IndiaMART InterMESH Limited (INDIAMART) Earnings Call Transcript & Summary

Good morning, members. I'm delighted to welcome you all to the 25th 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, so other audio/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 is situated at New Delhi shall be deemed as a venue for this meeting and the proceedings of 25th AGM shall be deemed to be made thereat, to transact the businesses, as mentioned in the notice of AGM. The notice of the AGM, along with Annual report for the financial year '23-'24, have been sent through electronic mode to those members whose e-mail IDs are registered with the company or registrar and transfer agent and depository participants in compliance with MCA general circulars and SEBI circulars issued from time to time. Please note that in terms of statutory requirements, the proceedings of the AGM are being recorded and transcript of the proceedings shall be made available on the company's website and shall 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 clarification, if any through chat box option facility. These questions may be taken up towards the end of the meeting. The unanswered questions or clarifications shall be replied within 7 working days from the date of AGM by the company suitably. As meeting is held through OC -- VC/OAVM, the provisions relating to appointment of proxy is not applicable. However, the body corporates are entitled to appoint authorized representatives to attend meeting through VC and cast their votes electronically. Requisite arrangements have been made through e-voting services provided by NSDL to enable the members to execute their right to vote on the resolution set forth in the AGM notice. Mr. Devesh Vasisht, Practicing Company Secretary membership number F8488, Managing Partner of M/s DPV & Associates LLP, Company Secretaries have been appointed as scrutinizer for remote e-voting process in 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; Mr. Brijesh Kumar Agrawal, whole-time Director; Mr. Vivek Narayan Gour, Independent Director and Chair of the Audit community, NRC and Stakeholders' Relationship Committee; Ms. Pallavi Dinodia Gupta, Lead Independent Director; Mr. Dhruv Prakash, Non-Executive Director; Mr. Jitin Diwan, CFO; and Mr. Prateek Chandra, Chief Strategy Officer of the company. Apart from above, we have Ms. Kanika Kohli and Mr. Sunil Arora, Representative of BSR & Company LLP Chartered accountants, Statutory Auditors. Mr. Lakhan Gupta, Partner of Chandrasekaran Associates Company Secretary, Secretarial Auditors are also present through video conferencing. Mr. Rajesh Sawhney and Mr. Aakash Chaudhry, independent directors could not attend the meeting due to their preoccupations. As there is no designated Chairman of the Board, I would like to request the present members of Board of Directors to elect the Chairperson of this meeting, among themselves in terms of Article 89, of articles of association of the company. May I request the directors to nominate the Chairman of this meeting, please.

First, Pallavi Dinodia.

I second that.

Thank you. So we'll place Ms. Dinodia, as the Chairman of this meeting. So Ms. Pallavi Dinodia Gupta, Independent Director nominated by other directors present at the meeting is elected as Chairperson of this meeting. The statutory, registers and 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 member who wants to inspect the same can send their requests to the e-mail IDs, as mentioned in the AGM notice. Now I would request the Chairperson to preside over and carry out the proceedings of this meeting. Ms. Dinodia, please.

Thank you, [indiscernible]. Dear members with utmost gratitude and immense pleasure, I extend a very warm welcome to all of you at the 25th 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 is being convened through videoconferencing. The company has made the necessary arrangements to enable the members to participate in the meeting through videoconferencing and voting electronically. The requisite quorum being present, I call the meeting to order. I'm pleased to share with you that we witnessed good performance in FY '24. As we continue to scale our operations and invest in our technologies and our people to cater to the emerging opportunities and evolving market needs. IndiaMART has delivered a consolidated revenue from operations of INR 1,197 crores, representing a year-on-year growth of 21%. Collections from customers grew from INR 1,219 crores to INR 1,474 crores on a consolidated basis. Our consolidated cash generated from operations was INR 559 crores. Deferred revenue as of 31st March 2024, stood at INR 1,440 crores, an increase of 24% year-on-year. Our consolidated EBITDA was INR 331 crores, representing a margin of 28%, while our net profit was INR 334 crores with a margin of 24%. As of 31st March 2024, the company has 194 million registered buyers. On the supplier side, we have [ 7.9 ] million supplier storefronts and 214,000 paying subscription suppliers. Unique business inquiries for the year were at 93 million this year. We added 51,000 paying suppliers during the last 2 years that is in FY '22 and '23, which has been the highest ever paying supplier addition in our history. Due to this addition in a short span of time, we experienced a much higher churn on the silver packages than anticipated. As there is -- retention is the lowest in these newly onboarded suppliers. This in turn led to lower net additions during the year. We continue to have good retention as well as upgraded the rates in the gold and platinum customer segments, which comprises of 75% of our revenue. We are continuously strengthening our product, which leverages insights into supplier and buyer preferences, enhancing user experience through data-driven algorithmic matchmaking. We have integrated generative AI into the suppliers need manager that analyzes the context and content of buyer inquiries and generate tailored response suggestions. This has improved response time and increase the likelihood of conversion. We have enhanced the accuracy and efficiency in the category [ MAC ] mapping using generative AI, enriching user experience and the SCO platform. We further focused on local language understanding to ensure precise search results and streamline the cataloging through AI-powered image editing tools. We acknowledge the importance of innovation and digital advancements while maintaining security and data privacy. We have several active ISO certifications, including ISO 27001 and ISO 22301 in place, which reflects our deep commitment to maintaining integrity of our digital infrastructure. As you're aware, that we forayed into the accounting space through the acquisition of Busy Accounting Software in the last financial year. Busy has generated 45% year-on-year growth in net billing, a 23% increase in revenue to INR 53 crores and a 59% increase in deferred revenue to INR 43 crores. New licenses sold during the year were 33,000, bringing the total licenses sold to date to 364,000. We've been working to enhance the growth prospects of the business through product enhancements, offering data accessibility through desktop, mobile and cloud and an expansion of our sales network. Overall, this being the second full year of our acquisition, the business has grown as expected, and we will continue to invest in our products and our people to sustain this growth. Creating holistic value creation for our stakeholders is our foremost priority. As part of ESG initiatives, IndiaMART encourages discovery and promotion of products that align with the UN sustainable development goals, a global framework aimed at promoting progress towards a sustainable future. In addition, we remain dedicated to driving meaningful change in society through our corporate social responsibility initiatives. During the year, we partnered with Udhyam Learning Foundation, The Khan Academy, Tech Mahindra Foundation and Saajha to provide educational and skilling programs. These initiatives enabled us to positively impact more than 1.1 million lives. While driving our business growth, we also remain committed to supporting the small businesses. We provided free online visibility to 7.7 million small and medium businesses on our platform, enabling their [ thrive ] in the digital landscape. Moreover, we offer 100% free services to our buyers. 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 face value of INR 10 for FY 2024, subject to shareholders' approval. In conclusion, I would like to take the 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 whose 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 the financial year ended 31st March 2024 has already been circulated to members through e-mail and the same is also available on the company's website. I now take the notice of the AGM, along with the explanatory statement and reports of the Board of Directors as read. As the statutory auditors have not made any qualifications, observations or comments in their audit report for the financial year ended 31st March 2024, I now take it 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 Saturday, June 15, 2024, to 5 p.m. IST till Wednesday, June 19, 2024 to cast their vote electronically on all the business items as set out in the notice of the AGM. All members of the company present at the AGM who were 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 now open and the same would close at 11 a.m. 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 connect on 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, 2024, together with the reports of the Board of Directors and auditors thereon. Item 2, to declare dividend of INR 20 per share for the financial year ended 31st March 2024. Item 3, to appoint a Director in place of Mr. Brijesh Kumar Agrawal, DIN Number: 00191760, who retires by rotation and being eligible, offers himself for reappointment. Item 4, to reappoint M/s B S R & Co. LLP, Chartered Accountants, Firm Registration Number: 101248W/W-100022, as Statutory Auditors of the Company. Item 5, reappointment of Mr. Dinesh Chandra Agarwal, DIN Number: 00191800, as the Managing Director and the Chief Executive Officer of the Company; and approval of his revised remuneration. Item 6, reappointment of Mr. Brijesh Kumar Agrawal, DIN Number: 00191760, as Whole-time Director of the Company and approval of his revised remuneration. Item 7, to approve related party transactions in respect to hold office or place of profit in the company by Mr. Bharat Agarwal. The resolutions along with explanatory statements pertaining to the Items #4 through 7 are 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 members attending the AGM through the videoconferencing. Now I would request Mr. Jitin Diwan to take up the questions received from the members through the chat box facility. Thank you.

Thank you. Good morning dear member. We've received first question from [ Mr. Rahul Luthra ]. Question is, what is IndiaMART's capital allocation strategy? And how do we plan to utilize the cash on our balance sheet. May I request Mr. Prateek to take up the question, please.

Yes. Thank you, Jitin. So with respect to the question on cash, as of March 31, 2024, we had INR 2,340 crores of cash and investment and INR 1,440 crores of deferred revenue in our balance sheet on a consolidated basis. In the terms of the allocation strategy, our first priority is to retain cash, commensurate with the size of our operations. Beyond that, we intend to either invest in mergers and acquisitions or investing in opportunities, which are strategic to our business as and when any suitable opportunity arises or distribute it back to the shareholders through dividends or buybacks if we could not identify the investment opportunities in the defined time frame. If you notice, our historical dividend and buybacks have been done and it's part of this similar framework. During the last 2 fiscal years, we have returned INR 811 crores through dividends, buybacks, including taxes thereon to the shareholders. Further, this year, the Board of Directors have recommended a final dividend of INR 20 per equity share, which would amount to approximately INR 120 crores, subject to the approval by the shareholders in this AGM. Therefore, the intent is to manage all the stakeholders interest while meeting the investment needs of the business. Thank you very much.

Thank you, Prateek. We have received the second question from Mr. [ Dheeraj ] and the question is, what initiatives have been taken to improve buyer and supplier engagement and retention on IndiaMART platform. May I request Mr. Dinesh Agarwal to take up this question, please.

Thank you, Jitin. So we believe that relevant inquiries and simplification are the key driver to improve the user engagement and retention. As most of you are aware that our platform utilizes supplier behavioral data and buyer preferences to facilitate relevant matchmaking as more and more people use the platform, our matchmaking algorithms become better and therefore, continuously improve on the accuracy. In addition to this, we are working on -- to further ease out the discovery and improving buyer experience by utilizing artificial intelligence and machine learning tools in the entire users journey such as improving specifications, image of the listings, their mappings under the respective product categories and thereby improving the product discovery. Improving search capabilities like multilingual and vernacular languages like combination of Hindi and English, like English that we use on our day-to-day conversations. Search for different spelling combinations, decreasing the number of seller introduction for each RFQ submitted on the platform so as to manage the competition, integration of WhatsApp feature, allowing buyers to send inquiry via WhatsApp and allowing sellers to be able to communicate with the buyers on the WhatsApp as the preferred channel as well. In addition to above, we are revising entire supplier onboarding and early engagement to ease the journey as well as improving inquiry conversion, leading to the early customer success. Thank you.

Thank you, Mr. Dinesh. We've received the third question from Sonam Bhatia. The question is, how is the accounting software landscape in India shaping up? And what is the growth outlook for the next few years? May I request Mr. Brijesh Agarwal to take up the question, please?

Thank you, Jitin. So when we look at the accounting software industry, it is now becoming an important part of the overall Indian business landscape, especially after the implementation of GST and due to the increase in the overall regulatory compliances, the accounting software is becoming an essential ingredient for micro, small, medium-sized businesses. They needed to manage their books of accounts, e-invoicing, e-way bill generation, GST filing, inventory management and many such more important activities. . With over 14 million GST registered businesses, and this number is gradually increasing, the demand for accounting software is expected to grow at a steady pace for several years to come forward. These business owners are now increasingly displaying preferences to have access to their accounting data on the go, especially via the mobile phones. This also presents an opportunity for accounting software to increase penetration via product innovations. Now to capitalize on this opportunity, we've strategically invested in the accounting software space. Our acquisitions include Busy Infotech, and Livekeeping Technologies. And we've also taken minority stakes in Realbooks and Simply Vyapar. Busy Infotech specializes in on-premise accounting software, which is meant for small and medium-sized businesses. Recently, Busy also launched a mobile app and an online version, providing real-time access from anywhere with an Internet connection. Livekeeping Technologies offers a range of value-added services to tally users, both on the mobile as well as on the web, which also includes data entry, real-time performance analysis, dashboards, et cetera. Vyapar is a mobile-first and user-friendly account software designed for micro and small businesses. It has expanded its services to include a hybrid cloud solution, which is accessible on desktops also. Realbooks on the other hand, offers a multi-branch multi-location, cloud-based accounting, inventory and payroll software. And it is very well suited for medium and large enterprises. So with these investments, we feel that we are fairly well entrenched to make the most of this changing landscape and the opportunities that are emerging in the accounting software space. And we should be able to fulfill this emerging need across the entire Indian MSME sector.

Thank you, Brijesh. As there are a few more questions being received, we would respond to the unanswered questions individually within 7 working days from this meeting. Now I will hand it over to Ms. Pallavi for further proceedings. Thanks.

Thank you, Jitin. 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 website of NSDL, NSE and BSE. Members, there being no other business to transact, I hereby conclude the AGM of our company, and thank you all for your participation and dignified presence. The e-voting shall be open until 11:00 a.m. and thereafter, the proceedings of the meeting shall stand concluded. Thank you.

Thank you very much, everyone. Thank you. We can conclude this meeting now.

Thank you very much. Thank you, Chairperson.

Thank you, everyone.

Thank you, everyone.