertains to the demat or say to a mutual fund account because when an entity fetches, he could be a broker who's also a DP for demat services. So, whether he's opening a demat account for mutual fund or whether he's opening for securities, we do not know as the investor may be taking delivery of the mutual fund in the physical form. So it's very difficult to give you that answer. [Nehal Vora on issuer charges hike]: It is all, again, between us and the regulator. We don't generally reveal that in the public domain. But as and when a final call would be taken, that would be kind of announced to the market. So, we will all have to wait till then.
So, first question is on the KYC revenue. Obviously, there has been a fall in the last 2 quarters, and it is because of the market slowdown and slowdown of the account charges. But if you see our account numbers, it has been increasing over the last 2 quarters. So in the KYC charges, if you can provide some color in terms of what has led to that steep fall? Is it such as it had come down considerably? Or is it because of any other being in terms of discounts being given to the brokers in this? Or if you can provide some breakup of this, fetch versus account opening in the online data charges? Also IPO and corporate action revenue mix split.
So, before I ask Sunil to answer, I think, Amit, overall, the market volume, delivery volumes, growth in demat account has all seen a muted response we've seen in the fourth quarter. And I think that is kind of the overall impact on CVL also, but I'll ask Sunil to take that question. [Sunil Alvares]: Yes. So, like what Nehal just said, that the number of accounts anyway has dropped not only in the last quarter, but in the last 2 quarters we've seen a drop in account opening as also with mutual fund investments and also with IPOs, which have come in, in the last 2 quarters. So typically, even if the account openings would have gone up, it could be more because of some fetch records, etc. But overall, we've seen the number of records itself, which are created have fallen as well as the number of fetch records also have fallen significantly. So that's what has led to the drop in income. [On IPO/corporate action mix, Nehal]: So, it's overall market impact, the impact is across both those teams. We don't give that different categories in the public domain. But to answer your question, it is overall impact amount. [On annual issuer/folios, Girish]: See, we had disclosed that in the first quarter. Throughout the 4 quarters, it almost remained the same. We have disclosed that 22.76 crores folios that we had billed. Unlisted revenue for the full year is at INR35.95 crores, so almost INR36 crores. [On LIC tie-up, Latesh]: LIC sign-up has just happened basically, and the integration work is in progress. We are expecting LIC to provide us the resources to do the integration there.
I have been a shareholder since 2015, and I have been really looking at the portfolio for the company for a long time. So I have two questions. One is about insurance repository business where we can see that our nearest competitor is enjoying a market share of more than 40% now and they are having additions for something like INR1 crore policies with eIA accounts close to 10 million or so eIA accounts. So somehow, we do not see the same kind of performance and same kind of genesin CDSL repository. And also, our PowerPoint presentation about insurance repository didn't cover much of the details. Second question is about the direction that the company is going towards, Nehal. One is that, see, like we do not charge anything for the demat account, and we say that we have 15 crore-odd demat accounts. Then we have a huge amount of cash in our books, INR1,500 crores, for which there didn't seem to be obvious usage. And then we also get to hear that the extra amount of technology expenses that we have for a stable infra institution, something like the technology expenses went up by almost 70% compared to the last year, and our operational metrics also had been going down. Like this year, our PBT margin is something 58% and last year it was 61%. Quarter-on-quarter, it is even worse. So, my question is that are we settling into some kind of happy infrastructure institution and nothing beyond?
Sure. The first question is maybe Latesh Shetty is here, who's the MD of the insurance repository. But before I hand it over to him to answer, our intent is, like any infrastructure business, we spend a lot of time in ensuring that the platform, the technology, etc., becomes robust. It links up well with the relevant stakeholders and that takes time on both sides to ensure it needs to be planned, tested, etc. [Latesh Shetty]: If you look at the past performance, we are in this business for almost 14 years. And again, the insurance repository business is also regulatory driven. The initial 10 to 12 years, we were hoping that the repository as a product would be made mandatory by the respective regulators. But yes, since this is not a mandatory subject, we have been limiting our investments on this business. Annually, the country turned out some INR30 crore policy and all the IR put together, we have just crossed INR2 crores. So 90% of the market is still up for grabs. [Nehal on direction]: Santosh, you need to see those various communications. I think it is your opinion, I don't think that's the opinion of people who I meet and certainly not the opinion of what is in the mind of CDSL as a management and also Board. We have a very specific focus. Otherwise, in the last 5 years, we would not have grown from about 1.8 crores demat accounts to 15.5 crores. These numbers cannot just happen out of thin air. Last year, the company issued a dividend of INR 19 per share, incorporating a regular profit distribution of 60% plus a special dividend of Rs 3 per share marking the company's 25th anniversary. This totaled to INR 22 per share when considering the special dividend. This year we declared a record dividend of INR 12.50 per share. With the 1:1 bonus factor, it effectively doubles to INR 25.00 per share, the highest ever.
The main thing that as a concern would be that the Q2 of your company last year did really well and there has been a dip in terms of both Y-o-Y and Q-o-Q quarter. Can you just highlight what led to it and what the trajectory going forward would be? And like on an approximate number-wise math, what growth rate can we expect from CDSL's overall management as a whole?
So, one is, Siddharth, we don't give future guidance. I won't be able to answer what is the future. It is for each shareholder to assess for themselves. But to your question on why Q2 was higher than Q3, Q4 is because the overall market volumes have dropped, the delivery base volumes have dropped. An important metrics, which one needs to look at is the delivery-based volumes on the stock exchanges, which shows the market participation, which culminates into delivery. And that's what is important from a depository standpoint. Our business is in long-term products that people take more and more shares into delivery, and that's how we are promoting a culture of also people staying long term in markets. And also, as an infrastructure institution, it's important to understand that we are building the right building blocks so that when we saw the spurt in volumes during COVID and post COVID, CDSL was able to withstand that higher volume and continue to work seamlessly. [Follow-up]: No, Siddharth, we don't give future guidance. But had I even known, you and I would not need to work any longer because if we all can predict what the volumes are going to be.
Can you also the way you gave 22.76 crore number for the last year, could you give the number for this year?
That would be possible only in next quarter.
Yes. So, sir, I just wanted to understand on the IPO corporate action part. So, the INR25 crores we have reported this quarter, this would be mainly from corporate action, right? So I mean, I just wanted to know that this INR25-odd crores, - how much would be seasonality across the quarter? Is the second, third quarter much more heavier? If you can give some indication based on the trends seen in last 2, 3 years.
IPO corporate action income is largely based on the IPO that comes in the market. So, it is directly linked with market activity in terms of the IPO that gets business during the quarter. So, if you ask us a seasonality, it is directly related to the market. [Nehal Vora]: We have to look at the past to see which quarter has more, but I don't think there's any specific trend in that. It depends on market activity. See, again, there are lots of corporate action like share split, the bonuses there. Now there is no seasonality on that also. It depends all on each company and I don't think that can be predicted. If somebody is willing to do the part research and come out with some finding, that's a different matter, but we don't see it that way. We see it again our intent is that platform should be robust and stable. And so that people, whenever they want to come, they can come. It is like a road and all, like the road has to ensure its value proposition. It has to ensure security, so that cars as and when, whether it comes in the middle of the day, middle of the night, whether they come more in January or they come more in March, that is not the focus on how a company who makes roads is going to focus. We have a similar kind of a focus on how we really structure and plan ourselves. [Follow-up on retail vs institutional folios]: So, the rules are there in the public domain. Number of folios, it's a combination of various factors on how issuer charges are getting charged. So, it is the fulfilment of those conditions. It's not only folios, it's a combination of various other factors also.
Just on that number that you just said, 22.76 crores. Is that number, correct? And then I'm not sure whether you gave the unlisted revenue number for FY '25? And this quarter, we saw a little bit of jump in that number from like you were doing about INR81 crores, we did about INR87 crores. Is there any onetime sort of processing fee, etc., in this quarter or on an overall sort of basis because a lot of unlisted companies have also come into demat in this year?
Of course, yes. As per SEBI circular, we have to raise the bill based on either slab basis or on the full year folio basis. Now this folio, how it has to be worked out, it is an average of the folios at full year, which is held in any demat account for any company. I just gave. I just said unlisted revenue from issuer is INR36 crores for the full financial year. So, for unlisted companies, we charge a onetime processing fee of INR15,000 per company. [Nehal Vora]: To answer your question, it's again a combination of both more companies coming on and it's actually that more companies are coming into the field. So that continues as our journey as we move ahead.
Sir, initially, a few data-keeping points, can you spell out cas income, e-voting income and pledge income in the current quarter and also the impairment cost? You alluded to the point that a number of folios at the start of the year was 2,276 lakhs. So just if I can tell me how it grew compared to the previous year? Also, just if I look at cash ADTO, quarter-on-quarter, it declined by 8 percentage for the country, BSE, NSE put together, cash ADTO. But if I look at our transaction income, it has dipped by 17 percentage as Q-o-Q. So there seems to be a little divergence typically is not there. So just wanted to understand what led to more fall in transaction income compared to the fall in cash ADTO?
So, the CAS statement income was at INR11 crores in the quarter. E-voting was around INR6 crores. Sure. So, impairment was INR88 lakhs in this quarter, and pledge income was INR5.40 crores. So Sanketh, previous year, it was at 19.50 crores. And current year, it is 22.76 crores. See, Sanketh, when we closely monitor the delivery volumes of exchanges vis-a-vis our billable transactions and we don't see that kind of slowdown decrease compared to what it is based on the what we see is the delivery volume and the average daily billable transaction move hand-in-hand. That's what we see from the historical data that we have. [Nehal Vora]: So, we don't know the billable transactions of our competition. We only track what is there at our end. And you have to compare it with the overall volumes out now.
Sir, I just wanted to know a couple of quarters back you had mentioned about account aggregator thing. Can you give a highlight on where are we and what is the progress in terms of that? And secondly, sir, in your CDSL Venture, you do eSign and eKYC. Is there further scope expanding that services, if you could?
Yes, we don't give future guidance, but I'll ask Sunil to answer the second question. But before that, on the first question on the account aggregator, we are part of the Account Aggregator Framework. We are there is something called an FIP or Financial Information Provider. CDSL was first amongst the kind of the ecosystem, at least in securities market, one of the first, which has become a part of this FIP, and we have been continuously giving that. So that is what our role is. So whatever account wherever data is requested by investor through the FIU or a Financial Information User, it gets routed through the Account Aggregator and comes to us and we provide that information after ensuring that relevant security checks, etc.. [Revenue stream]: Yes. Revenue as of now is not yet been there. It is in the process of getting formulated because these are early days. [Sunil Alvares on eSign/eKYC]: On the second part, with regard to the traction, what you're seeing on the eSign and the eKYC business, is that so far as eKYC is concerned, the intermediary like the DPs, etce., need to be registered as a subcarrier. Currently, they are using DigiLocker for these services, but we are seeing some intermediaries who have registered recently. And once they start off in this financial year, we will see more revenues coming from there.
Sir, one small clarification. You said 22.76 folios. If I multiply by INR11, the revenue comes at INR250 crores. But what we reported is INR326 crores. So, the difference between INR250 crores and INR326 crores is predominantly explained by what, sir?
See, Sanketh, you have to look at the SEBI circular. We have to raise invoices on the company based on folio and the capital. And apart from that, we have unlisted companies also. So, everything put together is a final number, which is there as an annual issuer income. What you are looking is limited to only the folios. It's a combination of both.
Just a bookkeeping question on the other income. What drove the sequential improvement in other income so much? And could you give us a breakdown of your investment in terms of where all the money is parked?
So other income is largely constituting of CAS charges, e-voting income, eSign income and investment income. The investment income is largely based on investment in fixed deposits, investment in mutual funds debt scheme and investment in bonds. These are all based on an investment policy approved by the Board. [Follow-up]: Yes, it's mainly because from the mark-to-market on the debt side.