So, I had just one question when you say that telescopic impact of the revenue negotiation what exactly you mean by that, I do not understand the term telescopic?

Sure. So, let me just try and explain that, the pricing structure that we have with our mutual fund customers is actually scale based, which is that there is no single bps rate that we charge for the assets under management. So, we broadly divide this and while the rates may be different for different customers, the structure is broadly the same for all the customers. There are asset class based bps that we agree upon, for example equity , debt, liquid and others or ETFs, PASS, etc. So, for example, take the equity, the rate of which that we arrive at for a particular customer is not the same and as the AUM keeps growing, for example if you had a 5000 crore AUM of equity assuming that your bps was say seven bps, if you get to the next 500 crores the rate will fall from 7 to 6.5 bps. So, as you grow in AUM the marginal billing that we do or the marginal cost for the mutual fund customer keeps decreasing, This is an deliberate inbuilt structure that is there in the pricing agreements with our customers , to ensure that the benefits of scale gets passed on to the customers without them having to come back to us every time that there is a big growth in assets. So, typically, what we see is , as the assets keep growing for the mutual fund customers, if your asset growth to say 10 then my asset fee growth is generally between six and seven, which is that we have a 30% depletion that generally happens , sometimes 25%, sometimes 30% that happens between the growth that you see in the assets versus the growth you see in the asset fee, which is what is called the telescoping pricing structure.

Then what exactly is meaning of telescopic in fact, the grade wise increase or decrease is not going to happen anymore?

No, sorry what I said was, barring the telescopic pricing impact because the rates generally go down because of a #A telescopic pricing because of any renegotiation , large renegotiation that happens on the base rate itself with the customers. We had indicated during the last few quarters that large customers contract for the last five years was renewed just now with a decrease in rates. What we indicated was, the impact of that will not be felt further, the only impact you will feel will be the impact of the telescopic pricing.

Thank you so much. The next question is from the line of Mr. Sanil Desai from ICICI Securities. Please go ahead.

My question was related with the yield movement as you said that there was some effect of the yield reset in this quarter. In a way going ahead also in this quarter, we also saw a big AUM jump. So, part of the impact would also because of telescoping and part of it would be because of the yield rest, any color which you can share on the extent of decline that we have seen in this quarter because of the yield reset, which will give us a better idea about what to take the yield assumptions for the coming quarters and also the year ahead?

So, the way to think about this, you saw a 20% AUM expansion Q2 to 2Q, last year to this year. Normally, you would have seen about a 14% to 15% revenue growth, what you saw is about a 10% revenue growth. The 15 minus 10 is perhaps the broad equivalent of what you are asking for. If we did not have that onetime adjustment, then we would have delivered the 14% to 15% on the overall asset growth, which was only 10%, the 15 minus 10 is then approximately the impact of whatever we are talking about.

Understood. So, going ahead, it will fall back to our historical way of decline which is in line with the telescopic thing right?

That’s correct. So, if assets let’s say in the next 12 months grow 20%, there ’s no reason that revenue will grow only 10% revenue should grow 14% to 15%.

Thank you so much. The next question is from the line of Dipanjan Ghosh from Citi. Please go ahead.

Sir, just a few questions, first if I look at your non-asset based mutual fund revenues, this quarter, on a quarter-on-quarter it seems to be on a flattish side, given that there are a lot of activities going on in the mutual fund space in terms of be it NFOs , or market being buoyant and so I would have expected that mutual fund at least spend ing a little bit more on the spreads. If you can give some color on that, that’s question number one. Question number two is, on your non- MF revenue so if I chip off the KRA business, and look at the other businesses from a momentum perspective sequentially. Like if you look at the Think360 over it has seen relatively flattish down on a Q-o-Q. So, the other businesses have also been not that great in terms of momentum of take on the revenue side compared to let’s say, the client variant or logo variant for business expansion sir. So, I just wanted to get some color on that. Lastly, in terms of expenses, can you give some color on incremental cost that we need to incur on the new businesses and what sort of trajectory should we all see on that?

Thank Dipanjan, I’ll take the question on the non -asset based revenue as well as the expenses and I will request Anuj to comment on the non-MF business. See on the non-asset based revenue, that there are four components , major five components major of it, which is the transaction based, the miscellaneous application based the call center. The NFOs that we built for and the out of bucket expenses. What we have seen as a trend is in the last quarter, we have not seen any big increase in the transaction based as such from a paper transactions perspective. What we have seen is some moderate increase has happened from a call center, and from a miscellaneous application perspective. So, while year-on-year we do see a good increase in terms of revenue , quarter-on-quarter it has been flattish, what we expect is and again as I was earlier mentioning, we do not expect the non -asset based revenue to kind of propel any growth for us or to propel any profit for us, because basically the transactions being up or down does not increment or incrementally impact the profits. So, would assume that they will be static within the same level that we are seeing now. The only upside that we could see is some increase because of the MF central related revenue that is paired with the application base. That’s the only increase that we could probably see to be profitable growth in this entire bucket that we see there . because of some reasons in terms of regulatory issues and all those things should go up and come down to crore here or crore there. But all those things are compensated by increase or decrease in revenue. So, that’s the reason for the non -asset-based revenue remaining static on a q uarter-on-quarter basis. From a expenses perspective, the major expense increase that you will see will be the salary expenses, even on a year -on-year basis my entire salary had increased by 7.6 crores and that includes the salary impact that we have given an April which is more than six crore. So, we have been remarkably disciplined in terms of adding manpower or regulating the cost from a manpower perspective. It includes the ESOP cost increase, it includes the Think Analytics cost, everything put together on a year-on-year basis we have increased cost and salary to the extent 7.6 crores. So, we feel that going forward, there will be stable cost that you will see, in fact our quarter-on-quarter basis i f you see the increase in revenue is almost like 13 crores, and t he increase in EBITDA is 12 crores. So, that could not be replicated every quarter going forward, we feel that the incremental cost will be measured, and we generally expect 50 % to 60% of the increase in revenue to flow down as the EBITDA in a normal quarter. So, from a fixed cost perspective or from an operating expenses perspective, operating expense generally remain at around 7% to 7.5% of revenue. Definitely less than eight that’s what they will continue to remain if you remove the OP part of it. With OP they will be around 12%, the trend has been remarkably stable across the last many quarters that we have seen. The employee expenses as I said, since we were able to cover, we are in fact seeing a downward trend, it ’s a little more than 34% o f overall revenue and your f ixed expenses even on a quarter -on-quarter basis you have seen this decreasing and a couple of quarters back there was a concern raised regarding why your fixed expenses gone up. And we set expectations saying that you will see this is the peak and you will not see a lot of increase other than inflation driven increase going forward, that’s what it played out the last couple of quarters too. I will kind of wait for any questions from you on this or Anuj can probably take the question on the non-MF front.

So, on the non-MF revenue, while we have stated that overall year-on-year growth is 47%, netted for the one time Think analytics revenue which started accruing in the first quarter that ’s about 30%. You are right in this quarter KRA has really driven a lot of this growth. Now, last quarter also KRA driven growth this has been a substantial quarter from a CAMS KRA contribution perspective. However, from our overall sales focus and signings pipeline, etc. We are very sure that the others, which is CAMSPay, Think360, AIF and insurance will be large contributors in the coming two quarters but in this quarter, you are correct the large part of non -MF increase outside of Think has been driven by CAMS KRA.

Sure. Sir, just if I can ask two more follow up questions, one on your AIF side, on an incremental sign ups your competitor highlighted that they have moved from a flat fee based slab to more of our AUM linked class, the ICICI M utual Fund, just wanted to get some color on whether you have also made some changes on that part. Second, is more of a structural question, let say in this quarter for example mutual funds, or last two quarters mutual funds have seen very sharp growth in AUM and some of them have seen change in slabs for themselves on the gross TER side. Your contract more from a two, three-year perspective. So, when they say change in slab, is it like a direct translation that you have built -in in the contract or how does it happen or do you expect pre-negotiations to be much more frequent is this sort of market trajectory, let’s say for hypotheticals?

Sure. So, when you take the first part another AIF moving from flat pricing, to a bps pricing, we are not seeing that and you must, I’m sure you appreciate that the market if I just suppose what it was two years back to what it is now , is a lot more competitive there are a couple of global players who are competing, the domestic both us and our key competitor. So, also of the ante, so in that kind of competitive scenario is not easy to change a pricing paradigm. The current pricing model works well for us. So, it is continuing the way it is. No large changes, we are not reporting any large changes. On the mutual fund side, just think of these as two separate trains. And how do those two separate trains move, mutual funds when they grow, they will charge as per the TER slab, but TER slab can continue falling from about 2.25% all the way down to let’s say one and some change. So, that is something that the mutual fund experiences. What we experience is our pricing contract with them, which says that the telescopic impact , I’m just throwing a number may not be very accurate, let’s say the telescopic impact is 2%. So, we will see our contraction irrespective of what change in fees they are undergoing. Are they using the argument of their change in slab and their change in fee to negotiate something else, with us the answer is no. While they are seeing, I’m sure there are many schemes which have crossed over to higher and higher slabs. It ’s also a fact that our telescopic methodology keeps rates at very, very affordable levels, but it ’s not a 1:1 mapping between what they experience and what we experience.

Got it sir. And if I can only one question on the account aggregator side have rates stabilized in the pricing, or how is the pricing pressure of that, that’s all. Thank you.

They have stabilized, the rates are maybe 20%, 25% of where we had started. So, they have stabilized to a certain level. Competition of course in both A and PSP is intense. But, we are seeing some stabilization of rates.

Thank you. The next question is from the line of Mr. Lalit Deo from Equirus Securities. Please go ahead.

So, coming on the AIF revenue piece, so if you see the overall AUM growth in the AIF segment that has grown materially during this quarter, but since the revenues have not grown , have remained broadly flattish on a sequential basis. So, do we expect that from this growth in the AUM the revenues could come up in the coming quarters , t hat was the first question. And second, like you mentioned b ecause of the renegotiation happening there were some kind of pressure on the revenue yields. So, what is the pipeline over the next 12 to 18 months, is there any major contract negotiations going to take place with our mutual fund plans?

Correct. So, from an AIF perspective, we’ve seen a steady pipeline of filings. And therefore yes, we are expecting that the growth numbers that we ’ve been reporting in the past should be back in the coming two quarters, we are quite confident of that. The AUM does continue to grow , every pricing is not AUM link, a lot of it is activity link pricing, But that notwithstanding we are seeing significant growth coming back in the next two quarters. From a MF perspective, you can see that we had stated that there was a large contract where we were resetting prices, because of some historical context, that exercise is now over in the second quarter. There is nothing major which we believe and that was like once in a 10 year event. And you ’ve seen that we saw price depletion in a sustained manner for about four to five quarters , in the next four to five quarters we did not see any event like that happening again. So, like Ramcharan said, you can expect a marginal small telescopic rate lead depletion, but nothing majo r from a price association perspective.

Sure. And sir just last, one data question you mentioned, a clarification you mentioned that the fixed expenses will be 12% of our revenue will be below 1 2% of the revenues, or was it something else?

Sorry, can you just repeat your question please, sorry.

Sir, the other fixed expenses, like as you mentioned that the operating expenses will be like we are doing but below 8% of the revenues and then there was some 12% of the revenues. So, I just missed that part.

What we mentioned was operating expenses if you take the out of pocket expenses, which was included the operating expenses as well as in the revenue, if you just do a division of the two, it comes to 12%. But if you remove the out of pocket expenses from the numerator and denominator just from the sales as well as the expenses, the real operating expenses that you incur, which is mainly some data entry cost, the sponsor bank charges that they do for the payments businesses, and some things like that , the amount will be less than 8% is generally between 7.5% to 8%, that was what I was mentioned on this 12% and 7%.

Thank you. The next question is from the line of Abhijeet Sakhare from Kotak Securities. Please go ahead.

I joined a bit late so some of it could be repetitive, sorry for that. So, first question is that, on the non-MF side there is little bit of volatility on the insurance , if you could explain that first. And secondly, let’s say on a 12 month basis, is there a visibility could be the growth all of these businesses put together, we are delivering somewhere close to about 20%, 25% so does that run rate still hold when you look forward one to two years. Second question is that , when we look at the overall EBIT margin at around 40%, is it possible to kind of break it down, how the RTA business is doing and the rest of the business is doing. And the related one is that, are we largely done on the investment front on the non -MF bus inesses so from here on the translation of revenue growth to bottom line as Ram sir mentioned earlier, that should kind of continue as well?

Sure. So, on the insurance side while we have been reporting growth in eIA accounts and policies, you are aware that there ’s a large fraction of the revenue which still comes from outsourcing services. In our persistency operations, there was some fall off from last year to this year, which is why you’ve seen a small diminish in the overall i nsurance revenue. From a long MF perspective, we’ve stated that we would like to grow 20% in revenue terms. And right now for the next 12 to 24 months, we’ll be just holding that number, we expect to grow +20% in the overall non-MF portfolio for the next one to two years. So, we are holding that number. On the third part of the EBIT, so Abhijeet on the EBIT part of it. As a bucket, the non-MF, if you kind of combine the non-MF versus MF, that was your question in terms of what will be the split between the two. See, your MF EBIT is obviously on the highest side, it is much higher than the 44% EBITDA that you ’re seeing there. But having said that, if yo u look at the single bucket non-MF might be less but within that A AF is also equally profitable, and CAMSPay is reasonably profitable. So, non-MF, MF, yes MF was higher EBIT than the remaining things. But within non-MF there is a pocket like AAF or payments which continues to be very profitable. So, that’s basically the numbers how they pan out. Our KRA is actually very profitable. Now KRA is a platform based business, so that possibility is really high. So, that’s how it breaks up.

And that 20% growth rate on the revenue front for non-MF, does that deliver even better growth rate on the EBIT or EBITDA front?

It will for sure because, as we said from an insurance perspective, or from payments the platform is ready. And the incremental policies that come on board and the Beema Central, if it goes in a minute goes live this quarter and start getting some traction from a revenue perspective. We feel that it will be accretive to the EBITDA and hence as a business, both insurance and the payments business could see some uptick in margins, insurance definitely, payments maybe.

Got it. And last one, the core RT A business from a OPEX front. There is nothing like a lumpy expense in the pipeline, like all the cloud tech related expenses, regulations, all of that is behind us right?

So, yes, that’s right from OPEX perspective, we do not see a big lumpy expense that needs to be done from our side. However, if there is a big project that we are doing from a technology perspective, we would probably have to think about it and that , so that will be more long term . So, in the immediate a few quarters from OPEX perspective, we do not see any lumpy expenses that is going to come to you, although regulations do continue to come. In fact, even from a KRA perspective there have been regulations on segregation of infrastructure and momentum to cloud, etc. But we are confident of keeping those things under check and you will not see a big lumpy expense that’s coming in.

Firstly on the core business, we see a lot of strict addition coming in from the Fintech platform, and the transactions that we are doing are coming in from FinTechs more than or year where we do a lot of paper weight transactions. So, do you think, does that incrementally contribute in any form to the revenues apart from the AUM that they add or how much of our revenues would be kind of, have some linkages to the number of transactions as well any clarity there?

So, Prayesh think about this way that, that train has been moving for many years now, think of it as having been moving for the last five years. We have single AMCs whose paper transactions are in single digit, which means that digital electronic is 90 , 91, 92, 93 that kind our cross portfolio level paper is 12. So, 88% is non-paper, paper like we’ve said is revenue accretive, but not margin accretive, it also creates risk because once we digitize the paper then everything else remains identical in our system, the process of digitization takes effort , cost and it reduces the form. So, we are very happy with the way th ings are, also do remember that the FinTechs have brought unprecedented scale to this market, the scale was not available to the market and the traditional distribution paradigm, the FinTechs have brought scale and have brought target sizes which are much smaller. So, overall if you see , we do book revenue from paper transactions which is not a very large number and even if it is drying up, pilot is drying up for the last, as long as I can think last seven, eight years every successive quarter it would have dried up but the scale, the efficiency that it brings into the system is accretive to us and takes out a lot of labor and a lot of risk . So, that’s a positive movement for us, the revenue fall off is a very small sacrifice to bank.

So, what I’m saying is, Rs.100 SIP will still get you, fetch you a 3.5 basis point yield and same say Rs.1 lakh to buy an HNI who will fetch you the same yield, is that the fair way to look at it or is there some or from a cost angle both would require same amount of effort or from your side or is that the right way to think?

Yes, absolutely. That is a right way to think, that from an AUM perspective the Rs.100 SIP will be much smaller, it will take a long time to create a mass . An HNIs Rs.1 lakh SIP will be very different in character because it will create AUM much faster but think of the Rs.100 SIP to be coming in millions, while the HNNI SIPs will be a few 100 or a few 1000s. So, when you see the scale we have crossed now 10,000 crore of net monthly SIP collection at just CAMS level, during the COVID phase this number used to be four. So, in less than three years, we are almost 2.5x. That kind of scale has been built on distribution and built on, this creation of small sachets is not built on HNIs part of the patient in this market as you can see. So, that’s really the right thing for the market, it’s going in the right direction.

The only thing I ’ll add to your question is Prayesh, is that the process of this S IP collection trigger is largely automated. So, if your question is whether you will incur the same cost, is the incremental cost it will incur and hence Rs.100 is not very beneficial to you. The process is largely automated and hence, that should not be a big part in this.

Got that. Okay, the other part was on the account aggregator piece, we ’re hearing that the PSU banks are still finding it challenging or apprehensive about coming on board on the account aggregator platform. And so what’s your sense there and earlier, whenever we use d to interact, you said that FY24 we will have much more clarity about when this account aggregator will start contributing to our revenue stream. So, any thoughts on these two aspects of the account aggregator business?

So, for participation perspective, every PSU bank is on board, each one of them. In fact, most of the private sector banks are on board, the smaller regional rural banks are coming on board, what you’re observing, but you’re partially correct, what you are observing with public sector banks is that they may not have built the capacity, or the finesse in technology for data transmission to be 100%. So, if we send 100 requests will all 100 get answered, the answer is no. Typically in a exchange like this 60 to 70 should get answered if you are answering only 10 or 20, then there is something wrong with needs to be fixed. So, there are small incidents of that kind, but from a signing and formal participation perspective, all of them are there. We are seeing signs of revenue and that revenue will be this year would be maybe a few crore rupees. So, it could be a two, three, four crore rupee number as we progress, but it’s a good number to have because it’s the beginning of the revenue stream. We are pushing through transactions, we have integration charges and signup charges so all of that is happening. Of course, like we told you that price depletion has been almost 80% what used to sell for Rs.10 is selling for Rs.1.50 and Rs.2 s o revenue has contracted to that extent, it still remains a very exciting market. The good thing to focus on is, how many used cases are emerging for how many physical, actual labor intensive processes can you find a substitute through account aggregator, like I said, whether it is a small ticket digital lending, whether it is account verification , part of the KYC process , NFO onboarding, third party verification of bank accounts, there are multiple users. So, if you keep your eyes on that, you will find that slowly the manual process will get phased out from the country and the revenue scales will be much larger than what I’m talking about right now.

And last bit on the EBIT margins, you mentioned around that, there are the non-MF businesses are at lower margins as compared to the MF businesses. But some of them are doing reasonably good margins but any of these businesses that can scale up to the levels of the MF business margin, say in the next two or three years, any thoughts there?

Sorry. So, I will just give you one example that wherever we have achieved a platform capability, which means I have hundreds of small users plugging into the platform, I don’t have to deploy too much labor, a new development all I need to deploy is storage, servers, connectivity, ability to manage API ’s, businesses start delivering 40% EBITDA, a great exa mple is our KRA business, which is delivering that margin as of today. After the recent scale up, our AI of business is a very close to that margin. So, they are very close to the MF margins. Payments has undergone some pricing pressures, et cetera recently, so maybe a little low, but as payments grows let’s say another 30%, 40% in size it will start mirroring these numbers. So, the good thing about the business and so the insurance repository be. So, you can think that as a business I don’t have to scale it to 100 crore, as I scale a business to let’s say 25 crore of revenue , 20 to 25 crore, it is possible for that business to be at 40% margin. And we are seeing that in MF, we are seeing that in KRA, we are seeing that in AIF , and the ones to watch o ut for our let’s say payments and insurance where you’ll start seeing similar character, maybe three or four quarters from now.

Thank you. The next question is from the line of Mr. Jeet Suchak from Nuvama Wealth Management. Please go ahead.

So, for mutual fund business transaction volume grew year-on-year 24% and Q -o-Q 10%, so how is it contributing to revenue or cost if you can give me an idea about that?

Most of this is digital volume, most of it is digital volume. If you say we do about 60 crore transactions in a year 55 to 60 crore, over 80% of this is SIP triggers and that’s a completely digital process from the time we collect all the information about the SIP s being live, to do a KYC check of them, to placing them with a sponsor bank, NPCI, et cetera to collect the payment, to create the units it’s completely untouched by hand. So, there was no real cost implication there, I used to trigger let say two crore SIPs, a few years back I am triggering four crore, I could also trigger eight crore but the quality of processing that we built and automation is not really cost accretive, from time -to-time we will add server capacity and storage, et cetera but there’s really no labor in this which is managing anything.

Okay. And any increment in revenue for the transaction volume?

So, generally, most of the digital transactions, triggers, SIPs, et cetera do not result in any incremental revenue also, it’s only the paper transactions that generally are giving us revenue in terms of per paper transaction being processed. So, these could not have a large impact on revenue and cost.

Thank you so much. That was our last question. I would now like to hand the conference over to Mr. Ramcharan, CFO for closing comments.

Thanks, Sagar and thank you to all the participants for your participation in the call and the continued interest you are showing in CAMS . Please feel free to reach out to either Orient Capital or Shri Anish Sawlani, investor relations for any questions that you may and Anuj and me are also reachable in case you need any clarifications. So, once again thank you for being part of this call.

Thank you . On behalf of Computer Age Management Services Limited that concludes this conference. Thank you for joining us and you may now disconnect your lines.