© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, welcome to the BSE's Q4 FY '19 Earnings Conference Call. My name is Daniel, and I will be the moderator for today's conference. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Joshi, Head, Investor Relations, BSE Limited. Thank you, and over to you, sir.
Hello, everyone, and welcome to BSE's earnings call to discuss Q4 FY '19 results. This is Yogesh, Head, Investor Relations. Joining us today on this call is BSE's leadership team consisting of Sri Nayan Mehta; and Sri Ashish Kumar Chauhan, who will be joining in some time. Do note that the conference is being recorded, and the transcript of the same will be available on our website.The financial results and investor presentations are also available on our website.I would now request Sri Nayan Mehta to give a brief overview of the company's performance, followed by a question-and-answer session. Please note that BSE does not provide specific revenue or earnings guidance. Anything said on this call will reflect BSE's outlook for the future, for which could be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces. With that, I would like to turn the call over to Mr. Nayan Mehta.
Thank you, Yogesh. Good morning, good afternoon, and good evening to all of you wherever you are. We are happy to share with you that the Board of BSE has recommended a payment of dividend of INR 25 per equity share of face value of INR 2 each.The proposal is subject to approval of shareholders at the [ financing holding ] Annual General Meeting scheduled to be held on July 15, 2019. After taking into account the interim dividend of INR 5 per equity share paid in the month of December 2018, the total dividend for the financial year stands at INR 30 per equity share of face value of INR 2 each. The dividend payout ratio is 97%.The record date for determining eligibility for the final dividend is June 28, 2019, and the payment will be made on or before August 13, 2019.BSE also proposes to buy back its fully paid equity shares of INR 2 each at INR 680 per equity share through tender offer rule, subject to passing of a special resolution by the shareholders of the company. The total amount of buyback price would be a maximum of rupees INR 460 crores.The company proposes to buy back INR 67,64,705 equity shares at a buyback offer price, which represents 13.06 percentage of the total equity paid-up capital of the company.The buyback offer price represents 24.73% of the aggregate total paid-up capital and free reserves of the company based on the standalone audited financial statement of the company as of March 31, 2019. Over the last few years, you would have observed that how BSE is steadily growing itself by expanding its services portfolio. Earlier, BSE was dependent only on one trading segment that is equities. That is the result of trading platform in various other trading segments like SME, currency derivatives, interest rate derivatives, commodity derivatives and startups.It has also created electronic distribution platforms for distribution of financial products like mutual funds, bonds, equity-related book building. Taking advantage of the opportunity to grow at a global scale, BSE has also setup a stock exchange as a clearing corporation at GIFT City, Gandhinagar.Further, it has tied up with Power Trading Corporation and ICICI Bank to set up a power trading exchange. BSE Startups exhibit, a leading financial supplier of on-demand software and e-commerce services to insurers and other industries to setup an insurance broking [indiscernible] sale. Financial services and electronic platforms tend to grow at nonlinear scale over time. However, some of those initiatives take time to mature. In this context, let me start with updating you on the mutual fund segment. BSE has setup mutual fund segment in the year 2009. This segment enables mutual fund intermediaries to process, purchase and submit financial request of mutual fund units from the clients across India on a fully automated electronic platform. While the intermediaries earn their fees, commissions for their services, the mutual fund pays BSE for processing of transactions. Over the last 5 years, this segment has exponentially grown at a CAGR of 117%. BSE started charging to mutual funds for its services since financial year 2017, '18. The income in the segment has grown by [ 192 percentage ] from INR 9.9 crores in financial year 2017, '18, to INR 29.1 crores in financial year '18, '19.The number of registered mutual fund distributor in Mutual Fund segment increased by 195% to [ INR 23,760 ] as of 13th April 2019, as compared to [ INR 8,046 ] as of 13th April 2018.This [indiscernible] record is over and above BSE's 1,400 member bank members led by 2 lakh -- more than 2 lakh authorized representatives and other intermediaries [indiscernible] of all countries. The total number of [indiscernible] segment increased by 9% to 4.81 lakhs for the year ended 31st March 2019 from 4.4 lakhs for the year ended 31st March...[Audio Gap][indiscernible] for the year ended 31st March 2018.The total number of orders research in the Mutual Fund segment increased by 111%, grew INR 3.6 crores for the year ended 31st March 2019 from INR 1.7 crores for the year ended 31st March 2018.The total value of orders present in the Mutual Fund segment increased by 36% to [ INR 1,60,601 crores ] for the year ended 31st March 2019 from [ INR 1,17,824 crores ] for the year ended 31st March 2018. Further, the total number of orders received in the month of March 2019 is higher by 57% as compared to orders received in the month of March 2018. BSE's market share in the segment for the year ended 31st March 2019 stands at 79%.BSE StAR MF, India's largest mutual fund distributor platform, recorded a new high of 7.2 lakh transactions on 11th March 2019. BSE StAR MF has got the earlier highest of 6.4 lakh transactions in a single day, which was registered on 10th December 2018. So the new high is 7.2 lakh transaction.The continuous growth in Mutual Fund Segment is in line with our expectation. BSE continues to pursue the strategy of appointment of distributors and optimal pricing for the services in the segment to maintain the rapid growth in business and revenues accumulated for the last few years.I now move on to Commodity Derivatives segment. As you must be aware, BSE has successfully launched Commodity Derivatives segment with the launch of gold and silver futures on 1st October 2018. Thereafter, BSE has launched contracts in Oman's crude oil futures on [25th ] October 2018.Of the contracts on second number -- 2nd November 2018, guar seed and guar gum are on 6th February 2019, and finally, cotton futures on 18th February 2019.Commodity Derivative Trading platform with futures trading in gold and silver contracts hit a fresh all-time peak with traded value logging INR 621 crores in October 2018.Guar seed also witnessed its highest market share of 43% and the highest turnover in the first 15 days of its launch.The Derivative Commodity -- the derivative segment has been steadily improving and I still think we have based on our turnover of INR 32,084 crores in the segment.Over the past 1 year, BSE has setup with various associations in the commodities business for growth and development of commodity derivatives business in India. The entities will become BSE Startup includes all entities including the Federation of Indian Export Organization, Coalition of Indian Export Organization, London Metal Exchange, Dubai Mercantile Exchange, Bombay Metal Exchange, Cotton Association of India, Federation of Indian Spices Stakeholders, Derivative Price Commission, Gems Jewellery Council, Bullion Federation, et cetera.BSE also entered into an agreement with the Dubai Mercantile Exchange, bringing energy focused commodity exchange in Middle East for the growth and systematic development of commodity derivatives market in the [ jewellery ] complex. BSE has reached 230 trading members and 31 trading members in the commodities segment as of 31st March 2019. Many new members are invited to use of admission process to membership. I now move on to Currency Derivatives segment. BSE's average daily turnover in Currency Derivatives Segment has increased by 65% to INR 30,271 crores for the year ended 31st March 2019, from INR 18,291 crores on the year ended 31st March 2019.The total contracts, too, has grown by 52% to INR 205.25 crores contract as of 31st March 2019 from INR 69.02 crores contract as of 31st March 2018.The growth has been aided by increasing turnover in most currency futures contracts as well as currency options contracts. The average daily turnover in Currency Futures segment has increased by 61% to INR 13,195 crore for the year ended 31st March 2019 from INR 8,196 crore for the year ended 31st March 2018.The average daily turnover in Currency Options segment has increased by 69% to INR 17,075 crores from the period ended 31st March 2019, from INR 10,095 crores for the year ended 31st March 2018. BSE's market share in the segment for the year ended 31st March 2019 stands at 46%.With respect to listing of securities, the number of companies listed with their equity capital on our exchange, which are available for trade, are 4,030 as of 3rd May 2019. BSE has the highest number of companies listed on any exchange around the globe. Market capitalization of companies listed on BSE is about INR 152 lakh crore. The total number of investors listed on BSE at unit level exceed INR 2.65 crores.BSE has been undertaking calibrated increases in listing fees over the last few years to make the same comparable to the [indiscernible] Exchange as well as to cover increasing cost of compliance. With a fixed sum on 1st February 2019, BSE have increased its annual listing fees [ Class 2 ] presently listed companies by INR 50,000 if their listed capital is up to INR 100 crores, and by INR 25,000 in case their listed capital is between INR 100 crores to INR 200 crores.BSE has launched Electronic Book Mechanism called the BSE BOND for issuance of debt securities on private placement basis above INR 500 crores on 1st July 2016.Taking [indiscernible] threshold limit, downward to debt insurances about INR 200 crores with effect from 1st April 2018.Issuance in this segment include renowned corporate from public as well as private sectors in India. During the year ended 31st March 2019, amount raised from BSE BOND platform grew by 54% to INR 3,42,251 crores as compared to INR 2,08,906 crores for the corresponding period in the previous year.The BSE BOND platform has enabled the issuance of debt securities of more than INR 6.39 lakhs crore since 1st July 2016.I now move up to BSE SME platform. The BSE SME platform has 295 companies listed on this platform as on date as compared to 291 companies listed as on 31st March 2019, and 235 companies listed as on 31st March 2018.Of the total number of companies listed in BSE SME platform, 50 companies have migrated to BSE Mainboard as of 31st March 2019.56 companies are listed on this platform during the year ended 31st March 2019. 124 market makers are registered with BSE SME platform for providing liquidity. The total amount of money raised to this platform is INR 2,986 crores at 31st March 2019.SME IPO Index launched on December 14th 2012 with a base value of 100 stood at INR 1,857 as of 31st March 2019, registering a tremendous gain of 1,758%.BSE's market share in listed companies and listing of companies in SME segment stood strong 60% as of 31st March 2019.India International Exchange is a wholly-owned subsidiary of BSE and continues to expand its footprint to various listings, credit offerings and growth of turnover.Average daily turnover in India INX, that is India International Exchange, witnessed a phenomenal growth of 615% to USD 766 million for the year ended 31st March 2019, from USD 107 million for the year ended 31st March 2018.The general operation of significant contribution by Equity Derivatives segment as well as Commodity Derivatives Segment. The Equity Derivative segment contributed to 73% of the average daily turnover, and the Commodity Derivatives segment contributed to 25% of average daily turnover for the year ended 31st March 2019.It will be noted that the average daily turnover for the month of -- sorry, it will be noted that the India Indices market share in the derivatives segment for the year ended 31st March 2019 is 71%.As of 31st March 2019, India INX's global securities market has cumulatively established medium-term notes, also known as MTN, amounting to USD 42.5 billion, and listed debt securities including masala bonds and green bonds amounting to above USD 14.7 million.About 35.3% of Indian insurers of debt securities in international markets have listed on India INX's global securities market.Several large Indian corporate entities, public sector units, banks and financial institutions have established medium-term notes and/or listed debt securities of the global securities market of India INX. These include, Export-Import Bank of India, Housing & Urban Development Corporation, India [ Derivatives ] Finance Corporation, investment Bank, National Highways Authority of India, National Thermal Power Corporation, Power Finance Corporation, Rural [ Directive ] Corporation, State Bank of India and YES Bank.On April 1, 2019, India INX has signed a memorandum of understanding with the Moscow Exchange with the main operating indices, commodity and companies in both countries and allowing the capital formation platform on largest scale.BSE and India INX are the first Indian exchanges to enter into an MoU with the Moscow Exchange. BSE along with Power Trading Corporation of India Limited and ICICI Bank Limited have filed a petition with the power market regulator to include electricity regulatory commission in September 2018 for a grant of license for setting up of a new power exchange.The said petition has been admitted and a shareholder agreement has been signed between the said shareholders in the previous month.This proposed institutional exchange, subject to a regulatory approval, would leverage the experience and expertise of the other shareholders and stakeholders in their field, their knowledge of the power sector, funding of the power project, associated infrastructure and setting up and running various exchanges and platforms in India, and also offer the market participants a credible power trading platform.BSE have set up a joint venture with Ebix Incorporated named BSE Ebix Insurance Broking Private Limited for conducting insurance broking business where BSE holds equity stake of 40% through its subsidiary, BSE Investments Limited.The regulatory approval from Insurance Regulatory Development Authority of India, IRDA, for the same is awaited. In terms of trading [ outlaying ] corporation necessitates linking of multiple clearing corporations. It allows market participants to consolidate debt clearing and relevant functions at the same as counter-party and irrespective of the stock exchange on which the trade is executed.It is expected that the interoperability of trading corporations would lead to efficient allocation of capital for the market participants, thereby trading on fast as well as by -- by the execution of trades.[indiscernible] in November 2018 approved suitable amendments to the securities contract regulation, stock exchange and trading corporation regulation [indiscernible] regulation to, as I said earlier, create interoperability among clearing corporation and have issued guidelines to take all necessary steps to operationalize interoperability among clearing corporations not later than 1st June 2019.The interoperability framework shall be applicable to all recognized clearing corporations, excluding those operating in the International Financial Services Centre [indiscernible]. All the product available for trading on stock exchanges, except commodity derivatives, shall be made available under the interoperability framework.Now I'll go over to the consolidated financial. On a consolidated basis, the total revenue for the quarter ending March 31, 2019, is higher by 3% to INR 182 crores as compared to the corresponding quarter of previous year -- sorry, corresponding to the previous quarter.The net profit for Q4 FY '19 is higher by 4% to [ INR 52 ] as compared to INR 50 crores for Q3 FY '19.The increase in revenue and profit during the quarter ended 31st March 2019 is mainly attributable to increase in income from operations by 11% to INR 116 crores.Over time, the operation revenue to total revenue has been increasing and expands to 62% of -- 64% for the quarter ended 31st March 2019.The operating EBITDA for the quarter ended 31st March 2019, has increased by INR 6.93 crores to positive INR 2.8 crores, as against negative of INR 4.55 crores in the previous quarter.The net profit margin is constant at 25% in the same quarter ending 31st March 2019, as well as the previous quarter. On a stand-alone basis, the total revenue for Q4 FY '19 is higher by 1% to INR 158 crores as compared to Q3 FY '19.The increase in revenue during the quarter ended 31st March 2019 is mainly attributable to increase in income from operations by 12% to INR 98 crores. Over time, the operation revenue to total revenue has been increasing and extends at 62% on the quarter ended 31st March 2019.The operating EBITDA for the quarter ended 31st March 2019 has increased by INR 5.61 crores to INR 7.73 crores as against INR 2.12 crores in the previous quarter on a consolidated basis.As on 30th April 2019, the total balance lying in settlement guarantee funds maintained by our clearing corporation is INR 394 crores.During the quarter, we have taken a hit of INR 2.5 crores, but we made a provision of INR 2.5 crores towards our impairment of investment analysis and another INR 1.4 crores in [indiscernible] strategic investment for [indiscernible].I would like to -- and with this, I would like to welcome you once again and invite all of you for question-and-answer. And before that, let me inform you that our [indiscernible] Sri Ashish Kumar Chauhan has joined the conference call, and we both will be willing to -- happy to take your queries.
[Operator Instructions] First question comes from [ Sandesh Gherwale ].
Hello. Can you all hear me?
Yes. Please.
[indiscernible] opportunities, I just had one question that [indiscernible]
Yes. So for the purpose of reporting, we need to show it as a part of our revenue, not expenses. It forms a part of revenue, the expenses. But actually, it is not an operating expense, but then as we're indicating it doesn't affect our reporting otherwise.
Okay. And how much you [indiscernible] you have provided?
So out of the INR 17 crores, we have provided for INR 12.54 crores.
So [indiscernible] any interest comment on that?
Can you please...
Interest.
Interest.
Well, interest [ we are not listing ]. We are not even accruing that income now.
Next question comes from Nalin Shah.
At the outset, Nayan, Ashish, many, many congratulations for a very, very outstanding performance. I have a couple of questions to ask you. One is that this buyback amount you enhanced, last time, I think, you had done a buyback of some INR 166 crores, if I remember correctly.
You're right.
So this year,, I think, this time, we have enhanced the amount to a whopping INR 460 crores. Just -- I mean, this is very good, but I just want to understand what is like our strategy going to be going forward on this account? Second, my question is that when do you feel, because you've been doing extremely well other than the equity segment, a lot of other segments are developing. And BSE is, I think, almost posing as #1 exchange in many respects. So when do you feel that will come out of this group of about INR 200 crores to INR 250 crores kind of profitability? And I mean, like breakout from this level? That is second question. My third question is that you mentioned somewhere that, now, we have some 2.65 crores customers, if I remember correctly, we are servicing the exchange. So is there a possibility that the BSE can take its own license of a payment bank or a small finance bank or something and do this? Because we have enough in-house crowd available, which can be a very, very good business proposition, just if you can give some idea on that?
My name is Ashish Chauhan, I'm the CEO of BSE. Yes, basically, buyback philosophy is slightly different. When we came with IPO, so we didn't need money, we had a huge cash circular on the balance sheet, so really no [indiscernible]. And we have been having the investor writing to us, in fact, you need to return the capital. And that's why we did the buyback of [ INR 166 crore]. Why we did [ INR 166 crore ] and not more is because we have to do it quick. And without the [indiscernible] approval, it's only 10%, that's why we went on [ uncovered debts ] is out of 10% relevance for this year. The board has decided to wait for 25% of the total ramp of our encumbered [indiscernible]. That's why we're going to basically have almost INR 460 crores. Almost [ 13% ] plus or so of [ devaluation ] that will happen. So [ 87% ] shares will remain after the [indiscernible] investor [indiscernible] bond shares of 15 July is the date on which the AGM would be basically right through the process, if the [ AGM ] approves that. Finally, we did this because even after that, we still have like INR 300-plus crores as unencumbered cash, which will remain in the balance. And we are not bringing any large investments, which are basically of -- require a huge cash. So all of our investments on our activities are basically not requiring that kind of number, but we continue to provide capital. And also income, which we received for the [indiscernible] amount in form of dividends. If you look at our dividend payout ratio, it's also in excess of 94%, 95% for the last 5, 6 years according to the policy. And this year also, almost the entire income posted has been distributed or has been proposed to be distributed as dividend. And that's what we shall continue going forward.In terms of profitability, currently, basically, what is [indiscernible] because we are returning capital, our investment income is going to go down over several years. And if we continue to do the capital return, but our income, that is going to go down against that. On operating income ratio our growth up commensurately to come out of that [ INR 150 crore ] match range. And hopefully [indiscernible] make mutual funds of India International Exchange of commodities, or bond distribution or SMEs or e-IPOs or [ IEX ]. So some of them, if they grow up well, they'll probably just come out of framework. But currently, our focus is more on making our efforts more broad-based, getting more and more market share. And then as and when the market power permits, because in many cases [indiscernible] subsidizing are not charging at all. And partly for us is to go to competition commission with cases, but it takes 25 years that you're seeing in case of MSCI, which went to NFC with competition [indiscernible]. They won. Then they went to [indiscernible] Supreme Court. So [indiscernible] to fight [indiscernible] and not be successful, despite sometimes you win. [indiscernible] to continue to fight, continue to generate market power and then start charging when you can. It's like what we are running retail funds where NSE is not charging. We're already charging and when have been able to generate [ INR 30 crore ] of revenue last year. And we are growing 100% year-over-year. So for us, idea is to generates more and more newer businesses, which can create more revenue going forward at pretty much the lowest cost leveraging on our current backlog and expertise and also operational activities. So that's what our focus will be going forward. In terms of the number of investors, we have a unique customer core almost of 4.13 crore customers, which is pretty much the [indiscernible] exchange in the country. And if you take unique customers, they would not be in the range, you said [ INR 2.65 crore ]. And we have thought through this, about the payment analytics. In fact, the [ 30.4 crore ] customers like the telecom companies, which also have customers, which are talking to them every moment, have not been able to successful in [indiscernible] and things like that.You think basically, [ it would be better to ] utilize our framework using the distribution of financial quarters to begin with. And then [indiscernible] successful, now we have a slight [indiscernible] with Ebix through -- and that has to do in share distribution. And if we are successful, we'll also go into many more other areas because of our operational sort of expertise and our technologic expertise is what we try to leverage, but your ears are correct that we must leverage. Otherwise, we'll continue to remain up or continue to improve in the committee level by less -- now that we have become relevant in certain areas. [indiscernible] get more volumes in the trading markets that is commodities, currencies, equity derivatives and equity. How do we get more and more revenues out of our market share, even from the non-trading market, which is basically the distribution market.So those are the strategies we have and we hope we're able to generate more revenues going forward in many of these areas.
Excellent. Congratulations once again for rewarding the investors in an excellent manner.
Thank you, sir.
The next question comes from [ Mr. Sriram Srinavasan ].
[indiscernible] just to your numbers [indiscernible]. I'd just like to get some clarifications. Actually, we are having a tie-up with Ebix in terms of insurance broking, right?
Yes, please.
[indiscernible] on tie-up with Ebix, may I know what will be the contingent that we can expect once the [indiscernible] in terms of core revenue. Because we are losing our market share in the equity segment nearly [indiscernible]. We have been dealing from 8% to now we are doing 5%. As last, in terms of commodities market also, we are leading 28%. Apart from the transaction charges, we are looking forward other things that we can get in ideally to move up our revenue, right?
Yes. So basically, your question is just slightly different, you're asking questions on the Ebix, but you're asking question, how do you basically generate more revenues, right?
Yes, we'd like to get into insurance brokering business.
Correct. So insurance distribution, we are only the minority shareholder, 40%. So you want to be adding into our top line, to our bottom line or in the value which we may be able to create. But currently, we do not have approvals to get into that. As and when the approval comes, we are already prepared with technology and with Ebix, and hopefully, we'll be able to start quickly using our broker’s network distribution framework. We have recently started charging on mutual funds and that has given us around INR 28 crore, INR 29 crore of revenues last year. And that is a significant increase in revenues because otherwise we are charging -- we're basically charging 0 until now. And that is [indiscernible] people don't count. In terms of this increase, we have been receiving regular listing fees. And this year also, we will continue to receive listing fees. In IPOs, we do very well. Basically, in equity derivatives, we have not done well. But currently, derivatives, now we have been very dominant today. As of today, on May 7, we have 65% market share in currency derivatives. Commodity derivatives, we just had around 6 months back. And we are doing very well in agriculture commodities and some days in gold also. Currently, we're not charging, so as it maybe become large, we will start charging in that time. We'll be able to provide [indiscernible]. So overall, whenever we become market leaders and be able to [ substitute ] market power, we will continue to charge. Where we do not have market powers, we won't be able to charge because NSE users there, revenues coming out of equity and equity derivatives trading volumes to subsidize other markets where they don't charge and so we are forced not to charge. And GIFT City they have been paying for order flow, they got approval from city to pay for order flow and we had to actually go in for similar stuff, but despite NSE paying more, we are still leading to the market, 75%, 80% of market in GIFT City. [indiscernible] becomes large and profitable, we'll again be able to charge some [indiscernible] charges and become large there. So overall, we have got many businesses which are green shoots. Some business like mutual funds, we are now seeing some good upside on the revenues. But overall, liquidity with derivatives, we have not been able to do well. Listings, we are doing well. E-IPOs, we are doing well.So in traditional businesses, currencies, equities, IPO, we are doing well. I think, we are doing well.Two businesses, which is equity derivatives, which you think is on the business, we are not doing well. But overall, our revenues have been growing, our operating revenues have been growing and that's what probably, for me, the proof of all these.
So one more thing that I'd like to ask here. Sir, actually, if you compare the average daily turnover on year-over-year basis, for the year 2019, we can see [indiscernible] main reasons behind that. It may be irrespective of market conditions?
Yes, please? You are correct.
Yes, it has to do on market conditions, okay. Sir, there are absolutely [indiscernible] in that past [indiscernible] after the [indiscernible] election [indiscernible], it has been boosting them, but we can expect some kind of tender booking, personal books from the average daily turnover?
I hope it happens if you have what I call a stable government. Probably, you might see even more. And more IPOs will mean more revenues this year.
Okay. Sir, asking [indiscernible] contribution that they are equity. Or further asking, do you think [indiscernible] daily turnover value, sir?
Equity [ SMI ] is 0 daily turnover.
Okay. So it's 0%, it's not that much operating, right?
Yes.
Next question comes from [ Ms. Drishti Shah ].
Sir, my question is related to the equity segment. Sir, if you see that, that is the -- our market share has been declining in that segment and that segment itself contributes 30%, 35% to the total revenue from operations. Sir, if we expect this market share to decline further, how do we view our revenue from operation going forward, at least for the next year or a couple of years? Because I don't think that the other segments would buck up further decrease in the cash segment? So what are your views on that? And my second question is, that if other segments are so lucrative for us and we have been gaining market share, at a later stage in our life, do we expect high competitive pressures from NSE even in those segments?
High competitive pressure is really all segments. Where we are winning is despite high competitive pressures and huge amount of money spent by competition, right? So that will continue and still we'll be able to have market power to make money like in mutual funds we are making.The other question, which you had was on credit segment, we are still losing market share, but we're not losing absolute sort of numbers. So which means that volumes, if it remains currently and if volumes go up, our market share may go down, but absolute value, which we are getting, will remain similar, right? So you're mixing up between the absolute number vis-Ã -vis the positive numbers, understand that? Are you getting it?
But sir, the...
Yes, the expectation you have is that we will not be able to increase our revenues from other resources. This is for your information, last year, around [ INR 29 crores], [ INR 30 crores ] came out of the mutual fund segment, which was not there, neither it is in your model. So once you put it in the model, you'll realize that slowly if you're going 100% year-on-year on that business, what kind of revenues will come out of that, right? So many times, we'll create models and we think the models have to be the [indiscernible] derivatives [indiscernible]. Sometimes, models have to be changed to fit to the realities.
Next question comes from Mr. Amit Chandra.
Sir, my question is related to the interoperability of the clearing corporation. Sir, as you said, that it will be beneficial for BSE in terms of some volumes can shift from NSE to BSE. So it would be better if you'll please explain that, how it can happen. For example, anyone who is trading on NSE after the interpretability coming in, why the volumes will shift, sir?
So basically, today, if you trade, say, you buy ACC share on NSE and you sell on BSE, you have to have ACC shares to actually do that, because you are selling on 1 space, you pay double the margins, you settle double, right? Twice. Once the interoperability comes, you buy on NSE, sell on BSE, you pay [indiscernible]. You don't pay any margins because it's settled on as if you're trading on one exchange, right? So it's a huge paradigm shift which many of us are not able to comprehend as of now because assume you are trading on 1 exchanges, not 2, what will happen to the -- it's like 1 exchange, 2 segments, A and B, and it will start trading like that.So it will clearly reduce people need for funds to trade on other exchange. People [indiscernible] of trading on other exchange. And also, if the [indiscernible] will be reduced for the [indiscernible]. So people today who are not willing to place orders on BSE, assuming that they can't come out on BSE on the derivatives, tomorrow, if they might see ACC future on BSE [indiscernible] of futures on NSE. They have a nice position, which is 0, right? And that way, people who are not currently willing to trade on BSE will start trading. That is how basically -- overall, it will benefit everyone on the efficient utilization of margins, less hassles on settlements and less -- actually, 0 [ ones ] on coming out of positions. Only thing which will not work is the index of BSE is different from the index of NSE. And that's where we want to have complete data, but otherwise, this is going to be very, very beneficial to people who are basically trading and are neutral to -- they'll be able to tell many people that if you buy ACC share on NSE, that is even more difficult regarding if you buy ACC share on BSE, no, right? But today, when you go to buy, even if it is [ 15 pesa ] costly INR 1 costly around NSE, today you buy there because your margin is light there. Tomorrow, you won't worry about it because it is interoperable, right?
Okay. So do you think that the shift of volume that happened because of the derivative being on the NSE, so that loss of market share that we had in the last 4, 5 quarters or 6 quarters, so that can recover after the interoperability comes in. And are we taking any steps in terms of educating the dealers or the investors? Or not taking any steps to make sure that the volumes shift from NSE, some volume from NSE to BSE after this interoperability comes in?
Yes, basically, we are member of -- going from city to city, our clearing team, because also, we need to make more members on the clearing side. That is in -- an ongoing cooperation [indiscernible] subsidiary of BSE. It is now going to complement NSE subsidiary we call NICCL. So they're also making people -- they're making people like hundreds and literally like on Friday, we had a seminar in BSE hall where 500 people came. And similarly in [indiscernible] Delhi, Calcutta, all sorts of operations, we have had several seminars and continue going forward because once the trading member decides where he wants to clear to, finally, the member and all their customers will have to clear through that and they will get huge benefits of the sort of margin sell-off and your settlement sell-offs going forward.And so it's an ongoing process, but BSE has taken leadership in thinking about it and implementation of it. And BSE clearly is a much better [indiscernible] compared to other exchanges in this area and other areas.So we think we have a good thing up our sleeve, but it remains to be seen how it finally translates into the higher volumes.
Okay, sir. And thirdly, as you mentioned that you're going to set up a power trading exchange with ICICI Bank. So just to get a picture, what are you planning for there then? How many investments is required for that?
So we have basically committed [ INR 12.5 crore ]. We'll eventually probably have [ 25% ] of the overall equity, and PTC will have 5%, and ICICI will have 10%, and then the remaining will go to other shareholders. We have already funded the company as of last week between 3 players around INR 25.5 crores, which means other people have also paid money. And now, CSC has asked for those details. So once that approval happens within few months, we should be able to go live given the pedigree that it has of PTC and BSE.
So our investment is INR 12.5 crores?
Yes.
Okay. And sir, on the total cost to -- if you think for FY '19, excluding the revenue one-offs that we had in FY '19, the benefits [indiscernible] the last quarters, the total cost had gone up by around 10%, and the employee cost has gone up by 15% YoY. I'm talking about FY '19. So what is the outlook? So because FY '19 was a bad year in terms of our overall [ RME ] growth, but we're not able to maintain the cost. So what is the outlook from here on? So how do we see the cost of share going forward?
So basically last year, we did many, many things including commodities transactions, which started. Also, the commodities trade for much longer hours than the equities. So in a way, we have to basically invest in people also. It's a continual cost because the fact that every day you're going to the markets longer hours and so on and so forth. That's where basically you'll see a little bit more than the normal increase of average -- average employee cost was up 10% year-on-year. And then, SEBI also forced us to charge the investment [indiscernible] cost into BSE set up a separate fund, which they've been forcing us to make.So last part of our listing revenue goes there and we're charging those people salaries to that front from this year, that is from '18, '19. We are start charging there and then also under the BSE, but that's why also you see some increase sort of in that area. But overall, you will see around 8% to 10% increase on employee cost going forward, unless there is some specific sort of instruction from SEBI to charge some more and stuff there.
Okay. So the overall cost, 8% to 10%, we are going to assume the growth there.
And the INFS, we have basically INR 12.5 crore. We have taken on some months we are able to take [ INR 1.5 crores ]. This is onetime. And even INFS is onetime. And then [indiscernible] onetime [indiscernible] [ INR 7 crores ]. So that's how -- basically, many of this costs are not annual recurring. But today, because of the way it is presented in biased. In fact, last quarter, you may recall, we have taken the increase on the profits [indiscernible] of the investments or other income, but losses out of investments is operating expense. That's where you made up into EBITDA negative, right?So that's how the entire [indiscernible] all of us, and unless we go into further details, we are not sort of allocating totally wonky numbers to everything.
Next question comes from Ashish Chopra.
I had a couple of questions. So firstly, Ashish, this year, we saw, I think, a liquidity announcement team towards INX of around [ INR 13-odd crores ]. And you mentioned that you would like to see the volumes go up, but does the [ LES ] kind of continue on INX in this fiscal also?
Till the time NSE continues, we'll also continue. And although, on a rupee to rupee basis, we are getting 5 times more volume. NSE spends more for lesser volumes by almost 80%, 90%. And till the time NSE does it, we'll be able to do it. So it's, in a sense, an investment we are making to remain in the race and continue to be not only remain, but continue to lead by almost 4x, 5x.
Okay. And you mentioned that maybe some more time before you start charging in terms of volumes. And you volumes revenue has picked up nicely now to maybe currently it sits at [indiscernible] EBIT. But what is the level of volumes at which you feel that it's adequate enough to maybe start monetizing that exchange?
Not just the year because that is a frictionless market, right? So anyone paying money to them [indiscernible]. And so we will continue to watch it until the time what I call market power in that [indiscernible], right? And that is pretty far away currently. But we're very frugal, given our net op resources regarding NSE. But always continue to be more effective, as we have done in the past.
Fair enough. And on the interoperability side. If you could just share some little bit more light on the timelines as we progress on there? So you mentioned that maybe not after 1st of June, the participants will have to be ready. But then what happens after that, if you could just show some clarity on that, it will be helpful?
[indiscernible] participants actually [indiscernible]. Today, they are settling through 2 clearing operations. On June 1, however, they'll go through only 1 clearing operation, right? Otherwise, they don't have to be -- they will just [indiscernible] which clearing operation they want to start with initially. Later on, if they want to change, they'll be able to change.But instead of going to 2 scores, today, they will [indiscernible] in the same [ school ].
Right. So interoperability actually goes live on June. I was under the impression that maybe there are a couple of more approvals from SEBI that may be needed before it actually goes live. So that was all I was wanting to clarify.
Yes. So cooperating exchange has been for clearing doomsday scenario and sky is falling type of stuff because they worry a lot about losing their by [indiscernible] and like that. And that's why they have also spending many new [indiscernible] and they were also using the many associations of India and foreign brokers and all. But it has been like 5, 6 years since this has been discussed with other committees. And so, hopefully, this will not be delayed any further.
Got it. And on the insurance broking distribution segment, could you just share what would be the kind of capital outlay that you would have budgeted for?
We have 14 -- well, we have 40% of liquidity, which will work out to probably INR 5 crores max.
Okay. And would you expect any operational expenses, so once the approval comes in place, I just wanted to know what other kind of investments that's going to people or any other investments?
Well, that company will have to do it. That company will have to do it. And so we're ready. And [indiscernible] technology, we provide some mode of technology and managerial support and that's [indiscernible] except for all the cost of servers connecting to insurance companies. Although we are ready with the technology. We just need to get approval in [indiscernible]
Next question comes from [ Manen Patel ].
Sir, my first question is related to your StAR MF platform. So last time, I understand your charges for transaction was around INR 9. So what was it in this -- in Q4? Can you -- and what is your vision like going 3 to 5 years down the line for this?
Basically, we want to be very close to INR 1 crore or INR 2 crore transaction per month from currently INR 43 lakhs, right? So that basically, you then figure out the revenues on that basis. And if you're able to increase some part of the transaction charge per transaction, it will add into that revenue, right?
Understood, sir. And sir, my next question is related to India Inc. So you mentioned the market share for FY '19 was around 71%, is it right?
Now [indiscernible] for the last 2 months, we are doing much better.
Okay. And from what I understand, it was 83% in FY '18. So why it was a significant loss in market share?
Basically, what happened is NSE started paying for order flow. So that's where they got some portion of order flow directly to them. But this financial year being despite their pain, people are coming more to us.
Understood. And sir, my last question is what would be your unencumbered cash as of March 31?
Around [INR 1,800 crore ].
INR 1,800 crores?
Yes.
And sir, one observation, I'm still not able to find your investor presentation for this quarter on your website or on NSE. So it would be great if you can upload the presentation a couple of hours before the call so that we can analyze the thing and then come up if we have question.
Okay. I think they're uploaded, but probably, I'll tell them to, somebody is just now going in to check out and reload probably if required.
Next question comes from Jayesh Gandhi.
Sir, all my questions have been answered.
Next question come from [ Malik Madhu ].
Sir, could you [indiscernible]. So I had 2 questions in the StAR MF platform. My call was disconnected, so I don't know if these questions have been answered, but I'll be quick. So one, is it possible for you to provide some estimate on what is the likely growth for revenue for the StAR MF platform in 2019, '20? And given that 2018, '19 was the first full year when charges were [ levied ] on the client platform, would it be reasonable to expect that in the coming financial year, the increase in revenue, if any, is more likely to be driven by increase in transaction rather the increase in the charges per transaction?
That's a fair understanding. And we have been growing 100% year-on-year for last several years, but on a lower base. So it remains to be seen going forward whether mutual fund distribution goes back half numbers and, of course, it is also a function of market conditions. If people don't invest in mutual funds, then -- although we're now larger market share. The numbers may not that grow up -- I mean, may not grow up that well. But if it does, then clearly, the number of transaction is what is going to tie basically the revenues going forward.
Okay. But is it possible to get some explanative revenue growth number for FY '20?
You can file it. Just to give you a perspective, on March 2018, close for the month, we did 37 lakh transactions. On average we did 43 lakhs. Yes, on average, [indiscernible] 43 lakhs. So you can see the growth there also, right, in some ways in just one month. And the fact is that it was not a great month for mutual funds, right?
Okay. Right. Clear. But the transaction...
We seem to be going faster than the industry for the last 10 years by pretty much miles. But that doesn't mean that pass as a good kind to the future.
Next question comes from [ Mr. Sriram Srinavasan ].
Sir, I ask you [indiscernible] the increase, clearing corporations [indiscernible] coming from June 2019, right? Actually, we are already [indiscernible] therefore [indiscernible] related to content and to the average daily turnover, which is will be nil. But I want to [indiscernible] what happens then, whether we can expect some growth in the segment?
And I hope -- I'm an internal optimist, but who knows? If it does, I mean, will it take off. We have a bit technology. We have a bit services. We have the lowest cost. The insurers [indiscernible] existing dominant players and [indiscernible]. Put together, it just make up so much. Interoperability might put an end on some of those cost and other things. I'm not so worried about just not being able to come out if. It actually comes true, then we think we'll -- currencies, nobody give a chance, right? In 2014, when we -- like today, we are much larger than other exchanges in currencies, right? So -- and we see that kind of traction happening in the -- slowly in commodities. And hopefully, we'll see an increase in this year going forward.
[Operator Instructions] No further questions from the participants, sir.
Okay. Thank you. I hope it was useful.
Okay. Thank you, everyone.
Can I conclude the call, sir?
Yes.
That does conclude the conference for today. Thank you for participating on the lines conference bridge. You may all disconnect now. Thank you all.