I m surprised . How kuvera is making money ? Is it in loss?
Yes off course they are in loss and so are most of the direct MF selling apps.
Most of them are burning money to acquire and retain customers.
Customers who … pay nothing, or pay peanuts at most? What might be the reasoning behind acquiring millions of non-paying customers who could jump ship to other equally-free portals at the drop of a hat?
Well I am not sure I am qualified to answer that. But my guess would be higher user base is useful for two things
- it can get you more investment as capital. There is frenzy going on in startup funding. And having higher user base is beneficial
- idea is to hook the users with free product and once you are hooked to it, either start charging or offer premium products.
Again these are my guesses. Only they know their business model.
I just answered this on the other thread
This is something we are working on currently. I can’t commit if it will be ready in 30 days, but our team is working on this as of now. This isn’t a simple fix, if it was, we would have done it a long time back. We were waiting for the new Coin backend to be ready to start working on this.
Btw this also means that Coin will be able to support SIPs with whatever is the minimum as per the AMC. Essentially we will switch the coin way of doing SIP (lumpsum reinvested) to the AMC way of doing SIP if the SIP amounts are smaller.
SWP is tricky again because Coin is built on the Demat+Broker mode of powering MF transactions. As a business, this way gives us the leverage of running the Coin platform for free (very low overheads) as this is an extension of how we clear and settle stocks. But yeah the flip side are issues like this STP, and earlier cut-off (which hopefully will be fixed soon).
On thinking about customers, let me tell u a short story.
There was this restaurant which gave amazing free food to all their customers. One day there was a hail storm and all the windshields of the customer’s cars which were parked around the restaurant were shattered. The restaurant called and covered all costs for fixing them as well. This restaurant was in a place where hailstorms did occur once in a while. What do you think happened to this restaurant in 5 years?
The most important priority for any business which has a long-standing relationship with their customer (stockbroking, banks, insurance, AMCs) is to remain in business. You can’t for customer delight take decisions that are not sustainable for your business. To delight a few, create expectations that aren’t sustainable and hence take a risk with the entire business.
Like I have said earlier, I know that we can continue offering Coin for free because of the way it is structured. In Demat form and settled the way we settle/clear stocks (our core business). But this way of powering MF comes with a few drawbacks, which include this early cutoff or not being able to offer SWP or not being able to offer those small value SIPs. We were ready to compromise on our offering because of the operational leverage this way of powering MF transactions brought us, and also give additional unique features like start/stop SIP anytime, step up SIPs, etc. But yeah, we should hopefully have a fix for both this cut-off and lower value SIPs soon.
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It is even worse: this particular restaurant is at a place where the customers have been known to actively try to make hailstorms occur, to benefit from the “windshield insurance”.
People were gaming the cut-off timings and payment limits to such an extent that SEBI (AMFI?) had to tighten the timings and NAV regulations to what they are now. I wouldn’t be surprised if gaming the different cut-off timings and making a loud noise on online platforms till Kuvera pays up the difference, becomes the new “stop-payment of Rs.1.99L cheque if market goes up”.
Thank you for responding, @nithin
On March 2, 2021 the cut-off time was changed to 1 pm from the usual 1.30 pm. It makes me ask two questions -
- Why was the cut-off time changed to 1 pm on March 2, randomly, without any specified reason?
- If the cut-off time can be changed to 1 pm for a day, why can’t be changed to 3 pm to comply with SEBI?
If you read Kuvera’s email, they have clearly stated “in this exceptional instance”. It is obvious that it’s a one time gesture. And not to be done on a recurring basis. So no unnecessary expectations are set.
May I ask you a third question related to this -
- On 26 Feb, did BSE Star payment gateway failure impact Coin buy orders as well. If yes, how did Zerodha address this? How did Zerodha communicate to users? I don’t know so asking.
I agree with you in parts. The first part more so. But there are grey areas in the second part of your statement. In the case of Kuvera giving back the NAV difference amount (strictly, one time only) created a trust value - “don’t worry, we have your back”, this money can’t buy otherwise. Also, think of it as an investment. Instead of doing some media spends, marketing elsewhere to acquire customers, they invested back in existing customers at the time of a hiccup. Now, word of mouth travels. That’s the RoI of this investment. I am sure the value of me writing this post on a forum run by a competition (without Kuvera asking me to write), where the CEO of the competition responds, is way more than the Rs 630 that my brother received back. So from an investment point of view, not everything is quantitative. E.g. You can’t measure your mother’s love in quantity. That’s the qualitative aspect of life. What Kuvera did was a calculated risk, marketing.
Correct me if I am wrong, doesn’t Zerodha absorb the CDSL charges of Rs 5+ GST on each redemption order on Coin? Because the sell orders of MF in SoA format are free, so Zerodha has to absorb the CDSL charges in order to make it free. So in a way Zerodha is also taking a calculated risk. No?
In the other thread, I, in fact, asked why can’t Zerodha provide basic reports and data which is mandatory for free, but the deep analysis of the portfolio, similar to how INDmoney app is providing comes at a premium?
When you talk about the company-customer relationship, now, what is the value of a person like me (many others too) giving you ideas on how to better the platform. What are we getting out of it. I am not getting paid for it. I don’t own shares of Zerodha. We can choose to abandon and go elsewhere. Why is the involvement then? Ever thought about it? Because we are also investors in Zerodha. Not money-wise (that’s the easiest) but an emotional investment. We are investing our time and energy to make it better. So a company-customer relationship is always a 2-way street. And that requires mutual trust and respect.
I also wanted to say that I have never been a promoter of free lunches. Making it clear just in case you assumed it so. All I seek is value. Quality. People are willing to pay more for quality.
Zerodha may or may not make the Coin UI better, add features like SWP, etc, all those are secondary to the business.
But Zerodha pre-closing the cut-off time from what SEBI says is fundamental and discriminatory, in the first place. This is the fundamental difference. How can the internal stakeholders, watchdogs let is pass. How can the compliance officer at Zerodha sign-off on this? How can you let it happen under your nose for years and not even seeking a viable solution until now? This is the norm that I challenged. Let me tell you, even if I was working with you at Zerodha, I would have told you the truth only that we are doing wrong with the investers. Nobody was considering it a problem at first. “Chalta hai” attitude. A rule is a rule is a rule. Zerodha can’t change the fundamental rules of the game that SEBI has defined. Zerodha can tweak the gameplay, and it should. But not the game. This is what my real fight with.
Anyway, now that you have responded to this, I shall wait for the resolution. I have already waited for 6 months. It’s a long time, you know. The Earth has revolved half-circle around the sun meanwhile. I hope it gets resolved sooner than later, for once and forever. 
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Don’t use coin. Simple.
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I didn’t get this. Can you please explain and help me understand?
Till a few months ago, if we put in an order of up to Rs.2L for mutual funds before the cut-off time on day T, we would get the units allotted with day T’s NAV, irrespective of whether our payment for this order was realized or not. For orders above Rs.2L, units were allotted only with the NAV of the day on which the AMC got the money.
Apparently, many people started abusing this provision in the following way:
- Place an order for Rs.1.99L for (say) a Nifty index fund, before cut-off time on day T.
- If the market goes up significantly by close of market on day T (which is later than the MF cut-off time), then don’t make the payment .
This is a no-loss proposition for the crafty buyer: they would first be allotted the units with the NAV of day T, but after a few days the MF will realize that the payment for the order has not materialized, so they will revert the allocation. Net effect on the buyer: no money spent, no units obtained.
But, once a large enough number of people start doing this, it is no longer a no-loss proposition for the MF (and hence, for the people who are already invested in the fund):
- To issue units with the NAV of day T, the MF has to buy the underlying shares. Since the payment has not been realized, they have to borrow the money for this.
- Once the fund realizes, a few days later, that the money has not come in, they will extinguish these units by selling the securities. Irrespective of whether this is at a profit or loss, the fund has to end up paying the interest for the time between day T and the day they realize that the money is not coming in. This interest is, eventually, borne by the other, genuine investors as part of the expense ratio.
When the scale of this abuse became significant, SEBI had to step in and say enough is enough.
A provision which was there for the sake of convenience and goodwill towards small investors (hence the Rs.2L limit — remember that above this amount, NAVs were always allotted based on the day that the money hit the AMC’s account), was thus abused by crooked people to such an extent that they had to take it away.
So how does one manage to not make the payment after putting in a buy order on day T? Easy:
- Pay by cheque, then issue stop-payment. The date of submission of the application was considered to be day T, not the realization date of the cheque.
- When buying online using NEFT: don’t complete the payment step, which was the last step in the buying process. Units would be allotted with the NAV of day T. If the market didn’t go up, complete the payment after market close using the “retry payment” option.
- When buying online using a “biller” set-up: Add a biller, but disable it before making the purchase. Enable the biller only if the market doesn’t go up.
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hmm… I have done business for many years and invested in many good businesses, I can tell you with experience that exceptions to any rule is what causes the biggest baggage for any business. It isn’t easy to say I will do it only once and get away. If the same issue happens next time and the loss is say Rs 65000 for someone, the business can’t say no to pay it back just because it is big. I get giving back revenue generated from that transaction, but paying out of pocket is hmm… Especially knowing this can happen again tomorrow or many times. This paying back once will potentially be argued by the next person complaining as the reason to pay back to him/her if there is an issue. But yeah, if you think it is customer delight and will win them more customers, I can’t really debate on it.
We had sent an email to all customers explaining the issue.
Not just this CDSL charges, but even giving brokerage free trading for stocks, there is some math behind it. We are not losing money on these and relying on having to continuously raise money to survive.
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Hope any future coin/zerodha changes don’t change the pledging process, which IMO, is very smooth here compared to some other places. Many brokerages don’t offer them & for some, you have to write an email to get your debt/mutual funds pledged, making it cumbersome.
Though, simultaneous real-time pledging or selling part of your pledged holding without unpledging are features which would be very useful.
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Yeah, the sooner the better. Because, only due to this reason I am using another platform to buy my Mutual Funds.
May I request you to raise a ticket from your Zerodha account requesting Zerodha to resolve ticket no 20200921976293.
It’s the ticket that I have raised officially requesting Zerodha to sync the cut-off timing to SEBI rules to which they have responded that they would correct it. Currently, I am the only one asking for it.
If more people raise a request, due to public demand Zerodha has to listen and take it on priority. For more information, visit my profile.
Moreover from my experience of using Coin, though there are pros like easy one-click order, there are some demerits of reporting and analysis too. I use Kuvera and INDmoney to analyze my portfolio because Coin does not provide much information.
e.g. today INDmoney sent me the notification of the upcoming long weekend and holidays.
@rupeshmandal Nitin says the team is working on fixing the Coin backend so that they can sync the cut-off timings with SEBI’s. Why not just wait a bit more instead of putting pressure on their customer support team?
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I have been holding patience for a long time, brother.
Please check the timestamp. June 2019 when I first reported the issue. This was never accepted as wrong by Zerodha. Did this question ever cross your mind, why was the manipulated timing accepted at the first place. From Zerodha’s compliance officer to 1000 of employees working at Zerodha to and even Nithin himself didn’t speak against this lowering cut-off being wrong against investors, snatching their rights. Don’t they have the conscience and consciousness for the right and wrong.
Meanwhile, I researched about this issue. Learned about SEBI Scores etc.
In Oct 2020 I raised an official ticket asking for an official stand on the issue of cut-off timing different than SEBI rules. When I didn’t receive a proper response, I replied back saying I need an official statement from Zerodha before filing a complaint at SEBI Scores. That’s when Zerodha team on written record said that they will correct it soon.
The. ‘soon’ has already passed 6 months. No body answers on my official ticket when I follow up asking the monthly progress. I have become an unpaid public project manager on this case. Still there is no ETA.
Considering Nithin’s response above that it is WIP I have not filed a complaint yet at SEBI Scores. I have filed a complaint against BSE Star for restricting us at 2:30 when SEBI allows till 3 pm. Respecting Nithin’s words I didn’t file a complaint against Zerodha. Now it is his turn to respect my time. And I certainly don’t have unlimited patience.
Hope you understand.
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I had raised ticket earlier and Zerodha had stuck to it’s stand justifying it. I had clearly communicated to them that I am now buyting MF from elsewhere, they have ignored it. So, for last 3 months, I am buying from another platform.
I understand where you are coming from brother, however as I see it, “Coin” is being provided as a free service (correct me if I am wrong) and if I am understanding it correctly, it works differently compared to other mutual funds, where the stocks don’t actually go into your demat account.
As this is a relatively new way to do MF, Coin’s backend system was bound to have some unforseen shortcomings… I am sure no one wants Coin to be inferior to others, even Zerodha team (who have been keeping quiet, as to reduce their legal liability I assume).
In the interim, you can continue using other MF brokers or accept Coin’s flaws and hope the Z team revamp the backend enough to allow more accurate cut off timings.
Feel free to share your side of the coin (sic).
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Earlier, Coin was charging a monthly fee and in July 2018 they first made the ELSS investments free ELSS/Tax saving funds are completely free on Coin now
And then from Aug 2018 Coin doesn’t have any monthly subscription fees. Coin is now completely free! – Z-Connect by Zerodha
But, if you understand the business landscape, it is so because there were competition mushrooming like Kuvera, Groww, Paytm had announced Paytm money to get into mutual fund business. So it was more of peer pressure that forced Zerodha to make Coin free otherwise they would have lost so many users to the competition.
Also, the way the other platform works, be it Kuvera, Groww etc, they provide mutual fund services in SoA format (Statement of Accounts) which is completely free by the AMC. Even if you don’t want to use those 3rd party services, you can directly login to AMC website and invest for free. That’s why under pressure Zerodha had to make Coin free. More so they were not providing any value added services. Many basic functionalities are still not done like STP, SWP etc.
BTW, do you know that with each mutual fund redemption order, Zerodha is paying Rs 5.5 + GST as Demat charges from its pocket because Zerodha provides mutual fund in Demat format. Since the competition like Kuvera and Groww cost zero to buy or sell a mutual fund, Zerodha had to do the same, providing for free while bearing the cost of 5.5 + GST per sell order.
Cut-off timing is non-negotiable. I repeat non-negotiable. Period. End of discussion. That’s a fundamental right of an investor to be able to place an order as per SEBI rules.
Even I want Coin to improve so more and more users join. And my questions are only to remove the dust over the truth so Zerodha team can see it clearly. Understanding that Zerodha is absorbing the cost of 5.5+ GST per sell order of mutual fund, I am okay with paying more as AMC charges or subscribing to premium services provided Zerodha gives us value and quality and the basics are taken care of like cut-off timing.
I use Kuvera and INDmoney to import my CAS and analyze my portfolio. If you do a survey, most of the Coin users go to a 3rd party like Kuvera etc to analyze their portfolio. It’s a failure on Coin’s part to not be able to retain a customer. Because Coin updates NAV at a snail speed. While the other platforms are updated by 11:30 pm Coin updates the NAV only next working day when market opens.
Try it tomorrow. After the market closes see when can you see Friday’s 26th March closing NAV on Coin. It would only show you on Tuesday 30th March after the market opens because Saturday, Sunday, and Monday (Holi) market is closed. While on Kuvera it would show tomorrow’s NAV tomorrow night at 11:30 pm. There is unnecessary lag on Coin.
Moreover, it doesn’t tell you the total expense ratio of the portfolio, XIRR, performance vs inflation, etc deep analysis. I wouldn’t mind paying for such a service if coin introduces so, but first, the basics need to be right.
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Let us see what SEBI has to say about this, in case you decide to lodge a complaint on their portal. Personally I agree with you, but I am also aware of the potential practical issues which may arise… so I am going to stay neutral for now.
Thanks for the recommendations, both of them look good…
Also thanks for the detailed write-up, I also read your “10 reasons” thread to get the full context.