IndiaMART InterMESH Limited (INDIAMART) Earnings Call Transcript & Summary

Good morning, members. I'm delighted to welcome you all to the 24th Annual General Meeting of IndiaMART InterMESH Limited. I trust and hope that all of you and your families are in good health. This meeting is being held through videoconferencing or other audio/video visual means in compliance with the circular issued by MCA and SEBI from time to time in this regard. The registered office of the company situated at New Delhi shall be deemed as a venue for this meeting and the proceedings of 24th Annual General Meeting shall be deemed to be made thereat, to transact the businesses, as mentioned in the notice of the AGM. The notice of the AGM, along with the annual report for financial year '22-'23, have been sent through electronic mode to those members whose e-mail IDs are registered with the company and RTA, and depository participants in compliance with the MCA general circulars and SEBI circulars issued from time to time. Please note that in terms of statutory requirements, the proceedings of AGM are being recorded, and transcript of the proceeding shall be made available on the company's website and can be uploaded on the Stock Exchanges. Before starting the proceedings of the meeting, I would like to inform the members about the modalities for participation or process to be followed while attending this meeting. The facility of participation at the AGM through VC/OAVM have been made available for 1,000 members on first come, first serve basis. Members participating in the meeting can ask questions and/or seek clarifications, if any through chat box option facility. These questions may be taken up towards the end of the meeting. The unanswered questions and clarifications if any, shall be replied within 7 working days from the date of AGM by the company suitably. As this meeting is held through VC/OAVM, the provisions relating to appointment of proxy is not applicable. However, the body corporates are entitled to appoint authorized representatives to attend the meeting through VC and cast their vote electronically. Requisite arrangements have been made through the e-voting services provided by NSDL to enable the members to exercise the right to vote on the resolution set forth in the AGM notice. Mr. Devesh Kumar Vasisht, Practicing Company Secretary, membership number, F8488, Managing Partner of M/s DPV & Associates LLP, Company Secretaries have been appointed as the scrutinizer for remote e-voting process and e-voting during the AGM. Now I would like to introduce the Board members and senior management personnel of the company who have joined this meeting through VC/OAVM. We have with us Mr. Dinesh Chandra Agarwal, Managing Director and CEO; we have Mr. Brijesh Kumar Agrawal, Whole-time Director; Mr. Vivek Narayan Gour, Independent Director and Chairman of the Audit Committee, NRC and Stakeholder Relationship Committee; we have Ms. Pallavi Dinodia Gupta, Lead Independent Director; Mr. Dhruv Prakash, Non-Executive Director; and Mr. Prateek Chandra, CFO of the company. Apart from above, we have Ms. Kanika Kohli and Ankit Gaba, representative of BSR and Company LLP, Chartered Accountants, statutory auditors; Mr. Rupesh Agarwal, Managing Partner of Chandrasekaran and Associates Company Secretaries, secretarial auditors are also present through video conferencing. As there is no designated Chairman of the Board, I would like to request the members of the Board of Directors who are present in the meeting to elect the Chairman of this AGM to among themselves in terms of Article 89 of article association of the company. So may I request the directors to elect the chairperson?

I nominate Ms. Pallavi Dinodia Gupta for the Chair.

I second it. I second Pallavi as Chairperson.

Dinesh, sir.

I second it.

Sir, you are on mute, sir.

I also second Pallavi as the Chairman.

Thank you, sir. Ms. Pallavi Dinodia Gupta, Independent Director nominated by the other directors present at the meeting is elected as the Chairperson of this meeting. The statutory registers and the relevant documents as referred to -- in the AGM notice have been made available and kept open during the meeting for inspection of members electronically. Any members who wants to inspect this same can send their request to the e-mail ID, as mentioned in the AGM notice. Now I would request the Chairperson to preside over and carry out the proceedings of this meeting.

Thank you. Dear members, with utmost gratitude and immense pleasure, I extend a warm welcome to all of you at the 24th Annual General Meeting of IndiaMART InterMESH Limited. I, on behalf of the company, express our deep appreciation for your presence and for taking out your valuable time today to attend this AGM, which has been convened through video conferencing. The company has made necessary arrangements to enable the members to participate in the meeting through video conferencing and voting electronically. The requisite quorum being present, I call the meeting to order. The year of '22-'23 witnessed IndiaMART sustained its growth by leveraging emerging opportunities in India's B2B segment. We are pleased to report during the year, IndiaMART has delivered a consolidated revenue from operations of INR 985 crores, representing a year-on-year growth of 31%. Collections from customers for the entire year grew from INR 934 crores to INR 1,219 crores on the consolidated basis. Deferred revenue as of 31 March '23, stood at INR 1,162 crores, an increase of 28% year-on-year. On a full year basis, the consolidated EBITDA was INR 268 crores, representing a margin of 27%, while net profit of INR 284 crores represents a margin of 24%, and cash flow from operations was INR 476 crores. IndiaMART registered a total traffic of 1,021 million and unique business inquiries of 88 million this year. As of March 31, 2023, the company has 170 million registered buyers, supplier store fronts grew to 7.5 million, an increase of 6% year-on-year and paying subscription suppliers grew to 202,690, a net addition of 33,000 subscribers during the year. Total headcount increased by 911 to 4,583 at the end of the year. In order to cater to the growing business opportunity, we made investments in our key resources, including people, technology, sales and services. Resultingly, we added 911 people to our workforce as well as expanded our channel partners' networks thereby, improving acquisition rate of customers with diverse needs throughout India. In addition, we continue to invest in product innovation to serve the evolving needs and improve matchmaking and its relevancy on the platform. During the year, we forayed in the accounting software space through acquisition of Busy Accounting Software and Lifekeeping, a tally on mobile application. These acquisitions, coupled with our investments in Vyapar and Realbooks have helped us build a presence across all customer segments requiring accounting softwares. In the first year itself, Busy Accounting Software reported INR 43 crores in revenue, which reflects that the Accounting Software vertical is emerging as a diversified revenue stream for the company from here on. In line with our belief of returning surplus cash to the shareholders, the company has recommended for your consideration a final dividend of INR 20 per equity share of the face value of INR 10 per equity share for financial year '22-'23. The Board of Directors have also recommended a bonus issue of 1:1, that is 1 equity share for every 1 existing share subject to shareholder approval. While driving our business growth, we remain committed to supporting the small businesses. We provided free online visibility to 7.3 million small and medium businesses on our platform, enabling them to drive -- to thrive in the digital landscape. Moreover, we offer 100% free services to our buyers especially transparency in price discovery of products listed on IndiaMART irrespective of the locations, whether they are based in metro cities or remote rural areas. Driven by our dedication towards being socially responsible, we have implemented policies that prioritize environmental production, corporate social responsibility and governance frameworks. Through our CSR endeavors, we focused on strengthening education and creating skill development facilities to uplift weaker and underserved sections of society. I'm delighted to share that our CSR initiatives have yielded significant results by positively impacting the lives of more than 1.1 million individuals through our various programs. By empowering students, teachers and parents alike, we strive to create a nurturing environment that fosters growth and opens the door to abundant opportunities. In conclusion, I would like to take this opportunity to thank each one of you for your continued trust in IndiaMART in taking forward the company's goals of fostering digital inclusion of businesses to steer India's growth story. I, on behalf of the company, I'm also grateful to our stakeholders who continued support and commitment has made it possible for us to make doing business easy and stay firmly on the course of our long-term goal. I'm confident that our partnership approach supported by our collective efforts will help us push the bar of inclusive and sustainable long-term growth for all of us. We shall now take up the formal agenda of the meeting. The notice of the AGM, along with the audited stand-alone and consolidated financial statements of the company and the reports of the Board of Directors and auditors thereon, including annexures thereof. For financial year ended 31st March '22-'23 has already been circulated to the members through e-mail and the same is also available on the company's website. I now take notice of the AGM along with the explanatory statement and report of the Board of Directors as read. As the auditors have not made any qualifications, observations or comments in the audit report for the financial year ended 31st March '22-'23, I now take that as read. In compliance with the provisions of the Companies Act 2013 and listing regulations, the company has provided remote e-voting facility to the members from 9 a.m. IST on Friday, June 9, '23 to 5 p.m. IST till Monday, June 12, '23 to cast their votes electronically on all business items as set out in the notice of the AGM. All members of the company present at the AGM who are eligible but could not exercise their right to vote during the remote e-voting period can exercise their vote now through the e-voting platform of NSDL. The window for e-voting is open now, and the same would close at 12 noon. Thereafter the proceedings of the meeting shall stand concluded. Members need to follow the instructions mentioned in the notice of the AGM. And in case of any difficulties, kindly contact the helpline numbers given therein. The following resolutions are proposed to be passed in this meeting. Item 1: To receive, consider and adopt the audited stand-alone and consolidated financial statements of the company for the financial year ended March 31, '23, together with the reports of the Board of Directors and auditors thereon. Item 2: To declare a dividend of INR 20 per equity share for the financial year ended 31st March '23. Item 3: To appoint a director in place of Mr. Dhruv Prakash, DIN number 05124958, who retires by rotation and being eligible, offers himself for reappointment. Item 4: To approve issue of bonus equity shares. The resolution along with the explanatory statement pertaining to this item is provided in the AGM notice already circulated to the members. The company has made available the option to raise any questions or seek clarifications using the chat box facility provided during the AGM to all the members attending the AGM through video conferencing. I now request Mr. Prateek Chandra to take up the questions received from the members through the chat box facility.

Thank you, Pallavi ma'am. So the first question is from Mr. Niraj. How much dividend is declared for this year and who was entitled to dividend and by when will we receive it? So the Board of Directors have proposed a dividend of INR 20 per equity share. It is subject to the approval of the shareholders in the AGM. And all the shareholders who are -- whose name appear as beneficial owner as on May 11, 2023, which has been the record date for the dividend would be entitled to receive this dividend. And once it is approved by the shareholders, it will be paid within 30 days. Moving on to second question from Mr. Ankit. How much bonus is declared in financial year 2023? Who is entitled to it? And by when will we receive it? Board of Directors have recommended a bonus issue of 1:1. That is 1 new share for every 1 existing share, is subject to the approval of the shareholders in this AGM and the record date for bonus issue is June 21, 2023. It means that all the members whose name appear as beneficiary owners as on June 21, 2023, as provided by NSDL and CDSL would be entitled to receive the bonus issue. Moving on to the third question from Mr. Mukesh. The company has spent INR 500 crores in acquiring Busy Accounting Software. What is the thought process? And how is this acquisition shaping up? I request our whole-time Director, Mr. Brijesh to take on this question.

Thanks, Prateek. Accounting is a strategic space for IndiaMART to realize our vision of making doing business easy. This is because accounting is the core need of all small midsized businesses. And it is a very sticky subscription business. During the year, we acquired Busy Infotech Private Limited, which is one of the largest accounting software companies in India, having sold almost 330,000 licensees so far. The acquisition has been shaping up very well in the first year. We sold about 30,000 licenses and did a revenue of INR 433 million and a deferred revenue of INR 273 million, representing a profitable growth of 22% and 23%, respectively. Our growth strategy for this business is to invest behind product as well as sales and distribution. This will help us improve our reach, our awareness across regions where we can improve our penetration significantly. Over the next year or so, we would want to continue to focus on expanding the team, strengthening the channel partner network and improve our penetration and accelerate the revenue growth.

Thank you, Brijesh. Moving on to the next question from Abhijit. IndiaMART stand-alone revenues have grown by 25% this year. Do we expect similar growth in the next few years? And what is the outlook for IndiaMART? So I request our Managing Director, Mr. Dinesh Chandra Agarwal to take this question.

Thank you, Prateek. IndiaMART has registered a modest growth in this year. Also, as you may be aware, our paying subscribers have grown by 20% to 203,000, which has been the primary driver of growth in the revenue. Overall, we believe increasing adoption of Internet in India, along with a projective business environment has accelerated business looking for a web presence as well as to buy products online and service products online. Businesses that have realized the need for digital transformation for improving their reach and closer customer connect. IndiaMART is well positioned to capitalize on this growth and growing demand. We have invested in building a stop -- a strong product, its recognition and market presence as well as technology infrastructure, which lays down a strong foundation for growth in future as well. While it may be difficult to qualify or quantify in numbers, we are confident to maintain the business growth momentum in the near future also. Thank you, Prateek.

Thank you, Dinesh. With this, we don't have any other questions showing up in the panel at this point of time. However, if there are any other questions, please feel free to write to us, and we will respond within 7 days from this AGM. With this, I'll pass it back to Pallavi ma'am for continuing the proceedings.

Thank you, Prateek. So like Prateek has said, if there are any other unanswered questions or you need clarifications, please write to us and we'll respond within 7 working days from this meeting. The consolidated results of the e-voting on the resolution set forth in the AGM notice, along with the report of the scrutinizer, shall be made available on the website of the company and disseminated on the websites of NSDL, NSE and BSE. Members, there being no other business to transact, I hereby conclude the AGM of the company, and thank you all for your participation and dignified presence. The e-voting shall be open until 12 noon. And thereafter, the proceedings of the meeting shall be closed. Thank you.