CarTrade Tech Limited (CARTRADE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to CarTrade Tech Limited Q1 FY '23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Vinod Sanghi, Chairman, MD and CEO, CarTrade Tech Limited. Thank you, and over to you, sir.

Good evening, everybody, and thank you for taking the time out to attend this earnings call. It's in the evening and it is quite late in the day, but thank you for that. Just want to go straight to highlight slide, which is Slide 3 on your presentation and take out a few numbers from here. We are the #1 automotive 2-wheeler, 4-wheeler portal in India. We have now 180 locations, about 120 auto malls and the rest are abSure outlets. Number of vehicles we have auctioned is at a run rate of 1.1 million in Q1. In quarter 1, we also hit 31 million unique visitors on CarWale, CarTrade, BikeWale platforms. 84% of these 31 million unique visitors came organically, which is the strength and health of the company. Quarter 1 revenue was about INR 93 crores, which grew by about 47%. EBITDA was about close to INR 18 crores, INR 17.7 crores, which grew about over 100%. And the company made a profit after tax of approximately INR 33 million or INR 3.3 crores during the year. As you know, the company is completely debt-free and has a strong cash balance of almost INR 1,000 crores. If you go to Slide 4 in the presentation and this is the consolidated financials for 3 months ended June '22. This has got some of the key highlights, which I have already talked about. INR 93 crores is the total income or revenue, which grew at 47%. It is last year same period was INR 63 crores. Having said that, last year was a COVID year. So the growth of 47% is taking that into account. Adjusted EBITDA, again, as I said, is INR 108 crores. It's about close to INR 18 crores. There has been some cost escalation on employees of about 25%, which has gone up. And if you look at the adjusted PAT, which is really the profit before ESOPs and deferred tax and tax expenses is roughly about INR 8.6 crores. And if you look at PAT, which is full deferred tax and ESOP, it is about INR 3.3 crores. This is partly also because of the onetime ESOP cost last year, which has now come down to the level which you see here. So the company is back to a PAT positive limits. If you look at Slide 5, it talks about the stand-alone financials of the company, which has grown by about 42% at INR 42 crores. Adjusted EBITDA is up by 100%, which is INR 8.6 crores. Adjusted PAT is about INR 7 crores, which is up again double of last year. And PAT itself is INR 1.68 crores. So on a stand-alone basis as well, the company is profitable. The adjusted EBITDA margin, which is without other income is roughly 4%. If we take the -- with the other income, it goes up to about 20%. If you look at the next slide, which is the remarketing side and the remarketing business, which is Slide 6. Here itself, we've also achieved a 52% growth, which is a INR 51 crores. Adjusted EBITDA is at INR 9 crores, which is again a 100% growth over last year. PAT, again, as I said, even the subsidiary, Shriram Automall is PAT positive and at INR 2.8 crores versus the loss last year. And adjusted EBITDA margins roughly about 13%, which is much higher than last year, but a little lower than the previous quarter. So one thing in the financials I want to highlight is that quarter 1 for the company is normally a little lower than quarter 4 and I think the accounts reflect that. It's not -- that our business is not very seasonal, but there is some seasonal factors and really quarter 1 in any year is normally the most mutated or the least of the 4 quarters. So that's one direction. The other thing I want to highlight a few segmentation for you so you get a better sense of the business. When you look at the consumer group itself, which is the stand-alone, our new vehicle business grew by about 48%. In the stand-alone, which is our used car media business, it grew by 187%. And now the used car media business contributes close to 16% of the consumer group revenue. The remarketing business for us, which is Shriram Automall is completely used. And if you take that used business and we add a consumer group used business, out of the total revenues of INR 93 crores, roughly about 67% of our revenues is used and the balance, of course, is new. The other cut I wanted to discuss with you is in the consumer group. Our OEM business or the car manufacturer business grew by 51%. And the Consumer Group, our dealer business grew by 76% in the quarter. And now our dealer business contributes 40% of our consumer group or our stand-alone revenues. The other one point I want to just give out is our abSure outlets have now gone to 57 across 34 cities. In the last year, there was a big focus on rolling out these stores. This year, in the last few months, we've actually -- we've been more focused on operations of these stores and also looking at the processes, customer satisfaction, making sure that booking online, et cetera, et cetera, various aspects of our used vehicle booking online or abSure business in terms of operations need to be. So there is heavy focus around that for us in the first quarter. And we continue to work heavily on our product initiatives around India as really allowing consumers to not only research vehicles on Carwale, Bikewale, CarTrade but also trying to complete their journey online to buy a vehicle. And we are continuously building and working with manufacturers, banks, dealers to allow that so what we call a one-click purchase on our platforms. So a lot of new product initiatives going on in the company as well. And of course, all these initiatives we are taking up, are built into the cost of our stand-alone accounts. Aneesha, you want to take the next couple of slides.

Sure, Vinay. So there is another slide which we've been giving quarterly consistently. This is the average monthly UVs. As Vinay did mention, our UVs for Q1 has been about 31 million and we continue to enjoy 84% of that being organic. The rest of it just gives us growth quarter-on-quarter and year-on-year. The next slide, a very important slide for us is the Google trend slide. It continues to demonstrate the dominance that we have as a brand, the high recall value that CarWale and BikeWale continue to enjoy over its competition giving in a way head and shoulders over our competition in terms of brand value. The next slide out there, which is Slide #9, talks about the key metrics on the auction side of the business. Our listings for this quarter was about 2.7 lakhs with a 57,000 volume, which transits to about 21% of conversion. Auction listing grew by about 28% quarter-on-quarter and about 92% in terms of the auction volumes that are transacted on the platform.

Yes, I just want to add one more thing that, as I said, the first quarter for us is a 47% growth. One should take into account that last year was COVID as well. And normally, I will again repeating first quarter normally is the lowest for us for the industry as well. Although the industry also had a healthy growth over last year same period, the car industry as well as 2-wheeler industry, and that's coming from, again a COVID base last year. So -- and this is what we had to say. We're happy to go into question and answers, et cetera, et cetera, and I will clarify any doubts you might have.

[Operator Instructions] we have first question from the line of Ankit Kanodia from Smart Sync Services.

Congratulations on a good set of numbers. So I have 2 questions. Number one is on auction listings. So if I see the auction listings, I see a clear trend that probably Q1 and Q2 are your weak quarters and Q3 and Q4 are strong quarters. Is that correct?

That is correct, Ankit. Thank you for asking the question. That is correct. As I said, Q1 is normally the most -- the lowest and there is some seasonality. As I said, it's not very significant, but there is some seasonality. Last year, Q1 was extremely low also because of COVID. But generally, Q3, Q4 are better quarters for us.

Great. So is it fair to assume that we have chance of crossing 3.5 lakh volumes in Q3 and Q4 this year, going by that numbers?

Our effort is, of course, continuously work on more and more supply coming to the platform. But that as I said, Q1 is normally a tough quarter or there is some seasonality effect of Q1.

So my second question is in the month of May, we read a news about one of your competitors laying off 600 employees. And so even when our balance sheet is very strong and some of our competitors who are probably cash strapped right now. So are we looking at this situation to be more aggressive and look for something maybe acquisition or something like that? Or we continue to do our work as it is? Any thought or any color on that?

Yes, it's a good question. And we actually continue to do our work. We feel that we've been consistent over many years on focusing on our consumer and delivering a fantastic customer experience, very, very stable with our recruitment policies and people policies. And one of the goals we have taken this year is to create a really strong people and learning organization. I always has said, one of the biggest strength we've got is the fact that we have tremendous stability in our business over many years now. And we -- as I said, we focus heavily on making sure our execution capabilities are strong, so we keep delivering fantastic value to our customers. And that can only be done because we have strong people policies as well.

We have our next question from the line of Nikhil Kale from Axis Capital.

So Vinay, my first question was on the stand-alone business. So you talked about that the employee costs have kind of gone up. So if you could just throw some color on that. Also in the employee cost, is there any variable component? So I mean, going forward, what kind of quarterly run rate should we be looking at? This is for the stand-alone business.

That's a good question, Nikhil. And I think it is -- employee costs had gone up and I think the first quarter is factoring increments which have gone in, which is the increase of incremental cost. However, if you see the March employee cost and you see the April and June employee cost, the differential is basically the increments which have come across in the business. Our employee cost mostly is not variable. So we don't see, at this point, a significant jump in employee costs in the next few quarters. But it has gone up and I think it's gone up over last quarter, which is incremental differential. But also year-on-year gone up quite significantly. And that is again the factor of just wage escalation and cost of escalation which are varied.

So then this is the run rate that we should be looking at?

I think so. Yes, I would think this is the rate you should look at correct.

And just again, on the stand-alone business, if I look at the other expenses, right? So putting aside the marketing expenses, the other expenses there has been a sharp cut sequentially from INR 8 crores, INR 9 crores to around maybe INR 5 crores, INR 6 crores. So any items here? And again, do you expect it going forward, there could be some normalization on these other expenses or they should continue at this level?

There was one specific -- I am sure we have taken the results specific entry last quarter, which is why it is not there now and you want to talk about that Aneesha.

So, this is as we had explained in the previous quarter call, in that INR 8.5 crores of cost that we saw in March, there was a provisional entry or provision for doubtful debts of about INR 2.4 crores, which is probably the biggest delta between that and June. Otherwise, the cost that you see in June is a good benchmark of the other expenses.

[Operator Instructions] we have our next question from the line of Vijit Jain from Citi.

Congratulations on a great set of numbers. I have 2 questions. One is can you give me some outlook on your marketing plans for FY '23? Is there any change in your outlook towards performance marketing? And second, your acquisition outlook given this environment change that we are seeing for start-ups in general? That's my first question. And my second question is on abSure. Now you will have had some dealerships which are nearly a year old. If you could give a sense of what kind of volumes you're seeing in these relatively more mature dealerships, that would be great.

Sure. Vijit, this question. Did you want to know about the acquisition of customers, you want the acquisition as in business?

No, no business acquisition because you had those plans earlier, right?

Got it. So on the customer acquisition front of the marketing side, as you've seen on the Google Trend slide, one is our traffic is up to 31 million compared to the previous year, same quarter. And we've seen the Google Trend slide. What's happened is when competition spends have come down, the gaps between our brand or our digital brand and then becomes more stock and that you saw on the Google Trend slide. And as I said, the brand has just got stronger. We feel our strength is that 85% organic traffic and our strength is also the fact that we do a lot -- the rest of the 15% is performance-based advertising, which builds the unit economics of the business the way it is. So we are not -- there is really no plan to change that strategy at this point of time. That's one. The second part is the acquisition strategy. We -- our strength is again the 30 million customers, the millions of vehicles we auction, all the technology and software we have. We are consistently on the look for inorganic opportunities so that we can augment additional services to the same amount of customers. There's nothing at a level where we can come out and say that we're doing it or we've done it. But we are continuously on the lookout for opportunities in every adjacency in the ecosystem, in the automotive ecosystem. So that's part of our daily job now. We're sitting with cash, as you all know, and the idea is to use that cash for such opportunities. It's just that we haven't found something yet to talk about, but we are continuously looking out for this. On the abSure side, as I said earlier, the 57 -- we've rolled out 57 outlets in 34 locations. The intent here is to now just focus heavily on the operations of these locations, which is really about 2, 3 different things. One is when you come online, CarWale [indiscernible] car and you find it, how is the buying experience, which is the tech interface or the technology interface or the car quality itself, the certification product itself, the money back guarantee itself. So we are heavily, heavily focused on the operations side of the business versus last year where we're looking at the rollout of the business. The second thing we focus on every store location, what the volume per store is, the viability of franchisees, the viability of ours out there. So these are the things which we are heavily, heavily focused on. Our first goal here is to make sure that the customer -- level of customer experience, in fact, many of you expressed doubts about 6 to 8 months ago where if we had -- we chose a franchise model to deliver this whole one-click used car buying experience. And when you have doubts, we don't control the entire experience, can you deliver a fantastic customer experience. So we feel pretty confident now that the abSure model delivers a fabulous customer experience. And I think that's the biggest, I would say, achievement for us over the last few months.

Got it. Just one follow-up question, if I can. At the start of this call, you gave some cuts of revenue, and I'm not sure I got all of them. So just confirming some of these numbers, if I can. You talked about the consumer business and you said new vehicle business is up 48% and new car media is up 107%. Did I get that right?

I said the new vehicle business of 48%. I said the OEM business grew by 51%. Our overall dealer business in the consumer group, used and new grew by 76%. And if you count Shriram Automall, our total used business, which is media used as well as Shriram Automall is 67% of our total revenues. And if you just look at the used media side, which is just B2C, it grew by 187% and 16% of our revenues.

Next in line is Mr. Siddhartha Bera from Nomura.

My first question is again on the stand-alone part of your business. So in terms of the new car ad spend, so we have started seeing in terms of supply normalizing and the production picking up from the OEMs. So just because this quarter obviously had an impact of base the growth is probably not correct. But just from your perspective, how to look at the revenue ramp-up from here given that now things are pretty back to normal level?

See I usually talk about the car industry. The car industry sold in the last quarter 910,000 vehicles, which is similar to quarter 4. I think you're right, the fact that supply chain seems to be getting better, semiconductor seems to be getting better. I don't think it's fully recovered, but probably over the next -- I think people are saying over the next 3 to 6 months, supply constraints, I mean, supply should be available. This definitely helps us. So if we see that supply chain getting better or we see supply getting better, it's definitely a benefit to our business on the new car side. So we are hopeful that happens. It's been actually last year for the industry has been pretty hard. Since the first quarter last year was only 640,000 and then 740,000. So getting this 900,000, it takes you up to almost the car industry roughly to about 3.6 million rate is pretty healthy, and we're hoping that this escalate even further in quarter 3, quarter 4.

Got it. So in terms of numbers, I mean, would you be -- would it be possible to highlight that given the improved traction now, 20% plus type of growth run rate we probably can do going ahead on a sustainable basis? Or do you think that that's too early to comment, right?

Sorry, just I didn't get the number, the percentage.

20%.

Are you talking about the car industry?

In terms of our sort of revenue traction in terms of the standalone level.

Is it about 20%, is the question? Yes, we feel pretty confident. We would like it to grow by 20%, yes, I think so. And considering a 47% growth in the first quarter, I think we definitely will grow by 20%, annual.

And second is on the margin side. So like we have seen a couple of costs remaining largely stable in the last couple of quarters, except just employees. So now with revenues ramping up, by how soon can we expect to touch that double-digit margins, which we used to probably have sometime in the past?

We feel like the first quarter normally, what happens is that the cost build-in of increments happened. But the revenue, as you see, is INR 10 crores lower than the previous quarter, which is quarter 4 last year. The moment we get back to that level of rate, we'll get back to the margin front, right? Because we don't see cost increasing in proportion to the revenue increase in the next few quarters.

[Operator Instructions] We have our next question from the line of Sachin Dixit from JM Financial.

Congratulations on a great set of numbers.

Thank you, Sachin.

I had a couple of questions. The first one is like us saying that abSure business has been in operation for some time now. Is it possible for you to lay out a quick used car landscape? How are the used car sales tracking? And if like between the inventory-led models and the franchisee models, which was the initial debate when you launched this business, like how are the different models tracking? Like are you seeing franchisee models ramping up faster, inventory-led models getting stuck, with cash becoming critical?

So we've, of course, never had an inventory-led model. The company stayed asset-light. We find that when you run a franchise-driven model and the inventory is held by the franchisee, or the infrastructure held by the franchisee, it definitely scales faster. I think the big challenge was not that it scales faster, the big challenge was whether you can deliver the same customer experience by not owning the whole stack, which is the inventory, the physical infrastructure and everything. We said we will own the product, right, which is we'll own the technology, the software, which enables people to book online. We'll own the certification product, the money-back guarantee and all of it. But we'll not own the inventory, if possible, or the infrastructure because it just scales much faster. And we feel that's been working because the one thing, as I said earlier, we've validated is the customer experience is actually excellent irrespective of whether we own the vehicle or the franchisee owns the vehicle. So we obviously believe that not only does the business scale faster, it also has a fantastic unit economics because they are completely asset-light. There are many people who are taking in inventory-driven models, and they believe they want to own or control the entire experience. I think the challenge for them will always be, when you want to own everything, one is you're competing with every dealer in India. And the second thing is how do you make your unit economics work and how do you roll out fast enough because you've got to put up every location yourself, you've got to buy every vehicle yourself. So I think their challenges are that, but they'll believe that they can have a superior customer experience. We don't believe that, but that is where these 2 models are against each other. One thing I want to highlight here, the Indian car market or the used car market is close to 5 million, 6 million and growing over the next 5 years. So it's possible that you might have both running, right? We might have a very successful franchise model. Others may have a reasonably successful full stack model. I think we're all a fragment of the market and the opportunity is huge. So one should not think that only one will succeed or 2 will succeed. There may be many which may be successful.

Just a small follow-up on the same piece, like I understood that we were planning to liquidate all the inventory that was on our books as of March '22, but we still continue to see some inventory costs in the current P&L of like roughly INR 2.5 crores. So can you explain how is that coming or how the business model is shaping up?

Aneesha, do you want to highlight that? But I think there's [ this insignificant pilots ] we keep doing. But Aneesha, you want to talk about it?

Yes, sure. So Sachin, the amount you see, if you look at the stand-alone entity, the purchase of stock in this quarter is only 10 lakhs. So the number you're seeing is along with the change in inventory, which is why it looks like a 2.5 number. It's a small number now in Q1.

Okay. But we'll continue to purchase some inventory, like in terms of [ inventory ].

So in the stand-alone entity, under the abSure model, we have whittled it out. We don't have any more purchase of stock. I think you'll have to refer to the stand-alone entity, the [ cash ] and purchase of stock in trade, which in March was about INR 2.7 crores for the quarter, which has come down to about 10 lakhs in that quarter.

[Operator Instructions] We have our next question from the line of Rahul Ranade from Goldman Sachs Asset Management.

Just a few questions from my side. So on the remarketing slide, if I were just to look at numbers from a March quarter to June quarter perspective for the expenses, broadly, they have remained flat, right? Employee cost is the same, marketing is the same, other expenses are the same. So is there no element of variable cost built into the model as such? And that's why we've seen the EBITDA margin drop to, let's say, 18% versus 33%. Is that a fair understanding?

Yes. The variable elements are very small. I think it's not completely correlated when revenue jumps up in a quarter, right? If you see it was INR 60 crores in the previous quarter and INR 51 crores now, it's not necessary that costs jump in the same proportion. I think what you see over the last year same period, a 30% up on manpower cost, I think that's coming from increments this year, increments last year. And last year, as I said, because of COVID, a lot of cost -- there was a lot of cost reduction across the board, which was taking place. And I think -- but I would tend to say that the variable elements are limited, very limited, across businesses. That is one of our strengths actually.

Okay. And just looking at consol numbers, just wanted to understand finance cost better. Actually, like, let's say, for the full year, it amounted to, let's say, INR 6.5 crores last year. What does this pertain to? Is this purely bank charges, et cetera? Because I don't understand why we need to kind of borrow, right?

No, we don't borrow. I think this is an Ind AS accounting standard for -- Risha will explain this out.

Rahul, one, I think you're referring to the depreciation. So finance cost is about INR 1.85 crores for the quarter and INR 6.5 crores for the year. That is purely on account of Ind AS accounting for the lease. We don't have any debt in the company. So there's no finance charges or bank charges.

Yes, yes, I was referring to the INR 6.5 crores number for FY '22. You're right, so that is largely just from the Ind AS accounting.

Yes.

Sure. And lastly, just on the abSure side of it, like the initial stores that we would have opened, are any of those stores, kind of in your view, reached a maturity stage? Or are they still ramping up? And if any of the stores have reached maturity, just wanted to understand the throughput in terms of number of vehicles, where are they in terms of breakeven? Just broad sense on that would be helpful.

Sure. The oldest outlet must be a year, maybe 15 months old. And of course, those have reached -- I mean, those are far more stable in terms of the volumes. The hardest are the ones which are in 0 to 4 months or 0 to 3 months where they're going to start -- the volumes are going to start from 0. And I think the challenge is buying a vehicle and then stocking it and then selling. So it's a process by itself. It's almost like a 60-day cycle itself to buy a vehicle, refurbish and sell it. But the older ones are more stable and doing better and also are the ones where we get confidence from all elements, which is the whole process of certification, warranties, the dealer viability, our viability. One of the things we've been focused on when you appoint dealers is keeping their costs frugal. So we know that their rental costs or their manpower costs are frugal so that we can make sure that the dealer makes money. For us, dealer viability or franchisee viability is as important as anything else. I would say 2 pillars which we focus on are customer experience on the purchase of vehicles and dealer viability. These are the top 2 things which we feel are really going to dictate the success of this model.

So would it be fair to say that the initial outlets are kind of at breakeven now?

Yes. Many of them would be profitable. In fact, now in the monthly reviews, we calculate or we review a dealer -- a profitability chart for dealers. So the initial ones would be profitable. I mean, as I said, again, there will be some profitable, some getting to profitability, but we feel pretty comfortable on the initial ones.

[Operator Instructions] We have a question from the line of Sagar Parekh from One Up Finance.

A few questions actually. So firstly, on the stand-alone business, so if I look at sequentially, the monthly average unique visitors has actually gone up from 30 million to about 31 million, right? But on a sequential basis, the revenues have kind of like gone down by 5%. So I just wanted to get your sense on this. So does that mean that they are not getting converted or something or the ad revenues are not up to the mark or there is no correlation between the 2?

No, there is not much correlation. You're talking about Q4 and Q1 this year.

Yes, correct.

Q4, normally, part of our revenues in the stand-alone business come from -- I mean, all come from manufacturers and dealers spending more money on us. And that's completely coming from their budgets, their volumes, their sales, right? So I think it's a factor of all of that. In fact, if you see the business, the stand-alone business, normally, you'd find, from quarter 4 to quarter 1, there's a drop. This time, actually, you'll find in the stand-alone that from Q4 to Q1, there's been a very marginal -- there's been about an 8%, 9% drop, right, INR 42 crores and INR 46 crores.

No, if I include the other income, so I'm just looking at the...

Yes, even if you look at INR 34.8 crores and INR 36.4 crores. Even that is about like a 7%, 8% fall. Normally, we'll be much more steeper between Q4 and Q1. It's been a better Q1 for that business. But the traffic and this are not very correlated is what I would say. The traffic is -- the revenues are dependent a lot on what manufacturers and dealers spend.

Okay. Got it. So basically, the bulk of the revenues in stand-alone would be largely dealer-driven subscription kind of revenue.

As I said earlier, 40% of it is dealer-driven and comes from manufacturers.

So when you say manufacturers, it's still -- okay. So manufacturers is also subscription-driven only, right?

No, manufacturers could spend on leads, they could spend on advertising. Some are even conversion-based models. So manufacturers are at different buckets. Dealers would be leads or subscription.

Okay. Got it. And my next question is on the remarketing business. So obviously, the numbers, volumes sequentially have fallen, and you are alluding to -- saying that it's more seasonal in nature. But if I look at your average take rates, it has actually improved sequentially. So what is your sense on how should we think of the commission per car? So it's like INR 8,400 for the quarter versus, let's say, last 2, 3 quarters, it's averaged about INR 7,500.

Yes. Yes, that is a seasonal fact. I think the take rate is just more a mix. One of the things we focused on is heavily where our take rate is slightly better. On our retail inventory, Shriram Automall has 2 distinct inventory supply sources. One is from corporates and big businesses, which bring vehicles in; and the second is from small users, which is what we call retail. And retail tends to be higher in margin for us. And there's a little bit of a mix in the sense a little bit of higher growth level in what we call our retail business there.

Okay. Got it. The last question is on the abSure business. So what is the -- can you give some color on the absolute revenues? I know it's insignificant, but broadly, if you can share.

It's insignificant. Actually, I'll be honest, right now, our full focus there is not revenue. It is really about, as I said, customer experience and franchise viability because we feel, if we plug 2 things in, we can scale very quickly out there. Both are correlated in a manner. So we've actually not gone out, and it's not a big focus area for us right now. Just trying to get the whole technology of the product, the customer, and again, the certification product, the money-back guarantees, the dealer viability, the rollout of the stores. I think we're still at that stage. It's only a 12- to 14-month-old business, where the first 3, 4 months were spent on experimentation, et cetera, et cetera. It's got far more stable now. But it will take us another quarter or 2 quarters to focus on revenues and margins, et cetera, et cetera.

But it's classified in the stand-alone business, right?.

It is a stand-alone, correct.

And just the commission that you charge per car is reflected as revenues? Or is that actual value of the car?

No, it's commission per car.

[Operator Instructions] We have a next question from the line of Bhargava Perni from Emkay Global.

Congrats on a great set of numbers. So just wanted to know how has the manufacturer and dealer spending been in this quarter? Like is the trend showing upward given that the last year was a COVID year and manufacturers and dealers were not spending much on getting leads and all? So how has that trend been? I'll come back with the second question.

Yes. The OEM business, as I said earlier on the call, in this quarter grew by 51%. So it's been a positive trend. One would debate that it could be better, but it grew by 51%. We feel that when supply chain is an issue and supply is an issue, manufacturers, anybody, would spend that money on advertising. So if a particular product has a shortage, it's hard to convince manufacturers to spend money on it and advertise it. So that becomes a challenge. But in spite of that, we've got 51%. As we said earlier on the call, as supply eases up over the next few quarters, it actually helps our business because manufacturers need to spend then more money to sell that product. So it's actually how it works.

Right. On the average, like vehicles that have been sold by maybe abSure, so just wanted to know what is your level of comfort where you want like a per month basis, how many vehicles do you want like for your comfort so that it's good for the business? Like what, 10 vehicles per month or something on that front, anything that you have looked at?

Sure. Our intent, as we said earlier, this year is to go to 100 locations from 57 now. And ideally, you're right, I think the average viability for a dealer will be 10, 15 -- I mean, in India, normally, used car dealers have volume of 15, 20 cars per month. And our intent is to like between 10 and 15 to 20 cars is the volume where these dealers tend to operate with. So I think that's how we will think about it, build a very strong foundation this year with maybe 100 locations and anything between 10 to 20 vehicles per outlet, which is really making sure that they're viable.

Right. And thirdly, on the Adroit business, so how much was the revenue from valuation and inspection business, any number?

Aneesha, what's the number?

For the quarter, it's about INR 4.6 crores.

Sorry?

INR 4.6 crores in the quarter.

[Operator Instructions] We have our next question from the line of Vijit Jain from Citi.

Sir, my question is on -- there's been a few new vehicle launches.

Vijit, there's some disturbance coming from your line.

It's on his phone, I think.

Is it better now?

A little better. You can go ahead.

Sir, I was just asking about there have been some new launches from a bunch of OEMs recently. OEMs like Citroen, et cetera, and even Maruti has launched a new SUV. So I'm just wondering, are you seeing any increase in engagement from new OEMs, especially also from established OEMs, as they take a fresh look at where they spend their marketing budget on.

We definitely are seeing across established or new OEMs a general view to digital or let's say, a different -- or a focus towards digital, I mean, without a doubt, whether it's Citroen or whether it's any established player. So that's clear. I think one of the factors is that you're seeing lots of launches coming out this year and the next year because, for 2 years with COVID, there's a lot of manufacturers that have obviously not been able to do it. So that should help us. I think when you have new launches coming out, it does help us. And we're hoping that over the next 2, 3, 4 quarters, that will start happening. But there is definite interest more from new, maybe less from established, but the drive towards digital definitely can be seen. And that comes with the 51% growth rate in the OEMs.

[Operator Instructions] We have our next question from the line of Nikhil Kale from Axis Capital.

So a couple of questions on the remarketing business. So just going back to the average commission per vehicle on the remarketing side, so I think typically, just wanted to understand, for the Q-o-Q increase, is that also a function of the higher value-added services? I remember you mentioning that last year, the parking charges, which is a decent...

Sir, your voice is breaking. We are not able to hear you.

Is it better now?

Is it the increase in take rate because of value-added services is what you said?

Yes. So has the parking charges also kind of normalized now? Are you seeing more...

It is a little better. I think that is a good point, and it is a little better because, if you look at last year's margins and this year, when you had COVID, the physical aspects of many other things we do, we could not do, it was mostly completely online and digital. When COVID has gone back, I think we can provide a lot more physical services to customers and therefore, take rates do go up. But I would think that the factor here is that it's a range, 7,500 and 8,000 orders. There's not that much difference. It's really in this range. I would still bet that the focus we've got is not that the take rate is going up, but really the focus is how do we increase conversion ratios and increase volume. That's the focus we have. I think the second thing here to note is the value-added service we talked about, many of them have not kicked in yet. It will take maybe some more time, whether it is documentation servicing, financing for dealers. Some of these things will take some time. So most of this is just a little bit of product mix differential or a little more physical services because COVID is gone. COVID has impacted it, now it is gone, but not impacted this quarter.

Got it. And just lastly, even in the remarketing business, there is some purchase of stock and trade worth around INR 1.2 crores. So what is that pertaining to?

We had experimented. We did a small experiment, which is what the result of that is. It's very insignificant. We were just experimenting. I think in all our businesses, we try and do some level of experimentation, just to understand some models, et cetera, et cetera.

We have our next question from the line of Karthi from Suyash Advisors.

A couple of things. One is, in terms of take rates, you mentioned that retail tends to be more profitable than corporate. I'm also curious whether the vehicle mix makes a difference. And could you share the vehicle mix for the quarter in terms of auctions?

Yes. What definitely matters is the biggest suppliers -- obviously, the margins are lower, number one. The more online and less physical, also margins are lower. Obviously, when you have physical services as well as an online sales, those margins are better. And then the third is, if you have supply coming from single users, that's obviously the highest margin. We've had that in the business. One of our biggest focus areas with Shriram Automall is to bring more single-user supply. It's roughly, as I said, 20%, 25% of our supply today, but that is the focus on the 1.2 million vehicles, roughly 20%, 25% comes from single users. So it is a big focus area for us, and that does help in margins. When you look at product mix, clearly, series commercial vehicle, which is 20%, 25% of our volume, is also slightly better margins. But I would say -- and again, coming back, the focus is not on take rate and margin. The focus really is on changing the 21% conversion rate and bringing that upwards or increasing the volume of vehicles auctioned.

The second question is on your abSure stores. I know it's early days, but if you had to give us a breakeven volume number, monthly basis, for the franchisee beyond which, of course, it becomes interesting. How soon can...

You mean a particular store, a particular operator?

Yes.

And that we are breakeven or the franchisee is breakeven, which is which?

I mean the franchisee is breakeven.

I think a franchisee that sells a vehicle per month will breakeven. That's difficult to -- and part of this is dictated by the cost of real estate, right, because the franchisee is going to take on a place. It comes from there. But normally, a used car dealer that sells a vehicle per month break evens at that volume. But as I said, again, for many of them who own properties and don't rent or lease properties, it could be even lower than that. It's a question of what the rental cost and premises cost is.

Right. And for you, what would be an interesting volume number? Would 20 be an interesting number, 30? I don't know the density and the economics of it.

I mean, over a period of time. I mean, it's too early right now. Over a period of time with like an average franchisee a month.

Right, right. One broader question, the last one from my side, would be in terms of adjacencies that you can get into to increase. For example, I'm looking at PH's acquisition of [ Kotas ]. Could something like that be of interest? Your current thoughts on it.

The acquisition of -- sorry, what has been acquired?

[ Kotas ], the online diagnostics services, the entity that they acquired in Pune.

So what we've looked at in our consumer group business overall, in all our businesses, again, as I said, we've got strength of some of our customers, the data, the technology, the products. We are continuously looking out for investments or acquisitions. But these would be in adjacencies -- there are 2, 3 different adjacencies. So one is it could be like financing, insurance. It could be around warranties of vehicles. It could be around something to do with electric vehicles. It could be ownership, which is around car servicing and repairs. Or it could be product and tech, which is just around really good products, which help our customers, right? But we would not make any acquisition unless it directly benefited our customers or we have products to offer to their customers and then that whole, what we call, synergy value. We continue to -- as I said, we have a lot of tech we do build, build on our own. But if there's something out there, which is providing a differentiated experience because the technologies are built, we'll be happy to look at that. And we're looking at those kind of cases.

Right, right. The reason I ask you this is the frequency of transactions or rather the frequency of interaction between transactions is fairly long between one vehicle purchase to the next for an individual. And therefore, I'm just trying to understand how you fill the time gap.

Between somebody buying a car today and buying a car after 3, 4 years, there's a lot of gap. And that's one of the reasons we are continuing to look out for something in this whole car ownership space as we talk about, right, on helping them maintain or own a vehicle. It's just that we haven't found something which we think we could invest and acquire, but then we'll look out for it.

We have our next question from the line of Naveen Jain from [ TN International ].

Yes. My question is like I want to know the full year employee benefit expenses for the full year.

The first quarter was roughly about -- Aneesha, you may want to highlight. But yes, I think do you mean the ESOP side or do you mean the salaries? What did you mean?

ESOP side.

ESOP side, I thought so. So the ESOP was about INR 5.3 crores in the first quarter. There may be some marginal increase in quarter 2, quarter 3, quarter 4. But Aneesha, would you say, at the end of the year, we should be somewhere about INR 25 crores to INR 30 crores, in that range?

Yes, Vinay.

As there are no further questions, I would now like to hand the conference over to the management team for closing comments. Over to you.

I just want to thank everybody for joining the call. It's been a very eventful quarter for us. And in this quarter, we've really been able to demonstrate a reasonable growth over the last year same quarter. Also, you've seen our profitability returning to the company, which has really been our track record over many years, the last 3, 4 years. And really thank you again for joining in and happy at a later date to also clarify any doubts or questions you might have. Thank you, everybody. Thank you.

Thank you, everyone.

Thank you. On behalf of CarTrade Tech Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines.