Q3 19/20

Jan 22, 2020

Welcome to IndiA Mart's Third Quarter Quarterly Results Conference Call. We have already circulated our earnings presentation and it is also on our website and Stock Exchange website. I'm sure you have gone through the presentation and you would have questions. Let me give you some summary of that and then I can take questions afterwards. So first of all, I'm pleased to report that Niamat has achieved consolidated revenue from operations at INR165 crores in the third quarter, which is about 23% year on year growth over the last year. Total number of paying customers or subscription suppliers that stands at approximately 142,000 and net addition for this quarter has been around R4,500 and deferred revenue for the quarter end stands at INR $6.49 crore. As we can see, there is a economical environment that is weaker and which is impacting our performance. Our net customer add has been slightly lower than our longer term average of approximately 5,000 plus customers per quarter. And the growth in deferred revenue has also slowed down considerably from 38% in the last year quarter, same quarter to 26% year on year this quarter. So we will remain cautious about the current economic scenario and we'll focus to maintain our margin while we're trying to find levers of further growth into our business. Now I would like to hand over this call to our financial officer to discuss the financial performance more in detail and I'll come back to answer your questions later. Thank you, and over to you Prateek. Thank you, Dinesh, and good afternoon, everyone. Consolidated EBITDA for the quarter was INR44 crore, representing a margin of 26%. This number is not comparable with the last year numbers as we have adopted in AS116 million with effect from April 1. The true margin expansion in the business was 3%, which is also reflected in EBIT margins for this quarter at 23% as compared to 20% last year. Net profit for the quarter was at INR 2 crores, which includes one time deferred tax credit of approximately INR 60 crores on account of timing differences pertaining to the Tolexo demerger scheme with EBIT from January 2017. Our cash flow from operation was INR 71 crore, leading to a closing cash and investment of INR $8.59 crore as on December 31. 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. First question is from the line of Nadia Sainz from Jefferies. Please go ahead. Hi. Good afternoon, Dinesh, Preetj and Preetj. First, my question is Dinesh. Dinesh, you came on TV in December and you talked of some moderation in your growth expectation. Can you sort of clarify what which year or which period that pertain to in terms of revenue growth and what were the numbers that you were referring to? So if you really see, we have if you how our revenue flows and how our business model is, we collect money for subscription in advance for monthly, annual and three year or two year period, which results into negative working capital. We do collect most of our money comes in advance of the entire period, thereby accumulating a lot of deferred revenue. As you can see, our deferred revenue is pretty high at INR $6.59 crores. And then revenue flows from the deferred revenue. And if you look at the breakup of the deferred revenue, almost 50% of that is the current, which is next twelve months, 60%, and 40% is beyond that. Internally, when we calculate, we see that an average age of our deferred revenue or average period of our deferred revenue is about twenty, twenty one months. Now that means that the revenue that you see is a twenty month moving average, which is reported on the quarterly financials. Now if you see the leading indicator of that is the collections or the difference in deferred revenue that you can calculate and it is there in our detailed financials also, collections or billing. So as compared to the last year, where our collections used to grow up 30% or so for the nine months, our collections have only grown 15% or so in the past nine months, past three quarters, which will which is resulting into slowing down of growth in our deferred revenue. So if you see last year same quarter, our deferred revenue grew by 8%. But this year same quarter, current quarter, the deferred revenue could only grow by 26%, quite sharp decline from 38% to 26%. And which will further show up in the actual revenue from operation. Even in the revenue from operation, if you see three quarter ago, Q1 we were at 30% growth rate, Q2 we were at 28% growth rate and now Q3 we are at 24% growth rate. So it is declining, but the decline will not happen in one single quarter or immediate coming quarter. As I said, it's a twenty months moving average. So in case the economy improves or our collection and net customer adds improve, and then it may not even go to the level of 15%, 18% because it will come back again above that. So this is where I see that in case we see couple of more quarters continuing to be below 20% collection growth rate, then obviously the revenue would start to trend in the similar line. Right. And that you think would reflect in the revenue by second half of FY 'twenty one or earlier? If next two quarters remains further subdued, you can expect it to be reflected in the second half of this calendar year or next financial year. Understood. Secondly, this 2021 month that you talked about, has there been much of a change to that number through the slowdown? Or is it more or less been where it was even before? Not really. It has not changed at all, in fact. If you go to the presentation in the slide number Slide 16, if you see five quarters ago, the current deferred revenue was 61%, which is now 62%. So yes, there has been 1% change, but nothing much has changed. Right, right. The other question I had was for Prateek, Prateek, the in 4Q, typically, there's a seasonal dip in your margin. Is that going to happen this time as well? So that is something which we should be looking for the fourth quarter? Yes. Ajay, I think that is right. Typically, in Q4, what we see that our billings are the highest among the quarters in the year. And since our expenses also are in proportion to the billings, that is where our expenses also increases. As Dinesh just explained that the revenue increase would all is always a moving average of the last twenty, twenty one months of billings. So therefore, there is no such increase in the revenues. However, with the billings increase or expenses increasing slightly, this is typically a quarter where we see the highest cash from operations. However, as the revenue increases only over a period of twenty, twenty one months, we see margin declining in this particular quarter. That would that is a pretty seasonal that we see every year. And the seasonality would be similar to what we saw last year, right? No reason to think there would be any major change in the kind of seasonal trend we saw last year? Yes. More or less, it would stay the same. It would also depend on where do we end up with the billings in this particular quarter. So largely, it should be pretty much in line. Fair enough. And then lastly on the tax rate, if I look at the first nine months, I think the tax rate is averaging more like 26%. But if I look at last year again, there seemed to be a much lower tax rate in the first quarter. Is there some seasonality to that as well? So going forward, our tax rate will stay at around 25%, 26% because of the change in the taxation rules. Last quarter we adopted for 25% flat of the acquisition regime. And because of that, in the last quarter, see the impact in the deferred tax, which we recognized. I just Yes, sorry, go ahead. Yes. However, on a run rate basis, it would stay at around 25% for the year. But adjusted for other income, it should be a bit lower, right? Yes. Other income is taxable at 20. And all the other operational income is taxable at around 25%, 23%, 24%, you can take. So I mean, fourth quarter, would there be a is there any adjustment that you made in the fourth quarter? I mean, last year, if you see fourth quarter tax rate was a lot lower. Is that something which can be done this time as well? No. As I said that we are operating in a different tax regime now. So it would be fairly, pretty standard coming at around 25%. Okay. Fair enough. That's all from my side. Thank you so much. Thank you. The next question is from the line of Pranav Kashmariya from Global Wise Broking Limited. Please go ahead. Hi. Thanks for the question. I have one question regarding the decline in the total number of business inquiries delivered There's a Y o Y decline. I just want to understand that what the factors really consider to it? And if there are certain one offs with regards to, let's say, Internet shutdown or some seasonal weakness, how is it trending for the first fifteen, twenty days of this quarter? No, there is a broader trend. If you see our business inquiries delivered has been pretty much plusminus constant at the last three, four quarters. There has been some marginal increase or marginal decline that you could see, but they are pretty much stable in the last four, five quarters because there is a general demand slowdown in the economy and nothing else. Having said that, could there be a marginal Internet shutdown related or a holiday related effect. And those are very smaller ninety day average, I don't think they matter much. And we our traffic is also very well diversified from across the geographies from South India, East India, North India. So I guess one off here and there keeps happening every quarter due to some or the other region and some or the other regions, so which is a common thing. Sometimes, it is slightly higher. Now having said that, generally, am I too bothered about the buyer inquiries in the short run? Because if you see, we are sitting on a very heavy growth base over the last FY 2016 to FY 2019, where our buyer base and traffic and inquiries typically grew by 100% of growth rate or 80% kind of growth rate. So I think given that we get about 60,000,000 visits on our platform every month, And I don't I'm not really bothered about short term in terms of buyer. Yes, in the longer run, there's a fundamental shift from the way India market is used or the way other services are used, then there could be an issue. But given that the economy has seen significant slowdown, many sectors like automobile and others are 20%, 30% slowdown. Even the FMCG, even the machinery, I think we are maintaining our traffic without any advertising is decent for India market. I don't think we have any and if you really see if you really see our registered buyer growth entire last twelve quarters or so, there is a 5,000,000 new buyers are being added every quarter. So and that rate hasn't changed much. So I think we are fine on that side. Yes, there is an economical show up showing up in those numbers. It's okay. Sir, Amit, alluded to the total registered buyers, which is that number is 600,000,000 now. How much incremental scope is there for PPMO? And if you can show some light on how many are the active buyers or let's say, buyers who have visited the website in last, let's say, three months or twelve months, sir, that will be helpful. Don't complete our data very regularly. We internally we do track thirty day active, ninety day active, twelve month active, everything. Our repeat rate, you know, ninety day repeat rate which we have been publishing regularly, overs at around 54%, 55%. If you see the twelve month active buyers or if you see the daily unique inquiries, that again remains at INR 18,000,000, 19,000,000 per quarter and which automatically translates into about INR 50,000,000 per month happening. Okay. Thank you very much. That's it from my side. Thank you very much. Next question is from the line of Madhu Guru from Central Booking Limited. Please go ahead. Yes. Hi, sir. Currently, paying customers around 2%. So how can we increase that paying suppliers? So how can is I think one adoption of the SMEs on to Internet, more buyer and more supplier embracing Internet. Two, how do we increase number of buyers or number of suppliers, one by way of cataloging or digitizing the suppliers, the buyer automatically come because they find a better variety of products and coming from better location of the supplier and they get to see the best prices on the website. So it's a vicious circle between increase the supplier, increase the supplier. Now how organically can we execute that particular thing? We have multiple ways to onboard new suppliers. One, we aggregate suppliers from various sources and call them back to see if they want to register. Two, they automatically come online and on India Mart and whether they come as a buyer or whether they come as a supplier, most of our since we are a B2B business, most of our users are business users and they have a propensity to register as a supplier also. And third, we have a large sales force, if you see our sales and service representatives, about 4,000 people and another 500 odd people in Delhi based sales. So about 4,500 people totally working on helping these suppliers come onboard on India market. And depending upon how well we can service and how fast is the disruption, what is their propensity to leave the platform and that is the net customer addition. So I think if you compare worldwide, most classified sites are 2% to 3% common penetration, but that 2% to 3% penetration is on all India basis. If you really look at our penetration on the top eight metros, where 60% of our customers now come from top eight metro, there the penetration would be much higher. I think Okay. So, And second on the deferred revenue growth, which has been very soft. So have you seen any attrition with your top accounts because for the top accounts contributed significant percentage of revenues? They continue to present represents our top 10% customers account for 40% of revenue. So if you see the data book, they continue to remain in line with the previous quarters. No change has been observed there because even though top 10% customer means 14,000 customer, which remains more or less same. Are able to maintain that. Sir, and just one last question on this competitor one. So they do all this credit as well as logistics, etcetera. So how feasible is it for RBOT for TRIO to try this method? Or are we looking into these value added services? Let us first understand the product categories where different people deal into. So India market is a pretty long tail, we have about more than one lakh product categories that there we deal into. Now, Udaan, our Walmart wholesale, our Metro Cash and Carry, our Amazon business, These people generally are focusing on the specific product categories, which are typically FMCG or dealer distribution product categories. Number two, they are building warehouses, logistics and transportation. I do not feel unlike the in a B2C, their deliveries are a new concept, home delivery is a new concept. Business to business deliveries, FOR deliveries has been happening for ages by way of seat, by way of train, by way of surface. And I do not see large value add by our experimentation that we did into LEXO in a B2B logistics. So we are not currently interested. Number three, I think they are doing some interesting experiments with credit, which is an interesting item to look at. We continue to do study and experimentation to see if anything like that can be built in India market. In case our pilots are successful, we would inform you and increase more penetration in that space. Okay, sir. Thanks. I'll come for the follow-up. Thank you. Next question is from the line of Puneet Shah from Abbott Capital. Please go ahead. Yes. Hi. Thank you for the opportunity. Sir, if you could help with the churn rates and how have they changed for the past few quarters, that would be helpful. Second, if you quantify the actual billings number this quarter and the corresponding quarter, that would be helpful. Thanks. If you see we have customers in various segments, platinum customer, gold customer, then silver annual customer and silver monthly customer. And then we have somebody who has paid up for one year, somebody who has paid up for two years and somebody who has paid up for three years. Ever since the economical environment has changed in the last year, yes, we have seen a marginal decline across all segments and all areas. However, the platinum segment continues to be very strong. As we said, gold and platinum, typically, we have less than 1% churn per month or an annual churn of about 10% to 12%. On the overall annual case, we now have about 20 odd percent churn. So the monthly, as I said, always, that is a volatile item. And on a monthly basis trial keeps on happening. And also if you see our total customer base, we have one third of the 142,000 customer on the monthly side only. And most of the other customers are in the annual side. And about 10% of our customers are in platinum segment. You also asked for the billing and collection numbers. Though we do not specifically publish as a KPI, if you see them in the detailed financials, you can find there is a section note where it is available and it can also be calculated very easily by way of opening deferred revenue and closing deferred revenue and revenue. For this particular call, will give you the number. Last collection for the current quarter was INR183 crores. Previous quarter was INR177 crores. Right. Thank you. This is very helpful. Thank you. Next question is from the line of Manish Saxena Please go ahead. Hi, Tanish. Hi, Prashik. Just a quick thing. So this share of thoughts essentially in terms of local traffic that over the last two, three years had actually gone significantly and then has shifted. And what led to the traffic increase? Was it a geography? Was it a product? Or was it some product innovations that you have done? And what can you further do in the automotive plastic? That's the first question, please. So I think in the last call, last couple of calls I have repeated this, but I will repeat this once again. Somewhere around 2015, sixteen onwards, we found two very good innovations that started to work for us. One, which was the price on the product. Two, which was the detailed product, and we migrated from being a classified listing website to a product catalog website. We are no longer a classified listing website. You can find the detailed product photos, videos, specification, item by item. If you go to India Mart, you will see in different sections you will find. And third, I think we started to use ergonomic matchmaking behavioral based matchmaking where we started to use suppliers' RFQ consumption behavior to assess his preferred location and his preferred product category over his stated location and his stated product category, which helped us all three of them helped us increase our higher fulfillment rates on a significant from 20% to almost 40% higher fulfillment rate over the twenty fifteen-twenty sixteen onwards. Second, if you see the macros also, there has been big changes in the mobile adoption and in the data speed and data cost both and which has and there has been forced adoption of the Internet also by way of compulsory income tax filing, compulsory GST and filing, demonetization led to a lot of people learning how to use Internet and payment methodology. So I guess all of it combined together started to play a network effect and when network effect starts to play out, it was like an exponential growth that you can see in buying buyer inquiries from FY 'sixteen to FY 'nineteen. What led to the plateau down, I think it is mostly to see the economy is going through a pain. I believe that as soon as the economy will improve and also we are touching a good amount of customers' lives given that we would we get about 60,000,000 visits on our platform every month, that's like INR six crores people. And in a year, we end up getting almost like INR 20 crores, 25 crores people on our platform, which is a good number anyway. What next question? So this platform is largely economy or is there some more product innovations or anything that you can do across to increase or is it certain geography or certain products which have used in terms of So is it largely economy? As far as we can assess, yes. Is there any migration of buyers to any other platform? I don't see any significant there are so many B2B platforms being tried currently, but none of them have gained any significant traction to say India market is losing out to them. What we can do probably, we can do in six languages. So for example, now you can search India Mart on seven different nine different Indian languages by way of voice command. Lot of people who come from tier two, tier three, tier four places, they do not read much, but they have a very good habit of watching videos. So can we do product videos? We have taken some initiatives on that direction. So will that be immediately visible. As I said, the base initiative and specification initiative and algorithmic matchmaking initiative were taken in twenty fifteen-twenty sixteen, which actually started to take fan out in the next two, three years. As we have taken some initiative on Hindi language and video, over the next three to five years, they should fan out. Secondly, we earlier we were only generating leads, now we help buyer and seller talk to each other using India Mart lead management system or India Mart section as a platform. Thirdly, can we start to provide payment facilitation, can we start to provide purchase financing. So there are many initiatives that can be taken. We continue to experiment them. Has anything become too big that I can talk about, not yet. Just remind us like your ad expenses at one time was impacted at a slightly higher percentage of sales, but probably has tapered down. Any thoughts on does it actually push across traffic or does it move? In FY twenty seventeen, eighteen, nineteen, we haven't done any advertising. So it is now going to be completing four financial year where we have not done any significant advertising. What you can what you would be seeing in a consolidated level was mostly what we were doing in the leg go in FY 2016 and 2017 that could be visible. We have enough organic traffic as of now. Every year we do budget for INR $20.25 crore for the purpose of advertising. And as and when we feel there is a need for advertising, we will go ahead and Next question is from the line of Shyamal Dhruv from Algebra Sun Life Insurance. Please go ahead. Hi. Thanks for taking the question. So my question is mainly on the pre addition in this quarter. So we had around $4,500 addition in this quarter. In the last quarter, we had mentioned that anything less than $500 would be difficult for us. So though the pay years increased from loss of 3,000 in Q1 to 4,500, but still it's below our aspiration. And so any comment on that, like when we would be able to reach 2011 level given the economic slowdown? Thank you, Hythik. You have already answered. Mean, we are striving. You can see we have increased focus on sales and service. We have increased the number of people in sales and service. Economy is something not in our control. So we by increasing the focus on sales and service and affordability of products, etcetera, we have been able to come back from a INR 3,000 to INR 4,500 and we'll continue to strive to make it INR 5,000 coming soon. So, because acquisition is normally easier problem to solve than the early infant mortality or SME mortality. Currently, a lot of SMEs are not able to maintain their cash flows. So that is where the issue is. And that problem cannot be fixed by way of more sales or more affordability. So with this economic slowdown, do you see our current clients holding back like the monthly pay clients delaying their like spending and affecting our total customers on the silver side of the monthly business? I think the answer remains same. As I said, people are worried from three sides. One, their demand in the market has slowed down. So and their cash flows or credit is crunched. So their ability to pay on higher amount for upgrade or sign up or their willingness to continue for a longer duration suffers. So I guess, either we find some experiments suddenly that works very beautifully, which starts to work or we wait for the economy anyway. So the next question with payee addition, so you mentioned that you had increased your sales effort to get the higher paying customers. So this should translate into lower margin. I think this quarter, we had a 300 basis points margin expansion. So with the current situation continuing, is this the normalized margin or you see any headwind on the margin part as well? So on the stability of the margin or on the ability to maintain the margin, I think we do not see any immediate problem. However, on the rapid expansion of the margin, given that currently the cost is we are investing more money and we are receiving actions which are slowly and slowly decreasing now, the margin expansions will slow down, but we will be able we are confident that we should be able to maintain the margin at these levels for sure. Yeah. Thanks, Rajesh from my side and all the best for coming to us. Thank you. Thank you. The next question is from the line of Imal Gohan from Union Mutual Fund. I just wanted to understand one of your data points that you provide is on the outsourced employees, which has risen by about 37% or 40% over previous year end. The current number is around INR1374 crores. Wanted to understand the rationale behind having a larger portion of outflows employees. Does it help us save on costs? Or is it only because of the flexibility that they have that they give you for keeping what you are wanting to keep in terms of outsource employees? So this outsource fee sales representative, which is about INR 1,300 crores, 1,400 crores, these are spread across our 75 plus offices, sales new sales acquisition offices. Now one when we hire people for the client servicing or for the purpose of product and technology or operations, we do not hire for that particular role. We hire people so that they can grow in the ranks of management and in the rank over the period of time as a senior manager also. However, not anybody everybody who is doing that kind of an education or then that kind of a is interested in doing SME sales. And so typically, we find that for a field sales operation or not really sales operation, the kind of people that you need and the attrition that you have and the which typically high, which actually is not necessary strains of our own payroll systems and systems. So that was the purpose. In fact, they actually cost slightly more than if they were on our own. We had taken that decision about three years ago and we'll evaluate going forward if that is makes sense even continuing forward. So based upon that, we'll do. There is nothing so much of to read between that. It's just that we wanted to be doubly sure that we report those people as a headcount because they are not visible in the statutory financials. Right, right, correct. So the point was to understand the cost advantage that we have. So basically, they do they are more expensive than the on roll employees, right? But they Yes, Please continue. Yes, if they were hired on roll, I think we would not have outsourcing extra overhead that we had. So outsourcing overhead is definitely an extra cost, but they were hired or unrolled, will that come at the same cost? I don't know. Okay. Fair enough. Thank you so much. Thank you. Next question is from the line of Kunal Shah from Klamath Investments. Please go ahead. Hi, sir. My question is regarding the cash on the books. What is the level we want to maintain and what is the plan for the cash on the books? So as stated last time also, we have three usage of that we have planned. One, as a company of our size and scale, how much cash reserves that we want to maintain and given the deferred revenue also that we have. Number two, we would continue to look for possible opportunities where we can make investments or acquisition. As you know, we have done one investment in Wabar app, which is a mobile accounting software app in the in the September, in 46% we had taken for INR31 crores. So we will continue to look for such opportunity. Third, I think once the first financial year completes after listing, the Board will decide the quantum of dividend that has to be paid out. And my second question is regarding the average revenue per user, What can you or do you share the vision of, say, the medium to long term growth that's possible in the average revenue per user? Traditionally, if you see, historically, we've been growing our customers at around 15%. And our ARPU growth has been trading at between 5% to 10%. Given that the economic scenario, what we've seen, we think probably the lower end of the growth should be the reasonable one to assume. In this quarter, if you look at our growth is already down to Q2 growth is already down to 7%. So maybe 5%, 7% should be the reasonable one we should assume. So I'm asking more from medium term perspective 10. Is that the same number that you will for? Sorry? I'm asking more from a medium term perspective for five to ten years. Then actually, it's also the same number you will guide for? Yes. At this point of time, we can make it similar to what we have seen historically in the past. Next question is from the line of Ayas Motivala from Sytbalis Partners. So the first question is on are we noticing in the marketplace a distinction between B2B and some sort of B2C businesses online, in particular, of eroding? Is the customer very strict when they are doing a search for suppliers focused on B2B or B2C or want to get a solution? See, Internet is an open platform and available at the click of a button. Yes, sir. So nobody can stop one wholesaler to go and check out on a B2C site and one consumer to go and check out on a wholesale website. So I guess there is always that 20% overlap that remains on an Internet platform. And beyond that, nothing much that happens. So I guess we will continue to have that 20% overlap where India Mart has 20% direct consumers who come and search more prices and other things. Yes, for higher value products also. So sometimes even the direct consumers, when they have to buy high value products, like if you want to buy a generator, which is maybe for your personal home consumption, it is a one lakh generator, I'm not too sure if you'll go on a B2C site and do an order as of now, you are better off doing it on India Mart. So I hope that answers your question. Sir, just one basis of that 50%, is that a number for India Mart or you're quoting an industry wide sort of No, I'm just quoting eightytwenty principal number, neither quoting India Mart calibrated number nor quoting industry wide standard. Sir, the other question was related to the asset spending. We have talked about it in the past call as well. And you talked about platinum customers contributing a certain number. I didn't catch if you could describe that in terms of your platinum customers' contribution to the overall business? And how much is the difference in which they pay versus the average ARPU or whatever you call it? Yes. So if you go to the Slide 15 of our presentation, the revenue from operations slide, yes, Slide number 15. That says very clearly that 40% of our revenue is contributed by top 10% of our paying suppliers. 40% of our paying suppliers, 30 of the the paying paying supplier. Yes. We have 142,000 paying supplier now. Which is what percentage of 15,000 top paying customers? Yes, 42,000 top paying customer And not that exactly that all the they are 100% platinum customers, very large, 90% of them would be platinum customers, more or less. Yes, and I think you mentioned that 40% number were platinum customers. And then the range of interest would be is similar to platinum, sir. Right. So the range of monthly or annual or two year committed payout would be how would you range this for, as you said, entry level B2B suppliers who come into the kind of India market and people who are evolved and out of this platinum or the top 10 percentile customers, how much would be the difference? Yes. So at entry level, when a new customer comes in, we have two plans, which is a monthly and annual. So the monthly plan is INR 3,000 per month with a INR 5,000 cost. Both of them are inclusive of GST. And the annual plan is INR 30,000 plus GST, which is more or less, both of them are similar. And almost 99% of our customers start at the silver monthly or at silver annual level. At the acquisition level, 80% of them again are on a monthly acquisition and 20% of them are on annual subscription. And then they are upgraded as they try the service or as they become comfortable with service, they are upgraded in two ways. One, are upgraded into the tier from silver to a gold tier or and we have multiple tiers in platinum. And two, they are upgraded into a multiyear service often. And three, sometimes it's a combination of gold plus multi year, which is our one of our most popular one. Generally, you will see that the ARPU at the blended level, which we have been reporting is about 44,000, 45,000 per annum. As I said, the entry level is about INR 30,000. And if you calculate the top 10% contributing 40% of the revenue, that works out to be a little upwards of INR 160,000 per customer. So top 40,000 customers would be paying us about INR 160,000. Now you have three numbers of ARPU. Yes. Yes. So that's helpful. And sir, again, I'm asking this question, which was what is to try and learn about the business. Is in your algorithm or the way you display when a B2B buyer comes in to seek for a supplier, does your system have preference in the same peers that you talked about? Or it would just give a number based on geolocation or how does that work, sir? It works on a multiple combination. So it will definitely take into account if somebody has paid INR 160,000 versus INR 30,000. It will also take into account the proximity of the buyer location and it will also take into account whether this particular supplier has preference for that location, if it is local location or if it is RFQ consumption preferred location. It will also take into account if your phone pickup rate is a supplier's phone pickup rate is above the threshold or not, because we cannot let the buyer quality buyer experience hamper if the suppliers are non responsive. So it is a 20 different parameter that will decide a particular search to rank the supplier for a particular buyer. Every buyer will see a very different supplier depending upon where is he logging from. And every supplier will see very different set of RFQs depending upon his past behavior and depending upon his year of subscription. Sir, just a final sort of hurdle in this part, which is on the gross listed suppliers versus paying customers, and we don't call that 2% ratio for listed companies. You're in some sense implying that you're while you're an open platform, you want to do business with people who spend on your platform. So in the end, if you do not have anything supplier in that category, then someone who's just been listed may also show up in that RFQ. Yes. I think, in fact, we don't give out the numbers of exact how many inquiries are delivered to a free supplier. But there's a significant business that you can do freely being listed on India market depending upon which category you are and how much competition in that category it is. So from our point of view, we want the buyer to go satisfied. Whether or not I made a money from that supplier, that's a secondary objective. If a buyer has come to India Mart, he must go satisfied. And every buyer that goes satisfied with the free supplier that becomes a sales lead for us. And that is how we go to that seller and say that since you have received X number of leads already with the free customer, imagine what you can do by doing a paid customer. And many of them wants to pay up and show up higher up in this category or location. And few are saying that or many say that, okay, we'll continue to enjoy free. Right. That's a great question. Thank you very much. I may come for another question, please. Thank you. Next question is from the line of Prakash Shah from Stallion Assets. Please go ahead. Hello. Hello. Go ahead, You're audible. Yes. I have two specific questions. One is regarding dividend distribution policy. What is going to be a dividend distribution policy going ahead? And are there any plans to launch any new product with Indramark or any new product which would be part of the next part? Yes. So we have adopted the dividend distribution policy. The amount of dividend that is to be distributed every year would be decided by the Board depending upon the yearly performance and cash availability and cash utilization. So that's about dividend distribution policy. And in terms of product, as I mentioned earlier, we continue to launch many, many products. As I said, lead management system has become significant enough to be mentioned that it has been used regularly by buyer and supplier. We also have a Pay with India Mart where we facilitate payments. We also have started to offer searches and display in Indian language content. We also have started to use AI, ML and video. But is any of those products significant enough at this point of time? No. And what will be return renewal rates for all kinds of customers, be it platinum, gold, silver? Yes. So, Arpit, in our customer base, have two kinds of customers. All of our customers have taken an annual or a multiyear package, wherein we have seen renewal of approximately 80 odd percent. And onethree of our customers are taking monthly subscriptions, wherein we are seeing a renewal of close to 95%. Okay. And we have discussed something regarding auction driven pricing. So are we having a new tranche to that? Sorry, what's that? Can you repeat the question, please? You were looking forward to for auction driven pricing on our platform? Not auction driven, no differential. It was not auction driven, but we were trying to do a differential pricing because currently the entire pricing on our platform is in standard price, irrespective of the location or irrespective of the value of the category in which you deal in. So we were trying to move to the differential pricing. However, given the different economic scenario, we may take slightly longer time in terms of launching that potential pricing all across. Okay. And what is the trend that you're seeing right now in like twenty one days of passing for month of January, what are the subscriber additions? What are the trends like this month? I think, Vibishan, as you would understand, we can't disclose. Still, I believe we are probably one of the few companies who are announcing results in twenty one days. The December results have already been shown to you. Okay. No problem. Thank you so much. Next question is from the line of Shivakumarke from Unifi Capital Private Limited. Please go ahead. Yes. Thank you for the opportunity. So just to confirm, the churn rates in both the annual plans and the monthly plans haven't changed much, right, from the last quarter? 35% per month is the monthly plan. Yes. So we haven't seen any significant change from the last quarter. Though historically, if we see, certainly, the churn rates have increased on an annual and multiyear customers. We used to see 16% to 18% churn, which has gone up to more like approximately 20% churn annually now. And similarly, on the monthly customers, which is one third of our database, our churn rates were around 3% or 4% per month, which have gone up to more approximately 5% per month. Okay. So, they have been in June, but not you haven't seen further? It has happened in the last three quarters. I see. Okay. And one question with regards to the employee cost, which have moved up almost 23% in the current quarter and almost 24% for the same three quarters put together. So should we expect the same kind of trend going forward? So the employee cost has primarily gone up because of the two reasons. One is the annual increments that we announced. And second is the headcount increase, which is largely we have done the hiring in the sales and servicing side. Specifically, this hiring was ramped up in the last quarter. And that is why you are seeing the slightly higher increase on the manpower. Overall, on a going forward basis, along with the client addition, we certainly need to add a few more people on the servicing side. So every quarter, customers, there would be some 70 to 100 people that we would be adding on the servicing side every quarter. That's all. But that's pretty much it and the increment will be effective every June. But historically, our manpower cost has been increasing at the rate of about 18%. And that is also because there was in FY 'seventeen, there were changes in monetization time. So we were slow in hiring. But I think going forward also, we will continue to remain in that 18% to 20% of the cost. Currently, it has gone up to 35%. Sir, the line for the participant got disconnected. We move on to the next participant. The next question is from the line of Harvik Solanki from Moneyb Investment Advisors. Please go ahead. Hi, sir. I just want to understand who is the person on the technology side where there's been always an obligation or they can as per the industry requirement, which is operating team, leveraging new things. So I just want to understand the person or the team looking after that. And do we have the specific team as a lock in to the company? How it is? So about 20% of our people expenditure remains in the product and technology side. We have about 400 people in the product technology data. But we have pretty seasoned set of people, new as well as old, as old as fifteen, twenty years would be, as new as so we have I'm pretty confident that we have a team which is very good in product and technology and at par with the industry standards anywhere in the world. We also keep taking consultancy from various sources. So for example, we are constantly looking at innovation in artificial intelligence and machine learning. So I'm confident and I myself is a software engineer by birth. So I think we have enough number of product and technology people here. Okay. And those so the team who will be managing like you and also few of the people will be looking after the technology team. I just want to understand, do we have the lock in with all these people around? Because now the population is huge and a lot of competition coming across in this space and there's instances that people may move out or just want to understand the right angle? No, sir, we don't believe in lock ins. In fact, we don't have any locks and keys in entire of our office. We don't have any of our cabins, any of our so we do not believe in locks and keys. Next question is from the line of Dixit Naredi from Naredi Investment Travel. Please go ahead. Hi. My question is, in this quarter, the company generated cash flow INR78 crores and the total cash and investment is INR858 crores. So as per the revenue amount, INR649 crores. So it looks like the company will generate cash flow in the future. So how you will utilize this cash in near future? Just now I answered that question. I'll repeat that again. The first thing is we'll continue to maintain a good balance because for the size of our company and for the size of this kind of deferred revenue, what is the balance that we need to maintain. Number two, we have already done one investment at INR31 crores for 26% in GAPR app and we'll continue to look for adjacency led investments that we can do either in minority or in majority. And third, we have adopted our dividend distribution policy that we will distribute in the amount of certificates would be decided by Board of Directors at the end of the year, and we'll let you know. Okay. Okay. Then, like, one more question is that, like, Amazon and Flipkart is also, like, you know, very quick, like, type of they are also in the same industry. So they, like, and then do this type of b to b thing. What's the, like, the risk on the company? Anyway, I think, nobody has stopped from entering any business. It is that it does understand whether what kind of exit barrier do we have in our business, what kind of stickiness that we have in our business. As I said, we have a lot of supplier behavior data and lot of buyer who are already registered on India Mart. And we have achieved a significant portion of the flywheel that is moving faster and getting bigger. So there's a network effect that is there. And once you achieve that network effect, it is not so easy for anybody to come into a network effect business. It's generally difficult. However, people do innovate and people do can come in a but I don't think since we are not a transaction based model, the discounting led innovation incentive may not work. Also we have a copyright on all our information that has been accumulated over the period of time. We will we do not so even to accumulate that kind of information that we have, just imagine, we have about INR 60 lakhs INR 59 lakhs suppliers registered on our platform and we have about INR 6 crore products with different kind of coming from 101,000 product categories. So unlike the current model of names that you have taken, they deal largely into standard set of products, which are fast moving, whereas we deal into more of a customized set of products. Most of the G2B transactions are for larger amounts. That will give you some comfort. And two, we have the behavioral data, which nobody else has. So that gives us a competitive advantage against any new entrant. Okay. Okay. Okay. Thank you. Thank you so much. And all the best for your future. Thank you. Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments. Thank you, ladies and gentlemen for joining our Q3 conference call. We are delighted by the interest and participation that you have shown in the company. And in case you have any further questions later, you can definitely reach out to our Investor Relations team and their email ID is available on our website. Thank you very much for your time once again and have a great New Year and good financial year ahead. Thank you.