IndiaMART InterMESH Limited (INDIAMART) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. On behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Q1 FY '24 Earnings Webinar. [Operator Instructions] Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer; Mr. Brijesh Agrawal, Full-Time Director; Mr. Prateek Chandra, Chief Financial Officer. Before we begin, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer Slide #3 of the earnings presentation for the detailed disclaimer. Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you, and over to you, Dinesh.

Thank you, Kushal. Good evening, everybody, and welcome to IndiaMART's FY '24 Earnings Webinar. Sorry for the slight delay in starting. I hope you guys can hear us clearly. We have already circulated our earnings presentation, which is available on our website as well as on Stock Exchange's website. I'm sure you would have gone through the presentation, and I will be happy to take any questions afterwards. I'm pleased to report that IndiaMART has started this financial year on a positive note, with about 26% year-on-year growth in collections to INR 321 crores and 25% growth in deferred revenue to INR 1,202 crores. Revenue from our operations also grew by 26% to INR 282 crores. Total traffic and resulting unique business inquiries on the platform remains stable. On the people front, we added about 238 new people, new employees, across sales, service, product and technology in this quarter. We will continue to make these investments in strengthening our organization to leverage the growth effort. In this quarter, we decided to give some discount at our entry-level packages and restore the prices to the pre-COVID level. Due to this [indiscernible] our net customer addition of 5,000 was lower than our guidance, it would take us at least 1 more quarter to normalize the impact of this pricing. We should get back to our guidance of 7,000 to 8,000 net customer addition per quarter from Q3 onwards. As you may have noticed that we have expanded our board with the addition of Mr. Aakash Chaudhry. Aakash is an entrepreneur, Cofounder of Aakash Educational Services Limited. He successfully scaled up Aakash Institute before selling the business to the Byju's. We look forward to working with him closely and benefit from his experience. Before I conclude, I would like to say that we have reviewed our capital needs in this quarter and approved distribution of surplus funds of INR 500 crores to the shareholders by way of buyback. This buyback remains subjected to the approval of shareholders. Overall, we stay confident of growth on all important metrics as we see improving macroeconomic environment, increased adoption of Internet by [ businesses ]. Now I will hand over the call to Brijesh for an update on Busy Infotech. Thank you, and over to you, Brijesh.

Hi. Good evening, everyone. Busy has delivered a billing of INR 23 crores in the Q1. This represents Y-o-Y growth of about 94%. The revenue from operations have grown by about 26% to INR 13.5 crores. And the deferred revenue has grown by 57% to INR 36 crores. The EBITDA for the quarter stood at INR 3.1 crores, which is a margin of 23%. And the net profit for the quarter was INR 3.6 crores. We generated positive cash flows of INR 11.1 crores during this quarter. And we've also sold about 9,000 new licenses in Q1 itself. Now the total count is up to 340,000 licenses at the end of June '23. The overall performance has been in line with our expectations, and we are focused on increasing our growth rate, as we had projected last time. And hopefully, we are on track to achieve that. With this, I will hand over the call to Prateek so that he can discuss about the financial performance.

Good evening, everyone. I will take you through the financial performance for the quarter ending June 2023. Consolidated collection from customers and revenue from operations grew by 26% each to INR 321 crores and INR 282 crores, respectively. Deferred revenue for the quarter stood at INR 1,202 crores, an increase of 25% on a Y-o-Y basis. IndiaMART's stand-alone collection from customers for the quarter were at INR 298 crores. And revenue from operations stood at INR 268 crores, registering year-on-year growth of 23% with 25%, respectively. Our growth in revenue was primarily driven by a 16% increase in paying subscription suppliers and 8% improvement in ARPU due to higher monetization. Deferred revenue were at INR 1,165 crores, representing a Y-o-Y growth of 25%. IndiaMART's stand-alone EBITDA stood at INR 76 crores, representing a growth of 27% Y-o-Y and margin of 28%. Consolidated EBITDA was at INR 77 crores, representing a margin of 27%. Our consolidated net profit grew substantially to INR 83 crores as compared to last year, primarily due to changes in fair value gains on treasury investments. Consolidated cash flow from operations was INR 91 crores and cash and treasury balance stood at INR 2,394 crores as at the end of this quarter. The buyback proposal as approved by the Board is for buyback up to 12.5 lakhs shares at a price of INR 4,000 per share for an amount not exceeding INR 500 crores. This is proposed to be done via tender offer route with pro rata participation from the promoters and the promoter group. As this accounts to roughly around 24% of the share capital and reserves and approximately 2% of total paid-up equity shares, the proposal remains subject to the approval from the shareholders. Thank you very much. We are now ready to take on the questions.

[Operator Instructions]

First question is from the line of Manish Gupta from Solidarity Capital.

This is -- I have 2 questions. First question is for Prateek. That if you look at your revenue to collections ratio, FY '22 and in FY '23, it is about 80%. Is my understanding correct that all your selling cost is written off in the same year because it doesn't show any -- there's nothing in prepaid expenses in selling costs. And therefore, if one will follow the matching principle of selling cost apportioned to revenue proportionately, under IFRS, your reported margins will expand by 4% or 5%?

So Manish, to answer your question, the financials, what we have reported is as per the Ind AS, which is pretty much in line with the IFRS. So what it talks about is that essentially any cost that you incur needs to be recognized upfront. Since we pay upfront for the customer acquisition, which is primarily selling and distribution cost, we recognize the entire cost upfront. And depending upon the period of the contract, the revenue gets recognized. So your point is correct that from looking at a pure matching perspective, of course, the costs are taken upfront while revenues are taken over a period of contract.

Not all the costs because there are servicing costs also and the servicing costs would commensurate with the revenue events.

Yes. My point was only on selling costs, which is about 20% of revenue. So to the extent that all the selling costs are being recognized upfront, the true profitability is actually higher than reported profitability, right?

That we calculate by way of the collection from customers. So there is a slide on collection from customers and collection margin.

My second question was that our top 10% of customers are approximately 50% of revenue. Is it -- and you have such extensive disclosures, is it possible to add a disclosure on gross additions and net additions of your top 10% customers?

In top 10% customer, nothing -- is not directing inward or outward from there. It is just the total number of customers, which is 208,000 and top 10% becomes 20,800 customers. So the revenue recognized from our top 10% customer is -- that is 46% in this particular quarter.

Yes. My question is, is it possible to report attrition in that bucket separately?

So that I anyway talked about because when you say top 10% customer, and I said this multiple times that our platinum bucket itself is greater than top 10%. Earlier, it used to be almost equal to the top 10%. So all of those customers are in the platinum subscription. And in the platinum subscription, our churn rates are less than 1% per month.

Okay. And my last question is that will we see Busy in a cloud format at some point in time?

Look, there are 2 things that we are doing with Busy. One is to take the Busy desktop version and make that available on cloud. So essentially, it is a desktop version, but it's the machine which is hosted on cloud, which you can access using a remote desktop facility from anywhere. That is something which we are going to launch in the near future. The pure, let's say, Busy at the SaaS version, I think that is multiple years away because what has been created in the last 25 years at Busy, it will take many more years before we put it in a SaaS bucket. Okay. Thank you.

Okay, thank you.

One more addition to this. We've already introduced mobile app that connects with the desktop, it means the data that is available to insert on the Busy Desktop is synched on the cloud, which can be viewed using our mobile app. One can also now create orders, invoices, receipts through the mobile app, which synchs back into the Busy desktop. So that's another product that is launched just a couple of quarters back.

Next question is from the line of Ms. Ruchi Mukhija from Elara Securities.

I have 2 questions. Firstly, we've seen for IndiaMART platform, the traffic has been static for some quarter, even the unique inquiries has been, I would say, range bound in the recent quarter. You're seeing that to reach the guidance of about 6,000 to 7,000 quarterly paying vendor additions, we would take some more time. So in that context, the pricing increase in your junior-most category, that seems that it carries some risk. So here, I just want to understand what is the reasoning behind taking this pricing increase at this point of time?

So we were at INR 3,000 per month or INR 30,000 per year pricing introduced in September or November 2018. And we continued doing that until 2020 and then in 2020 we faced the COVID. And a lot of micro and small enterprises were facing challenges on the cash flow and all the... So that's when we gave the discount from INR 3,000 to INR 2,500. So if you really see what we have restored back is 2018 September, October, November prices. So it is not really increasing any prices [ at the bottom of the calamities ]. Just the going back to the old price which was established -- we carried that price for almost 1.5 years.

And could you talk about -- was it affected throughout the quarter or it was taken in between the...

That was taken in the middle of the quarter.

Mid of the ... And was there any change in the conversion rate after the pricing increase? Or we saw almost a similar run rate even after the pricing increase?

No. As I said, we had productivity issues and that we have seen. Every time there is a change in the price, it takes 3 months to 4 months for productivity to get back to the previous level, and we have only completed 2 months so far. I think in a couple of more weeks, the productivity should get back to the previous...

Understood. Now second aspect I wanted clarity was on the buyback. We've made a welcome announcement. Here I just wanted to get more clarity. We've been announcing dividends at several, I would say, frequency. We've done buyback even last year. So you've been rewarding or distributing cash flow to the shareholder. But is there some thought process where we put commitment and quantify how much on a regular basis, would we return capital to the shareholders?

Ruchi, so as a company, if you see our track record, we've been using both dividend distribution and buyback for distributing the surplus funds. This buyback was primarily decided because when we reviewed the funds, we had almost INR 2,400 crore of cash balance as of now. And if you see in the last few years, we've been generating anywhere between INR 500 crores to INR 600 crores of cash every year, including the income from treasury and the cash flow from operations. So looking at the cash flow generation as well as our own growth capital needs and the safety cash requirements of the business, we thought that this INR 500 crores was the surplus funds, which needed to be distributed to the shareholders. And accordingly, we have proposed a buyback of INR 500 crores.

Next in queue is Anmol Garg from DAM Capital.

I hope I am audible.

Yes, Anmol.

Yes. Firstly, congratulations on a good buyback announcement. I had a couple of questions. Firstly, if I look at our paid supplier as a conversion factor, then we are at around 2.7% of the total supplier. Now historically, this has been in the range of 2.3 to 2.5-odd percent. Now given that the paid supplier growth that we are seeing for a longer term, which is INR 7,000 to INR 8,000 kind of paid supplier addition and given that our total supplier additions has been a little bit softer than that in terms of the growth rate, so we will surpass 3% kind of number on the conversion factor at some time. So do you think that this is kind of -- which is -- sustainable in terms of the -- if we talk on the overall conversion factor? And what are the factors that -- or what are the things that we are doing to add on to the new paid suppliers?

Likewise, in the classified space, the premium classified space, anywhere between 2%, 3% to 4%, 5% paying subscriber base is very common and very normal. If you see the -- if you see from our angle, total GST on the ad varies about INR 13 million, INR 14 million in the country. And out of that, we probably have only got 20%, 25% on our books. Rest is non-GST book of INR 20 lakh, INR 25 lakh that we have. We do all kinds of things to make suppliers or install with our portal. Many buyers -- many people who come as a buyer first, they have given IndiaMART baton from where they register, which is available on mobile app as well as our desktop port. Apart from that, we have a premium sales force of about 1,500 people of our own and 150 channel partners in different cities. They also have paid sales force. And these people have a IndiaMART mobile ERP system on their app where they go and collect the information from the various wholesale markets. So that is another source. And third, there will be regularly visit all the creditors and collect any directories that are there and then do e-mail marketing and telemarketing to them. We also run a freelancer program, which basically helps on the supplier. These suppliers also call us on our help line number, 969-696-9696. So from there also, we get supplier registries. We have been getting about 0.1 million supplier every quarter free of cost and about 6,000, 7,000 supplier per quarter, or 8,000 per quarter. So that is a glance of third-party update. So that is fine, I think.

Sure. Thanks for the detailed answer. Another thing that I wanted to understand is that this year we have added some 280-odd employees. Now last time we indicated that for addition of 7,000 to 8,000 kind of paid supplier, we need to add some 120 to 130 employees to service them. Now the paid supplier addition has been a bit lower this quarter. Despite that, the total addition in the employees has been higher. So if you can indicate -- do you see that the paid supplier additions maybe in the second half of the year will be much higher than 7,000 to 8,000?

Think now about planning and deployment and execution, and since the price has been increased in the middle of the quarter, and we believe that is the right thing to do, and this productivity loss in the comparably 2, 3 months last, and that might be the reason. So we will definitely like to get that to our 7,000 to 8,000 number, sometimes later this year, for sure. Whereas the hiring of the numbers are concerned, people are to be hired and trained and deployed on the field, especially June, July is the time when a lot of campus hiring concludes after the examination. So plus/minus 100 here and there will continue to happen, I think.

Sure. And lastly, from my end, I just wanted to have a understanding on the margin trajectory. How should we look at the margins, particularly for FY '24 and beyond as well?

FY '24, I have been saying that the target is to see if we can reach 30% historically. Pre-COVID around was 28%, which has increased from 12% to 16% to 28%. So now on a full year basis, if we can reap 28% and maybe towards the end of the year, if we can reach on a quarterly basis to 30%, that should be our target. Going beyond, I think as I've guided earlier also, these businesses typically operate in a 25% to 35% margin. So I think we are at the middle of that. And we would like to stay that way to maintain our growth. And if you see the operating leverage, that operating leverage is slowly playing out -- but was surely playing out, but then we had a last -- during the -- we have safety cost during the COVID, and then there is a sudden develop of the cost depend on the salaries there in the market and we backfill the people. So I think we are filing at 30%. Next, once we stabilized at 30%, how do we go from there.

Next in queue is Mr. Rahul Jain from Dolat Capital.

Firstly, I just want to understand your experience. You shared a little bit about that, but it would be great if you could spend some more time on that. What is the general experience for you for this kind of a price hike impact? Is it on the new additions on that basis? And also, increase on the existing monthly plans on a silver basis. So if you could tell in both the aspect that what kind of impact you have observed and what is your past experience and your understanding how and when it should normalize back?

No, we don't encourage prices of the existing products. I mean, existing means, existing customers. Existing customers will pay higher price when in terms of next upgrade or next year. So for example, of the monthly scheme which we have taken for INR 1,500, as long as you don't change, you will continue to pay INR 2,500, there is no increase on that. It is only the new customer who is coming in is coming in at INR 3,000. So it is very incremental impact from the overall ARPU to begin with. Yes, over the 1.5 year also it starts to take overall impact because if the entry level price is high, then the upsell price is going to -- renewal price is also high. So that is how we see it. So the good part is in our business, but any price hike that is taking neither does it reflect immediately in the ARPU already -- so if you see there is a consistent growth in the average revenue per customer year-on-year, despite the fact that we have actually reduced the price from INR 3,000 to INR 2,500 because some other pricing, some other maybe gold or platinum, that's where we compensated. So it's a mix of so many different packages and different customer vintage that is visible in the average revenue per customer. So in the past also we have seen that it takes typically 2 to 3 months or maximum to finally get back to the previous product sales productivity. And once it stabilizes, then I think it builds up the base for both. It helps us reduce the churn from INR 2,500 subscribers, and it also -- as far as increased the further upsell price from, say, INR 40,000 to INR 45,000.

Right. Just one more question regarding the sales cost, which has also gone up 6% Q-o-Q despite weak net addition. Is it that we have also increased our channel partner commission along the lines of price hike?

Not really because the cost will go up probably because the productivity has got this over. That is why you might be seeing it. I don't think there is any difference with that.

But if the channel partners are monetized or commercialized based on the conversion, is it higher because our gross addition would be much higher and the net is lower. So we might have paid for higher addition, but the net impact was lower. Is that the understanding right? You want me to repeat the question, sir?

No, I don't have that answer upfront. Maybe you can send us an e-mail, and then we can give you that answer. Because I don't think it is 100% not variable because we do provide assistance -- a minimum guarantee for channel partners and then there is a variable program.

Yes. So Anmol (sic) [ Rahul ], I mean, half of our cost is essentially not completely variable because there we pay on a per person basis. On half of the cost, you can say where we say this is a completely channel partner on a per hosting basis. They are also -- we do provide an early support to the channel partners depending upon their own vintage with us. So therefore, it could be a mix of the things. We will look into it and then we can come back to you with the detailed answer thereon.

Sure. And just one clarification to your earlier comment where you said the upsell plant prices are also revised up. Is that what you were trying to say?

No. Once we stabilize this, the upsell prices are also upwardly revised because we have experience in the upsell approach.

Right. So you're saying you would do it after some time? Or it is already implied but would be relevant as these people progress into that plan?

And these will be progressive.

So the effective date would be what?

So it is not as effective date, because if you come in at INR 3,000, your annualized cost become INR 30,000. So the -- your multi-India, if you take a 3-year package, it becomes INR 60,000. If you came in at INR 2,500, your annualized cost is at INR 25,000, significant -- so that's the [ idea ].

Yes. So essentially, what you're saying is that if you take a multiyear plan that longer tenure discount also would have -- that revision would have happened even if I take a 2-, 3-year plan versus what I would have taken a 2-, 3-year plan earlier?

Yes.

Yes. Understood. And is there a way to understand what could be the addition to the EBITDA or revenue on a like-for-like basis because of this pricing impact on annual basis?

Because there is little difference, want to begin with, out of the 3,000 -- 208,000 customers, we would be adding maybe 2,000 customers per month on this new pricing. Imagine it is -- and that is going to come at -- 12% new customers going to come at 20% higher. So it's a 0.2% addition to the revenue -- to the additional collection per month.

Okay, I'll take this offline. Thank you, and I'll join back the queue.

Next question is from the line of Mr. Abhisek Banerjee from ICICI Securities.

Just quickly, on the price increases that you have taken, what is now the differential between the silver and the gold plan vis-a-vis what it used to be earlier?

The gold plan, again, that are, firstly gold and the upside gold to maximize is about INR 60,000 per year. And steel is about INR 40,000 per year. And for multiyear, there are various discounts available. So the price list is available on our website, if you go to the corporate.indiamart.com, the prices for various services are written there.

Got it. Sir, my question was with regards to, do you think this will lead to your customers kind of upgrading to a gold plan because you're bringing the pricing differential lower? Is that something that you are hoping for?

No, I think as I explained earlier to Rahul Jain's answer, it has an participating effect on newer customers over a period of time and older customers coming up for renewal so far when the pricing is passed on, even more slowly, because we cannot -- somebody paid last year INR 27,000, we cannot suddenly to start INR 30,000. So we will probably take it up in 2 renewals that price increase. So typically this price increase takes effect on the -- and that, so for this INR 3,000 ARPU increase annually, it will come probably in 3 years' time.

Also, Abhisek, actually, this price increase is more of a restoration of our older price rather than increasing the price from the levels where it was. Earlier also even operating will be similar differential.

Got it. Sir, also, with regards to the guidance in terms of adding new subscribers, this 7,000 to 8,000 number, is it with regards to basically the full year as in you want to say that you would add between 28,000 to 30,000 new subscribers for FY '24. Is that what you're trying to say? Because my understanding was that quarterly number was in the range of 8,000 to 9,000.

Quarterly number was in the range of...?

8,000 to 9,000.

So it was 8,000 to 9,000, that way last time we had revised the guidelines to around 8,000, and now I'm saying that we will try and do 7,000 to 8,000. So it is from 9,000 earlier. Earlier we used to guide 8,000 to 9,000, which was correct for FY '23. Because in FY '23, it was the first full year of our expansion. Now we have added -- you will see about 60,000 new customers in the last 18 months. And those 60,000 new customers, many of them are coming for the first time renewal. And first time renewal rates are much lower than second time renewal and then the third time renewal. So what happens is the churn base effect comes in. So that is why the addition rates have to kind of -- we have to go on a growth path, in the consolidated go on a growth path and then consolidate, because if we break the patent heavily on the growth, the first year churn will not let you grow beyond a certain point. So you have to let the first year customer migrate to the second year and third year. And once that balancing happens, then you place first the INR 2,500.

Understood, sir. That is clear. But now if I look at the margin guidance that you're giving, 28% for the full year. Sir, I'm actually struggling to understand, given the kind of revenue growth that we are seeing, also you have earlier said that you will not need to hire too many new people. So my model tells me that the margin uplift should be higher, right? So I'm trying to understand, is it that are you building in for more tech investment? Are you building in for more investment into CAT? You're going to do SEO. If you could give us some clarity on that, then we'll also understand why the margin uplift will not be as much as it should be, I mean, in a -- when the other expenses have kind of topped out.

So effectively, if you please, sir, look at the margin lever, we have our base despite at 72%, 73% quarter on quarter. And we continue to invest behind the newer technologies also. The newer technologies are far more expensive. We continue to move towards the cloud domain. Cloud is again far more expensive. So our basis, the first year customer needs lot more service support. The upfront tax also need like more continuous support. That is why I'm little bit afraid of giving you a guidance above 20%, 30% because the cost pressure is continuing in the last 18 months, whether it is the salary cost pressure or whether it is the technology cost pressure. I think -- and it was completely different in the first 18 months of the COVID and then last 18 months.

Understood, sir. That is helpful. And one last question from my side, if Brijesh sir can answer this. Sir, busy, we are seeing a very, very strong ramp up, right? Where from here? So last year, your objective was to kind of consolidate what we had acquired. Is this year going to be an all-in -- I mean, all-out growth here? How are you looking at it?

The guidance that we had actually given an idea is that every single year that we spend at Busy, our aim would be to increase the growth rate that have been even additional. So even in this particular area, we want to increase the growth rate and etcetera. What you see in, let's say, Q1 is also a result of certain exceptional growth that we have seen in a couple of areas. But what we can go ahead and confidently say that as we start to push for our own geographical expansion, we should be able to achieve the growth rates than what we see.

Got it. Congrats on a great set of results.

Next question is from the line of Mr. Amit Chandra from HDFC Securities.

Am I audible?

Yes, Amit.

So my simple question is in terms of the growth that we're seeing in terms of paid subscribers at an overall level, it's 16% to 18%. But if I see the growth in terms of the various buckets in terms of platinum gold, so how has been the growth there in terms of the absolute number of customers? Or is it higher than the overall company level? Or how is it trending? Because if I see the ARPUs, they're going up. So there is a migration from monthly to gold to a platinum. So what is the parameters that will show us that there is an optimization going on. Also, in terms of what percentage of the customers upgrade every year?

So you see the top 1%. That is why we give this top 1%, top 10% number, right? Because we don't provide the exact silver monthly, silver and our gold and platinum numbers, but we do provide top 1%, top 10%.

But that is in line with the overall company because every time if you do top 10%, then the growth rates for all 3 markets is this -- for us, it's the same. But internally, how has been that taking? So that's what I want to understand in terms of absolute numbers?

We will discuss internally and maybe we will try to find one KPI, we can help you decipher that. In general, if I want to give you the overall sense as of now, what is the mix? Currently, out of the 2 lakh customers about 1/4 are on the silver monthly, about 3/4 on the rest of it. And similarly, if I look at the platinum and gold customers, they account for -- currently account for about 50% of the customer sale. I've given you all the 3 numbers.

Okay. So -- and in terms of the upgrades, how many of the monthly payer suppliers who are then the platform say -- for, say, like 6 months. They upgrade to an higher package. So what is that number, if you can give any number that you can share there? So typically, about 2% of the customers of the total base?

So typically, about 2% of the customers of the total base. Typically, and that can range from manager to manager, from industry to industry, from city to city, anywhere between 1% -- average 1% to average 3%. But on an overall basis, approximately 2% customer if I'm able to get to upgrade from a monthly to an annual sale. I think I would generally be happy.

Okay. And sir, in terms of the monthly additions or in terms of the upgrade paid subscribe addition that we are doing, is it all in the like monthly bucket? Or is it we had some customers that had gold platinum as well, sir?

So we don't add as much customers to the gold budget, but in the -- between the silver, we had about 60% on the monthly and about 40% on the annual.

Okay. And sir, lastly, on the price hikes that we have announced for the monthly subscribers. What is the price hike that we have taken ever in terms of gold platinum in the past? And is there any plans to increase price there in gold platinum?

As the script clearly visible, we see the top 10% customer revenue, I remember, we started giving that number, it was in the range of INR 7 lakh annually or quarterly about INR 1 lakh. So it has grown up almost by 30%, 40%. Yes, I know, and the gold and platinum top 10% customer needs to contribute in revenue. 40% of the revenue now today they'll looking about 46% of the revenue on an improved revenue base. So the overall customer base as well as the ARPU. In fact, most of the ARPU gain would have come typically from the gold and platinum because if you see from FY 2018 has not increased any prices in the silver. I've only given that discount during the COVID, and how we have been withdrawing that discount. So since September, October 2018, the silver monthly and silver annual prices are same.

Okay. And sir, the last question is on the margins. So obviously, we have seen some margin expansion. But if you can throw some light in terms of what proportion of the cost will increase in line with the growth in terms of the paid subscribers and what proportion of the cost will be inflation linked in terms of overall cost, I'm asking?

Let's look at the slide where we have the discussion. So this particular slide can give you some idea how costs are associated, but with less -- things until FY '20 were very different and post FY '22, things are very different. So let's not take FY '21 and '22 as a benchmark. And if you compare FY '20 versus FY '24 now, by FY '23 now. We can give you the different cost structure that has been going into different segments, this particular slide.

No, sir, but in terms of total cost, if you can -- in terms of total cost, what is actually going in line with this -- the paying subscriber? And what will -- from here on, how do you see that cost structure in terms of that?

Yes, we are looking at maintaining the margin and that are probably bring little bit margin upto 30%. So I don't expect the margin to expand very rapidly or contract very oily. I just expect the margins to stabilize at this level, 28%, 30%, 32%. And then we'll see what are the levers for them.

Next question is from the line of Mr. Sarang Sanil from RW Investment Advisors.

My first question is to Brijesh sir, then I'll come back to IndiaMART's business. Sir, you said that Busy is trying to launch desktop cloud version, but I believe you already have a mobile app version, which updates real time and I believe it's through cloud. So why is it so hard to have a desktop cloud there?

So when we have a mobile app which connects the leverage with a desktop application and the data things, the kind of activities that you're able to do in the mobile at the day we are related to rooming that data. In terms of entering transactions on router, we have limited number of these routers that can be entered through the mobile app at the desktop. However, there are organizations who have visible offices, there are multiple people who are working remotely on the accounting system. And they need to have access to the same desktop software over a cloud machine. And therefore, Busy Online actually makes sense for those kinds of customers. And therefore, Busy Online, which is desktop available on cloud is a product that services that particular segment. There, there is a need to access remotely at any point from it.

Sure, sir. That was helpful. On the IndiaMART business side, sir, is it possible to give a split between metros and rurals? Is it possible to give a volume split and value split? It can be on an overall 2,000 -- at 108,000 also. Is it fair to assume that the metro side has better margins?

Metro side would have better margin because metros -- mart that number is given. So we paid suppliers from metro city, it was 54%. We're very clear to city had about 28% and the rest of India, 18%. And desktop India to be 10%, 20% if I remember, pre-COVID. We have -- now have better trainee in presence and better China presence. Now in terms of value, we don't have a split deal, but you can renew that 60% of the of big collections, our revenue would come from metro city, because metro cities would have a better and a deeper penetration of gold and platinum and a better ability for the customer. However, the rest of India, which is 18% in terms of the customer needs, would only account for maybe 20% of the revenue.

Understood, sir. Sir, I just want to understand a little better here. So what is that factor that we paid suppliers are seeing to stick with IndiaMART, all the new suppliers coming at a higher ARPU now, right? Because I can see in the past couple of quarters, the traffic has been flat. So this is regarding on the buyer engagement side, traffic has been flat, registered by us, which is not material. So active buyers, which is material, that has been flat, unique business inquiries, that has been flat. So what is that one factor you think you would pitch to a new paying supplier?

So if we look at the active buyer base, there has been a jump from 30 million active buyer yearly to 37 million active buyer in the last 2 years. Last 2 years mean FY '20 to FY '22. However, we did not increase any customer base in those 2 years. We started -- we ended FY '20 at 147,000, and we ended December ''22 at 155,000 of user. So this whole 7,000, 8,000 additional active buyer has not been monetized and also 7,000, 8,000 active buyers, which has been increased, that nature has been -- there nature in FY '20 and '21 was mask and gas and sanitizers. Now those are gone, but there is no -- not much of a mask selling, not much of a gas selling or not oxygen selling or not much of the crowd. Now these are back for the usual business, previous usual business. So why you see this is flat? Actually, there is a lot of transition has happened from the shortened demand to the broader industry demand. So that is also a need to be fulfilled. And 37 million is huge actually to see in a B2B kind of a scenario. If we can match them properly to a buyer -- right buyer to the right seller. I think there is -- even we could sell even double the number of sellers with the same buyers. Now the problem is not that people need more inquiries, people need more relevant inquiries where the maturity can happen better. So you can see in 40 years development and limiting and making sure that the right buyer was to the right supplier. And by doing that, you actually do not need for any buyers to come back again and again on our platform. We really get better maturity then. So there are 2 ways to do it, either you start particularly with one small sector or one small industry. That's what we used to do in connection. Are you start horizontal and then keep making the buyer/seller match making better and better. And today, even more possibilities are emerging because every year, we could prove that only on certain parameters. Parameters means defining parameter such as location such as quantity or such as product category. Now we will be at advantage of large language models, in the end artificial intelligence and to do the match making even better. So in times to come, you will see even further better deployment of machine learning and audit term using these large language models that have emerged to be able to do that in specification level match making or even the buyer profile level match making. So I'm not worried even, right now, yes, it just continues to remain the situation it was 2 years or so, then obviously, the problem is modified.

Understood. So you are not worried about the -- on the buyer side. Sir, my last question is, do you think generative AI or any of that application on that side would help in improving the margins on a medium to long term per se?

Generative, I don't think that they're generative would help, but a lot of predictive AI will help. And while the whole of the attention of the market is on the generative, in fact that was large AI wise model has a lot more impact on prediction, which was earlier very different, and now it is very different because now, unstructured data can do a much better prediction.

I would now like Dinesh to give his concluding remarks.

Thank you, Aditi. Thank you, ladies and gentlemen, for attending our quarter 1 FY 2024 conference call. We have tried to address your queries in the time available, but if you still have any questions, feel free to contact our Investor Relations team on the e-mail id given on the press release and the investor presentation. Thank you. Have a great sawan, extended sawan and delayed holidays. Look forward to seeing you around Diwali.

Thank You, everyone. On behalf of IndiaMART, we now conclude this webinar. Thank you very much.