Ladies and gentlemen, good day and welcome to the conference call organized by Central Depository Services (India) Limited. As a reminder, all participant lines will be in the interactive mode. If you're traveling or in a public place, please mute and unmute your lines by pressing star and six on your touchtone phone. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nilesh Kittur. Thank you, and over to you, sir. Yeah. Good day and welcome to conference call of CDSL. For today's call, CDSL management team is represented by Mr. Sunil Alvares, MD & CEO of CDSL Ventures Limited, Mr. Girish Amesara, our CFO, CDSL, Mr. Ramkumar K, Head of Business Development, Operations, and New Projects, and Mr. Swaroop Gothi, who is Vice President, Finance. I request the operator to open the floor for questions. Thank you very much. Thanks, Nikhil Bala here from QMS. Nikhil is already on the line. Yes. Hello. Yeah, hi. Thank you for your time. I really appreciate you taking the time out of your schedule. I only have a few questions. Just in terms of background, I work at American Century Investments, which is a mutual fund based out of U.S. Within that I work in the emerging markets team. We have invested in CDSL, you know, if we've gotten at a pretty good level at 400 or so, and been pretty happy with our investments. I thought it's been a while, and it'd be good to just quickly catch up on just a few things. We really don't need more than little bit of time on this call. I thought it'll be good time to catch up. One of the primary reasons for the call is, I understand there are different segments that the company has, some of which are cyclical, some of which are structural. Now, within the cyclical part, I thought I'll try and understand how things can work in the coming period if there were to be, as people say, bear market. You know, volumes can decline a little bit, et cetera, or what have you. At the same time, annual issuer charges and those charges are expected to probably continue to grow. Overall, while I understand it's very difficult to predict what the volumes can be like, et cetera, overall, just trying to understand how are you thinking over the next few quarters. I understand there are a lot of different segments where the company is planning to grow, which are new. At the end of the day, transaction charges are still a good proportion. IPO also is a good proportion of the company's revenues. Just generally wondering what are your thoughts on those segments before I continue with other segments. Just to, you know, reiterate, the revenue of CDSL is largely contributed by recurring income, transaction charges, online trade, which is our CRA business, and IPO cost, IPO charges. These are the four main drivers of our income, and rest of the income are ancillary to this activity. Now, during COVID, you must have witnessed a very robust contribution of all this income in our overall yearly closing which we did and quarterly closing. See, in terms of future predictability, something that we generally don't do it because future statements we generally don't make it. You can, you know, look at the overall market conditions which are prevailing in India, and it is based on geopolitical pressure or any factor due to which there will be a volatility in the market. I guess we would. Sure. not be able to give any heads-up on this. As a market participant, you may have various other sources to find this out. Understood. Sure. I appreciate that. The base will become higher for those segments as well, slowly as we keep moving forward. I'm guessing that the other segments are still too small to be able to compensate for that base in order to ensure that the growth remains strong, right? Some of the other new segments that the company is targeting, those will take time to scale up. Is that correct? Yes, that is correct. That is correct. What has been the impact of recent regulation? Broker margin levels went up, which resulted in some pressure on retail consumers and brokers. I think there's some impact on volumes as well. Anything that you sense from the market based on the recent changes? Ramkumar, can you touch upon this? Yeah. I was on mute. Okay. Okay. What was the change in regulation in particular in the month of May? Sir, I think this call is about details of thirty-first March. I don't know whether we will be talking about April and May. Girish, we are supposed to be giving information on April, May also in this call or how is it? That we can see only after thirteenth June. I guess your question is on the margin pledge activity which was initiated last year. No. From what I understand, there was some regulatory change which was That's true, sir. I think what the government did is the requirement of margin, correct? Yes. Requirement at the individual client level. Yeah, yeah. That again, that affects the clearing member of the trading member. It doesn't affect the depository. That is imposed on the clearing member who is a registered member of the exchange, not of the depository. This is something that we will not be able to answer. Now, that impact would be a depository or a clearing corporation. Right. That's okay. Yeah. Yeah, that's what I meant. I was trying to understand that better because in a way, clearing members or brokers, if they get impacted, then volumes get impacted. I was trying to understand exactly who was it that the new regulation that they have to deal with. Anyway, it's okay if you cannot comment on that. The other thing was, you're still in discussions with SEBI to see if they can raise the fee. It's been pending for a while, right? Are you getting any feelers from the regulator on whether they are warming up to this or they're open to listening to this at the moment? These charges, basically, is a combined effort between both the depository, taking up with SEBI and, Mm-hmm. You know, recently that the COVID-related restriction has been lifted, somewhere in last month or so. We are still thinking of, you know, getting into discussion with NSDL or that internal discussion. Thereafter we will see as to how we can take it to SEBI. We have yet not approached to SEBI on this and, we'll wait for some time to come to SEBI with this. Okay. You know, LIC IPO which has happened recently. I noticed that new accounts grew from 50 million-63 million in just nine months, pretty fast. I'm wondering, you know, how much of it might have been mainly because of that IPO, because while everywhere in the world we are seeing retail participation increasing. I'm guessing you would have better visibility in terms of how many people are only there for LIC out of the new accounts that might have opened. How active are these in general? You don't have to go into all the details, but I was looking to get some color on possible, you know, out of these accounts, how much might be LIC impact and going forward so that I can get some understanding of what might be that one-off we might see because of LIC IPO, if at all. Sir, LIC IPO details came into this financial year, this quarter. This is something that I think we should not be discussing because we are here to discuss about the last quarter previous financial year. Of course you can ask about everything that happened in the previous financial year. This is my understanding, sir. Okay. Well, that's fine, if you cannot discuss it. In terms of annual issuer charges, I just want to understand one thing. If the overall, let's say hypothetically, if there were to be a slowdown in the economy, et cetera, then annual issuer charges from what I understand also has non-listed entities which is continuing to grow. Is there? Would you expect that to continue to happen at a good pace even if there were to be slowdown, as a non-listed space? Is there a lot of interest in that segment? There is, the unlisted companies are supposed to admit their capital with depository in case they have to come out with any corporate actions. There is no compulsion on them to remain with both the depository. They can either be with NSDL or CDSL. There are chances that company may decide on their preference as to which depository he wants to admit their capital. Now, having said this, once any corporate action is accepted by the unlisted company, they have to continue to remain admitted with the depository. You know, as I told, they keep on moving between two depositories, but they have to remain with one depository. Okay. Would you expect large market share in unlisted also like it is in the listed one? Do you know what might be the current market share in the unlisted entity between the two depositories? See, rightly, roughly our market share is 30%. We may continue to hold that. Okay. Investment income trends with higher interest rates, should we expect better investment income, especially because the rates are rising everywhere? If I be seeking investment income, it's a back door of income and we usually don't, you know, put our much effort on that because these are totally driven by the interest rate that RBI decides in India. If RBI increases the repo rate or CRR rate, there are high chances that the bond yield will increase, and that will result into lower NAV with respect to, you know, investment revenue. If RBI increases the rate further from this, there are chances that the investment income would be lower compared to earlier periods. I think we had witnessed that during 2021, 2022 compared to 2021. Okay. You mean the bond prices go lower? Yes. with higher rates and therefore the mark-to-market actually. Yes. Because of that mark-to-market gain would be lower compared to earlier period. Which we witnessed in last year. In 2022 we witnessed that in comparison with 2021. Okay. Just on cost front, if we were to witness slower growth hypothetically, I'm not really predicting anything here, but if we were to witness slower growth, I'm just trying to understand how much of the costs are, how much operating leverage the business would have. Are there a lot of cost control measures that you can work with to ensure that margins are, if not protected, at least they don't go down much, or are most of the costs likely to be a little bit sticky? If you look at our profitability and the expense compared to our income, we have tried to, you know, control our cost to a larger extent. The main driver for cost increase is investment technological cost and the employee cost. Because being into service industry, these two costs is the main cost based on which the business is going to run. You know, everywhere we hear this Great Resignation trend that is happening for almost like 6-9 months. There is a likely impact of increasing cost in respect to our cost and employee cost. Having said that, what we achieved during March is what we... You know, if you look at it, we are quite high compared to what we had achieved two years back. In 2021 and 2020, if you compare our profitability, we are at all-time high. You know, cost is going to remain like this. I recommend in quarter of June as to what could be the, you know, cost. Right. Sure. Is it reasonable to generally expect costs to? Generally there could be increase. In line with inflation? There could be inflationary pressure on the cost as well as I already told you know, this Great Resignation is trending to increase employee cost to an extent. You know, all large technological companies are witnessing an increase in their cost. That trend is likely to continue overall business. All right. Okay. Then just last question from me. All the things you're doing outside of the main revenue stream, I look five years from now, what would be something that excites you the most? Let's say you think, the business can be exciting for the company in the next 4, 5 years. Which segment or which new business would that be upcoming? Ramkumar, personally. No, sir. We will not be able to make forward-looking statements. I think this question specifically cannot be answered. If you have any specific question on any of the projects that we have on our side. For example, your gold depository, which is in the news or the Securities and Covenant Monitoring, we can answer that, sir. In terms of open projects, that is something that we'll not be able to comment on. Hello? Okay. Yeah, yeah. Yeah. Any specific questions you have? New New project which is released by way of or as a regulator as a press release or by public is public knowledge that we can definitely answer. Okay. No, I didn't have anything specific, and I guess it's mainly it was mainly the current success that I was curious about. Okay. In this case, that's all from me. Thank you again for your time. Really appreciate it. Thank you. Have a great evening, all of you. Thanks a lot, sir. Thank you. Thank you. Thank you. Ladies and gentlemen, on behalf of Central Depository Services (India) Limited, that concludes this conference call. 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