Multi Commodity Exchange of India Limited (MCX) Earnings Call Transcript & Summary

Good afternoon, everyone. So we have on the call -- we have Mr. P.S. Reddy, he's our Managing Director and Chief Executive Officer. We have Mr. Satyajeet Bolar, who is our Chief Financial Officer; and Mr. Praveen DG, who's Head of Investor Relations.

Good afternoon.

Good afternoon.

Good afternoon, sir.

Good afternoon, sir.

Afternoon, madam. So you are not new to MCX, probably both of you -- I mean, all of you can fire questions, I will answer. Is that fine? .

Sure.

Yes. Please go ahead.

Yes. Sure. So first of all, sir, thanks for this meeting. And we have been following the company for quite a while. And I'll start with the main question that is there in our mind today. So we have been pretty positively surprised by the scale-up in the options turnover. And it has become, I think, if I look at the last 2 months, I think it is almost equal to -- only slightly lower than the futures turnover that we are doing. So we would want -- we want to understand just more in detail what is the driving factor behind the scale-up? And what are the key reasons for this? And how would you look at this segment going forward?

Okay. See, somehow, I am not able to fathom the region. I mean, Indian market is more fond of options than futures. And that's what we have seen in equity markets also. And probably, they think that you pay onetime lump sum premium, and then end of it. That's all. You don't need to worry on a day-to-day basis about margins being received, not received, et cetera. And there's no other headache. So their -- they think that their risk is limited to that extent and only upside is theirs. I think that's a very fair way of assessing this particular product. Maybe option writers have to do much more work than the option by SB that put option or call option. So that has led many people to drive towards it. Having said this, probably we need to reduce the -- to bring in more and more customers into this segment. Probably, we need to reduce the tenor of the contract wherever there is a long. So that's where our 1-month options contract in gold, underlying 2 months futures help us. That's how we see this. And of course, option writers also are finding it, I mean, interesting, this product, because without many times, I'm sure they must be exiting much earlier than the options are getting exercised. So they are able to get the premium income well. So I mean buyers are happy, sellers are -- the option writers are happy. So we are happy. So yes, we need to buy this options contract [indiscernible] long. And we are looking at, at this point in time, only these 2 have been launched, and we have got this gold contract. We will see when we can launch quickly that contract also. And the electricity futures is another one, which we are looking forward to. And some of the agri contracts also, especially the cotton, we are doing a good -- witnessing good turnover. Now that is also eligible to introduce options. Probably, we will be writing to SEBI, apply for an options contract in the quarter as well.

Right, right. If you could touch upon a little bit more in detail on the 2 aspects that you highlighted. One is that tenure will -- reduction in tenure will be important. So if you can just explain what is the current tenure of the products in terms of how will it make a difference, if you can better explain that part.

Okay. See, for our gold and silver contracts, it is at 2 months -- it's a bimonthly contract. Okay? So it's -- the premium will also be, if you introduce a plain vanilla option on that kind of thing, it will be a 2 months -- exercise will happen only at the end of the contract period. So they have to wait for 2 months. So the cost of carry, et cetera, is built into that. So that's why it is expensive. Now if you have in monthly options, obviously, it will expire within a month. So you are paying the premium only for one month rather than 2 months. This is one. Second, we also introduced the, what you call a -- I mean, currently, I was told at almost INR 96,000 is the premium, if you take it bimonthly options contract. Now if it is 1 monthly, then automatically INR 45,000 -- around INR 45,000, INR 48,000. Then another thing is we have also introduced a options on a mini -- Gold Mini contract. Okay? In the Gold Mini, again, not only the tenure is 1 month, even the -- it is 1/10 of the main contracts. So it automatically becomes -- how much? Is it INR 4,500 is a premium. So the play will be more. More and more smaller players can get into it. Is that clear?

Yes. Yes, sir. So currently, as we understand, crude is the bigger contributor in terms of your options turnover. Am I correct? So that will be on monthly?

It is also picking up. Now we are almost [ INR 3,500 crores ].

Okay. Okay. So both of these are monthly contracts? Is it?

Yes. Both of them are monthly contracts.

Sir, was there a reason for these being monthly and the other 2 being bimonthly?

These are -- CME prices. CME -- there's a lot of background noise maybe. The CME prices, and at CME, these monthly contracts -- these are all monthly contracts.

Sure. For monthly contracts in gold and silver, do we have the corresponding CME contracts? And how will that work?

These are settled on Indian prices. So we don't go to CME for a settlement of those contracts.

So there's no hindrance to launching monthly contracts, right? If we understand correctly for gold and silver.

There is no hindrance, but I do not know whether the bimonthly contract get cannibalized in the case of futures, because it's established well. I do not want to disturb that.

Currently, whatever we are planning out, like monthly contracts, monthly gold options, they're actually based on the same bimonthly contracts. That means you will have multiple deliveries on the same contract. Like suppose, if I had taken an example of April contract, you may have a March contract and the April contract. But both will finally will devolve into the April contract, April futures contract. So one side, you will have the bimonthly futures contract. On the other side, you will be having monthly options contract. But monthly options contract, again, will devolve into the bimonthly contracts only.

Okay. Sir, you're saying the underlying will remain the same. It will just be the expiry would be...

That's right.

Okay. Okay. So you have already launched this Gold Mini monthly, right? If I'm not -- if my understanding is correct?

Yes. We've launched Gold Mini, and that is also I think doing reasonably well, about INR 80 crores, INR 90 crores is the ADT in that contract.

Got it. Got it. So on this one, there's one more question that I had. So I think you mentioned on the call that whenever futures turnover is high for any product, those will be the products that we will look at launching on the option side also. So which are these -- I mean, which are the yet to be launched and maybe already -- we are already large in futures, and we have not yet launched in options?

Yes. One is the -- the metal contracts are not successful, although we had a very good turnover. Some of the metal contracts, option contracts are not done well. I think cotton is the only 1 where at this point in time which is remaining open. But yes, we had CPO also. In fact, SEBI given a permission, we were to launch in the month of January. And end of December month, they have suspended the CPO contract -- banned the CPO contract. So otherwise, in a volatile period, all these products would have picked up greatly. And thanks to the nickel debacle in London LME, even our index -- nickel indexes also have come to a knot. But again, going forward, probably on BULLDEX, we can launch options on indexes. So that SEBI already issued the guidelines. But we need to build volume in that. Currently, the volume is about INR 150 crores, INR 200 crores. That is not enough for us to launch any options contract. So the regulatory framework is in place, but then the necessary liquidity is not provided in that underlying contract.

Got it. Got it. Sir, so is my understanding correct that because options margin requirement will be on the options premium, which is where there has been a big shift in volumes that we have seen towards options?

No, in case of options, the premium is a onetime payment for the buyer side. Okay? It is like -- only in case of the seller side, it is like, based on the span and other thing, you will have to see that what could be the margin, because there won't be any M2M for the sellers of options, right, as to what whom I'm saying. So for the buyers, it is like they will have to pay only one time and they need not have to get into this kind of M2M payments. And also, there is a benefit of transaction tax benefits, which is lower in options contract. So all these things contribute to the -- this one, interest in the options contract.

So, sir, like as we have seen that there has been an interest in terms of options. And obviously, there are a lot of other advantages which a trader would have when they do [indiscernible] options volume actually surpassing into these future volumes as well because this was something which was unexpected. We were always, I'd say, another kind of thing which we were working out now, we have seen this is almost coming at 40% plus. Is there any chance that we may see these options actually with new contracts coming in, premium obviously being lower size. So I know there can be a positive surprise that volumes on the option side might be higher than what we are doing on the futures side?

See, I don't think you need to have -- anybody need to have a surprise. In fact, we want to move in that direction. That's the way it is. And -- but then don't compare the volume of options as equal in to the option -- futures. As I have been saying, it is just equaling to 1/3 in terms of contribution to the revenue. So maybe if it is 30,000, the futures is equaling to -- I mean, 30,000 options is equaling to maybe 10,000 futures turnover. That's the way it is. And maybe a little more than that, because we have seen the revenue potential is at 40%, not 33%. That is in that sense. So it's better realization. But we are not too sure when the liquidity is still builds in, whether the same ratio will hold good or the premium -- because it all depends on the premium paid. If more contracts trade at far away prices, maybe the premium will be much lower. And if it's traded much closer to the inter-money contract, then obviously the premium will be higher. So currently, it is trading at the money, mostly contracts. That's why it's getting us more revenue.

Sir, can you take us through how has been the global experience in this sense? Like, are we somewhere nearing the similar range where the global exchanges would be in terms of options versus futures? Or...

I was told that options, we are the #1. I don't think anybody else is here. Yes, please go ahead.

So underlying options, I'm telling whether it is stock or whether it's commodities. In case of commodities, it is about 10% to 20% of the futures volume in global market. And I've taken an example of CME. That is how the numbers have been there. But you know that even in the equity markets in India, especially the options are paying a bigger role as compared to the futures. So that has been the trend in the Indian market, which is somehow it is different from the global markets. Like I said, there are several other factors, like the peak margin reporting, which is not the case. It is there in global market, or a transaction tax, which is another element. So there are many elements out there because of that one that has pushed -- led to greater interest in the option contract compared to the futures contract in Indian market.

Sure, sure. So the other question that -- the important question on the regulation side, I think, which is where we had got actually impacted in the last 1 year, especially on the margin requirements, et cetera, going up. So if you can update us in terms of what has been the final -- in your assessment, final impact of this increased regulation and margins, et cetera, that have happened? And how do you foresee the regulatory actions going forward, in terms of what are the possible actions that are yet to happen on the regulatory side? How it will impact us?

I think it's impacted about 20% on our volumes. That is for sure and it remained there. But having said this, I think recently, SEBI has come out with another circular, instead of having a peak margin, they will have a margin at the beginning of the day. Let us say, if somebody had a position yesterday and they fully settled it in terms of margining, and even if the prices go intra-day up, they don't need to bring in additional margin cover as long as they've fulfilled the obligation on the M2M. So that is one major development that has taken place that helps the investors who have -- who are holding a position, open interest, they don't need to keep on margining it, except for their -- they have to settle it on a day-to-day basis the M2M. So I'm sure there are many other people who have resisted such kind of thing. Now the SEBI has relaxed that norm. This is one part of it. Second thing is the client collateral. I mean, the second one is the negatively impact, but then it is not -- we have not seen as yet. The investors, at the client level, margining has been separated. And every time a trade is done, 50% has to be cash and then remaining can be other than cash and -- or cash or cash equivalent. And it has to be maintained at the exchange level. There are some challenges still there. And what -- the ask of the industry is that whether a client, especially he being a client of a common member across all exchanges, as long as he keeps the margin and that margin is reported to NSE or MCX or anywhere else, as long as the margin is there in the -- that margin should be taken into consideration for the fulfillment of the client's obligation towards the trade in respect to whether the trade is -- whether the margin is deposited with NSE or BSE or MCX, et cetera. I think that -- I mean there is a condition that within 1 hour or 2 hours, they have to -- that margin. Probably that is adding to the administrative work burden of the member brokers. I think once SEBI also agrees to that kind of interoperability being at the end of the day, but not intra-day, unless broker choose to do it, probably that should also address the concern.

Sir, has this been implemented already? Or...

The second has been implemented, if I'm correct.

Sir?

2nd May.

2nd May. Okay, okay. But as of now, I think we haven't seen any negative impact at least? Or has it not been implemented fully? Or is it just a...

The 2nd May, the circular -- I mean it was postponed once, and it was 2nd May, the income from once again. We have launched it.

Okay. Okay. And I think there was this timing issue also that had come in that earlier, I think the margin requirement was on a full day basis, and now it is based on time per day basis. So that implementation, I think, has happened in Q4, if we are not mistaken. So how is that impacted, sir?

It's probably happened. I think it is already in place. Like earlier, it was till 5:00. Now it is being extended like the holiday would be considered.

So there also, that is already in the -- I mean in the phase in terms of the impact, whatever impact...

But the -- particularly, we are not seeing any greater impact because of that particular aspect.

Got it. So on the regulatory side, if I were to ask, what are the -- I mean, what is the wish list from our side? And what is the -- given the actions that we've seen from the regulator, what is the -- incrementally any negative possible regulatory actions that we can -- that we need to watch out for, let's say, in the next 1 or 2 years?

You're talking about negative impact. Is that correct?

No. I said that 2 things. One which...

Our wish list is FII should be permit, that's what one of our wish list is. And I think the SEBI has floated a consultation paper. Now that consultation -- I think everybody has given the responses. Now it will -- they will take it before the Board of SEBI, and then that will approved. That is one important wish list. We wanted the electricity futures to be permitted. And the third thing is the multiple contracts to be permitted, mini contracts in other metals and others. In fact, tomorrow, there is a CDAC meeting, and there is, again -- this is a paper on this for discussion. Multiple contracts should be permitted. We had it prior to the 2019 June, July, we had the mini contract in aluminum and also a major contract. Then SGF is another thing that we need to -- we have asked them concession on SGF where in and out can happen frequently from the SGF contribution so that we can reduce the margins. As I told you, currently, crude oil, we have 21%, 22% margin. Probably, that can be reduced once we increase our contribution to SGF. And once volatility goes down, we are allowed to withdraw. So that facility is one thing which we've asked them. Probably that is another ask which is taking time.

But now just taking a step back here. I mean, what we have at least noticed from our side is that the regulatory action has been more towards making it tighter and tighter from a investor perspective. So would you to hear your thoughts in terms of what is the regulator thinking, and how -- and what is it that is still yet to happen? Or how they are thinking about taking these steps forward? Overall -- what is your overall sense on that?

See, I don't think it is a regulator only. Even we too don't want anything which will put the system to danger. Okay? So when we are recommending certain things, we are also conscious and mindful of what works, what does not work in the sustainable interest of the market, whether such measures have to be taken or not taken. So whatever sizes we are giving, they are really vetted first from the risk management and risk mitigation point of view, then only we are recommending. So mini contracts, for example, I don't think that they will harm anybody. Okay? We are not looking at harming. Today, contract size has gone up to INR 30 lakhs, INR 37 lakhs nickel contract. Okay? Copper contract, INR 27 lakhs. Now which investor will come? And what is the margin on INR 29 lakhs? Okay? 10%, you take it, it's about INR 2.9 lakhs, which is too much. So that is the reason why we are looking for introducing smaller contracts. So the participation -- there's almost all -- in each contract, almost all, INR 75,000 to INR 1.5 lakh investors have moved away ever since these mini contracts were removed from the system. And sometime moved out -- moved in. So we have done that analysis. And then made a presentation to the SEBI. So they're endless.

My perspective on asking this question was that I think when we had seen the negative crude price and very high margin that the regulator have put in, I think the expectation was that over time, there will be a significant reduction in crude margin that will help us on the turnover side. But I think it has been a bit slower than I think what you were expecting in terms of the reduced margin. So is it that they are...

No. That's not the case. I'll tell you, regulator-wise you put in very higher requirement. The point is, there is something called a stress test. So stress test takes into consideration 15 years of volatility, okay, in a product. And based on which we have to contribute to our SGF. So that SGF looks into more than 100 scenarios. Okay? What all happens? If 1 commodity goes under or 2 commodities goes under or maybe 2 member brokers goes under, what will happen? All these scenarios are done. Or 2 happens simultaneously, 2 members will go down the drain and 2 commodities also causes such kind of a stress in the system. Then what should be your SGF cover? And if that is the way SGF cover is decided. So we have to do it on -- every day, we do that. The average for that month will be the stress -- the SGF cover we have to maintain for the next month. Now if you remove the crude oil, may 20%, you bring it down to 10%. What happens now? The SGF cover goes up to INR 650 crores. Okay? Now this happens notwithstanding other commodities be -- I mean, not with -- I mean rather -- other things being equal, that is [indiscernible] conditions. But if the gold also moves simultaneously, then it may go to INR 800 crores. Now what we have asked SEBI a dispensation is, we are willing to contribute. We want to keep the margins at 10%, anyway there is what is called a war margin based on volatility, which kicks in every 2 hours, and then it takes care of that. So what we have suggested to SEBI is, we will continue to charge war margins based on volatility. But you allow us to contribute to SGF based on the requirements. That -- I mean, if there is a need to contribute, we'll contribute. But if there is no need, we won't keep it in that fund. We will take it back. Subject to a minimum fund size. Today, we have INR 525 crores SGF. Just it is blocked aside, that's all. So -- and from our results, we have to contribute. We will contribute subject to that kind of thing. That is the reason. It's not the regulators. It's a dilemma that regulators is currently going through at this point in time. Okay? In London Metal Exchange, nickel has gone maybe 100%, it has gone up. What can we do if such a situation happens here? Yes, we understand. But our margins also went up simultaneously. There's no default on the exchange, by the way.

Sure, sure. Sir, I think that was very clear. So let me just ask this regulatory the way we are -- we were looking at in order to clarify. So what we have seen at least in the last 1 year is that some of the regulatory actions are actually, because of whatever reasons, have negatively impacted our turnover. So is there something in the next year or so where you are expecting something getting dissolved and which will actually positively contribute in terms of, let's say, a new product or something else, which will help us in terms of the volumes going forward? That was the last question on the regulatory side.

I think this is -- SGF is a major concern that I have and then the mini contracts introduction, and FII. These 3 are the ones which we are following up with them. If these 3 are addressed, I'm sure we will be able to make it. And it should be addressed in the next 6 months, why 1 year. That's the way it is.

Sure. Sir, you think these -- all these are at the advanced stage in terms of going forward?

That's right. That's right.

And sir, on the negative side, whatever, like the increased margin, the 50% cash requirement, higher margin, those files, all those are already being built in the volumes on the negative side, right? So there cannot be a further negative surprise based on this?

That's right. That's right. At this point in time, yes. On the client collateral thing, when client level margining is already implemented, but what the brokers are saying is currently there's no penalty imposed if the broker takes that entire money into his prop account and then distribute it, prop account. There's no penalty. So currently, brokers are doing it for ease of business. But otherwise, there's an identification, which client has given how much margin. And brokerage allowed -- if there is any shortage of funds, brokerage allowed to fund it to that extent, okay, from his own collateral.

Okay. Okay. Sure. Sir, just one question on the volume side. So we have seen at least in the last couple of months very high volatility in crude, which has actually helped us on volumes, INR 2 crore to some extent. But historically, I think we have seen much higher the -- in these kind of environments, much higher turnover for MCX if I look at -- even if I look at futures plus options combined versus our historical futures. So anything on the way you are looking at it, why volumes have not gone back to much higher levels despite this increased volatility?

But as you have pointed out, I mean, I don't know what historical you're looking at it. I think post CTT time, that is in 2013-'14, the highest volume seen in '19-'20 and '20-'21. And '21-'22 is not so good. But otherwise, '19-'20, '20-'21 are the 2 peak years in terms of both revenue as well as the volumes. Now even the options were not paid. Only this year, in the -- this year means it's '21-'22 second quarter onwards, we also started charging margin -- charging transaction taxes. At the same time -- not taxes, transaction fees. And volumes also coincided to go up. So we are just lucky we have not left any phase where they had a heyday, but we have not made any money. That's not the case. Now -- so coming back to the question. I don't know what period you are referring to. But because of this peak margin circular, which was imposed, and -- so it has peaked out in that sense. Now there is a -- I mean, INR 25,000 crores, INR 26,000 crores is what we are seeing currently the ADT. Probably, it will continue given this volatility. But if you look at diversifying into it, introduce more contracts and grow them, that is the only way to increase the margin. And bring in more participants, that is another way.

Sure. Sure. Sir, the option -- introduction of the options and mini contracts, do you think that will be a significant driver in terms of volumes for us? That's what one should expect?

Introduction of?

Newer contracts on options and the mini contracts on futures, I think these are the 2 you talked about. So those will be meaningful from a volume perspective. At least that's what one should expect.

Going forward?

Going forward, yes.

Yes. That's right.

And sir, under some developments which we were looking from last 3, 4 years basically which were yet to contribute to volume, such as -- we've talked about educational participation, bank distribution, all these points. So what exactly have been the challenges in your -- like what exactly is we bring unlocking this potential? And do we see now that things are maybe improving on the other end? We can get some positive signs on this part as well.

In fact, maybe -- on a lighter note, I can tell you, you should guide me, "Mr. Reddy, please, in the industry -- our industry in mutual funds, these are the things that they are talking about, MCX contract. Please, you do these 10 things, then they will come back to your platform." You should guide me how to go about doing it. Now having said this, in fact, there are two, three things. Of course, very subtle, issues are there. We have already taken up with the SEBI mutual fund. I mean, there's a deportment, what is the funds -- I don't know, whatever we call it. So we have taken up with them. And there are certain operational issues are there that needs to be addressed, first and foremost thing. Okay? Second, that needs to be addressed is, GST is another issue that they wanted it to be addressed. Okay? But there all fund houses are not registered across the country. That is one major thing. And our delivery centers, especially in metal contracts, are spread across the country. I mean, across means at least 4 states have to be covered. The other issue is, within the mutual fund industry, there's no focus on commodity sales yet. So we have made some presentation on how they can make money in arbitrage funds. So some fund houses have it. And we have done a 3-year data lately. We have presented to him. Look, these are the arbitrage opportunities that you get. So even for arbitrage opportunities, GST is coming in the way, by the way. Okay? They may not lift the metal or they may not take the -- they take the deliveries, they may not take out the goods from the warehouses. But then they have -- those goods will be in the name of that particular fund house. That's the way it is. So the -- some arbitrage funds have started participating recently. There are about -- 4 of them are currently doing it. Earlier, we had 3 of them, now fourth one has jointed. And within the mutual fund industry also, we suggested Mr. Bala, that is Mr. Balasubramanian of Birla that they should have a, what we call, a committee only on the commodities-focused. They have many operations committees, but all related to equity markets but not for the commodities. So they have -- I think they are constituting a commodities-related committee so that some fund houses will start joining, looking at this. Whatever information they want, we can give it. So engagement will increase. These are the ones we have.

Sir, any resolution on the GST aspect that you talked about?

That is, I mean, taking time. That is taking time. We are knocking at the doors now and then. SEBI itself is doing it, by the way. This gold spot exchange did not take up because of the GST issue.

So what -- just for the understanding, what is the issue here, sir?

See, the gold spot exchange, the trading takes place based on the EDR, electronic -- EGDR, the electronic gold deposit receipts. Now once they are security, then no GST is applicable. That means anyone who is holding a EDR is not required to pay. But EDR come into existence only when the first guy who is going to deposit the gold in the vault and then convert them into EDR. Then the first person who is depositing must have paid the GST. So he has to get the -- get his, what we call, benefit input credit tax. So he will not get it until the last guy in the chain converts his EDR into gold and then pays it. Now the -- I mean, it's a nonstarter. So all the deposit at some issue.

Sir, on the software migration, if you can just explain us, like have we incurred bulk of the costs in this particular year? And how do we see like the status of shifting from -- I know the current technology to other end. Are we most likely behind the curve in terms of pipeline? How do we look at this entire thing?

I didn't get the question right probably. Can you repeat, please?

So sir, basically, on the software migration, so...

From which platform? From 63 Moons platform?

Yes, yes.

Tell me. Are we behind the curve?

Sorry, sir. Sir, you were saying something?

Are you behind the curve? Is that what you're saying?

Yes. We were saying that, are we behind the timelines? Actually, because it's fast approaching. And have we done welcome the first, how do we see the migration happening? Like is that in place? So a little bit of listing on the entire process. What exactly is happening here on the software side?

Yes, yes. You see, first of all, the window that is available for MCX is strictly 2 years. Okay? Before that, you could not have awarded the contract. That is prior to September 2020. Okay? You could not have awarded the contract. You should not have thought of this. If you do that, then probably you are violating the agreement. So they are tightly -- the 63 Moons agreement, they have so tightly coupled that you will be having, all in all, 2 months -- 2 years. Now it is such a complex system. Please appreciate that. Notwithstanding that, we have prepared the BRS, okay, all that and kept ready. On 1st of -- on the 7th of October, we issued the BRS. Okay? And then we -- the entire process started with this and have come all that. On -- it took about 3 months' time. By the end of January, we have concluded the contract, okay, with TCS. So in February, work has started, February 21. Now we are -- the what we call, mock trading has started, with some modules, of course, not all of them. Now that is going on. And maybe by the end of this month, we will be able to give at least all the critical components that are needed for launching trading. Okay? That's what is, migration. So we have kept at the end of July and -- no, end of August or early September as the migration date for moving over to. So we will have 1 month window for us to do -- figure out what to do. But come what may, we propose to go ahead with the TCS. And so that they are around to help us. That is the way it is. And the 63 Moons is reluctant to give any extension unless it is a minimum of some X number of years. Okay? And that is something which is -- we can't afford. That's the way.

Sir, given where we are, I mean, in terms of implementation, are you confident? And this shall -- will we be able to manage the next 3 months?

At this stage, we are confident. And we are trying everything to ensure that it takes off as we plan.

Sorry. So, sir, as like what we think was we had kept a certain amount specific because people are going to require for the software migration. Now that we have that extra cash, probably it's not considering that SGF thing which you said that there might be an increase there. Is there any payout plans which have changed? Or we are looking for a special payout on that side?

What payout you want?

So the cash component is obviously under higher price. So people are looking at...

No, no. I understand your concerns. Okay? Look, we have also decide to start a coal exchange, okay, and -- coal spot exchange. And SEBI may permit. We don't know when they will permit. What you call co-location facility. Apart from your SGF requirement, where you will put in cash and how to take it out whenever there is no need. So that buffer is needed. Spot exchange, as I said, coal spot exchange is one. Probably, we may look at metal spot exchange also. And so that's the way we are looking at it. Yes, we have restrictions on the return that money can earn. And that is the reason why you may be looking at. You will do a better job than we are doing it. But still, once given out, probably it is difficult to get it back. And once these requirements get crystallized, probably we can look at it maybe next 3 to 5 years later.

So, sir, if we look at all the new initiatives or whatever we are looking at, what in mind we would have that incremental money which we would have found then say, like as you said, for SGF, maybe we would be requiring INR 150 crores, INR 200-odd crores additional if things -- what we...

I just gave an example to INR 150 crores to INR 200 crores, depending on the volatility in the market. If volatility increases, then SGF cover increases. I'll appreciate. And if 3 products start having a higher volatility, even SGF cover also will increase. I just said it. If you have to reduce the crude oil margin from 21%, 22% to 10%, then you needed so much, INR 150 crores to INR 200 crores. So imagine if we have, I think, 2% in gold also. Okay? So whichever one is bringing more volume coupled with higher margin, then it requires higher SGF cover.

No, sir. I think coupled with this new additional SGF requirement, plus, as you said, that we are looking for some new initiatives. So can we get like, what sort of amount have you thought? Like, we would be comfortable or we would be parking in, or there would be some additional requirements which can also come up?

Bolar, any thoughts on?

As MD said, we're looking for opportunities. We have also spelled out the opportunities that we presently are looking at. Also, we should remember that the regulator takes -- these opportunities will come when the regulatory allows us to enter into various spaces. So this will not happen overnight, right? And as MD said, once we -- once the cash is given out, then we'll have to generate it from within, right? While we do not -- as he rightly said, we do not want to sit on this cash because we are unable to give you the better returns, that is something that we all acknowledge. But at the same time, for opportunities which will come in the next few years, we need cash. Now it may take 4 years, it may take 5 years. But at an appropriate time, the management and the Board will take a call and then decide on it.

Sure, sir. Sure. Sir, one more question I had was that we did mention the point that we have done some recruitment hiring in the last 6 to 8 months. So if you can just share on that. Like what is the thought process there? And what realignment we would have done? Is that specific to some new initiatives? Or how do we look at this?

Hiring is with respect to IT, technology. Because now going into the new platform, and we need a lot of testers also there. Wherever it is temporarily phased, we have taken them via some recruitment agencies where they will -- not recruitment agencies, the consultancy firms, so maybe for 1 year or 1.5 years contracted. But some of them are really needed because now it's going to be our own platform in that sense. Okay? It's like that.

Sir, like the costs would have been done major cost in terms of recruitment hiring, whatever would be required?

Yes, almost all of them has done. But in software, payments have not done as yet. ECS fees are not as yet paid.

Sure, sure. Sir, in terms of the cost saving that we are expecting from this contract, if you could just touch upon that as well.

We mentioned in earlier calls, we are presently paying a fixed component of 15.6% goes to the present rent per annum as well as a variable, 10.3% of transaction charges to the [indiscernible]. We pay around INR 50 crores on a...

Annual basis?

INR 55 crores on an annual basis to the present vendor, right? Going forward, from -- once we go live, after the first year of warranty, we'll be paying a fixed component which has already been decided and agreed upon, a single digit, as MD as said, in earlier calls to the -- to TCS, right? So that would be the AMC to TCS. But this is something that we are all getting visibility on, and it may take some -- maybe by September, we'll get better visibility. Is that one is that we'll also have to start depreciation on our platform and all the additional servers and infrastructure that we purchase. So that will be over a period of 8 to 10 years. Also, there'll be quite -- there'll be certain operating softwares that we'll have purchased, and we may have to keep paying for on an annual basis for operating the new platform, right? So those pay we are yet to get proper visibility, but those would be the cost that we'll be incurring on the software, on the new plant.

Sure. Sir, what is the total approximate cost in terms of all the contract on the capital side?

I think that we have not disclosed it because of the confidentiality, price is not told.

Sure, sir. Sir, thank you so much, sir. I think we've have covered all the aspects in quite a bit of detail. So again, thanks a lot for this call, and all the best for the future. We hope to see you again very soon.

Give me some tips from your mutual fund industry, why they are not participating, okay? Thank you.

No. There's enough money on the table. Everyone even come.

So that is the bottom line. Okay. Thank you so much.

Thank you so much, sir.

Thank you, everyone.