Q4 19/20

May 13, 2020

Ladies and gentlemen, good day and welcome to the Indiamart Q4 and FY twenty twenty Results Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. Joining us today from the management side, have Mr. Dinesh Agarwal, Chief Executive Officer Mr. Brijesh Agarwal, Full Time Director and Mr. Prateek Chandra, Chief Financial Officer. Before we begin today, I would like to remind you that some of the statements made in today's conference call may be forward looking in nature and may involve risks and uncertainties. Kindly refer Slide number three of the earnings presentation for detailed disclaimer. Now I would like to hand the conference over to Mr. Dinesh Agrawal for his opening remarks. Thank you, and over to you, sir. Good evening, and welcome to IndiMRt's fourth quarter results conference call. We have already circulated our earnings presentation, which is also available on our website as well as the stock exchange website. I'm sure you would have gone through the presentation and our recent disclosure made today on our investment in Mobisi Technologies Private Limited. I would be happy to take any questions afterwards. First of all, I'm pleased to report that India Mart has achieved a consolidated revenue from operations of INR170 crore in the fourth quarter and INR639 crore for the full year, representing a year on year growth of 2326% respectively. Collections from customers have increased moderately by about 10% from INR671 crore in FY 2019 to INR738 crore in FY 2020 as consolidated basis. As a result, the deferred revenue as on March 2020 stood at INR685 crores, where the year on year growth has been decreased to 17% as compared to 38% for the same period last year. Total paying subscribers at IndiaMart stood at approximately 147,000 with a net addition of approximately 5,000 subscription suppliers for the quarter. Now I will brief you about the impact of COVID on our business and our customers and the measures that have been taken by us to mitigate the same until now. The last financial year has been challenging because of the weakness in the overall economy and we have been sharing this information since last two, three quarters itself. March onwards, COVID induced lockdown has further impacted the business environment and due to the nature of COVID-nineteen exigency, our top priority was to ensure the safety and well-being of our employees as well as our vendor partners. First of all, all of our employees are safe and they have adopted to this new work from home environment with full dedication and commitment. This has allowed unhindered running of the marketplace platform both on website as well as on mobile app. We have continued support on the customer service on our toll free number as well as our email and mobile app. The nationwide lockdown has resulted into general business activity coming to a standstill. As a result, we have observed a reduction in the traffic on an average of 50% lower than the normal values. Though it varies significantly across categories and across geographies, India Mart has a very important responsibility towards the nation and we have a very important role to play, especially in these tough times. Everyone from across the world is looking for products and suppliers related to hygiene, safety, medical, pharmaceutical and entire food value chain. Due to the coronavirus outbreak related lockdown in China, since early February, the entire world has been looking at India and India Mart is the destination for many such categories. We are witnessing significant traffic growth in categories such as sanitization, safety, hospital, pharmaceutical and food supplies, etcetera. And indirect categories like chemical, packaging, raw materials related to the above mentioned items. To help buyers looking for essential items, we have identified many such categories of importance, and we are working hard to increase the number of products and suppliers available in those categories from all across the India and from the cities all across India, so as it is easier for buyers to be able to find the kind of products that they are looking for in these days of emergency of COVID created because of the COVID. Most businesses, including our customers, especially SME customers, are currently facing acute financial challenges and they have been already facing financial challenges since last year due to economical slowdown and which got further aggravated in the month of October, November when the financial crunch started. And it got further acute when the sudden and long lockdown has happened to them. As always, we promise to stand by our customers in these challenging times. We have undertaken various customer retention initiatives such as discounts and relaxed payment terms for suppliers to help them navigate the current situation. The current market is also non conducive for any new sales due to the lockdowns as most of our salespeople are not able to meet the customer and most of our customer businesses and premises are completely closed. Hence, approximately 10% to 20% of our subscriber base may maybe severely impacted and are more likely to churn. We are witnessing a sharp downfall in the sales and collection from customers and anticipate the same to remain suppressed for the next few months until the lockdown is completely withdrawn and the life is back to normal. The situation requires us to be financially prudent, responsive and proactive in larger interest of all the stakeholders of the company. We are taking a number of cost optimization measures such as relooking at our current cost structure, renegotiating with vendor contracts, looking at variable cost, deferment of appraisals and temporary salary rationalization without doing any kind of a layoff. Amongst this bloom, the silver lining that we foresee in the long run Number one, there is a overall adoption curve of the Internet will improve. Lot more people and businesses will adapt to the Internet in times to come. There is a natural pull for Make in India in the post COVID scenario that should increase the manufacturing intensity in India, potentially enlarging India market size. There would also be increased openness to the online and telesales that may reduce our reliance on physical meetings in the long run and make it more efficient. Our geographic and category diversification put us in a position to leverage the staggered opening of the lockdowns. The inherent strength of our company's subscription based business model with negative working capital and robust cash reserve give us a confidence that at the end, we will emerge stronger together. Now I would like to appraise you about the investment that we have announced this afternoon. The Board has approved to invest INR 10 crore in Mobisi Technologies Private Limited. They run a business called Bizoom along with other investor, Triton Investment Advisors. Visum is a Bangalore based SaaS startup offering Salesforce automation, distribution management system to medium and large sized businesses. This is co founded by Lalit Bise, Vasudeo and Sri Bise. It offers a mobile first cloud solution that enables the digital transformation of sales and supply channels of the consumer brand distributing through retail stores. Visum, which is solving the complex sales and distribution and direct retail reach needs of the consumer brands on a mobile is stabilized and scalable platform is a strategic fit with our long term vision to make doing business easy for all kind of businesses, whether small, medium or large. Now I would like to hand over this call to Prateek to discuss the financial performance more in detail, and we will come back to you with your questions and answers later. Thank you, and over to you, Prateek. Thank you, Dinesh, and good evening, everyone. I would like to first discuss performance for fourth quarter followed by the performance for the entire fiscal year. The consolidated revenue from operations was at INR170 crores for the quarter with EBIT of INR46 crores representing a margin of 27% as compared to a 14% EBIT margin last year. The margin expansion is primarily driven by the higher revenue growth. Net profit for the quarter was at INR44 crores and cash flow from operations during the quarter was INR 94 crores. On a full year basis, consolidated revenue from operations stood at INR $6.39 crores with EBITDA of INR 169 crores, representing a margin of 26. Margin expansion in the business was 8% as EBIT margins increased to 23% as compared to 15% last year and net profit for the year was at INR147 crores. Cash flow from operations during the year was INR261 crores, leading to a closing cash and investment of INR931 crores as on 03/31/2020. Thank you very much. We are now ready to take any questions. Thank you very much. We will now begin the question and answer session. The first question is from the line of Pranushatriya from Edelweiss. Please go ahead. Hi. Thanks for the opportunity. My first question is regarding the statement you made on 10% to 20% of the customer could churn out. Can you give us some sense that if this portion of the customer is already churned out or this is your expectation that the lockdown by the end of this lockdown, that is what will happen? And secondly, what would be the profile of these customers? Because top 10% of the customers give you almost 40% of the revenue. So should we assume this will be more of a bottom end customers and hence possibly revenue impact will not be to the similar extent? That's my first question. Thank you, Pranav. Hope you are doing well in the lockdown days. So now coming to the 10% to 20% and why such a big range and why not a closer range because I myself do not know. There are uncertain times. Initially, things were like three weeks of lockdown, then it further got extended and then it got further got extended with and numb numbers of patients are also rising. So many people who initially thought that they should be hanging on to the subscription may give up in the times to come. So given that we have 150,000 customers and we are not adding any new customers or very little number of customers who may be specifically coming from these special focus categories that are working in the COVID times, I would say that, let us assume that we would be down by 20% from our current customer base. If the lockdown if this one this fourth lockdown is the last one to be, If if the further uncertainty continues and the economy goes through further challenges, I can only come back and tell you in a month's time or so how what kind of feelers do we have. As of now, I can only tell you that maybe about ten percent are already on hold. And given that next forty five days, based upon the last forty five days, another ten percent may go. So that is where we are. Now coming to the second part of your question, which is the mix of the customer and as you rightly said that top 10% of our customer, which is a platinum customer accounts for about 40% of our revenue. So you are right, there will be higher churn at the bottom of the pyramid. This would be slightly lower churn in the middle of the pyramid. But please also understand that the top of the pyramid is the most expensive for people to sustain as well. And so on one side, those are the customer who have a long term belief in India Mart because they have tasted the silver solution or a monthly solution and then only have taken a gold or platinum or for longer duration. On the other hand, they are paying also on an average of INR 175,000 per annum, which is almost like INR 15,000 per month. So every month of lockdown is going to cause stress on them. So they may not churn out completely, but it is quite likely that many of them would go for a temporary suspension of the yes, temporary suspension of the for a month or for a quarter. A few of them may request us that please downgrade us to the lower tier. However, we can tell you that on the larger size of customers, about 50% of our customers are paid for more than one year or so. So they are probably more than one year, two year, three year combination. I hope that answers your question. Yes, sir. Thank you very much for that. My just to follow-up on that would be how are you seeing the activity in some of the zones, which are basically in the green zone and where some of the activities are allowed, some of the factories are also opening. So in those areas, are you seeing some activity coming back? And if you can give a sense that especially in those areas, how is the traffic for those kind of products or basically traffic for in those area vis a vis how much it was when the entire lockdown was in place? So any color on that will be helpful. So no, as I said, there is a week on week and day by day changes and certainty and uncertainty happening. So in the entire month of April, we have seen a huge fluctuation on the traffic as well as traffic coming from different cities based upon how the cities have you know, reacted to the first patient and second patient. Now, this particular one that you are talking in the last ten days or so was announced at the central level itself on May and which percolated to the state level and which percolated to the district level. It is only yesterday's newspaper and day before yesterday's newspaper that I could see that these manufacturers have given permission to operate in Noida. Even I, for the first time, stepped out after March 20 out of my home. And when I look out of my window from the office, it still looks like entire Noida is at home. So there is it will take some time before people can actually return to any kind of normalcy. Having said that, have I seen some improvement in traffic over the month of April? Yes. I would not deny that. But am I hopeful of sustaining everything like this? Because very next day, something was opened, Ahmedabad was completely put into the curfew. So I mean, I'm as clueless as anybody could be, you know, that perspective. The good part is that whereas entire physical businesses are literally closed, literally means literally closed 100% apart from, you know, some bread and milk. At India Mart, still we are getting on an average about 50% of the traffic, which is still quite remarkable for Enquiries in this five, six, seven categories, which I mentioned earlier in my speech also, whether it is safety or whether it is health or whether it is hospital related or whether it is medical equipment related, pharmaceutical, chemical, PPE, food. So if you search for any of those items, you will find that India Mart probably is the only destination for finding something. And so that is where we are. I would say it is safe to assume that we'll remain anywhere around 50%, 60% because the worst time of the lockdown we were at about 50%. If something improve, it should be a bonus for everybody. Sir, a small follow-up on that. So 50% decline in traffic, should it translate into 50% decline in the inquiries also? And because a lot of businesses are closed, are you seeing pickup inquiry pickup rate lower? So Pranav, when I say traffic, I actually almost interchangeably use inquiry versus traffic versus calls or versus RFQ. All of them typically fall more or less in tandem because the overall conversion rates do not change. Right. Okay. Okay. Thank you so much. That's it from my side. Thank you. The next question is from the line of Vivekananda Subaraman from Ambit Capital. Please go ahead. Thank you. Thank you very much for the opportunity. And I I just wanted some more color on two things. The mix of packages that you have longer than one year packages versus monthly packages, How how different is it in among your top 10 versus the rest of the rest of the customer base? And on a related note, you know, you mentioned about the request that you've been getting from customers to possibly downgrade. Can you help us understand that in terms of your top 10% versus the overall universe? That's question one. Yes. So Bibi, to your first question, wherein you were saying that what kind of packages we have. So we have broadly three tiers. The top one is the platinum tier, the middle one is the gold tier and the third one is the silver tier. Platinum and gold packages are available only in the yearly mode. So most of the customers there have taken the yearly and the longer term subscription. In silver, we have two different packages. Either supplier can opt for a monthly package, which we call it as in silver monthly bucket, and either they can opt for a yearly option in the silver. About onethree? Yes. In total, about onethree of our total customers would have opted for a monthly package on the silver. And roughly 10% are the top platinum customers. So hopefully, this answers your question on the mix of the packages? Yes. Now could you come to your second question? Yes. The second question is with respect to your branch expansion. This year, I guess, you added around fourteen, fifteen branches. Yet if I look at the other expenses that you have reported for the full year basis, I see that your costs have actually come down. So any can you give any color on the cost initiatives that you have taken? Because in FY 'twenty also, your cost performance has been quite good if I look at the nonemployee costs. A discussion there and where we should look at this number for fiscal 'twenty one and 'twenty two, that would really help. Yes. So, Vivek, to your the second question on the expenses part, the other expenses and the G and A part. Certainly, with the branches, our expenses on that side has slightly gone up. However, in this year, we have also adopted Ind AS 116, which requires a reclassification of the rent expense to moving down to more like depreciation because the standard requires to capitalize all the long term leases that we have and charge depreciation instead of showing it as a rental in the P and L. So roughly around 16 crore for the year and INR 4 crore for the quarter would have got reclassified from the other expenses to the depreciation line in this year. If you add back that particular line, you will see that my other expenses have actually gone up vis a vis last year. Alright. Understood. Okay. So you have recategorized the rent into depreciation. Okay. Got it. And last question is on the requirement of standards. So it was not a voluntary decision as per Of course, of course, Of the standard. Right. And and last question is with respect to the competitive intensity. We we are reading news reports of .com companies like, Oran facing, challenges, given that the funding environment has become much, much more circumspect. So in in this slide, do you think that the competitive intensity in the space will subside? And if so, can you talk about the specific initiatives that you can take in this environment post lockdown to look at adjacent market opportunities? Yes. Let me try and answer this question, not an easy direct answer. You are right that funding would become tougher for the short term to medium term as the funds will change the best returns in these times. And any new kind of a trial and testing, the funding would be lesser available. However, the name that you have taken, Uran, they have a large amount of funds available with them and they have also been financially prudent to cut cost and save that funding for long. On the other hand, Udan and Indiamart and Amazon business and, you know, Amazon are very, very different businesses. The kind of products and categories that we deal into, the kind of product and categories that they deal into are very, very different. We are mostly manufacturers, wholesalers, custom product mix, truckload products. Just to give you one comparison, if Udaan has about $60 average order value at India Mart, it would be around $600 So that will give you and at Amazon, it may be at around $16 So I mean, is a $16 and $60 and $600 So we are in a very, very different category. Not every B2B and not every SME business is the same. However, having said that, once they get into the once they get their feet on the ground, there's always a possibility that they would try and expand into each other's area. As I said, as much as this crisis present the risk, so that people would not so that smaller start ups would wind down, so that the smaller start ups would not get money as much as it presents a silver lining opportunity because two years down the line, when everybody would be using Internet, when remote working will become like a norm, and when by that time, you know, Internet based commercial platforms like India Mart would become a super hit, the competition can and funding can come back with a far more rigor and far more veneers. So just like when Indiamart became successful, a large amount of funding went into multiple B2B and SME platforms. Similarly, for now, there may be certain opportunities for us to consolidate and as much as we can consolidate, that should be our goal. However, those who have large amount of fundings are smart enough to save it for the rainy day. And once the overall scenario gets settled in, I think everybody would look at even higher degree of competition would probably come. So on a short run, yes, this is a positive. On a longer run, yes, we have to be cautious. And third, they are into very different business than ours. Understood. One small follow-up. So the two investments that you have made till now are minority, investments. Do you also, intend to, buy out, companies in, adjacent areas? So we are we are not averse to buying out or averse to investing, we only invest in the strategic areas first of all. We are not a normal venture capital fund who will go and invest in our money in a consumer startup or in a sports startup or a sweet startup because there is an opportunity. We because there's a lot of money available with lot of financial institutions for various kind of entrepreneurs. If we at IndiaMart cannot add any value, we as a management with our experience or we cannot learn anything from that startup. It's neither in our favor nor in their favor to give money or to take money from each other. So we will continue to be making investment in the spaces that are that are more adjacent to us, which they which add an ecosystem to the small and medium sized businesses. And if you really see Vapar as an investment, People manage leads through us, and then we went on to the lead management system, which is a CRM, which has been developed by India Mart. And today, I am I can say that probably we are the largest CRM company in India used by distinct number of individual businesses. Our IndiaMath CRM and if I can give you the last quarter's CRM usage data, last quarter itself, the number of callback and replies done through our own CRM was to the tune of 40,000,000 calls and messages. So about 40,000,000 calls and messages have been exchanged by 100,000 distinct businesses. About 100,000 distinct businesses have used. So then we moved on to investing in a business called ZAPAR. As you know, every SME, the first requirement on computer has been accounting software. However, accounting software comes with an accountant. And now that computer is in everybody's hand in the name of mobile computer, I do not need an accountant and that's where the need of a mobile based self accounting software was there. I have been looking for a solution like that for myself and for my relatives' businesses, fortunate to find Vapar. And so we have taken a smaller stake to begin with because we feel that it's a very nascent business kind right now. We will wait and see how we can nurture that business. Today, we have made an investment into a forward management of distribution and sales, so helping distributors of large brands and helping retailers of large brands using again the mobile based SaaS application. The beauty of Visom is that unlike being a standard SaaS application and unlike being a totally customized software, it is a bit mix of a configurable multi tenant SaaS software available. And in some senses, they have made their infrastructure or underlying infrastructure in a very similar way as SAP in the customized software solution base or as Salesforce in this kind of software base. Now coming to your question whether we are open to acquiring businesses, yes, we will be open to acquiring, but for that we need to continue to look for and continue to find right candidate and a strategic fit and a strategic value. Thank you. Thanks a lot for the detailed explanation. All the best. Thank you. The next question is from the line of Itesh Jain from Invesco Asset Management. Please go ahead. Mr. Jain, your line is in talk mode. Kindly go ahead with your question. As there is no reply from the current participant, we move to the next question from the line of Sanjay Lada from Concept Investment. Please go ahead. Thank you so much for giving me the opportunity. Sir, I have three quest three questions. So first is, correct me if I'm wrong. In my view, most of the paying suppliers who are associated with the company for a long period of time renew the plan in the starting of the financial year. So the time also in the month of April, have seen whether the customer is taking our subscription model or not. So what is going on that side? If you can highlight more on that and how the demand of our product has been in the terms of paying suppliers? And what is the churning ratio in this quarter? This is my first question. Hi. So it it does not work on a financial year basis. It works on a rolling mechanism. So if if somebody started his subscription, say, on February 15 and has taken a monthly auto debit or electronic clearing scheme kind of an subscription, then every fifteenth of the month, his subscription would be renewed. Similarly coming to an annual subscription, if somebody has taken a subscription in the month of June 2019, he would be sent a renewal notice somewhere in the month of May for a subscription renewal in the month of June 2020 and similarly for a three year subscription. So we do not have a annual budgeting from the SMEs as and when so this has two benefits. One, it gives the flexibility of our sales team to be able to sell all year round. At the same time, gives us continuous cash flow because if something was all gathered around a particular event, say, Diwali or say, New Year or say, of the financial year or end of the financial year, that's very risky. So all of our sales and all of our renewals are by and large equally dispersed across the year and across the geographies and across the various SME sizes. Second question was? What is the trending issue in this quarter? Yes. So trending, I think we already always tell that in particular, in this quarter, there has not been much difference than the previous quarters. So we have three kind of customer base, platinum customer base, which accounts for about 10% of our customer base. There we account for about 40% of our revenue and that accounts for about 5% to 6% of the annual share, 5% to 6% of the annual share. Then we have a gold customer base and gold customer base is about 30% of our customer 30%, 35% of our customer base, where we have about 10% to 12% of the annual churn. And then we have silver monthly and silver annual. In terms of silver monthly customer base, we have about 20% to 25% of our customer churn. And in the monthly base, we have about 5% to 6% of our monthly churn. However, post the March 20, things have been under complete lockdown and we have received multiple requests from multiple customers to stop their subscription or to give them extension. So we do not know how long this uncertainty will continue and during that uncertainty how many people will be able to survive and will be able to afford the subscription over the longer period of time. So these are the historical figure. How they will fan out in the times to come, I cannot assess at this point of time. So my second question will be on the collection from customer in the quarter remains flat. So how is the previous trend, if you can highlight? And what is your view on the coming quarters? If you can throw some light on that. And that's like and the continuation to that question, in the previous phone call, you have mentioned to add 5,000 paying subscript subscriptions every quarter. Do we still hold this going ahead and also the growth upward of 20%? Do we still hold on a longer period of time? I'm not talking about the three months or six months period of time on a longer period of time. Yes. So let me answer one by one. Yes, sir. So collection from customers, it is already there in the presentation. If you go to now we have the presentation, there's a dedicated slide, which gives you last five quarters collection and last five years collection. Let me read out to you. Last five quarters collection has been INR204 crore, INR168 crore, INR173 crore and INR178 crore the immediate quarter was INR202 crore. And now coming to the growth rates, last in FY 2018, we had a collection growth of about 33%. In FY 2019 also, had a collection growth of 33%. In FY 2020, the collection growth has was about 15% until December and February. However, in the month of March, since the collection is negative or flat, their overall collection growth is only 10%. Now coming to your second question, we have been adding about net 5,000 customers per quarter. As I said, currently we have about 150,000 or 147,000 customers. I mean, just a rough calculation that is every for every month of lockdown, we may end up losing 10% of the existing customer base because during that lockdown, a lot of customers may not be able to afford or may have to change their business model or so I would say that assuming that in the next three months all of this is over, I would start at a 20% lower customer base. And as things return to normalcy over the six months, we will start to add maybe 1,000 customers per month per quarter and then 2,000 and then 5,000 sometimes. But we don't really know how it will pan out in the times to come. Now as you said, we have been looking at upwards of 20% growth and I have been guiding that the growth is a mix of two numbers. There has been about 10% to 15% of the growth, which has been coming from the new customer addition and about 5% to 10% of the growth which has been coming from the increased realization which is called average collection per customer or average revenue per customer. Now last year, financial year, it has been very tough initially with the automobile sector completely drying up and real estate sector completely drying up. And then in the later part of the year, there has been financial turmoil and then the NBFC crisis further hitting the SMEs and which further led to a toughness in the churn as well as monetization. And now this third wave of corona has happened. So I would say that it will take some longer period of time before we can look at that kind of growth again. So currently, we would say that we would like to protect our current revenues and current customers. And then as and when the situation improves, we would be able to talk about how and what kind of growth and in what period of time we can expect. So my last question will be how strategic the investment in UBC will help the IndiaMat platform? If you can throw some color on the investment side and the strategic partnership with the IndiaMat platform. So there are certain reasons and there are certain hypotheses based upon which we have done Mobiusi investment or the Loom investment. We looked at the entire space and we found that they are one of the fastest growing player and the largest as well. So they have grown at 50%, 50% CAGR over the last three years and they have become their last year revenue was about INR30, INR35 crore, still the final numbers to come. Secondly, they are taking advantage of mobile phone or a smart mobile computer, what we call. And that is a strategic fit as majority of our suppliers also are utilizing mobile, IndiaMart mobile app. They have a very stabilized and very scalable product portfolio. I have seen their product working from a company like a Boston Lom to a company like Coca Cola and to a company like Jyoti Laboratories and to a company like United Breweries and to a company like Philips, which have very different products and very different distribution challenges. However, their product works seamlessly, configurable across these set of customers. So it's an impressive set of customers, a stable set of customers and scalable and stabilized product. They are a cash efficient business. If you really see, they have been able to come this far at 50%, 50% growth with an efficient thing. And the team has been together for a long period of time. So the founders and have been together, not only founders, the entire senior leadership team has been together for a long period of time. I visited their office and I found the cultural fitment and financial prudence in everything that they do. Probable synergies with India Mart, two kind of things that we can think of. One, as I have been saying that now India Mart is not only relevant for smaller businesses, we have bigger brands who utilize our platform for buying and selling both. Today, have more than 200 customers, whether if you go to diesel generator page or if you go to medical equipment page, you will find customers like Philips and customers like Kirill Oscar and customers like Tata Motors and customers like Tata Steel and General Steel. And these are coming from diverse industries. Similar customer base is there at the Visum also. So there may be a cross sell or a joint sell opportunity between IndiaMart and Visum, but that is just too long short. Second thing is, when we approach these larger and bigger brands, many of them find it difficult to manage the leads volume of leads being generated from India Mart. They are habitual of lead handling by their dealers and distributors. They do not know how to monitor those leads. And I think that Zoom provides me that platform where these leads can be directly pushed on to their dealers and distributors and retailers and whereas the principal brand can have a quite a a grip or quite a visibility on what is happening on those leads because Visom is doing their Salesforce automation, Visom is doing their distribution management, and Visom is also working with their retail partners. Thank you. Thank you so much for detailed answer. Wish you a good luck. Thank you. Thank you. The next question is from the line of Prince Podar from JM Financial. Please go ahead. Hello, sir. Thank you for the opportunity. I have just one question. Sir, I just wanted to understand the kind of customers we have. How what kind of percentage of those customers would be completely or or to some extent dependent on IndiaMart subscription for quality leads? So, essentially, what I need to ask is if, hypothetically, let's say, this quarter was was completely going out of the business, how many will come back immediately the next quarter because of their business need rather than as a discretionary spend? Would you give us a little sense on that? I mean, of course, you would not have a perfect answer for that. But what what is your sense on Skype? The the kind of customers you have? So, one, I think you have already answered your question that many of the customers might have a larger portion of their business coming through the leads that are generated and that are followed by India market. And we will not have exact or exact means even a ballpark figures that these many customers have 10% of their business coming through India Mart and these many customers have 50% and these many customers have 75%. However, the current situation is less on the dependence of their less about their dependence on India market, more about their own financial ability and their own financial commitments about so many other things. They may have rental, they may have other financial liabilities, banks and loan. So one, whether they will be able to fulfill the buyers that they are able to get from India Mart, that itself is going to be a key whether they would like to continue with India Mart as a subscription. So one is the survivor part of it. The second is the what portion of their customers or revenues come from India Mart. And a cross section of these two will decide what will happen to our ourselves. And this will all depend upon the number of days we take to return to run normalcy. Right. I mean, on the twentieth March, nobody would have thought that even on twelfth May, we would be still be sitting at home. So I think the uncertainty is the biggest biggest question mark in front of everybody today in planning for business or and that is even more uncertain for the for the small and medium businesses. So I would I would say that given that there are lockdown, India Mart is the preferred is the probably only choice, not preferred choice, is the probably only choice. And, you know, there is no nobody nobody in a competition in the kind of products and services that we deal into. So so we are in a in a good position, but whether we will be able to monetize that immediately based upon what is the financials. So last year, for example, I think we have been able to maintain buyer traction very well. And despite all that, we have had to deal with a higher churn and a lower monetization growth because this 9% growth rate is not because of the COVID. You know, even until the nine nine months as against upwards of 30% growth, we were running at fourteen, fifteen, 16% of growth rate. So is that there could be two two reasons for that. One is the external, I mean, the macro regions where people are not able to afford. The second is our own execution reasons. We continue to look at where else can we improve, but at the same time, we all know that the overall economy and the growth rate has gone down substantially. And this will this particular event will be even even more difficult for anybody to guess what is the people are comparing this with 300 a year, I don't know. So Just just to follow-up on that, sir. Is there a possibility for because as you know, many of the suppliers are there which are still not paying customers for India Mart, but they're they are already there on the India Mart platform. Is there a possibility that the suppliers who have a good cash position or a decent cash position, they might start opting for India Mart? Is I mean, are you seeing any any of such traction that new customers of such type are coming in? Maybe from a specific Yes. Have I got a few incoming leads few incoming leads from few known bigger brands? Yes. So your hypothesis is right. But how much will that add to scale is is is something questionable, you know. So we will definitely know how many people would be left with good amount of cash in their on their balance sheet. But, yes, you are right. In the last whatever sales that we are able to do and whatever collections that we are to do today is because of people who have cash and because of people who have trust on India Mart. So I think there is a and because of the new people who are developing trust in India in online business. So there is a possibility. In fact, there could be a possibility even on the export side if Make in India becomes better or truer. Perfect. Perfect. That that is very helpful and all the best. Thank you. Thank you. A reminder to the participants, please limit your questions to two per participant. The next question is from the line of Harshil Ghania from Aditya Villa Capital. I had two questions. Firstly, that are there any COVID specific schemes that we are we will look forward to as in maybe an extension or some kind of discounts to the suppliers so that they can probably not discontinue with Indiamart? I have already said in my opening speech also and I have already given that as part of the COVID update towards the end of the presentation that we are already these are difficult times. Our customers are facing acute financial crisis because of the sudden and long lockdown. So we are offering we are offering shorter duration renewals, we are offering relaxed payment terms and where need be if need be, we are offering discounts as well. If you look at the page number 72 of our investors presentation uploaded on the stock exchange, you will find that there. Also, so you mentioned that you have around 200 big customers that are you have had on in on IndiaMart. So won't it be inherently a problem for the smaller base? Because the larger base might get a better start on IndiaMart, and the smaller base might lose interest. So will it not be a problem in the long run with the platform mainly inherently cat catering to bigger players and shifting for shifting the focus from MSMEs to larger players? No, sir. Actually, it what I have seen is actually adds adds to the platform. First, I have seen that smaller players are typically regional players, and typically they are able to deal in certain pockets and of the whereas the larger players like I said Tata Steel or Tata Motors, they are able to deal on all India basis. They have a dealer distribution network. Number two, a presence of a brand gives a lot more trust to the buyer that this entire list of manufacturers or suppliers that is present here is not a flea market, but is a more trusted marketplace. So I think if you go to if you read the Google advertising also, It is a level playing field for everyone. Yes. And if you see on Google also, everybody can advertise, whereas more than, you know, there is about 5080% of their advertiser base is also SME. So I think it is is where everyone gains. Brands attract more traffic for India Mart. Brands give more trust to India Mart, they are able to fulfill the remote buyer inquiry. Whereas the long tail of products and long tail of pricing is filled by the small and medium manufacturers. So I have not seen many complaints where the brand has said that I would not join because you have so many smaller and uncertified or players. At the same time, have not seen many smaller businesses quitting saying that we have now now that you have a bigger brand, what's the what's our need? So I think we haven't seen that kind of a behavior yet. Okay. Thank you, sir. Thank you. The next question is from the line of Ayaz Motiwala from Novelis Partners. Please go ahead. Yes. Hi. Good afternoon. Thank you for the opportunity. Sir, I have two quick questions. One is the length of contract duration of the customers which are longest on the India March platforms. In your experience, as you've been to a 147,000 paying customers, are there some customers who have been around for an extended long period of time? Let me give you some basic numbers. About one third of our customer base is definitely more than three years. And I don't have the exact percentage here in front of me, but we do track the customers more than ten years and the customers more than five years. And I also happen to have few customers more than fifteen years as well. But, yes, to answer your question, more than one third of our customer base is more than three years old. Right. And so more than three years old would imply much extended, as you said, five, ten, or even fifteen years. Yeah. This is a blend of three year, four year, five year, six year, ten year. Yeah. Right. So the the reason I was asking this question was on a premise that, you know, b to b relationships, the way you were expressing entirely through the call, you know, get established for two, three, four years, and then they get very intimate. Is there a desire of such people who might then become even bigger platinum customers to churn out after a period? So that was my motivation of this question. Sorry. I missed that. Can you please come again? What what I was trying to get at to know the length of customer engagement is if, you know, b two b's are more long established relationships. And after they are after they are set where the customer has discovered on your platform, a supplier, and then the bill business relationship builds up over two, three years of being on the India market platform or longer, they find it less reason to be there and especially a motivation like this crisis may push them out of the platform. That was the reason I was asking this question. No, sir. That is not the case. You know, I have seen that even in case my capacity has become full and because of India Mart, my capacity has become full. Now that my capacity has become full because of India Mart, I I don't want to leave India Mart even if I don't utilize enough. That has been the generic premise that once you have benefited, twice you have benefited, twice you have benefited, you don't want to let go of that platform and relationship. And also the entry barrier, somebody might have just to tell you, when we launched the monthly package in January 2015 December 2014, January 2015, it was at 2,000 per month. And those customers who are continuing since then, they are still paying INR 2,000 per month. Whereas the new customer who have joined somewhere in twenty sixteen, twenty seventeen, they started to pay INR2500. The new customer who has started joined later in twenty eighteen, twenty nineteen, they started to pay INR3000. So if you really see an older customer now, if he turns out today and wants to join in back, his annual cost of reentry would increase from INR24000 to INR36000. So I think there is enough reasons for people to grow. Those people who have got these kind of benefits to us, they have also grown bigger. And I have seen customers from single room as we were from single room. And I have seen my chartered accountant from single room grown that way, my customers have grown that way, our employees have grown that way. Together, all of us have only grown. There may be few people who have left on the way, but yes, mostly it has been a growth journey. Right. So the second question is regarding payments, collections, discounts, etcetera. You said there are hardly any new sales being done and even collections are very slow or not happening because salesman cannot visit potential customers. So in this backdrop, some of your competition, one of them, Trade India, seems to be promoting very aggressively and offering, you know, deals and discounts. So do you have a comment on the competitive market? Are there people trying to grab market share of churning customers of yours as such? And could you quantify the level of discounts and deferment in the same context, please? So I think what's address you are, you know, the name that you took is not a new name. In fact, when I started my business in 1996, they were already in business for five, six, seven years. So they started probably in '87 or '91, if I remember. So they have been following our business day in, day out. Today, we get about fifty, sixty million visits on our platform every month. As per the public data available on similar web, they get less than 5,000,000 or three to 4,000,000 visits on their platform every month. So and obviously, when whenever there is a a leadership position, there will always be some rub off effect, which will go to the smallest competition. But the distance between us and the nearest competition has been increasing forever. Now coming to your second question was length of the format data. So as of now, because when we started, we thought that it's a three week thing. And most people said that, okay. And and are you know, the government also came back and said that you can defer your EMI. So similarly, you know, most people came back and said, please defer for this particular month. Give us an extension for three months. So it is ranging mostly between now that it is we are already in the second month, so it is most of the people who have been deferred have been deferred anywhere between one month to three months. And and this is totally basis customer requirement. Many of the customers are using this time where we are offering flexible terms than the normal days, are using this time where we are offering discount than the normal days to lock up for a longer period or to upgrade. However, those are those stories are far and few. Most of the money that is coming nowadays are purely and purely because of the categories which are more relevant in these times which are related to health, safety, food, hospital, medical or medical chemical and related items. So hope that answers your question. Yes, sir. Thank you very much and all the very best. Thank you. Next question is from the line of Girish Patak from Goldman Sachs. Please go ahead. As the current participant has kept the call on hold, we move to the next question from the line of Itay Jain from Investo Asset Management. Sir, I had one question. So your top 10 clients contribute 40% of the revenue. This number was similar last year as well, which means that you have been able to have a higher realization increase in your top 10 clients. That is why the 40% number remains the same this year as well. And given that the realization is quite high, as you said, it's closer to 1.5 lakhs or something, how are you able to do that? And this is in contrast to what you said earlier, where your older clients tend to pay at a lesser price compared to the newer customers. Yes. Lesser per per unit per month. Generally, I've seen that the older customer also want to upgrade their tiers. They have tested the platform. They have experienced the platform. They have tasted the success from the platform and they want more and more inquiries. They have expanded their business through us. So if you see the data book where we clearly say that and it has remained at 40%, 41%, in general, we have taken price hikes and not everybody is on a monthly customer base. In general, on an annual customer base, we are able to take 10% price hike every two, three years, which also results and we are able to launch more innovative products such as earlier there was a single all category pricing, which has been now kept to a limited category pricing. We are also working with a category city combination based pricing. And as I've been telling you in the past that we are thinking of finding ways and means to introduce city category based differential pricing. So because somebody who is selling in Delhi versus somebody who wants to sell in Durbanca, the prices cannot be same. And similarly for the say somebody who is selling a bag versus somebody who is selling a bag making machine, the prices of advertising cannot be similar. So but currently it is very similar in India market. So I think we continue to have more and more opportunities where one customers are liking us to their relevancy is increasing. Number of inquiries per customer have gone up if you really see over the last five years data, how has our customers have gone up and how our number of inquiries have gone up. The number of inquiries per customer has almost doubled or tripled over the last four, five years. So that has also increased the realization. And belief on the platform and overall Internet users have also gone up. So I think all in all, those are the areas that help us retain that and the total number 10% customer base is also growing. So if we had 100,000 customers, there were only 10,000 customers. Now if we have 150,000 customers, there are 15,000 customers. Sure. And do you in your strategy, how do you look at this, Rajesh, because 40% of your revenue is coming from 10% of the clients. Now given that when we are seeing some kind of stress in the environment, and you also alluded to in your opening remarks that this could be a risk if any of this hiring customer go through stress, then that hit our top line as well. So from a strategy perspective, do you think you want to look at this number in a different way? Would you want to bring this down? Because at least this year, we haven't seen that happening. So how do you look at this risk internally? I think as I repeated, we will continue to look at that combination of three things. One, shorter duration package two, flexible payment option three, discount led sales and retention. So and also if you really see the overall churn metrics, as I said, on the lowest tier of the customer, which is silver and monthly, the churn rates are to the tune of 5%, 6% per month, whereas on the top tier of the customer, which is the platinum customer, the churn rates are less than 1% per month. So the churn rate themselves are indicative of the overall stickiness of the platform. It's not a risk of the top 10% because it is around 15,000 customers and very, very diversified. So even if I end up losing 100 customers here or there, that my overall revenue would be affected by maybe 1% or 2% there. I think the bigger risk is to reduce the overall customer base itself by whereas bottom of the pyramid customers may go out of the business or may not be able to afford the B2B marketing. So those are the bigger challenges. I don't think I would worry a lot about losing the top end customer. I would worry then maybe for this partial period of time to downgrade or to extend or to take certain discount. But I would not worry a large impact of that on overall revenue. Fair point. Thank you. Thank you. The next question is from the line of Deepak Kopal from Capital. Please go ahead. Hello. Sir, you may go ahead with your question. Yes, please go ahead. Hello? Sir Deepak, you may go ahead with your question. Yeah. Hi. Thank you very much for the opportunity. So also first question is, now you mentioned about giving customer discount and then the shorter duration renewal. So the so so do we do we expect that our average revenue per paying subscriber can fall substantially over next one year or or maybe in the shorter term? As I've been repeating again and again, I mean, priority is to retain the customers. Mhmm. The current priority is to save the mortality. And at that at this point of time, I don't want to save my, you know, ARPU at the cost of losing a customer or at the cost of closing down his business. Right, right, So he could be highly making a large portion of his business could be coming from India market. And if we do not and he himself I mean, that customer himself could be running into financial crunch because of the many other And at this point of time, if we do not offer them help, which will be a help to India Mart as well in terms of retaining the customer, think that would be unfair as well as unwise on our part. So you can safely assume that average realization per customer can go down substantially in the short run. Depending upon the in the long run, but depending upon how lockdown plays out, we will come to more a clearer picture on this. But as of now, as I said, neither the sales are happening nor the collection is anywhere near to the previous normal. So that is already affecting our average collections per customer in the month of April and ever since the lockdown. Right. Fair enough. And so my second question is regards your you spoke about this emerging new category in terms of safety, hospital, pharmaceuticals, food supplies, sanitization. So over next one year, how do you foresee this new business opportunity can become how much portion of your current categories or current subscriber? I know it may be too early to comment on that, but any kind of guidance would help in terms of any comments here. If you really ask my wish, I would want this category to die tomorrow. I do not want this category to survive for a really long time. I want this category to end as soon as possible so that we can focus on the rest of the category. Having said that, some of the categories which will be here for a longer term to stay, which are medical equipment, So I don't want face mask to survive. I do not want this insect to survive. And we are giving our endeavor is to build on those category to help the hospital and help the consumer rather than make the monetization. Whatever little monetization is coming, coming, but yes. In the longer run, whether we will be established as a player in the medical and pharmaceutical and chemical and disinfection as a category due to the work that we would have done in this time, yes, probably and that would be our endeavor. But I would want this category this consumable category specifically related to coronavirus to die as soon as possible. Absolutely, absolutely. Fair enough. Okay. That's it from my side. Thank you very much, All the very best. The next question is from the line of Shiva Kumar from Unifi Capital. Sir, I was referring to the employee benefits expenses in Q4, which has come down sequentially. What's the reason for this fall? And when you are referring to cost rationalization in your opening comments, what are the targets towards which you are working towards? Shiva, it's Prateek here. In the terms of our employee expenses, roughly around 70% of the employee expenses represents the variable portion. So certainly, in this particular quarter, as our collections have been much lesser as compared to what we have seen in terms of the historical past, The growth rate has only been around 10% for the year. So certainly, there are savings on that front on the variable incentives. Probably because of that, you're seeing a much lesser employee expense in this quarter as compared to the previous quarter. Right. And how should we look at this number going forward in FY 'twenty one? It is a little difficult to comment on how this number will because play these are the variable incentives and the variable portions, which are linked to a certain performance targets in the PFA. Currently, at this point of time, it is difficult to assess as to what the target would be because of the given uncertainty. So really difficult to say as to how it will pan out in the next Just to add, have not planned any layoffs. So it is only the variable pay, which is automatically has come down. And we have done a very little rationalization on the salary over and above the variable pay pay. Also, as I said, a lot of our people are in sales and service divisions. Though they are not able to meet the customers, they are not able to go to the customer level. But they are certainly engaged in customer service and possible renewal collection from home using the telephone and online as a method. So whatever sales that are happening or whatever renewal collection that are happening or whatever collection that are happening are happening in the by way of the telesales and online sales and work from home solution. As I said earlier also that our currently, we are trending at about 20% to 25% of our previous normal of collection. I don't know how will that pan out going forward depending upon the how unlocks the lockdown will pan out. But it is not that everybody is sitting idle. In fact, I'm getting more complaints from my wife as well as from my employees that this lockdown is making me work harder than than when we were going to the office. Fair enough. Sir, second question is just a bookkeeping one as to you said the platinum plan has about 10% of the customers and the number for gold yearly plans and silver yearly plan would be what? So 10% of the customers are platinum and one third of the customers are silver monthly, but the rest of the customers are divided between gold annual and silver annual. Okay. And what would be the ARPUs for gold and silver? You're you're one point, Shanti, for the platinum? We have not been disclosing a separate ARPU. We have we have been disclosing the entry level price, which is 3,000 per month at the rate inclusive of tax. So it works out at about INR 2,600. On an average, overall ARPU is around 5,000 per annum and top 10% customers contribute about 40% of the revenue, which works out at around INR175000 or so. Sir, is there any scope for increasing the efficiency in the nonemployee expenses? Is there any scope for savings there? Sir, I think if you really see non employee expenses, if you really see, they have already done a good job from the days of demonetization and from the days of so I had done a full cleanup during the demonetization. And even the last forty five days, we are trying to do a lot of cleanup there. Overall, out of the INR120 crore rupees, if you really see INR90 crore is manpower cost, INR30 crore is the non manpower cost and INR5 crore is the below the line, which goes into the EBITDA, which is the rental cost. Out of this INR30 crore, one third is already variable cost, which is depending upon the number of leads, the number of new customers that we host and number of so we are seeing wherever we can. But beyond this variable and beyond there is not much of a scope. I will try to squeeze that further by 10%, but on a sustainable basis, there is not enough scope there. Thank you. That's it from my side. Thank you. Ladies and gentlemen, due to time constraint, we take the last question from the line of Rajat Shethia from Vritti Capital. Please go ahead. Hi, sir. My question was just answered. Thank you. Next question from the line of Bismuth Naik from R. W. Investments. Please go ahead. Yes, sir. Thanks for the opportunity. So in in your experience, have you seen such churn before of 10 to 20% that you stated? And how long before their numb the numbers get back to normal? So this churn have been, you know, we have been reporting the churn number on every con call. If you listen to over the last three, four con call, you will come to know that there has been constant update on churn number. This particular that I'm talking about is specific to the COVID lockdown situation, where we are saying that our overall customer base itself can be reduced by 10% to 20% by the time lockdown ends if lockdown ends within this quarter itself. Hope that answers your question. But did you see the same kind of churn in February? For that in the February. Yes. This one, this crisis cannot be compared with that. The two, we were way too small to be affected by a crisis of a global level or a national level at that point of time. Indian SMEs were not so badly affected. If I remember correctly, we were like INR 40 crore companies back then, INR36 crore rupees company back then. Yes, did our growth rate came down? Yes. But, you know, the churn rates would not be I mean, those are eleven, twelve years old story and we had only ten, fifteen, 14,000 customers to be precise. And today, have one lakh 40,000 customers, which is 10 times bigger. I'm not too sure if you can compare those two scenarios. And Internet user base was also, you know, uncomparable. Understood. Sir, one last thing. If I look at page 14, close to 24 25 to 30% of business is related to what Sir, we lost the line for the current participant. I now hand the conference over to the management for closing comments. Thank you, everybody, for taking out time in this particular crisis time. Sorry, we ran out of time and we could not cover everybody's question. And thank you for your enthusiasm as always. We would try our level best to be standby our customers as well as standby our employees and vendor partners in these times and help the nation as much as we can. I'm sure together we will emerge stronger after this crisis. And I hope this that you all keep well at home and take care of your health and safety. Thank you very much. Thank you. Thank you. Ladies and gentlemen, on behalf of Indiamat, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.