INDIAMART — earnings call

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Questions and answers

Ravi Gothwal

Thank you Prateek.

We will now begin the Q&A session.

Please allow camera and microphone access if you wish to ask a question and use the raise hand option available on your screen.

Please restrict to two questions so that we may be able to address questions from all the participants.

We will wait for a couple of seconds while the question queue assembles.

So, first question is from the line of Pranav Kshatriya from Edelweiss.

Pranav, please go ahead.

Pranav Kshatriya

Yeah, thanks for the opportunity.

My first question is regarding the 8,000 to 9,000 paying customer addition what you talked about.

Should we expect, you know, this higher subscriber addition to have any implications on the ARPU, you know, that it shouldn't dilute because, you know, the subscriber addition IndiaMART InterMESH Limited April 29, 2022 is going to be primarily at the lower end.

My second question is can you provide a little bit more colour on the cost side, Q4 tend to have the highest cost in the quarter and typically in Q1, one sees the cost, you know, sort of going down, for example, our Q4FY19, the cost was Rs 117 crore in Q1 came down to Rs 110 crore.

So, should we expect the costs for the next quarter to be down?

Because, you know, the variable notes will not be there in that quarter?

And if you can quantify, that will be useful.

And basically, the last quarter we were talking about roughly Rs 470 crores plus around 15 to 20 percent cost escalation on that sort of cost run rate for FY23. Is that a sustainable cost?

And my last very small question is on unique business inquiries.

You know, that has tended to be plateaued, in fact, it is down 1% on a year on year.

You know, what is happening here?

Because I think, you know, that's a very important parameter for ensuring higher, you know, customer growth and satisfactory inquiries for the paying customers.

Dinesh Agarwal

Thank you, Pranav.

9,000 customers will have a minor implication on ARPU in the near term.

Yeah, as the bulk of the customer gets added at the bottom of the pyramid, it may have a little bit of difference on the ARPU side.

But over the time, it will catch up, we are confident that as we are going to be building a little bit of a differential pricing here and there.

I think on the platinum side, our price momentum continues to be good.

Now coming to the cost run rate and Q4 versus Q1, because we are on a ramping up over time.

And we have added 500 odd people in the last quarter itself also added many new channel partners and they have added people at their end.

So much of that could have been in the February and March.

So I don't expect this time around Q1 cost run rate to come down.

In fact, cost for the March is running at around Rs 50 crores plus, which, you know, is going to be reflecting in our increased costs for quarter one, as we're doubling down on the growth.

Now, so that answers the new cost run rate, as well as the Q4 versus Q1. On the unique inquiry side, last couple of quarters has had this unique demand on the medical supplies, medicines, mask, and other things, which I think as the COVID is subsiding, is going down, which is good.

It is not a mark.

So, I think if you really see pre-COVID, the traffic and unique inquiries have anyway gone up by almost 50%.

We used to, if I remember correctly, we used to model our business were about 500 unique business inquiries per customer per year.

Now we are already at 600 odd.

So, I think we have enough scope there.

I'm not worried on the flattening of the unique business inquiries, as the business will settle down.

Now that schools are opening up, the school sector which is used to consume lots of inquiries that are coming back.

Hotels are opening up; travel is opening up.

So, I think all that will come back because we represent almost like 50 industries, the 95,000 IndiaMART InterMESH Limited April 29, 2022 categories.

It keeps happening in some of the industries.

The inquiries go up inquiries go down.

Currently there is a lot of pressure on the commodity pricing because everything is inflationary.

So that's why also there could be some slow demand, but I'm not worried on that side.

Thank you.

Pranav Kshatriya

Yeah.

Thanks so much.

Ravi Gothwal

Thank you Pranav.

Next question is from the line of Ambit Capital.

Vivekanand, please go ahead with your question.

Vivekanand

Hi, thank you very much for the opportunity.

I have two questions.

So, can you tell us about the churn levels across customer segments?

So, whether it's silver monthly, gold and platinum, that's one.

Secondly, what is the progress of integration of some of the older investees like VYAPAR and BIZOM, you have had shareholding in these companies for a while and I believe that their power is in an area of immense interest for you, which is mobile accounting software.

So, if you could give us an update on that?

Thank you.

Dinesh Agarwal

As mentioned earlier also, Platinum and gold churns are back to almost pre COVID levels, we see less than 10% annual churn in gold and platinum customers, and we are back to those levels.

In terms of monthly and silver annual and MYR I think there is continued to be affected because and when and why our customers are coming up for renewal now, there as we guided the churn rates remain between 25% to 30%.

It remains there, it has definitely improved from during the COVID level.

And churn depends a lot on the vintage of the customer, as first year is higher, second year term is lower, third year churn is further lower.

A challenge for the lower churn in the silver monthly customers, I think we have gone down from 6% to no more like 5% per month.

So, hopefully this will increase number of customers because two thirds of those customers get added to silver monthly, we should be able to look at the churn more positively in times to come as the economy keeps opening and as the network effects become stronger.

On the investment integration, On the Vyapar side we have started to do a little bit of a cross selling.

So, if you take a IndiaMART new subscription, you are offered the first-year subscription for free.

I think about 20% of new subscribers who offer IndiaMART they are taking a trial package.

We haven't yet looked back, and we get some money paid on the ounce length basis for the referral of those customers from Vyapar that would be visible in the financial numbers in the related party transactions.

On the reverse side, we have not yet done much an integration where Vyapar customers could be present on IndiaMART, we are looking at talking to them if we can integrate IndiaMART search within our application for those people if they need anything to buy.

It will be more like advertising IndiaMART within the Vyapar platform.

So that IndiaMART InterMESH Limited April 29, 2022 what we have done on the BIZOM side, we continue to learn from their business, their business is more corporate in nature and more enterprise in nature, we haven't been able to do much integration so far, I think far closer we should be able to do better integration with Livekeeping going forward.

So, I think those are the updates, and most other investments have happened in the past year alone.

Vivekanand

Just one follow up on the investees.

So, Dinesh ji and Brijesh ji in the next 12 to 24 months, should we expect IndiaMART to make many more new investments?

Or will you be focused more on the existing investees perhaps putting money in the series B C D rounds?

Can you give us some colour on that?

Thank you.

Dinesh Agarwal

During the COVID time, we looked at almost 300 companies in these two years.

Given that there is a limited scope of the number of the startups within the SME B2B kind of space.

I think that deal flow has reduced considerably now because we have scanned quite a bit of market now.

So, your question is right that I think from now on a lot more focused on trying to understand these businesses, trying to integrate these businesses and do the follow-on investment as we have done in Vyapar, the past series investment.

So, Series A, we invested about Rs 31 crores, and then we invested about Rs 62 crores more in Vyapar.

So, I think follow on investments would be required.

We have recently announced the follow-on investment in Super Procure as well as Legistify.

So, I think going forward, less of new investment we will continue to look for, but more of existing investments.

Vivekanand

Thank you, and I wish you all the best.

I'll come back.

Ravi Gothwal

Thank you, Vivekanand.

Now we'll move on to the next participant Abhishek Bhandari from Nomura, please go ahead with your question Abhishek.

Abhishek

Thank you for the opportunity.

Sir, I have two questions.

First, if you can give us some ballpark cost number, is it fair to assume it'll be like Rs 150 Odd crore per quarter for FY23, that’s the first part.

Secondly, could you also help us understand you know, how are you trying to control attrition in your sales team, servicing team, you know, because in most of the services sector, we are seeing a very high attrition level and very incremental hiring is too expensive.

I know which is a cost item for us.

So, if you could help us on these two parameters, it will be helpful.

Dinesh Agarwal

As we are investing aggressively behind growth and salaries are also increasing, and there is no respite from the increase in wage inflation.

All I can say for the next quarter or so, let's assume Rs 155 crores, whatever it is, but going forward, as we IndiaMART InterMESH Limited April 29, 2022 increase our number of customers, we will definitely need more people to serve them.

Because for every 70-75 Odd customers, you need one person, and you need to build that pipeline early on.

So, I think all the costs for this entire year will remain on the investment side.

Because we can see that we can probably get a similar level of collection growth and customer growth as pre COVID levels.

On the acquisition side, I think one we have done aggressive salary revision which you can see in the in the cost side as well as we have also issued ESOPs to about 365 new people, new and existing people.

So, over and above 500-600 People who are still under the size of 2018 is 100 additional people have been included in the ESOP programme, which will be further going on for the next three four years. so, I think that is also reflecting or starting to reflect in the cost side of the employment if it makes sense.

So, we are doing levels, we have also announced quite a bit work from home or work from anywhere.

So, for most of the people who were working behind the desk or behind the telephone, most of them are allowed to work flexible working days.

So that also we are trying to do, so multiple areas we are trying to work upon.

Hopefully, that should result into a better vintage.

As of 31st march, now we have around more than 200 people who are more than 10 years old, i.e., more than 10 years old in the organisation, about 800 people or more than five years old into our organisation and I don't know if you noticed, we are probably the first company to adopt a weekly pay salary structure in the country.

US accepts bi-weekly pay and in Australia, New Zealand it is a weekly pay.

We are the first company in India to adopt and this is applicable across all the levels.

So, 100% of our employees are now getting weekly salaries.

So hopefully, these things should be better.

We have been a good employee retention company, and hope we continue to be there.

Abhishek

Sure.

So, one more question if time permits.

So basically, what's your thinking on you know, long term growth rate of ARPU, I think you said in one of the earlier questions that since most of the guys are entering at the lower end of the package that is dragging down the growth and ARPU, but if you could give some indication around the pre migration trend and the increases you're seeing in the Premium Pack value, you know, as an ARPU, and longer term, do you think you really have a pricing, you know, capability to enforce 4 or 5% kind of long term, you know, increases on your ARPU of your customers?

Dinesh Agarwal

Yes, so I believe that the long-term trend of 5% will continue.

Because the top 10% i.e., top 1% customers to top 10% customers give us about 45% revenue today, which means their ARPU is about 1,80,000 odd.

Now we have started to disclose another number, if you see on the slide number 20 of the presentation top 1% contribute about 17% of the revenue, IndiaMART InterMESH Limited April 29, 2022 which means that ARPU of about Rs 8 lakh, which is 1,700 Customers close to 2,000 Customer giving us eight lakh rupees.

So, in the near term, yes, it may have Rs 1,000 dent on the overall ARPU that you can see, primarily not because customers will start to pay low, it is the denominator which will increase substantially.

But our gold and platinum ARPU continues to be healthy and continues to improve year on year, we have particularly reduced the ARPU of silver because we want to invest behind the growth.

So, we are confident that the 5% long term CAGR should be possible.

Abhishek

If you can give the ARPU growth of premium customer what has been the trend for last few years?

Dinesh Agarwal

I can come back on that because I don't have that number handy.

But let's take another question.

Another think is that if you look at the leads, that we are giving to every person, whether it is platinum gold or silver, we are the lowest cost per lead platform across all the whether it is Facebook, whether it is Instagram, whether it is Google, nowhere you can get that kind of a cost per lead for gold and platinum, our cost per lead turns out to be around Rs 15 for a silver cost per lead to Rs 30 or so.

So, we have taken a look, we have a lot more power to increase the prices in the long run.

We are going slowly because as the base needs to expand for better network effect and for better matchmaking, we are going slowly and also it gets complicated as you go and try to get every dollar for the worth of the platform that is delivered.

So, we are going slow which is easier on sales.

Simple plans with flat pricing kind of, as we slowly and slowly introduce differential pricing at here and there will continue to get 5% Jump may not be this year, but over a long period of time.

Abhishek

Thank you and all the best for the year.

Ravi Gothwal

Thank you Abhishek.

Next question is from the line of Ratik Gupta from Guardian Asset Management.

Please go ahead with your question.

Ratik

Hi sir, thank you for the opportunity.

My first question is on the Sales per Employee.

So, you have although mentioned that the sales employees have increased in the later half of Feb and March, but the per employee revenue has been decreased.

So, are we seeing to going to that level or is this the normal level what we are expecting in the coming quarters?

Dinesh Agarwal

Per Employee Revenue, right?

Ratik

Yeah, Revenue Per Employee.

Dinesh Agarwal

I think it will catch up over a period of time because you know, the customers new customers are being added at lower revenue per customer itself, but we need to allocate similar number of IndiaMART InterMESH Limited April 29, 2022 employee whether the customer is paying you Rs 30,000 or the customer is paying you three lakh rupees, at least the headcount to service them remains the same.

In fact, as the customers move to a higher ARPU, they become far more self-aware about the platform and requires much lesser servicing to be done.

It's a counterintuitive, but yes, we allocate much expensive resource to serve them, but less frequently it is.

So, I think, in this particular year, you may see that revenue per employee will remain a little bit lower as the cost will remain, but it will all catch up because if you look at the collections, and the cash flow from operations, all of that will catch up.

In the past also, I'm telling even during the IPO and before the IPO, we had Rs 182 crores of cash from operation, but only Rs 60 crores of, you know EBITDA margins, which got catch up.

So, ultimately the cash flows will reflect into the profit

Ratik

Okay.

And sir, do you have in hand, the revenue breakup between the platinum, gold, silver annually and silver monthly?

Dinesh Agarwal

We already declared that top 10% which is similar, which is more or less platinum customer, the platinum customer we can assume top 10 customers, our top 10% customers, which is about 17,000 customers, today, they contributed 45% of the revenue which means the ARPU is about 1,80,000 And you know silver monthly remains at around 25 to 35%.

The rest is all silver MYR and gold.

Ratik

And what can be the reason for such increase in the other expenses for this quarter as compared to the previous quarter.

Dinesh Agarwal

That expenses is not it is the output sales expenses.

The other expenses have remained stagnant.

Because most of the new acquisition a lot of new acquisition happens through channel partners and employee on the partner payroll.

So that is all what is reflected in the other expenses.

And within that it is outsource sales cost

Ratik

Okay, that's it from my side.

So, all the best for the upcoming results.

Thank you.

Ravi Gothwal

Thank you Ratik.

Next question is from the line of Mihir from Ambit investments.

Please go ahead.

Mihir

Yeah, I hope I am audible.

So, my first question is, what are the other investments which you have made or are looking to make to drive growth and that is over and about increasing count?

Dinesh Agarwal

Can you repeat your question once?

Mihir

Yeah.

So, my first question is, you said that you made investments to drive growth.

So, are we looking to make any additional investments other than increase in headcount?

IndiaMART InterMESH Limited April 29, 2022 Because we've seen traffic growth being almost kind of flattish.

Are you also looking to make investments to drive traffic growth in addition to subscribers?

Dinesh Agarwal

If you see pre COVID, we used to get 60 million traffic per month, which increased to now close to 90 million per month.

So, traffic has already grown, we have not monetized in the last two years.

Now.

In order to monetize, our monetization model is mostly SME driven and field, driven and people driven, as you can see, on the people slide.

For many people in this lesson, so many people in this channel partners, so the traffic had already grown now we need to monetize that traffic for next couple of years or so.

So, if you mean to ask whether I'm going to invest on the advertising to bring the traffic or not in the near future, but even in the past, it has not been a very large amount even if we do but that has nothing is planned in this calendar year for sure.

Mihir

Okay, and just a simple basic question that what are the factors that have driven such a high substantial subscriber growth from, like 6,000-7,000 to almost 13,000?

And what gives you the confidence that we'll be able to make more than 10,000 Subscribers additions to the quarter?

Dinesh Agarwal

Yes.

So, as I said, one was there is a supportive economic environment.

The second was recovery of the lost customers.

Because if you see, during the two COVID waves, we had cumulatively lost about 20,000 customers.

So, I think many of those customers by themselves came back and said that they wanted to come back to IndiaMART.

And second, we increase the number of people in sales, as well as the number of channel partners.

And most of this, about two thirds of those customers come at the silver monthly level, and 1/3 of those customers come at the silver annual level.

Mihir

Got it.

Got it.

So just pushing a bit on it.

But would it be fair to assume that the Subscriber edition of this quarter can be replicated in the future quarters?

Dinesh Agarwal

No, no. So, as I said, it, this was a lot of one off, manage that fourth quarter is always the seasonally best quarter for us.

As you can see, historically, also, March quarter is the best one.

But yes, as I'm typing those 8,000 to 9,000 customers, we will try to earlier, we had the capacity to add 5000 to 6000.

And now we have built the capacity to add up to 9,000 customers, let us see how the churn behaves, because the customer attrition is a function of new customer acquisition, minus churn since we have started to acquire many new customers now in the last 3-4 months, as they will become six months old or nine months old.

And we can say that first year churn is higher.

So, I think we will come to know about the steady state level of net IndiaMART InterMESH Limited April 29, 2022 customer attrition per quarter.

But let's assume for the next two quarter 8,000 – 9,000

Mihir

Got it.

Thank you very much.

Ravi Gothwal

Thank you here, reminder to all the participants that you may use raise hand option on your screen if you wish to ask question and also accept the request to come on stage and ask the question.

Amit, you can go ahead with your question.

Amit

Yeah.

Hi, thanks for the opportunity.

So, my first question is on the salary costs.

So, as we have seen the salary costs going up.

So, now, in that how much would be fixed and the variable costs that we have incurred in this quarter?

And is there any bunching up of sales incentives that we have given in the quarter because we have not given incentives earlier.

So, and also in terms of incentives, are we giving the incentives weekly, as we have you know change these salary model?

So, are the incentives also going out weekly or is it still like quarterly or annual basis?

Prateek

Sure, so, if you look at our manpower expenses, in three heads, the salary incentives and the Stock based compensation and Gratuity and leave encashment.

The salary for this quarter had been roughly around Rs 74 crores as compared to Rs 60 crores in the last quarter.

So, there is an increase of Rs 14 crores in the salary side and incentives were almost five crores as compared to two crores last quarter increase of three crores there.

And all the other expenses, the Stock-based compensation, Gratuity, leave encashments combined were appear on nine crores as compared to three crores last quarter.

So that should give you the increase by the elements of the total manpower cost.

Dinesh Agarwal

And in terms of incentive dispersal, I know new client acquisition incentive dispersal happens weekly.

Client Servicing incentives are disbursed fortnightly.

However, the entire salary is now being disbursed on a weekly basis.

Okay.

Amit

And sir you mentioned about in the margin around it is around like Rs 50 crores per month.

So, this cost is excluding the acquisition right.

So, that we have made busy so, that will be integrated next quarter, so, that the cost of like this acquisition will be additional to this right.

Prateek

Yes, so, as we concluded the busy transaction in the month of April that could be the one-time cost of completing the acquisition and other than that, it will get consolidated from the next quarter onwards, we would give you a separate breakup of the revenues as well as expenses in the Busy business separately.

IndiaMART InterMESH Limited April 29, 2022

Amit

Okay.

On the like, you mentioned about the channel partner model that you have been investing in that.

So, if you can elaborate more on that, what exactly is it and how it is like benefiting us?

Dinesh Agarwal

So earlier we used to have our own branches everywhere and we could not afford very small branches because we have our own management structure sales managers.

So, in many cities, we could not cover far flung areas in tier-two towns, we could not cover many, many of those areas.

So, I think one, we have a team, and we were forced actually, we during the COVID.

We were fooled that most of our allies went home, and they were mostly working from home only could do telesales.

So, we as much COVID effect was there on the metro cities it was not there on the tier two cities.

So, we started experimenting with channel partners in tier two cities.

And we found that it was a good model one profitable model for a small proprietor or a small firm owner to run our business.

And then we started to experiment even in the bigger cities.

In any case, they all use our own CRM system with you know, our own mobile CRM as well as desktop CRM, we assigned the companies we assigned the leads, it is only that we are now able to operate as smaller branches which are operated by a channel partner.

However, we have a manager who looks at each one of those personally.

So, this particular model starts as a fixed pay model, but over the time, we are able to move it to the variable pay model, we have done that for many channel partners.

It is only last six months or so, that we have asked them to increase salaries similar to IndiaMART salary levels and that's why you see outsource sales cost increasing, so, I think the model is working and we will keep evolving as and when it requires better.

Amit

Okay.

So, in the channel partner model, the incentives are higher than what we give or is it on a revenue share kind of a model?

Dinesh Agarwal

I think it is the same as our site, there are no differences

Amit

And how much of the subscriber addition that you had has been coming from the Channel Sales buttons, if you can give some number.

Dinesh Agarwal

So, between if I, give you some number about 1/3 will come from say field channel partners 1/3 will come from our own tele verses or field telesales combined and 1/3 will come from our own outsource sales employees that we have on our, currently it is like that, which used to be 80% ours and 20% telephone, pre COVID.

Amit

Okay.

And so, in terms of technology, what kind of investments we are making?

So, we have around 7 million free IndiaMART InterMESH Limited April 29, 2022 suppliers on the platform.

And out of that only around 2.5 or 3% is paying so are we intending to increase that further with the help of technology and on no salespeople and rather use technology to penetrate deeper to separate areas.

Dinesh Agarwal

We use technology to predict who will benefit from our platform, what kind of customer will benefit from our platform and whom should be approach, but for the SME customer as of now, it is as you can see earlier 100% of the sales, we used to happen from the field sales people have learned a little bit now, a lot more sales are happening on telephone that itself is a technology adoption.

Our online sales are pure online sales, but most of them almost 40% of our sales are coming from people who come and give a lead online and say that I want to do this service online or who add a product online and then we approach them.

So, it is not that all of these people are doing only pure database calling they are all working on a proper hot lead system.

And those leads are everything that a visitor does on our app or on our website, whether he adds a product whether he looks at a buy lead whether he tries to do any payment all of that is recorded and then we use the intelligent engine to say that he is the one who is more likely to benefit and then run technology.

So, I guess you know, we are already a good profitable company over the period of time, technology has eased our margin level well however, if you can see the current light technology and content cost, which used to be Rs 100 crores every year has now gone up to Rs 32 crores per quarter.

So, we are already investing quite a bit behind technology.

I don't know if you notice that this particular time, we have declared another number which is the replies and call back number on our lead manager.

And they're almost close to a million conversations that have started to happen beyond our discovery platform.

So, technology is being used at all the places one to identify which supplier, two to do the better discovery and matchmaking and three to make them converse between the buyer and seller, both.

Amit

Okay, sir, like one last question from my side on the buyback.

So, we have around Rs 100 crores of buyback.

So, like maybe I was wondering that, No, like it could have been higher and because the quantum is very small, and because we are almost done with acquisitions, and we have cash on our books, so is it like it and also on the promoters, are the promoters like going to participate in the buy back?

Prateek

If you look at in this particular year, we have announced Rs 100 crore buyback and then another two rupees of the final dividend subject to the shareholders’ approval.

Now, combine this including taxes and everything this would mean an outflow of close Rs 126 – 130 crores, which would be if you see the cash that we've generated for this year, it's been roughly around IndiaMART InterMESH Limited April 29, 2022 Rs 400 crores which will be almost 1/3 of the cash that we've generated.

So, basis this we have decided to propose the size of the buyback and as we go along, we want to see depending on the cash flow generation and the cash requirements, the Board will visit this every year.

And we'll come back on the suitable shareholder.

The second question was on the promoter’s participation to that would be to the extent of their entitlement that would be the pro rata to the share only to the buyer issue size.

Amit

Okay, so thank you and all the best for the future.

Thanks.

Ravi Gothwal

Thank you.

Next question is from the line of Mr. Anuj Sehgal from Manas Asian equity.

Please go ahead with your question.

Anuj

I have two questions.

One on the employee cost.

If I look at the annual trend, the employee cost per employee went down in FY22. If I divide the employee expenditure by the total number of employees so Is that to say that the extremely high wage inflation that you're talking about only started to happen towards the later half of the year?

And what is your trend in terms of employee?

You know, expenses per head going forward?

And my second question is, if I look at your buyers on the platform, it's about 149 million as of end of FY22 is a substantial 20% Jump from last year.

What drove that?

And can you explain when you say that, I think if I remember correctly, 38 million of those are recurring or current buyers, meaning they have done a transaction in less than one year, but the ones that have added have they just been added and have not done any transaction because I can't really understand when there is a big jump in the number of buyers, why the ones who have transacted with IndiaMART is only a very small piece.

Dinesh Agarwal

So, first on the wage inflation, so, you were right, the wage inflation typically started to happen only around, I think, June or July onwards.

So, we started to respond something sometime around June first and then again in January.

So, you are seeing mostly in the later part.

So, that would be visible going forward as well.

On the buyer side, so, on slide 26, there is increase from 125 to 149 million Buyers, which is about 24 million new buyers got added in this year.

So, among this 38 million, 24 million new buyers who came in and transacted this year, and from the past another 12 million or 14 million, which transacted this year.

So that's how you see this, that's why we started to report this number.

Anuj

So, 35 million going to 30 or just an increase of 3 million that is the existing buyers who have transacted or increased Is that what you're saying?

Dinesh Agarwal

38 has two portions one is the 149 minus 125 which is just 24 million.

So, 24 million has definitely transacted in this 38 IndiaMART InterMESH Limited April 29, 2022 million.

Now the other 14 million came from the previous 125 figure.

Anuj

Got it.

So then is that also to say then that assuming at the end of FY21, you had one qualify, so only 14 of them continue to transact which is just about almost a 10%.

So, 90% of the buyers on the platform are actually ideal?

Dinesh Agarwal

They are not on the platform; these are registered buyers till date.

So, if you want to look at the platform, let's go to the traffic slide.

On the traffic slide, this is when you say that a billion visits have happened, these billion visits have happened by close to half a billion people out of those half a billion people about 40 million have projected.

So, 10% of the people who visit ended up doing some transaction, transaction means ended up doing some inquiry.

Anuj

Right.

So, just to be clear, the 149 million is not the existing number of buyers on the platform like as you say right?

Dinesh Agarwal

That is why we report that unique buyer.

So, if you go to unique buyer slide this is the current people who are buying.

Anuj

Right okay understood.

Dinesh Agarwal

And then people buying on a daily basis for any anybody who comes today and looks for a pen comes to three days later and look for a pencil those are two different buying, but this is a better number.

Anuj

Right understood and then on the cost side you as I mentioned earlier, your actual cost per employee was down 4% in FY22, but what is your expectation of that number going forward in terms of wage inflation.

Did you say 15% earlier?

Dinesh Agarwal

So, if we look at the quarter quarterly number that will give you better because you know the yearly number has changed dramatically in the last two three quarters.

Last quarter run rate number will give you some better idea.

Prateek

I just wanted to add there that if you see one that wage inflation also happened in the second half of the year.

The headcount addition also started hitting up in the second half of the year.

Therefore, FY22 is not reflecting the whole year cost of the increases that has happened which is why we may be getting a 4% reduction in the average cost of the employee.

Dinesh Agarwal

If you look at the financial, what happens when you issue ESOP or SAR it is the front loaded, the cost comes front loaded while the vesting happens till ended.

So, if you have 10-20-30- 40 vesting the cost becomes 40-30-20-10.

IndiaMART InterMESH Limited April 29, 2022

Ravi Gothwal

Reminder to participants.

If you wish to ask question, please raise your hand option on your screen.

Next question is from the line of Chirag of Kinu capital.

Please go ahead.

Chirag

Thank you for the opportunity.

Sir I just wanted to ask the new salesforce that has added in this year which part are they added in? could you give it in terms of percentage that they are added in like this percentage is added in metro cities, this percentage is added in tier two and rest of India.

Dinesh Agarwal

So, if you go to our slide, there is a buyer seller geography city wise.

This is slide no. 12 and you can take a similar slide of 1 year old, that will give you the metro vs tier 2 vs rest of the India paying subscription suppliers.

Chirag

I am asking for employees, the salesforce that has added.

Dinesh Agarwal

The salesforce that has added, mostly added in the metro cities and tier two.

Chirag

Are we facing any kind of issues in growing paid suppliers in metro cities right now?

Dinesh Agarwal

No. Infact now metro cities are reviving after COVID.

Because metro cities were most effected during the covid because most of the lockdowns were imposed there.

Infact last two years or 18 months of Covid lot of clients came from telephone or tier two.

Now we have started to refocus on metros.

Chirag

Okay good to hear that.

Last one question, is it possible for you to provide data like you are providing for paying subscribers, is it possible for you to provide data for total suppliers that are available?

Dinesh Agarwal

That would be market intelligence.

Chirag

Okay.

Thank you so much Sir.

Ravi Gothwal

Thank you.

With this we come to the end of the Q&A session.

Now I hand over the call to the management for their closing remarks.

Dinesh Agarwal

Thank you very much everybody.

I think this has been a great year for us after a very muted FY21 where we had a negative collection growth, we have gone up by 31% and the good part is we are exiting the year at a higher net customer runrate also which is also very and we have completed the acquisition of BUSY and now we have a very good foothold on the accounting space so looking forward to a great new financial year and thank you for joining the conference call.

In case if you still have some queries left which have been not answered, you can reach out to our investor relation team whose email id has been given on the investor ppt.

Thank you very much.

Have a nice day and a great weekend.

IndiaMART InterMESH Limited April 29, 2022

Ravi Gothwal

Thank you everyone.

On behalf of IndiaMART we now conclude this webinar, you may now exit your lines.

Thank you.

Notes

1.

This transcript has been edited for readability and does not purport to be a verbatim record of the proceedings 2.

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