Central Depository Services (India) Ltd Management Discussions.


During FY 2019-20, India has witnessed close to 5% GDP growth, which is the highest amongst the major world economies. The growth was achieved in an environment of low inflation, improved current account balance and notable reduction in the fiscal deficit-to-GDP ratio, making the growth more creditable.

Various reforms undertaken by the Government of India have led to increase in Indias ranking in the World Banks Ease of Doing Business Index from 77 in 2019 to 63 in 2020. As a result of the continued efforts by the Government, India has improved its ranking.


Indian capital markets

In capital market, business enterprises or government entities raise long term funds by issuing equity or debt securities. Securities market facilitates transfer of surplus resources from those with idle resources to others who have a productive need for them. Securities markets provide channels for allocation of savings to investments and thereby decouple these two activities. As a result, the savers and investors are not constrained by their individual abilities, but by the economys abilities to invest and save respectively, which inevitably enhances savings and investment in the economy. This market has two inter-dependent and inseparable segments; the primary (new issues) and secondary (stock) markets. The primary market is concerned with the floatation of new issues of shares or bonds. The firms issue new securities to raise funds for investment/ expansion plans or to reduce any obligations. The types of issues in the primary market include: an initial public offer (IPO); follow-on public offer (FPO); a rights offer where securities are offered to existing shareholders; preferential issue/bonus issue/ qualified institutional buyer placement; or a composite issue (comprising a mixture of a rights and public offer, or an offer for sale).

The secondary market is to facilitate dealing in existing securities. This market provides both liquidity and marketability to such securities. It implies that it is a market where a security can be bought or sold at small transaction cost. Spot market, futures market and options market are also a part of the secondary market. During FY 2019-20, the S&P BSE Sensex opened at 38,858 and hit a high of 42,273 on January 20, 2020 and thereafter closed at 29,468 on March 31, 2020. During same period Nifty opened at 11,665 and hit a high of 12,430 on January 20, 2020 and thereafter closed at 8,597 on March 31, 2020. As per Prime Database, 39 public issues have raised 37,677 crores in FY 2019-20 as compared to 42 public issues mobilizing 36,405 crores in FY 2018-19.

Depository Industry in India

Depository is an institution registered with SEBI for holding custody of securities in electronic form and facilitates transfer based on the instructions from the account holders. With growth in Indian capital market, it became difficult to handle the growing volume of paper. This caused problems like delay in transfers, long settlement period, high levels of failed trade and bad deliveries, high-risk exposure etc. To remove these bottlenecks, the Depositories Act was legislated in August 1996. Subsequently three years later in 1999, Central Depository Services (India) Limited (CDSL) was established following the implementation of compulsory trading in dematerialized securities for all investors.

In terms of cumulative market share of active demat accounts, CDSL has experienced a growth in market share from 40% in FY 2013-14 to 51% in FY 2019-20.

The presence of depositories supports the capital market growth in a variety of ways including substantial reduction in bad deliveries, enhanced liquidity of securities, reduction in transaction cost, elimination of problems relating to change of address of investors, transmission etc, makes faster disbursement of non-cash corporate benefits like rights, bonus, etc. possible, faster settlement cycle.

Factors driving growth of depositories

Business of depositories grows in direct proportion to growth in capital markets. The past three-to-four years have witnessed a steady structural shift of savings from physical assets such as real-estate and gold into financial assets. The prevailing positive interest rates should enable this trend to continue. Within financial assets, the allocation towards equities has been increasing steadily due to the relatively low base; given that the retail investor has traditionally been under-invested in equities.

Equity market: In the financial market segment, the BSE Sensex has increased from 22,386 in FY 2013-14 to 29,468 in FY2019- 20. Indias stock market is slipped from 7th to 8th position in the world with market-cap of $2.13 trillion. Continuous improvement in the rankings of Ease of Doing Business by the World Bank in which India has improved significantly once again from the rank of 77th in 2019 to highly appreciable rank of 63rd in 2020. This is the true reflection of the diligent efforts of the Government to improve Indias position in the global rankings. The country has successfully improved its position from 142nd in 2014 to the rank of 63 in 2020. Whereas, CPI inflation has come down from 9.4% in FY 2013-14 to 4.1% in FY 2019-20. According to the IMFs World Economic Outlook (WEO) update revised Indias 2020 growth forecast to 5.8%.

Initial Public Offerings: According to Prime Database, total equity capital raised during FY 2019-20 was 37,677 crores as against 36,405 crores raised during FY 2018-19. After a slowdown in the FY 2019-20, analysts expect a further slowdown in the FY 2020-21, due to global issues prevailing in the market. In the Union Budget 2020-21, the Finance Minister Smt. Nirmala Sitharaman told that Government is looking to list LIC (Life Insurance Corporation) in the FY 2020-21.

Increase in trading volumes and retail participation:

CDSL has experienced a substantial growth in the number of companies / Issuers admitted in demat from 541 in FY 199900 to 14,018 in FY 2019-20, a growth of 18% CAGR. The active participation of retail investors was demonstrated with the increase in the turnover of shares traded on BSE rising from 5.21 lakh crores in FY 2013-14, to 6.61 lakh crore in FY 2019-20 at CAGR of 4.05%, while trading on NSE increased from 28.08 lakh crore in FY 2013-14, to 89.99 lakh crore in FY 2019-20 at CAGR of 21.42%.

Digital Account Opening & Online Initiatives: Many Depository participant who conduct their business through the online mode of operations have started opening digital account in online mode which has helped CDSL to improve its account opening count and became the number ONE depository in India and to cross the milestone of 2 crore (20 Million) demat accounts. Bank Details of the investors can be verified online using Rupee Drop facility of any scheduled bank which many of the depository participants are using.


CDSL initially promoted by BSE Ltd, which had thereafter divested its stake to leading banks. CDSL received the certificate of commencement of business from SEBI in February, 1999. All leading stock exchanges like BSE Limited. (BSE), National Stock Exchange of India Limited (NSE) and Metropolitan Stock Exchange of India Limited (MSE) and the leading clearing corporations like Indian Clearing Corporation Limited (ICCL), National Clearing Corporation Limited (NCCL) and Metropolitan Clearing Corporation of India Limited (MCCIL) have established connectivity with CDSL. Your Company strives to provide convenient, dependable and secure depository services at affordable cost to all market participants.

The Companys subsidiary, CDSL Ventures Limited (CVL) is registered with SEBI and a KYC Registration Agency (KRA) for investors in the capital markets including the mutual fund industry.

CDSL through its subsidiary, CDSL Insurance Repository Limited, has arrangements with several life insurance companies and general insurance companies for holding insurance policies in electronic form and seamlessly enables the policy holders to undertake changes, modifications and revisions to insurance policies.

CDSLs subsidiary, CDSL Commodity Repository Limited (CCRL), was setup to establish and run a Commodity Repository on the lines of a Securities Depository.


CDSLs clientele can be broadly classified into various categories namely:

• Depository Participants (DPs): An investor opens an account through the agent of depository known as Depository Participant (DP). After opening the account, the investor can convert the physical shares issued by Issuer companies into electronic form through the DP. An investor can transfer such electronically held securities from his account to any other account by submitting the delivery instruction slip (DIS) to the DP.

• Issuer Companies: A wide range of securities including equity shares, preference shares, mutual fund units, debt instruments, government securities, etc. are available for dematerialization in CDSL. CDSL enables issuer companies to credit securities including non-cash corporate benefits to a shareholders or applicants demat account.

• Capital Market Intermediaries: CDSL provides facility of holding and managing settlements of trades undertaken in the stock exchanges by the various capital market intermediaries for their clients.

• Insurance Companies: Through its subsidiary, CDSL Insurance Repository Limited, the Company offers facilities for holding of insurance policies in electronic form.

• Warehouse Service Providers / Warehouses: Through its subsidiary, CDSL Commodity Repository Limited, the company offers facilities for holding and transacting of electronic negotiable warehouse receipts (eNWRs).

• CDSL offers other online services such as

? Easi (Electronic Access to Security Information)

? Easiest (Electronic Access to Securities Information and Execution of Secured Transaction)

? e-Voting

? e-Locker

? Mobile application (Myeasi, m-Voting)

Medium-term and long-term strategy of the company:

Continue to focus on developing new DPs relationships and leveraging our existing DP network

We will continue to build on our existing DP relationships and leverage their extensive network all over India to take our offering to new investors. We will aim to strengthen our virtual DP network under which the Trading Member / Clearing Member only needs to submit his Power of Attorney ("PoA") and is no longer required to contact the DP and authorise each and every trade.

Continue to introduce new offerings and scale up recently started businesses

You company endeavors to provide the investors with a comprehensive range of services at competitive prices and to maintain optimal service standards. In order to maintain and enhance the competitive position, your company will continue to offer the services at aggressive prices achieved through our low operational costs driven by operational efficiency, high economies of scale and innovative service implementation. Your company plans to further improve its operating efficiency through:

• Offering single demat account to our investors which will hold all financial assets across regulators (SEBI, RBI, IRDAI, PFRDA, etc). subject to all regulatory approvals based on the announcements made by the Finance Minister in Union Budget;

• Enabling electronic submission and receipt of documents by DPs and other intermediaries;

• Focus on eliminating all paper-based processes and workflows to become a fully digital organization;

• Improve customer experience by enhancing self-service channels for efficiently and effectively serving routine requirements and

• Develop more and more API based services in collaboration with our Depository participants to facilitate seamless interoperability and straight through processing with their systems.

We will continue to diversify our product and service offerings depending on investors needs. We believe a continuous review of our services according to our evolving understanding of investor preferences and market behaviour will help us to cater better to our investors needs, enhance their user experience and maximize our account volumes and revenues.

Continue to invest and upgrade our IT infrastructure and systems leading to Enhancement of operational efficiency and service quality

We believe that maintaining and improving our technology is critical to our business. We intend to regularly allocate optimal resources towards upgrading our IT infrastructure and systems, with the goal of improving market efficiency and transparency, enhancing user access and providing flexibility for future business growth and market needs.

We will focus towards the improvement in our cyber-security framework and information security management systems. We were identified as a part of National Critical Information Infrastructure by National Critical Information Infrastructure Protection Centre.

Our Standing Committee on Technology (formerly IT Strategy committee) consists of external IT experts and professionals who advise our Board in relation to improving and maintaining our IT infrastructure on an ongoing basis. We also plan to invest further in our IT and data management systems to improve productivity and time savings thereby increasing our operating efficiency.

Targeting and focusing on Unlisted and Private Limited Companies

In our country, there are a large number of unlisted public and private limited companies who have not dematerialized their securities as yet. Ministry of Corporate Affairs has issued Companies (Prospectus and Allotment of Securities) Third Amendment Rules, 2018 which inter alia mandates an unlisted public company to issue securities only in dematerialised form. The said rules also mandate transfer of securities in dematerialised form. We intend to pursue with these companies and get their securities admitted in our company. We will also explain benefits of demat to private limited companies and try to get their securities admitted in our Company. This has dual benefits of increase in Issuer Charges as well as opening of more number of Corporate Promoter Demat accounts.

Investor Awareness Drive in Tier 2, Tier 3 and Tier 4 Cities to increase number of potential new investors.

This year, SEBI has given us ambitious target of doing 272 Regional Seminars, mostly in Tier 2, Tier 3 and Tier 4 cities, across the country.

These are organized with BSE-IPF, MSE-IPF & SEBI. The purpose was to focus on financial inclusion & to reach the retail investors, who never had any opportunity to invest in Capital Market. We have conducted over 240 Regional Seminars in FY 2019-20 so far, allowing investors across geographies, professions and age groups to come together and learn about the advantages of opening Demat, Trading account, SEBIs role for retail investors & dos & dont of investing in Capital Market.

We have actively participated in World Investor Week (WIW) i.e. September 30, 2019 to October 6, 2019 under the aegis of SEBI & International Organization of Securities Commission (IOSCO) & organized 36 IAPs during the week, across India. Wehave done 12 programs across the country for promotion of the concept of e-voting, with NISM (educational subsidiary of SEBI). Further, we have conducted more than 465 Investor Awareness Programs in association with our DPs, Corporates, educational institutions such as ICSI and also for various colleges.

We have initiated steps for social media promotions such as information about IAPs on Facebook, Linked In & also organizing webinars giving wealth of information about capital market to reach masses, to introduce and explain the benefits of investing in securities. We are in process of preparing small educational films and videos giving information about depository services and capital market for the benefit of retail investors besides traditional ways of doing IAPs. With the help of all market intermediaries, SEBI has prepared Securities Market Booklet. These are distributed at present across the country.

Long-term metrics as per Companys long-term strategy for measurement of progress:

Developing new DPs relationship & Leveraging our existing DP network We aim to strategically expand our network of DPs and service centres to reach potential investors. We will evaluate each opportunity on the basis of several factors including expected investment and financial returns, catchment area served and current levels of depository services available in the area.
Introduce new offerings and scale up recently started businesses We will continue to diversify our product and service offerings depending on investors needs. We believe a continuous review of our services according to our evolving understanding of investor preferences and market behaviour will help us better cater to our investors needs, enhance their user experience and maximise our account volumes and revenues.
Upgrade our IT infrastructure and systems We also plan to invest further in our IT and data management systems to improve productivity and time savings thereby increasing our operating efficiency.
Targeting Unlisted and Private Limited Companies We will explain benefits of demat to unlisted public and private limited companies and endeavour to get their securities admitted in our Company. This has dual benefits of increase in Issuer Charges as well as opening of a greater number of Corporate Promoter Demat accounts.
Investor Education Initiatives We plan to, and have initiated steps to, further these programs by targeting the general public in tier-2, tier-3 and tier 4 cities in India to introduce and explain the benefits of investing in securities. We plan to conduct approximately 450 programs in financial year 2020-21.
PRODUCT-WISE PERFORMANCE Operational Income FY 20 Document

Revenue streams

The Company offers services to several sub-sectors of the Indian securities and financial services market including Capital Markets, Mutual Funds and Insurance companies. The Company has high stability of operating income from the fixed annual charges collected from the registered Issuer companies and transaction-based fees collected from Depository Participants. The Company offers dematerialisation for a wide spectrum of securities including equity shares, preference shares and bonds of public (listed and unlisted) and private companies, units of mutual funds, government securities, commercial papers and certificates of deposits. The Company also charges account maintenance charges to corporate account holders and monthly maintenance charges to clearing members for maintenance of settlement accounts.

Other consistent revenue-generating services offered by the Company include e-voting and e-notice services to the registered companies enabling their shareholders to receive notices in electronic form and to allow shareholders to cast their votes electronically, remotely or at the meeting venue.

Annual Issuer charges for FY 2019-20 are at 7,748.47 lakhs as compared to 6,715.69 lakhs for FY 2018-19, which has increased by 15%. Transaction charges are at 4,290.69 lakhs in FY 2019-20 as compared to 3,927.78 lakhs for FY 2018-19, increased by 9%. IPO and Corporate Action charges increased by 14% to to 2,257.37 lakhs in FY 2019-20 as compared to 1987.91 lakhs for FY 2018-19. Online Data charges increased by 16% to 3,678.59 lakhs in FY 2019-20 as compared to 3,167.80 lakhs in FY 2018-19. Document verification charges for FY 2019-20 are at 940.49 lakhs as compared to 285.10 lakhs for FY 2018-19, increased by 230%. ECAS charges increased by 17% to 930.63 lakhs for FY 2019-20 as compared to 796.21 lakhs for FY 2018-19. E voting charges decreased by 28% to 365.33 lakhs for FY 2019-20 as compared to 506.23 lakhs for FY 2018-19. Income from others increased by 3% to 2,294.36 lakhs for FY 2019-20 as compared to 2,238.45 lakhs for FY 2018-19.

Depository Participant Network:

The Company is the leading securities depository in India by incremental growth of Beneficial Owner (BO) accounts of over 1.16 crore from FY 2015-16 to 2.12 crore FY 2019-20. Further, the total number of registered Depository Participants (DPs) is 599 at the end of FY 2019-20.

The Company has a wide network of DPs, who act as points of service. CDSL had 599 registered DPs with over 20,350 service centres across India. The DPs are spread across 28 states and 8 union territories.

As on March 31, 2020, CDSL had over 45,573 crore securities representing a total value of INR 16,71,972 crore.


Growth Drivers

Enablement of e-KYC for capital market intermediaries:

Ministry of Finance (Department ofRevenue) has recognized CDSL and CVL as a reporting entity to perform Aadhaar Authentication via the gazette notification No. CG-DL-E-22042020-219106 dated April 22, 2020. Also, Securities Exchange Board of India (SEBI) came out with a Circular No. SEBI/HO/MIRSD/DOP/CIR/P/2020/73 dated April 24, 2020 regarding Clarification on Know Your Client (KYC) Process and Use of Technology for KYC. In the circular, SEBI has given clarification on Online KYC process for establishing account-based relationship with registered intermediary (RI), Investor s KYC can be completed through Online / App based KYC, In-Person Verification through Video, Online submission of Officially Valid Document (OVD) / other documents using e-sign of the investors. The above Initiative by SEBI & MoF will help registered capital market intermediaries to open trading and demat accounts digitally. Many large broking houses & discount broking firms are likely to get benefits due to the same.

Change in FDI rules:

India changed its foreign direct investment (FDI) policy to curb "opportunistic takeovers/acquisitions of Indian companies due to the current pandemic", according to the Department for Promotion of Industry and Internal Trade. With the fall in globalshare prices, there is concern that China may take advantage of the situation, leading to hostile takeovers. While the new FDI policy does not restrict markets, the policy ensures that all FDIs from individuals or entities based in countries that share a land border with India i.e. Afghanistan, Bangladesh, Bhutan, China (including Hongkong), Myanmar, Nepal and Pakistan will come through the Ministry of Commerce and Industry.

Global Multinational Corporations (Global MNCs) may shift their manufacturing base from China to countries like India, Taiwan, Thailand, Vietnam, etc. This may result in Governments " Make in India" Programme likely to get support from the global community, global industrial bodies, Governments, etc. to look at India. Global MNCs who set up shop here in India will result in jobs getting created here locally. Further, these Companies may get listed here on Indian Stock Exchanges to raise Capital which may lead to Business Opportunities for us. Additionally, such companies may require raw materials, support services, etc. from existing companies in India, which may result in such Indian companies to raise capital.


Global Recession due to Coronavirus (COVID-19):

The coronavirus recession, also known as the Great Lockdown, is an ongoing severe global economic recession which began affecting the world economy in early 2020. The recession is considered to be the steepest economic downturn since the Great Depression of 1929. On April 14, 2020, the International Monetary Fund (IMF) reported that all of the G7 nations had already entered or were entering into what was called a deep recession, alongside most of the western world with significant slowdown of growth across developing and emerging economies. The IMF has stated that the economic decline is far worse than that of the Great Recession of 2009.

Many large listed companies in India have temporarily suspended or significantly reduced operations and hence the production. Based on recent media report in the month of April 2020, not even a single automobile was sold in the country. Young startups have been impacted as funding has fallen due to Global Economies including India going into Recession. This is likely to lead to weak and volatile stock markets in India. This may result in Volatility in Operational Revenues for us.


In the third week of March, following the governments directive, Amazon announced that it would stop sale of non-essential items in India so that it can focus on essential needs. Amazon has followed a similar strategy in Italy and France. On March 25, Walmart-owned Flipkart temporarily suspended some of its services on its e-commerce platform and will only be selling and distributing essentials. BigBasket and Grofers also run restricted services, facing disruptions in services due to the lockdown.

Stock markets:

On March 23, 2020, stock markets in India posted worst losses in history. SENSEX fell 4000 points (13.15%) and NSE NIFTY fell 1150 points (12.98%). However, on March 25, 2020 one day after a complete 21-day lock-down was announced by the Prime Minister, SENSEX posted its biggest gains in 11 years, adding a value of Rs. 4.7 lakh crore (US$66 billion) crore for investors. On April 8, 2020 following positive indication from the Wall Street that the pandemic may have reached its peak in the US, the stock markets in India rose steeply once again.

CDSL Tariff control by SEBI:

CDSL Tariff charges for Depository Participants (DPs) as well as Issuers are approved by SEBI. Our operational income is dependent on the capital market activities. If the markets remain volatile due to COVID - 19 effects then our market driven revenues are likely to go down.

Oil prices:

Cheaper oil can hurt the governments exchequer, too. Close to 90 per cent of the total excise duty is generated by the government from sale of oil. Excluding customs, oil revenue accounted for Rs 2,63,812 crore in 2018-19. While the government on March 14, 2020 raised excise duty on petrol and diesel @ Rs 3/- per litre, the receipts for 2019-20 would still possibly be about Rs 14,000 crore lower than last year. As demand falls further, the governments receipts in 2020-21 could decline more and fall way short of the estimated figure of Rs 2.4 trillion. Cheap oil is unlikely to ease the governments fuel subsidy burden, as it has committed itself to providing free cooking gas refills to about 83 million people. The pricing power of global oil companies was declining when the coronavirus pandemic hit the world economy. Global oil demand was expected to fall in 2020 — the first full-year decline in more than a decade — but now the world has more refining capacity than it needs and storage capacity is filled to the brim. The prices of all petroleum products have begun to sink, hurting the revenue of companies like IOCL, BPCL and HPCL, as inventory costs shoot up. The companies are unlikely to find fresh storage space soon and may have to lower their production. IOCL has a refining capacity of 80.7 million tonnes per annum, but it had to declare a force majeure on its supplies from Saudi Arabia, UAE, Kuwait and Iraq. India, along with Japan, China and South Korea, forms the largest demand block in the world for oil.

Cyber security:

The financial sector has always faced major risk of cyber security attacks due to the amount of money involved. These cyberattacks can shut down the Organization causing business and reputational loss. Also due to the COVID-19 lockdown majority of the employees are working from home (WFH). Though adequate security controls have been put in place before enabling the WFH for the users, the attack landscape has increased. This makes it all the more critical to be proactive when it comes to cybersecurity issues. Constant enhancement in the Cyber Security Framework and Information Security Management System has been the Companys top priority.

Some of the types of cyber threats that the Company could face:

• Malware - Malware includes computer viruses, worms, trojans, ad-wares, spywares and spam.

• Ransomware - This type of malicious software that carries out a crypto extortion attack blocking access to data until a ransom is paid.

• Phishing - Phishing is a form of fraud in which the attacker tries to learn information such as login credentials or account information by masquerading as a reputable entity or person in an email, Instant Messaging or other communication channels.

• Distributed denial of service (DDoS) - A sustained DDoS attack can flood websites, other applications and systems with unwanted traffic causing accessibility issues and network unavailability.

• Application based attacks such as SQL Injection, XSS, Broken Authentication, etc. For e.g. In a SQL injection attack unauthorized access is gained to the database and the attacker can retrieve valuable information.


Indias GDP is expected to fall to 1.9 % in FY2020-21 as against 5.8 % estimated in January amid the ongoing lockdown due to coronavirus pandemic, a global report said. The Indian economy may grow at 4.2 % in FY20 as against 5 % estimated by the statistics department, the International Monetary Fund (IMF) also said in its bi-annual World Economic Outlook. However, India is the only country other than China to register a positive growth rate in 2020, it added.

Global growth will see its worst recession this year since the Great Depression of 1929, the IMF also said, adding that partial recovery is expected in 2021. "A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound," Gita Gopinath, the IMFs chief economist, said.

In January, the IMF had estimated 3.4 % growth for global GDP in 2021. The global economy is likely to fall sharply by 3 % in 2020, much worse than during the FY09 financial crisis. However, India may see a sharp economic recovery in FY22 at 7.4 %, it added. Meanwhile, foreign brokerage Barclays cut Indias calendar year (CY) 2020 GDP forecast to 0 % from 2.5 % earlier and 0.8 % for the financial year 2020-21 from 3.5 % earlier. The brokerage has also lowered its CY21 GDP growth forecast to 7.5 % from 8 %, previously.


Your Company is looking to add newer services to contribute to the future growth. Single demat account for all financial assets where an investor can access all the details of their investments on a common platform if implemented will result in improved prospects. This is envisaged as a one-stop account for all financial investments including pension funds, fixed deposits, life insurance policies, etc.

You company is on the continuous lookout to engage itself in new projects / new initiatives, etc. which will ensure that your company, which is presently over leveraged on the performance of the stock exchanges by way of having demat accounts of investors in the Securities markets and the securities delivery behavioral pattern, is reduced thereby ensuring that your company continues to be profitable / income generating even in situations where poor / weak market conditions exist for a prolonged period.


CDSL has deployed state-of-the-art IT systems with global accreditation. The Companys core depository system is based on a centralised architecture which helps to provide real-time updated information to users. The system can be accessed over the internet and the intranet though a secure channel using multi-factor user authentication. The Company has deployed state-of-the-art server hardware, enterprise flash storages and highly resilient network infrastructure.

CDSL has been certified for ISO27001 for its Information Security Management System. It protects information throughout the life span, from its initial creation to its final disposal. CDSL infrastructure has multiple back-up levels which includes a redundant fail-over cluster and a seamless switchover to the Disaster Recovery System (DRS). The DRS is located at a different seismic zone. The Company has been awarded ISO 22301:2012 certification for its Business Continuity Management System.


The Company clocked Operational Revenue of INR 16,815.16 lakhs in FY 2019-20 as against INR 15,234.12 lakhs in FY 2018-19, up 10%. Other Income increased by 20% to INR 4,323.78 lakhs in FY 2019-20 as against INR 3,612.88 lakhs in FY 2018-19 due to appreciation in value of investments. CDSLs main costs are Employee Wages and Benefits, Computer Technology Related Expenses which are largely fixed in nature. Total expenditure in FY 2019-20 stood at 1,1421.80 lakhs against 7,881.05 in FY 2018-19, up 45% as compared to the previous year. Other Expense increased by 26% as compared to previous year. EBITDA reduced to 10,588.77 lakhs in FY 2019-20 as against 1,1791.46 lakhs in FY 2018-19. PAT reduced to 7,731.81 lakhs, down 8% over the previous year. The Net Worth of the Company stood at 56,961 lakhs as on March 31,2020 as compared to 54,253 lakhs as on March 31,2019. The Cash Generated from operations stood at 7,888.43 lakhs during FY2019-20. There is net cash generated from Operating Activities of 6,350.92 lakhs as on March 31, 2020.


Revenue from operations includes transaction charges, account maintenance charges and settlement charges paid by DPs and annual fees, corporate action charges and e-voting charges paid by companies and KYC charges paid by intermediaries. The Company clocked Operational Revenue of 22,505.93 lakhs in FY 2019-20 as against 19,625.17 lakhs in FY 201819, up 15%. As compared to the previous year Annual Issuer Charges increased by 15%, transaction Charges increased by 9%, IPO Corporate Action Charges increased by 14% and Online Data Charges that is income from KYC increased by 16%. The increase in revenues is attributable to higher number of transactions and corporate actions despite volatile financial market conditions and increase in admission of number of unlisted companies as compared to previous year.

Other Income increased by 20% to 5,919.06 lakhs in FY 201920 as against 4,919.38 lakhs in FY 2018-19 due to appreciation in value of investments.

CDSLs main costs are Employee Wages and Benefits, Computer Technology Related Expenses which are largely fixed in nature. Total expenditure in FY 2019-20 stood at 14,780.21 lakhs against 9,723.82 in FY 2018-19, up by 52% as compared to the previous year. Other Expense is up by 41% as compared to previous year.

EBITDA reduced to 14,818.02 lakhs in FY 2019-20 as against 15,812.26 lakhs in FY 2018-19. PAT reduced to 10,671.82 lakhs, down 7% over the previous year.

The Net Worth of the Company stood at 76,585 lakhs as on March 31,2020 as compared to 70,943 lakhs as on March 31, 2019. The Cash Generated from operations stood at 10,616 lakhs during FY 2019-20. There is net cash from Operating Activities of 8,214 lakhs as on March 31,2020.

Name of the entity in the Group For the year ended March 31, 2020 For the year ended March 31, 2019
Share in profit or loss
As % of Consolidated net Profit and Loss Amount (Rs. in Lakhs) As % of Consolidated net Profit and Loss Amount (Rs. in Lakhs)
Parent Company- Central Depository Services (India) Limited 73% 7,746.78 73% 8,438.30
CDSL Ventures Limited 26% 2,812.22 24% 2,733.40
CDSL Insurance Repository Limited 1% 56.89 1% 107.77
CDSL Commodity Repository Limited 0% 8.80 1% 72.26
Non-controlling Interest in subsidiary 1% 56.10 1% 131.29
Total 100% 10,680.79 100% 11,483.02

Change in key financial ratios

Sr. No. Ratios FY 2019-20 FY 2018-19 % Change
(i) Debtors Turnover 8.65 10.26 -16%
(ii) Inventory Turnover N.A. N.A.
(iii) Interest Coverage Ratio N.A. N.A.
(iv) Current Ratio 5.17 2.87 80%
(v) Debt Equity Ratio N.A. N.A.
(vi) Operating Profit Margin (%) 48.01% 60.38% -20%
(vii) Net Profit Margin (%) 37.35% 47.09% -21%
(viii) Sector-specific equivalent ratios, as applicable. - -

There are no significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

Change in Return on Net-worth (RONW) as compared to the immediately previous financial year

Ratio FY 2019-20 FY 2018-19
RONW 14.66% 16.99%

The RONW is down due to decline in Profit as compared to the growth in the Net-Worth.

Internal Financial Control Systems and its adequacy:

Internal financial controls means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

The company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, process and operating level standard operating procedures.

1) Adequate documentation and maintenance of the records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

2) The policies and procedures are designed to provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statement in accordance with generally accepted accounting principles and Indian Accounting Standards (IAS), and that receipts and expenditures of the company are being made only in accordance with authorizations of management and director of the company and

3) Company has aligned its current systems with the requirement of the Companies Act ,2013 on the lines of the globally accepted risk based framework as issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, so as to provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the companys assets that could have a material effects on the financial statements.

Some significant features of our Internal Financial Control System are:

During the year, such internal controls over financial reporting were tested by management, internal auditors and statutory auditors. No reportable material weakness in design and effectiveness was observed.


The Companys securities depository business competes closely with its competitor for DPs, investor accounts and number of securities pertaining to various instruments on its depository systems.

The Companys inability to effectively manage its growing DP network or any disruptions in its supply or distribution infrastructure may have an adverse effect on its business, results of operations and financial condition.

Bulk of the accounts are presently being opened by the online account opening mechanism, which primarily depends on the online feed from / to depositories / stock exchanges / KRAs. Any changes to the mode of exchange of information from / to these entities enforced due to regulatory directions from SEBI, etc., could adversely impact account opening.

Any interruptions or malfunctions in the operation of the Companys IT systems could damage its reputation and cause loss for the business.

If there is a shift in consumer preferences away from investing and trading in securities to other products and services, it could significantly reduce demand for the Companys services and adversely affect its business, financial condition and results of operations.

Fraud due to unauthorized transfer of securities or service deficiency could result in losses. Further, if account data disseminated by the Company contains undetected errors, this could have a material adverse effect on its business, financial condition or results of operations.

Broad market trends, economic and market conditions and other factors beyond the Companys control could significantly reduce demand for its services and harm its business, financial condition and results of operations.

Insufficient system capacity and systems failures could materially and adversely affect the Companys business.

The Company must adapt to significant and rapid technological changes in the industry in order to compete successfully.

The Company works in a tightly regulated environment hence any changes brought about due to changes in the processes and procedure to be followed due to issuance of instructions by the regulator could slow down its growth trajectory.


Strict internal processes and controls enable the Company to effectively manage the business risks it encounters on daily basis. The Companys risk management framework includes risk management policy as devised by the Risk Management Committee (RMC). The Committee monitors and identifies risks at regular intervals to improve standard operating procedures and to set appropriate risk limits and controls. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and business activities, with any new activity or deviation from existing procedure referred to the Risk Management Committee. The Companys risk management system covers various aspects of the business. The Company also has in place a special contingency insurance policy to cover risks associated with depository operations which covers the Company and the registered DPs.

The Company also ensures that its clients comply with applicable regulatory provisions. The Company conducts regular inspections of both DPs and RTAs and provides compliance training across the country for DPs. In addition to the bi-annual internal audits, the Company has made it mandatory for all registered DPs to appoint independent chartered accountant firms to conduct concurrent audits of risk prone areas.

Material developments in Human Resources / Industrial Relations front, including number of people employed.

There were no material developments in Human Resources front during the financial year 2019-20. 18 employees were hired and 9 employees left the Company during the financial year 2019-20. There were 220 employees on the payrolls of the Company as on March 31,2020.


Statements in the Annual Report, including those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ. The Company has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed.