Good evening. Good evening, ladies and gentlemen. I'm Ravi Gothwal from Churchgate Partners, and on behalf of IndiaMART InterMESH Limited, I would like to welcome you all to the company Q4 FY 2022 earnings webinar. As a reminder, all participant line will be in the listen-only mode, and there will be an opportunity for you to ask question once the presentation concludes. Joining us today from the management side, we have Mr. Dinesh Agarwal, Managing Director and Chief Executive Officer, Mr. Brijesh Agrawal, Whole-time Director, Mr. Prateek Chandra, Chief Financial Officer, and Mr. Kushal Maheshwari, Head of Treasury and Investor Relations. Before we begin, I would like to remind you that some of the statements made in today's webinar may be forward-looking in nature and may involve risk and uncertainties. Kindly refer to slide number three of the earnings presentation for the detailed disclaimer.
Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you, and over to you, sir.
Thank you, Ravi. Good evening, everybody, and welcome to IndiaMART's Quarter Four FY 2022 Earnings Webinar. I hope you and your loved ones are staying safe and healthy. We have already circulated our earnings presentation, which is available on our website as well as the website of stock exchanges. I'm sure you would have gone through the presentation, and I would be happy to take any questions afterwards. I'm pleased to report that the collections from customers for this year grew to INR 934 crore in FY 2022, a growth of 31% year-on-year basis. Deferred revenue has also registered a growth of about 25% to INR 907 crore as on March 2022. Cash flow from operations for last year was INR 402 crore with 25% growth over last year.
Consolidated revenue from operations of INR 201 crore for the fourth quarter and INR 753 crore for the full year, representing a year-on-year growth of 12% and 13% respectively. We also witnessed our highest ever net customer addition in the last quarter, while doing net customer addition of 13,000 paying subscribers. At the end of March 2022, our total count of paying subscribers stood at 169,000. A supportive demand environment, recovery of lost customers, growth in the number of channel sales partners and people in sales and service teams have helped us achieve this milestone. We are seeing a good growth momentum as we continue making investments behind growth and strengthening our product sales and customer service teams.
The coming year will be the year of investment for us as we expect to add 8,000-9,000 net paying customers every quarter. At the beginning of the COVID-19 pandemic, we communicated that the margins will be elevated for the next few quarters due to cost control measures implemented by the company in FY 2021. Now, with the business volumes recovering, a portion of the cost have come back and we are doubling down on the growth momentum which we are witnessing post-COVID. We have significantly expanded our sales and service team. In Q4 FY 2022 alone, our employee headcount has increased by 15% on sequential basis. Consequently, the expenses have increased in the similar trend.
As I had told you earlier, there has been an increase in the salaries across the board in the last six, nine months, as can be seen in the industry as elsewhere. Unique business inquiries for the quarter stood at 23 million, with our 90-day repeat buyers standing at about approximately 55%. In the last quarter, we have announced the following investments. INR 104 crore for 26% stake in IndustryBuying.com, an eCommerce platform for industrial and business supplies. This is operated by MonotaRO of Japan, who is a leader in the MRO goods eCommerce for the last 20 years in Japan. INR 91 crore for 16.5% stake in Fleetx, a freight and fleet management software as a service which is used by corporates as well as fleet owners. INR 46 crore for 51% in Livekeeping.
This has been announced and under the due diligence for the completion. Platform providing an add-on service to the existing on-premise accounting software such as Tally. INR 17 crore for 10% stake in Zimyo. It's a SaaS-based HR management software for small and medium new-age companies. INR 14 crore for 26% stake in RealBooks, which is again a cloud-based multi-location accounting software, mostly used by multi-branch, multi-location, real-time accounting. For the sake of our new participants, two transactions that were announced in the last to last quarter are completed during this quarter. One, we have participated in Series B investment round for our associate company, Simply Vyapar, and currently now hold 27% stake post the transaction.
I'm happy to announce that we have completed the 100% acquisition of Busy Infotech, accounting software company, which was completed on 6th of April , 2022. All these investments are focused towards building a comprehensive ecosystem for enabling businesses and helping them doing business easier. So far, we have invested close to INR 1,000 crore in aggregate in all of these companies. Before I could conclude, I would like to say that we are very happy to close the financial year with good growth on all important metrics, and we are optimistic about the next year. An improving macroeconomic environment, increasing adoption of internet by businesses, and our strengthening value proposition will support the growth momentum at IndiaMART.com. Now, I would like to hand over the call to Brijesh to discuss about our investments, particularly in the accounting space, with updates on Busy Infotech.
Thank you, and over to you, Brijesh.
Thank you. Good afternoon, everyone. As we had shared during the last call, accounting space is a key strategic priority for IndiaMART. It is a priority because it is also key in realizing our vision of make doing business easy for businesses. Now, apart from our investment in Vyapar, we were able to complete two other investments, which were in process. One is of Busy and the second one of RealBooks, both of them done on 6th of April 2022. We are in the process of closing the Livekeeping transaction, which should happen sometime in May month itself. Now, with these four investments in place, we have a portfolio of products that appeals to the entire wide spectrum of businesses, from micro-sized businesses to the large-sized businesses put together.
Regarding Busy specifically, the business did a collection of roughly about INR 45 crore. They did generate cash from operations of roughly about INR 10 crore, both of which essentially are showing a growth of about 10% from what was done in the last financial year. Now, post the closure of this or completion of this transaction, we are actively managing the business. We also now have a new head of finance who's joined the team and helping us build the business. Our principal focus for this year at Busy essentially is to ensure a smooth transition because obviously there's a change in the management team here.
The three key priority areas that we've picked up for us, one, would be to double the growth in the top line, and also, grow the new customer acquisition base, for the company. Then further strengthen the team and the reach, that Busy currently has, so that this entire growth can be realized. Now, while we invest behind these, like we are looking at, you know, continuing to build the Busy brand, and make it far more stronger. During this entire year, obviously, we would have, better visibility on the nitty-gritties of the business, and we should also be able to go ahead and build, a view on the timelines, for these activities, which are required to cross-leverage the strengths of both Busy as well as IndiaMART.
As far as RealBooks and Livekeeping are concerned, we will continue with our existing strategy on you know the investments where we have minority stake in the businesses. We will help the founders continue to scale the business. And then over the period of time, we would explore what are the deeper collaboration opportunities that are available to us. Right. This is the update on the accounting and Busy specifically. I'll hand over the call now to Prateek to discuss the financial performance in detail. Thank you. Prateek, you can take it away.
Thank you, Brijesh. Good evening, everyone. I will take you through the financial performance for the quarter and fiscal year ending March 2022. Consolidated revenue from operations were INR 201 crore in the fourth quarter, a growth of 12% year-on-year, driven primarily by increase in paying subscribers and marginal improvements in ARPU. Consolidated EBITDA was INR 57 crore, representing a margin of 28%. As we communicated earlier, our margins during the last year were high due to low business volumes and related cost savings that were temporary in nature. Now, with business volumes recovering and our focus on investing behind growth.
We have significantly expanded our sales as well as customer services team that is responsible for the renewals and the upsells of existing customers. As you would have seen, our employee headcount has increased by 487 people in this quarter. Further, our outsourced sales cost has also increased by INR 12 crore as compared to the last quarter, in line with growth in paying subscribers. All of these costs are recurring in nature. Therefore, we expect our margins to remain subdued as we continue to make investments for the growth ahead. Net profit for the quarter was INR 57 crore with a margin of 25%, and cash generated from operations during the quarter was INR 158 crore.
On a full year basis, consolidated revenue from operations was INR 753 crore, with EBITDA of INR 308 crore, representing a margin of 41%. Net profit for the year was INR 298 crore with a margin of 34%. Cash flow from operations during the year was INR 402 crore. As of March 31st, 2022, cash and investment balance stood at INR 2,419 crore. Subsequent to the balance sheet date, we have concluded our acquisition of Bizom, for which consideration of INR 500 crore has been discharged. Therefore, as of now, our effective cash balance will be approximately INR 2,000 crore.
In line with our policy of distributing return to the shareholders, we have proposed share buyback at a price of INR 6,250 per share for amounts not exceeding INR 100 crores. Further, a final dividend of INR 2 per share has been recommended for approval from the shareholders. Thank you very much. We are now ready to take any questions.
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 second while the question queue assembles. First question is from the line of, Pranav Kshatriya from Edelweiss. Pranav, please go ahead.
Yeah. Thanks for the opportunity. My first question is regarding the 8,000-9,000 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, should it dilute because, you know, the subscriber addition is gonna be primarily at the lower end? My second question is, a little bit more color 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. I mean, for example, Q4 FY 2019, the cost was INR 317 crore. In Q1, it came down to INR 110 crore.
Should we expect the cost for the next quarter to be down, because, you know, the variable payouts will not be there in that quarter? If you can quantify that will be useful. You know, between the last quarter, we were talking of roughly INR 470 crore plus around 15%-20% cost escalation on that, sort of a cost run rate for FY 2023. Is that, you know, a sustainable cost run rate, you know? My last, very small question is on, unique business inquiries. You know, that has tended to plateau. In fact, it is down 1% on a year-on-year basis. 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, you know, satisfactory inquiries for the paying customers.
Yeah. Thank you, Pranav. I think 8000-9000 net customer gains may have a minor implication on ARPU in the near term. Pranav, can you mute yourself now? Yeah. As the bulk of the customer get 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 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 new cost run rate and Q4 vs Q1, because you know, we are on a ramping up 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. And much of that could have been you know, in February and March. So, I don't expect this time around Q1 cost run rate to come down. In fact, cost for March is running at around INR 50 crores plus.
you know, which is going to be reflecting in our increased cost for quarter one, as we are doubling down on the growth. Now, that answers the new cost run rate as well as the Q4 vs 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. I think if you really see pre-COVID, the traffic and unique inquiries have anyway gone up by almost 50%. If I remember correctly, we used to model our business. There are 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 used to consume lot 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 and 95,000 categories. It keeps happening in some of the industries. The inquiries go up, in some of the 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.
Yeah. Thank you. I'll come back to you for more questions. Thank you so much.
Thank you, Pranav. Next question is from the line of Ambit Capital. Vivekanand, please go ahead with your question.
Hi. Thank you very much for the opportunity. I have two questions. 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 Vyapar is in an area of immense interest for you, which is mobile accounting software. If you could give us an update on that would be great. Thank you.
Churn side, as we have been telling 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 silver monthly and silver annual MYR, I think there is continued to be because annual and MYR customers are coming up for renewal now. There, as we have guided, the churn rates remain between 25%-30%. It remains there. It has definitely improved from during the COVID level. Churn depends a lot on the vintage of the customer as the first year churn is higher, second year churn is lower, third year churn is further lower.
In the silver monthly customers, I think we have come down from 6% to now more like 5% per month churn. Which is a welcome move now. Hopefully, with increased number of customers, because 2/3 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, what's the second question was?
Investment integration.
On the investment integration, on the Vyapar side, we have started to do a little bit of cross-selling. If you take a IndiaMART new subscription, you are offered the first year Vyapar subscription for free. I think about 20% of new subscribers who opt for IndiaMART, they are taking a trial package of Vyapar. We haven't yet looked back, and we get some money paid on an ongoing 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 in integration where Vyapar customers could be present on IndiaMART. We are talking to them if we can integrate IndiaMART Search within Vyapar application.
Those people, if they need anything to buy it will be more like advertising IndiaMART within the Vyapar platform. That much 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. I think those are the updates, and most other investments have happened in the past year alone.
Just one follow-up on the investees. Dinesh Ji and Brijesh Ji, in the next 12- 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 color on that? Thank you.
As I said 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 the deal flow has reduced considerably now because we have scanned quite a bit of market. Your question is right that, I think from now on, a lot more focus go on trying to understand these businesses, trying to integrate these businesses, and also do the scale follow-on investment, as we have done in Vyapar series B investment. Series A, we invested about INR 31 crore, and then we invested about INR 62 crore more in Vyapar. I think follow-on investments would be required.
We have recently announced a follow-on investment in SuperProcure as well as in Legistify. I think, going forward, less of new investment we will continue to look for, but more of existing investments.
Thank you and wish you all the best. I'll come back in the queue.
Thank you, Vivek. Next question is from the line of Motilal Oswal. Mukul Garg, please go ahead with your question. Mukul, you can unmute your line and please go ahead with your question. I'm sorry, Mukul. We cannot hear you, so maybe you can come back in queue. Now we'll move on to the next participant, Abhishek Bhandari from Nomura. Please go ahead with your question, Abhishek.
Thank you for the opportunity. Sir, I have two questions. First, if you can give, you know, some ballpark, cost number. Is it fair to assume it will be like INR 150 odd crore per quarter for FY 2023? That's the first part. Secondly, could you also help us understand, you know, how are you trying to control, you know, attrition in your, you know, sales team, servicing team? You know, because in most of the services sector, we are seeing a very high attrition level, and every incremental hiring is so expensive, I know, which is a cost item for us. If you could help us on these two parameters, it will be helpful.
See, as we are investing aggressively behind growth and, salaries are also increasing and, there is no respite from the increasing wage inflation. All I can say for the next quarter or so, let's assume INR 100 crore-INR 155 crore, whatever it is. Going forward, as we, if we increase our, you know, number of customers, we will definitely need more people to serve them. Because for every 70-75 odd customers, you need 1 person, and you need to build that pipeline early on. I think on the cost front, this entire year will remain on the investment side, because we can see that we can probably get the similar level of collection growth and customer growth as pre-COVID levels.
On the attrition side, I think one, we have done aggressive salary revision, which you can see in the cost side, as well as we have also issued ESOPs/SAR to about 365 new and existing people. Over and above 500-600 people who are still under the SAR of 2018, is
100 additional.
Yeah. 100 additional people have been included in the ESOP program, which will be further going on for the next three, years. I think that is also reflecting, starting to reflect in the cost side of the employee benefit expense. We are doing levels. We have also announced quite a bit work from home or work from anywhere. For the most of the people who were working behind the desk or, you know, behind the telephone, most of them are allowed to work flexible working days. That also we are trying to do. Multiple areas we are trying to work upon. Hopefully, that should result into a better vintage.
As of 31st March, we had around more than 200 people who are more than 10 years old in our organization. About 800 people are more than five years old into our organization. I don't know if you noticed, we are probably the first company to adopt a weekly pay salary pay structure in the country. In U.S., etc., there are biweekly pay and in Australia and New Zealand, it's a weekly pay. We are the first company in India to adopt. This is applicable across levels. 100% of our employees are now getting weekly pay salaries. Hopefully, these things should be better. We have been a good employee retention company, and hope we continue to be that.
Sure. One more question if time permits. Basically, what's your thinking on, you know, long-term growth rate of ARPU? You have, I think you said in the, one of the earlier questions that since most of the guys are entering at lower end of the package, that is dragging down the growth in ARPU. But if you could give some indication around the, you know, premiumization 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%, 5% kind of long-term, you know, increases on your ARPU to your customers?
Yes. I definitely believe that the long-term trend of 5% will continue. You know, because the top 10% and top 1% customers. Top 10% customers give us about 45% revenue today, which means their ARPU is about INR 180,000 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, which means that ARPU of about INR 800,000, which is 1,700 customers, close to 2,000 customers giving us INR 800,000. In the near term, yes, it may have INR 1,000 dent on the overall ARPU that you can see, and primarily not because the customers will start to pay low.
It's the denominator which will increase substantially. Our Gold and Platinum ARPU continues to be healthy and continues to improve year-on-year. We have particularly reduced the ARPU of the Silver because we want to invest behind the growth. We are pretty confident that the 5% long-term CAGR should be possible.
sir, if you can give the ARPU growth of premium customer, what has been the trend for last few years?
I can come back on that because I don't have that number handy. Prateek, in the meantime, if you can pick out that number, I will give you in the call. No, let's take another question. Prateek will take out the number and give you in the call.
No problem. Thank you.
Another thing 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, you know, 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 or Platinum, our cost per lead turns out to be around INR 15. For a Silver, cost per lead turns out to be around INR 30 or so. We have a lot more power to increase 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.
It gets complicated as you go and try to get every dollar for the worth of the platform that is delivered. We are going slow, which is easier on sales. Simple plans with flat pricing kind of. As we slowly introduce differential pricing here and there, the ARPUs will continue to get a 5% jump. May not be this year, but over a long period of time.
Thank you, and all the best for the year.
Thank you, Abhishek. Next question is from the line of Ratik Gupta from Guardian Asset Management. Ratik, please go ahead with your question.
Hi, sir. Thank you for the opportunity. My first question is on the sales per sales employee. Although you have mentioned that the sales employees have increased in the later half of Feb and March, but the per employee revenue has been decreased. Are we seeing to going to that level, or is this the normal level, what we are expecting in the coming quarters?
per employee revenue, right?
Yeah, revenue per employee.
Yeah, I think it will catch up over a period of time because, you know, the customers, new customers are being added at a lower revenue per customer itself and but we need to allocate similar number of employee, whether the customer is paying you INR 30,000 or whether the customer is paying you INR 3 lakh. 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 counterintuitive, but yes. We allocate much expensive resource to serve them, but less frequently it is done.
I think in this particular year, you may see that revenue per employee will remain a little bit lower as the cost, you know, ARPU also will remain low. 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. You know, in the past also I'm telling even during the IPO and before the IPO, we had INR 182 crore of cash from operations, but only INR 60 crore of EBITDA margins, which will catch up. It will reflect into the profit.
Okay. Sir, do you have in hand the revenue breakup between the Platinum, Gold, Silver annually, and Silver monthly?
Yes. We already declared that top 10%, which is similar, which is more or less platinum customer.
Yeah.
Platinum customer, you can assume top 10 customers are top 10% customers, which is about 17,000 customers today. They contribute 45% of the revenue, which means the ARPU is about INR 1.8 lakh. You know, we always say that silver monthly remains at around 25%-35% there. The rest is all the silver MYR and gold.
Okay. What can be the reason for such increase in the other expenses for this quarter as compared to the previous quarter?
No, other expenses is not. It is the outsourced sales expenses. The other expenses have remained more or less stagnant because the most of the new acquisition, a lot of new acquisition happens through channel partners and employees on the partner payroll. That is all what is reflected in the other expenses, and within that it is outsourced sales cost.
Okay. That's it from my side, sir. All the best for the upcoming results. Thank you.
Thank you, Ratik. Next question is from the line of Mihir Damania from Ambit Investment Advisors. Please go ahead.
Yeah. I hope I'm audible. My first question is, what are the other investments which you have made or are looking to make in order to drive growth, and that is over and above the increase in headcount?
Other investments to drive growth. What's that? Can you repeat your questions once more?
Yeah. My first question is, you said that you made investments in order to drive growth. Are you looking to make any additional investments other than increase in headcount? 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 subscriber growth?
Okay. If you see, you know, pre-COVID, we used to get 60 million traffic per month, which increased to now close to 90 million per month. Traffic had already grown. We had 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, we have so many people in the sales service and so many people in the channel partners. The traffic had already grown. Now we need to monetize that traffic, for next couple of years or so.
If you mean to ask whether are we going to invest on the advertising to bring the traffic, not in the near future, but even in the past it has not been a very large amount, even if we do. But nothing is planned in this calendar year for sure.
Just a simple basic question, what are the factors that have driven such a high substantial subscriber growth from like 6,000-7,000 to almost 13,000? What gives you the confidence that we'll be able to make more than like 8,000-9,000 subscriber additions every quarter?
As I said, one was that there is a supportive economic environment. The second was recovery of the lost customer, because if you see, during the two COVID waves, we had cumulatively lost about 20,000 customers. I think many of those customers by themselves came back and said that they wanted to come back to IndiaMART. Second, we increased the number of people in sales as well as the number of channel partners. Most of this, about 2/3 of those customers come at the silver monthly level, and 1/3 of those customers come at the silver annual level.
Got it. Just pushing a bit on it, but would it be fair to assume that the subscriber addition of this quarter can be replicated in the future quarters?
No, no. As I said, this was a lot of one-off. One is the JFM quarter is always a seasonally best quarter for us. As you can see historically also, March quarter is the best quarter. Yes, as I'm guiding that 8,000-9,000 customers, we will try to add. Earlier we had the capacity to add 5,000-6,000, and now we have built the capacity to add up to 9,000 customer. Let us see how the churn behaves, because the next customer addition is a function of new customer acquisition minus churn.
Since we have acquired, started to acquire many new customers now in the last three to four months, as they will become six months old or nine months old, as we can say that first year churn is higher. I think we will come to know about the steady state level of net customer addition per quarter. Let's assume for the next two quarters, 8,000-9,000.
Got it. Thank you very much, and all the best.
Thank you, Mihir. A reminder to all the participant 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.
Hello. Yeah, it is Amit. Amit here. Can you hear me?
Yeah. Hi, Amit. You can go ahead with your question, Amit.
Yeah. Yeah. Hi, sir. Thanks for the opportunity. My, you know, my first question is on the salary cost. You know, as we have seen, the salary cost is going up. 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? Now, and also in terms of incentives, are we giving the incentives weekly as we have right now, like, changed this, you know, salary model? Are the incentives also going out weekly or is it still you know, like quarterly or annual basis?
Yeah. Prateek will tell you all this criteria.
Sure. If you look at our manpower expenses in three heads, the salary, incentives and the stock-based compensation and gratuity and leave encashments. The salary for this particular quarter had been roughly around INR 74 crore as compared to INR 60 crore in the last quarter. There is an increase of INR 14 crore in the salary side. Incentives were almost INR 5 crore as compared to INR 2 crore last quarter, increase of INR 3 crore there. All the other expenses, the stock-based compensation, gratuity, leave encashments combined were roughly around INR 9 crore as compared to INR 3 crore last quarter. That should give you the increase by the elements of the total manpower cost.
In terms of incentive disbursement, I know new client acquisition incentive disbursement happens weekly, if the client servicing in.
Mm-hmm.
Client servicing incentives are disbursed fortnightly. However, the entire salary is now being disbursed on a weekly basis.
Okay. Sir, you know, you mentioned about the in March run rate is around like 50 crore per month. This cost is excluding the acquisition, right? That we have made Busy, so that will be integrated next quarter. That the like cost of Busy acquisition will be additional to this, right?
Yes. As we've concluded the Busy transaction in the month of April, there could be the one-time cost of completing the acquisition.
Okay.
Other than that, I think it will get consolidated from the next quarter onwards. You know, we would give you a separate breakup of the revenues as well as expenses in the Busy business, separately.
Okay. Sir, on the, you know, like you mentioned about the channel partner model that you have been investing in that. If you can elaborate, you know, like more on that, you know, what exactly, you know, is it and, how it is, like, benefiting us.
Earlier, we used to have our own branches everywhere. We could not afford very small branches because we have our own management structure, you know, sales managers. In many cities we could not cover far-flung areas. In tier two towns, we could not cover many of those areas. I think one we have seen and we were forced actually. During COVID, we were forced that most of our employees went home, and they were mostly working from home, only could do telesales. As much COVID effect was there on the metro city, this was not there on the tier two cities. We started experimenting with channel partners in tier two cities.
We found that it was a good model. A profitable model for a small proprietor or a small firm owner to run our business. Then we started to experiment even in the bigger cities. In any case, they all use our own CRM system, hamara, you know, our own mobile CRM as well as desktop CRM. We assign the companies, we assign the leads. It is only that we are now able to operate smaller and smaller branches, which are owned and operated by a channel partner. However, we have a manager who looks at each one of those personally.
This particular model is. It 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 increased. We have asked them to increase salaries similar to IndiaMART salary levels, and that's why you see outdoor sales cost increasing. I think the model is working. We will keep evolving as and when it requires better.
Sir, in the you know channel partner model, the incentives are higher than like what we give. Is it on a revenue share kind of a model?
I think it is the same as ours. There are no differences per se.
Okay. How much of the, you know, subscriber addition that we had has been coming from the channel sales partners? If you can give some number.
I mean, if I give you some number, about 1/3 will come from, say, field channel partners, 1/3 will come from our own tele vs field, or a field tele sales combined, and 1/3 will come from our own, you know, outsource sales, employees that we have on our. I think currently it is like that, which used to be 80% ours and 20% telephone, pre-COVID.
Okay. Sir, in terms of technology, what kind of investments are we making? We have around 7 million, you know, free suppliers on the platform, and out of that only around 2.5% or 3% is paying. You know, are we, you know, intending to, like, increase that further with the help of technology and, you know, actually-
Yeah, of course, with technology there are many.
Reduce our dependence on, you know, salespeople and rather use technology to, you know, penetrate deeper?
There are two separate areas. One, we use technology to predict who will benefit from our platform, what kind of customer will benefit from our platform, and whom should we approach. For the SME customer, as of now it is. You know, as you can see, earlier 100% of the sales used to happen from the field sales. As you know, people have learned a little bit, now a lot more sales are happening on telephone. That itself is a technology adoption.
Our online sales is contribute pure online sales, but most of, you know, 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. 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 an intelligent engine to say that he is the one who is more likely to benefit and then run technology. I guess, you know, we are already a good profitable company and over the period of time, technology has eased our margin leverage as well. However, if you can see the current slide, technology and content cost, which used to be INR 100-odd crore every year, has now gone up to INR 32 crore per quarter. We are already investing quite a bit behind technology.
I don't know if you noticed this particular time we have declared another number, which is 32, the replies and callback number on our lead manager. There are almost close to 1 million conversations have started to happen beyond our discovery platform. Technology is being used at all the places. One, to identify which supplier. Two, to do better discovery and matchmaking. Three, to make them converse between the buyer and seller both.
Okay, sir, you know, like, you know, like one last question from my side on the buyback. You know, we have announced INR 100 crore of buyback. Like, maybe I was wondering that, you know, like, it could have been higher and because the quantum is very small and you know, because we are almost done with the acquisitions and we have cash on our books. It, like, also on the promoters, are the promoters, like, going to participate in the buyback?
Yeah. Prateek, go ahead, please.
Sure. Thanks. If you look at, in this particular year, we have announced, 100 crore of buyback and another INR 2 of the dividend or the final dividend, subject to the shareholders', approval. Now, combine this including taxes and everything, this would mean an outflow of, you know, close to INR 126 crore-INR 130 crore. Which would be, if you see, the cash that we've generated this year, it's been roughly around INR 400 crore. Which will be, almost 1/3 of the cash that we've generated.
Based on this we have decided to, you know, we have proposed the size of the buyback and as we go along we would see, depending upon the cash flow generation and the cash requirements as to how the board will revisit this every year and will come back on the suitable shareholder return.
On the promoter.
On the promoter part.
The second question was on the
On the promoter part.
On the promoters' participation. Promoters' participation would be to the extent of their entitlement, that would be the pro rata to the shareholder, to the buyback issue size.
Okay, sir. Okay, sir. Thank you and all the best for the future, sir. Thanks.
Thank you, Amit. Next question is from the line of Mr. Anuj Sehgal from Manas Asian Equity. Please go ahead with your question.
Yeah, thanks. I have two questions. One on the employee cost, you know, if I look at the annual trend, the employee cost per employee actually went down in FY 2022, you know, if I divide the employee expenditure by the total number of employees. Is that to say that the extremely high wage inflation that you are 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? My second question is, if I look at your buyers on the platform, it's about 149 million as of end of FY 2022. There's 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. 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 increase.
First on the wage inflation. You are right, the wage inflation typically started to happen only around, I think, June, July onward, July onwards. We responded. We started to respond sometime around June, July first and then January second. You are seeing mostly in the later part of the. That would be visible going forward as well. On the buyer side, Kushal, can you put that buyer slide? Yeah. Yeah, sure. Everything. On the buyer side, so 125-149 buyers, which is about 20 million new buyers or 24 million new buyers got added in this year. Now this 38 million. 24 million new buyers who came and definitely transacted this year.
From the past, another 12 million, 14 million which transacted this year. That's how you see this. That's why we started to report this number.
What is the 35 going to 38 is just an increase of 3 million. That is the existing buyers which have transacted or increased. Is that what you're saying?
No. 38 has two portions. One is the INR 149 minus INR 125.
Okay. Okay.
Which is 49, which is INR 24 million.
Yeah.
24 million is definitely transacted in this 38. Okay?
Okay. Okay.
Now, the other 14 million.
The remaining is 14 million.
The other 14 million came from the previous 125 or 135.
Got it. Is that also to say that assuming at the end of FY 2021, you had 125, so only 14 of them continued to transact, which is just about, you know, almost say 10%. Ninety percent of the buyers on the platform are actually idle.
They are not on the platform. These are registered buyers till date.
Okay.
If you want to look at the on the platform, let's go to the traffic slide. Now on the traffic slide, this is when you say that there are 1 billion visits have happened, these 1 billion visits have happened by close to half a billion people. Out of those half a billion people, about 40 million have transacted. 10% of the people who visit end up doing some transaction. Transaction means end up doing some inquiry.
Right. Just to be clear, the 149 million is not the existing number of buyers on the platform. Like, you know, as you say, right, the store-
That is why we report that unique buyers. If you go to unique buyer slide. This is the current people who are buying.
Right. Okay. Understood.
People buying on a daily basis. Anybody who comes today and looks for a pen and comes three days later and looks for a pencil, those are considered to be two different buying. This is a better number.
Right. Understood. Then on the cost side, you, as I mentioned earlier, so your actual cost per employee was down 4% in FY 22, but what is your expectation of that number going forward in terms of wage inflation? Did you say 15% earlier?
If you look at the quarterly number, that will give you better because, you know, the yearly number has changed dramatically in the last two, three quarters. If last quarter run rate number will give you some better idea there.
Okay. Understood. Okay.
Kushal, do you want to add something there?
Yeah. Just wanted to add that if you see, one that the wage inflation also happened in the second half of the year. The headcount addition also started, building up in the second half of the year. Therefore, the FY 2022 is not reflecting the full year cost of the, increases that has happened, which is why you may be getting a 4% reduction in the average cost of employee.
Understood.
You would get the true picture of the employee.
If you look at the financials, what happens when you issue ESOP or SAR, it is the front-loaded, the cost comes front-loaded while the vesting happens tail-ended. If you have 10, 20, 30, 40 vesting, the cost becomes 40, 30, 20, 10.
Right. Okay, sir. Thank you.
A reminder to participate, if you wish to ask question, please raise your hand, option on your screen. Next question is from the line of Chirag Maroo from Keynote Capital. Please go ahead.
Yeah. Thank you for the opportunity. Sir, I just wanted to ask that the new sales force that is added in this year, which part are they added in? Could you give it in terms of percentage that they are added in? This percentage are added in metro cities, this percentage added in tier two and rest of the India?
If you go to our slide where there's a buyer-seller geography-wise, this is slide number 12. You can take the slide number 12, I mean similar slide one year old, that will give you the metro vs Tier 2 vs Tier 3, rest of India paying subscription suppliers.
No, sir, I'm asking for employees. That sales force that is added.
Sales force that is added, mostly added in the metro cities and tier two.
Okay, sir. Sir, are we facing any kind of issues in growing paid suppliers in metro cities right now?
No, in fact, you know, in fact now metro cities are reviving after the two years, because metro cities were the most affected during the COVID, because most of the lockdowns, most of the, you know, these are cities, so they were the most affected. In fact, the last two years or the 18 months of the COVID, a lot of client came from Tier 1 or Tier 2. Now we have started to refocus on metros.
Okay. Okay. Good to hear that. Sir, last one question. Is it possible for you to provide data like you have provided for paying subscribers? Is it possible for you to provide data for the total suppliers that are available? Means that 7.1 million suppliers.
That would be market intelligence.
Okay, sir. Thank you so much, sir.
Thank you. With this, we come to an end of the Q&A session, and now I hand over the call to the management for their closing remarks.
Okay. Thank you very much, everybody. I think this has been a great year for us. You know, after a very muted FY 2021, where we had a negative collections growth, I think we have gone up to collections by 31%, which is very healthy. The good part is that we are exiting the year at a higher net customer run rate also, which is also very good. Third, we completed the acquisition of Busy, and now we have a very good foothold on the accounting space. Looking forward to a great new financial year, and thank you for joining the conference call.
In case you still have some queries left, which have not been answered, you can definitely reach out to our investor relations team, whose email ID is given on the investor PPT. Thank you very much. Have a nice day. Have a great weekend.
Thank you, everyone. On behalf of IndiaMART, we now conclude this webinar. You may exit your lines. Thank you.