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Indiamart Intermesh Ltd
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So, we'll start this session now. Good evening, ladies and gentlemen. I'm Ravi Gothwal from Churchgate Partners. And on behalf of IndiaMART International Limited, I would like to welcome you all to the company's Q1 FY '23 earnings webinar. [Operator Instructions]
Joining us today from the management side, we have Mr. Dinesh Agarwal, Managing Director and Chief Executive Officer; Mr. Brijesh Agarwal, Whole Time Director; Mr. Prateek Chandra, Chief Financial Officer; and Mr. Kushal Maheshwari, Head of Investor Relations. Before we begin, I would like to remind you that some of the statements made in today's webinar may be forward-looking in nature and may involve risks and uncertainties. Kindly refer to slide number 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, sir.
Thank you Ravi. Hi. Good evening, everybody, and welcome to IndiaMART's Q1 FY '23 earnings webinar. We have already circulated our earnings presentation, which is available on our website as well as the website of the stock exchanges. I'm sure you would have gone through the presentation, and I would be happy to take any questions afterwards. I'm pleased to report that IndiaMART has delivered consolidated collection from customers of INR 254 crores and revenue from operations of INR 225 crores this quarter.
Consolidated deferred revenue increased to INR 961 crores and paying subscription suppliers increased 179,000, representing a net addition of 10,000 in this quarter. These numbers also include INR 10.5 crores revenue and INR 25 crores of deferred revenue from Busy Infotech business as the acquisition has been completed in this particular portal.
Sorry to interrupt Mr. Dinesh. Could you speak a little bit louder or closer to the mic, yes? Thank you.
In the IndiaMART business, growth in the revenue collections and deferred revenue was primarily driven by improving macro economy as well as a result of recent growth investments we have made in products, sales and servicing and building the organization. We will continue to make these investments as needed to maintain the growth momentum. Traffic on our platform and resulting unique business inquiries remained stable at 257 and 22 million, respectively. Our 90-day repeat buyers stands at approximately 54% which represents the continued trust on the platform. Total business inquiries delivered stood at 115 million for the quarter.
As we discussed in the previous earnings call, the reduction in the total business inquiry is an outcome of certain volatile changes to increase the efficiency for our management team and improve the relevancy of [indiscernible] being delivered to the users. During the quarter we have completed the acquisition of Busy Infotech as well as 100% acquisition of Busy Infotech and 51% of the Livekeeping resulting into the addition of the Accounting Software segment in addition to the existing IndiaMART Web Services business.
We have done segmental reporting also from now on, and I'm extremely positive about scaling up this particular segment over the years leading to the augmentation of new revenue streams at IndiaMART. Overall, I believe we have started off the new fiscal year on a positive note on all performance indicators, and we will remain committed to enhance our value proposition and deliver value to the customers, which will help consolidate our leadership position in the investing.
Now, I will hand over the call to Mr. Brijesh to discuss a little bit more details about Busy Infotech. Thank you.
And over to you Brijesh.
Thank you. Good afternoon, everyone. The Busy transaction was consummated on April 6. And since then Busy now is a wholly-owned subsidiary of IndiaMART. And being a subsidiary, we shifted the accounting standards from [ IDAC ] to IndAS for reporting the financials right from this quarter onwards. In this quarter, we delivered a billing of INR 13 crores and the revenue from operations of INR 10.5 crores.
Please note that because of this change to IndAS, the revenue, P&L, these numbers may not be comparable with the previous periods. Busy also sold about 9,000 new licenses in this quarter, taking the overall licenses sold to about 3.11 lakh. This being the first quarter of acquisition, our focus in Q1 essentially was to assimilate people, partners and bringing the financial system with the reporting standards that we follow here at IndiaMART.
I think we've made very good progress on all of these 3 counts. Now over the next 2 quarters, we would start focusing on expanding the team, expanding the partner network and improve our penetration in those areas where it is still very underpenetrated. We hope that the next 2 quarters, once the focus gets on these other ones, we should be able to continue to build on the growth momentum that we've achieved in Q1.
Now with this, I'll hand over the call to Prateek so that he can discuss the financial performance.
Thank you, Brijesh, and good evening, everyone. I will take you through the financial performance for the quarter ended June 2022. Consolidated revenue from operations was INR 225 crores in this quarter, a growth of 24% year-on-year, primarily due to 23% increase in paying subscription suppliers as well as a addition of INR 10.5 crores from the Accounting Software segment. On a like-to-like basis, and [indiscernible] collections from customers, revenue from operations and deferred revenue were at INR 241crores, INR 213 crores and INR 935 crores, representing a year-on-year growth of 42%, 18% and 31%, respectively.
The company continued making growth investments in increasing manpower across functions, leading to an addition of 163 new employees in this quarter, taking total employee headcount to 3,835. Consolidated EBITDA for the quarter stood at 29%. We recorded significant decline in other income from INR 30 crores till this quarter to INR 1 crore this quarter, primarily due to mark-to-market losses on treasury portfolio owing to a significant increase in bond yields during the quarter. As most of our credit investments are in high grade securities and have been done with the perspective of only 2 to 3 years, we believe that this notional loss will reverse in its due course. As a result, net profit for the quarter stood at INR 47 crores with a margin of 21%. Cash generated from operations during the quarter was INR 75 crores.
During the quarter, in addition to cash generated from operations, we have utilized cash in making payments for Busy and Finlite acquisitions as well as completing INR 100 crores share buyback and the certain tax expense of INR 35 crores. As a result, consolidated cash balance stood at INR 1,882 crores as of June 30, 2022.
Thank you very much. We are now ready to take any questions.
Thank you, Prateek. [Operator Instructions] First question is from the line of Vivekanand, AMBIT Capital.
And first question is, could you help us understand your distribution model now? How much of the new customer addition is happening by our channel partners versus your own employees? And why is the outsourced sales cost still rising despite a Q-o-Q decline in collection? Second question is on the competition. We are seeing competition from 2 areas.
One is the new age B2B marketplaces for Moglix or even large corporate groups like L&T and Grasim. And secondly, the government is talking about its own O&T marketplace. So initially just wanted to understand, is it fair to assess that IndiaMART is focused mostly on SME at points via suppliers, whereas most of the peers are focused on large enterprise buyers.
On the new channel versus sales, I think the channel has been developed over a period of 18 months and we continue to invest in the level. Currently, I think uses acquisition is [indiscernible]. Sorry can you mute yourself, please? Slowly and slowly we're working towards half and half. So half of them are coming from the people who are completely managed by IndiaMART.
They are still on a different third-party payroll. And second part is the channel, so halfway has started to come from the channel. On your question, why the channel cost is still increasing versus the collection from the last quarter. So collection from the last quarter is Q4 quarter. Q4, most of our collection comes from existing customers. However, the channel is deployed to -- for the new customer acquisition. So you see channel costs will probably start to stabilize in some quarters about. But now prices are not related [indiscernible].
On the competition elements [indiscernible] that we are more of the marketplace. We are more of a network business, where buyer and supplier both comes. And many of the names that you took are typically focusing on trading our goods rather than matchmaking and [indiscernible]. So to that extent, we are different. However but after matchmaking also the buyers and suppliers transact with each other so that, from that perspective, we are similar. And one of them are actually solving full discovery issue. So currently, if you look at whether it is price discovery, product discovery, modern discovery, supply discovery I think there's no other platform than IndiaMART there.
Sorry, Dinesh there is some disturbance from your side. If you could just repeat that?
[indiscernible] 86 million products, we get a wide variety of the products and suppliers on IndiaMART platform. So in that respect, I think we continue to perform better year-on-year over any other platform that you will see right now.
Just small follow up. So one is on -- your own employees acquiring new customers versus channel partners. So last, I remember, I think you had said that around 500 of your own employees were also acquiring customers. Is that number similar or has that come down now? Secondly, on the explanation you gave on competition just wanted your thoughts on the government's ONDC marketplace because that comes up for discussion very often.
[indiscernible] managers who are overseeing the channels, there are managers who are overseeing the branches. So those are the people on the [indiscernible] and rest everybody is on channel and other entity. On the ONDC, it is something as a concert evolving and very early. And as and when more clarity will emerge, we will try and see where to collaborate and where to complete it. But I think it will be more of a collaboration if at all it becomes positive. And it is mostly for B2C consumers. For B2B consumers, I think it is still maybe 5 years away after we become successful on B2C side.
Just a minute, Ravi, are we properly audible?
Now you are audible. There was some disturbance in between, but I think it's all clear now.
Thank you. Let's proceed.
So next question is from the line of Abhishek Bhandari from Nomura. So sorry, Abhishek, we cannot hear you. Please unmute yourself. No, no, still we can't hear you. We can see you, but we can't hear you. So we can move on to the next participant. Pranav from Edelweiss.
My first question is regarding the cost. The cost, we typically used to see some decline in Q1 from Q4. But this quarter, there was an increase. So how should we see in the next couple of quarters, costs going up? So that's my first question. And secondly, if I look at 2 factors, one is the unique business inquiries and traffic, that has sort of plateaued and sort of started decline. Can you give me some more color on what is happening? If there are any cuts which are actually leading to a decline or how is the underlying traffic behaving?
So let's address the second part and then I will hand over to Prateek for the first part. So on the traffic and unique business inquiries, they have stabilized. I don't think that there is 1%, 2% decline in any means [indiscernible]. What has happened is a lot of distress items were in demand during the COVID times. Thankfully, there are -- I mean whether it is masks, whether it is sanitizer, whether it is medical equipment, whether it is medicine. A lot of that demand has wane away.
The other part is that -- especially in month of April [indiscernible] quarter, there has been a huge price rise in various commodities. And that probably led to some tapering of demand. And this is very seasonal. We do not have any much worries on both sides. We should be fine from the buyer side. From pre-COVID, we are up so almost 33% to 40% on the buyer segment. If we can maintain these for the next couple of quarters and then start to grow at 10% to 20% per annum, that would be fine. Prateek, do you want to add the housing people side and?
Sure. So Pranav, as I've already spoken about we continue to invest behind growth and therefore have also added manpower in this quarter so almost 163 new employees have been added. Because of this, if you see the total manpower cost [indiscernible] INR 7 crores last quarter [indiscernible] of which like INR 2 crore is on account of this increase and will be [indiscernible] software materials into the business. Other than that, the cost have been going up largely in line with the customer additions, whether it is [indiscernible]. Overall, for the going forward what we foresee is that cost will increase in line with the revenues, and we expect to maintain similar [indiscernible].
Sorry to interrupt Prateek once again, the audio is not very clear. It's breaking up. So can you just double check connectivity at your end? Is it good?
Sure. So Ravi, should I repeat the answer again or we could hear the part of the advertised or?
So I think we heard half of it. So if you could just repeat last couple of lines.
Just a minute. Ravi let us check the connection once again. Just give us a minute.
So let me repeat, answer Pranav to your question on the cost. Whatever they're speaking about the cost base in last quarter, we had a total cost of INR 144 crore, INR 160 crores [indiscernible] last quarter to INR 93 crores this quarter, of which almost INR 4 crores has been on account of addition of accounting and software vertical. And the other is because of the normal increase in the manpower of close to [indiscernible] in this quarter, which we have added. So we continue to make investments and continue to add employees which will be needed for the growth in the business. On the overall basis, we expect our margins to remain stable at 20% to 30% for the next 2, 3 quarters. Every time we continue to [indiscernible].
Okay. And I also wanted to ask a bit about Busy. So Busy has shown a good margin. So how should we see the growth for this business going forward? And have you started seeing any benefit because of the integration, cross-selling, et cetera, which will need growth or margin?
So Pranav, as I mentioned the focus in Q1 for us has been that given that acquisition causes anxiety amongst people on the partner network, and we also need to go ahead and strengthen the basic financial systems. Our focus essentially has been on doing that well. And as I said, we've come out fairly well. We should be able to start focusing on building up the sales team in Q2 and then start to build up on the partner network in Q3. And I think these 2 quarters Q2, Q3 put together, I think it should give us a very good view on how the business will move going forward. We should be able to come back to you with a lot more clarity once we've sailed through this initial period where it is important to ensure that the acquisition and this whole transition actually happens very well.
[Operator Instructions] Abhishek Bhandari.
This is [ Abhishek Banerjee ] from [indiscernible]. Sir, again, sorry, I couldn't hear your explanation on the cost side. Are you saying that manpower cost and outsourced sales cost are going to be in the same -- I mean, are they going to be continuing the same trajectory going ahead?
Yes. So what I said was that the manpower costs that we outsource sales from, most of them will grow in line with our overall customer growth. So what we are anticipating is that as we are continuing to invest in this growth for the next 2, 3 quarters, our overall [indiscernible].
Okay. So for the next 2, 3 quarters, they should remain elevated and then literally in line with revenues.
Yes, if we're comparing them with the previous year, then obviously, yes, they will remain elevated. But if you are comparing them from Q-on-Q level, I think as the revenue growth is now on a standalone basis at IndiaMART is about 5%, 6% Q-on-Q. I would say that similar increase you should assume in the manpower and the sales cost [indiscernible].
Got it. Sir, do you share any numbers on average order values that you're paying customers are seeing? [indiscernible] making on your platform?
Yes, I think that -- many quarters ago, I had said some data around this. Average order value because IndiaMART is a horizontal platform is very difficult to say average but because there are clothing, there are machinery and there are claims and there are raw materials. However, whatever little information that we get from our own survey, we get to see anywhere between $500 to $1,000 average order value. Our own payment platform, Pay With Indiamart, where people use that for smaller orders because for larger orders, we typically don't [indiscernible] of system. There, we see an average order value of about INR 25,000. However, these larger orders are not processed through the paywithindiamart.com. As against a certain reports, I had read that [indiscernible] on Amazon is about $13, $14 versus average order on [indiscernible] was about $60 to $75. So our average order value would range almost 10x of that. And in terms of ROI, [indiscernible].
Sorry, to interrupt Dineshji again, your voice is breaking up. So maybe let's take a moment.
I'm sorry some intermittent Internet problem is happening.
It's better Dineshji. You can go ahead.
So I was saying that that in terms of number of inquiries by customers and the conversion and the average order value for that industry altogether will define the overall ROI for the customer. Generally, we have seen that in the last 4 or 5 years, our number of inquiries have gone multifold up as compared to the number of customers. So the inquiries for customer is already at a quite healthy number. And that is why we are also trying to work more on the relevancy side so that the relevancy net improvement can happen. [indiscernible] And typically customers are able to convert anywhere between 5% to 15% of the inquiry that they receive.
[indiscernible]
Sorry, can you repeat your question? Your voice had broken off in between?
[indiscernible]
Your question is still not clear, I think.
So moving on then, the next question, Anmol Garg.
Just had a couple of questions. Firstly, we added some 226 employees in product and tech this quarter. Will it be entirely related to Busy Infotech or we have also increased the intensity of our tech hiring? That's one. And secondly, I wanted to have a view on margins that we are giving an estimate of adding 8,000 to 9,000 paid suppliers every quarter. So just wanted to understand that our sales in, like you said that our sales and employee costs will increase in that manner. However, can we expect any advertisement revenue also coming through into the company to increase that traffic share? And can that impact our margins as well in the next year or going ahead as well? So that are the 2 questions from my end.
Your voice is not audible, once again.
Ravi, is it any better now?
It's much better. Let's start once again.
Okay. First, talking about the product and technology employees. In the last 2 years, we haven't hired any product and technology employees and we have taken offers to the campus in this entire last year. And people had started to join as a trainee from January. And most of the people, they completed their examiner in this particular quarter. And that's why you are seeing a step function jump in the employee count. So we have actually beefed up our product and tech team, knowing that the market is going to be tough for product.
We need more people. We have expanded multifold into different products. As you can see, our CRM has become quite mainstream, and we are also trying to do experiments around various more engagement features on the relevancy improvement, category-based improvement as well as trying to experiment more of the payment and debit side. On the Busy also, I think 180 total employees have been added [indiscernible].
Sorry to interrupt once again. So maybe you can now start answering the second question, please.
Yes. The second question was around margins. So I think as we guided that margins will remain in the range of 30-odd percent. As we are adding these new customers, these new customers are added at the lowest ARPU [indiscernible]. As the customer moves up, becomes older, then the margins improve. As you can see, the top 10% customer ARPU is around INR 220,000 and top 1% customer ARPU is around INR 790,000. However, the overall ARPU is about INR 46,000 while the Silver monthly ARPU is over INR 2,500 per month, which is about INR 30,000.
So just a follow-up on that. Just wanted to understand that can we expect IndiaMART to spend more on advertisement as well in coming years?
Yes. As we have always guided if at all, we decide to do an advertisement, it will be to the tune of INR 30 crores, INR 40 crores per annum. However, we feel that last couple of years there's been more buyers than sellers. We are trying to build more supply on the platform, more responsive supply, more -- so I think current year or so, we don't plan to spend anything on the brand building advertising for buyer acquisition. Our 100% buyer acquisition remains organic, and we believe that it will remain so for the next year or so. If at all, there are any advertising plan we'll let you know in advance.
Next question is from the line of Ratik Gupta, Guardian Asset Management.
So my first question is on the supplier front. So although we are seeing a 10,000 increase in the supplier front for this quarter so do we have a number if we have launched any?
Yes. So if you are asking about the channel, we give the channel numbers quite frequently in every call. The top gold and platinum customers, the churn remains less than 10% per annum; in the silver annual segment the churn remains around 25% per annum. [indiscernible] As I said the churn in the gold and platinum segment, the churn remains at less than 10% per annum. In the silver annual segment, the churn becomes about 20% to 25% per annum. And in silver monthly segment, the churn is about 5% per month.
Okay. And my second question is sir, on the current scenario, what we see is that the focus has been towards the manufacturing sector and the product sector. So are we looking forward to move towards the service sector as well as IndiaMART service?
Yes. I mean on a large macro side, dividing that into manufacturing, I think many service providers are our customers also. We go by small category by category from business services, construction services, that kind of it. And I think we continue to expand into more and more categories to monetize better, and we will continue to do that. But are we going to go into B2C services, I don't think so. We will continue to remain B2B services.
Not specifically to B2B or B2C, sir. I'm talking about the services -- the service segment sector. As we are focused towards the manufacturing sector like industrial plants, machinery or the construction on the machinery parts are we focusing on the service segment as well, supposedly IT Services or the Financial Services segment?
Yes. Not much on IT services and financial services, but we will see software many, many software companies, we will see many call center companies. We will also see many consultants, you will see many chartered accountants and logistic service providers, transportation, that kind of services.
Next question is from the line of Amit Chandra, HDFC Securities.
I'm audible now?
Yes, you're audible.
Sir, my first question is on the customer addition that is mostly on the -- mostly on the monthly subscribers. So what percentage of the monthly subscribers get converted to maybe a long-term engagement with us. So if you can provide some colors on that, whether how many of them that we add that remain with us because you have mentioned that the churn is coming down. So what kind of impact this is going to have on our ARPUs over a longer period of time? And also in terms of the addition that if I see the incremental ARPU, that is obviously on the lower side. So obviously, are we providing some kind of discounts to get suppliers on our platform or the pricing remains the same?
[indiscernible] on the long-term ARPU growth, we have [indiscernible] we try to take anywhere between 5% to 6% ARPU growth. And that has been the [indiscernible]. We don't have 1/3 of the customer come in the annual one. And from the silver customers, many customers upgrade to the gold and platinum over a period of time. Approximately, I know quite sure that approximately 20% of the customers typically upgrade in a year's time. So if you look at the [indiscernible] approximately 20% in the year's period. And that is how the ARPUs increase over a period of time. [indiscernible] going to happen on the silver side so in the near term, ARPU will remain flattish or even could be even muted for some time. But over a long period of time, they will increase by way of upselling, by way of upgrades. Are we giving discounts? I think there are no [indiscernible]. When it comes to the platinum side, we definitely offer customized packages for other customers.
Sorry to interrupt Amit. Your voice is not audible. Amit, can you repeat your questions, please? [indiscernible] Maybe, Amit, you can turn off your camera. It will save some bandwidth and you can repeat your question then.
I'm audible?
Yes, you're audible. Go ahead.
So my question is on the channel partners. So how the channel partner economics actually work in terms of commissions that we're giving to channel partners because what I'm seeing is that as you have mentioned that the cost will actually go up in line with the supply additions. So is it that most of the sales that is coming or sales, like I mean in terms of customer additions that is coming is mostly to the channel partner ecosystem or our in-house sales is also adding [indiscernible]?
Yes. As I said earlier, about 50% -- more than 50% of the sales currently come from in-house sales channel. And our endeavor is to keep it at 50%-50%. And the cost on the employee front will rise because our cumulative customer base is increasing, and we need client servicing and renewal and upsell employees. And those are 100% in-house employees. We have not yet tried channel partners there. We will probably start to think about goals especially in the Tier 3 towns. And how the commission works is many -- like when a standard DSP mechanism, which you see in the banking sector, we see [indiscernible]. So the commission on the sales to the general partners are per sales basis and is right that based upon the historical cost we have had many of them.
All right. So I think Amit have left. So we will move on to the next participant. Manish Gupta from Solidarity Advisors.
I'm sorry, I'm coming back to a question, other participants have also raised; you made a statement, I hope I've understood that right, that employee cost will stay roughly proportionate to how your revenue increases. That's kind of very counterintuitive because of 2 reasons. One is one would expect that there will be some productivity of the sales force over time. And secondly, you do mention that people come in, in the lower tier and then they upgrade to higher revenue per supplier as they move into the gold and the silver -- the silver and the gold and the platinum programs. So it's very counterintuitive why your employee to revenue ratio just for the standalone business should not decline over time?
Yes. See, when we see the current slide of it there. [indiscernible]
Sorry, Dinesh, I can't hear you. Dinesh, it's a very bad line. One request is just to see whether this is an issue of bandwidth or it's an issue of the software platform you're using because this is really a terrible line. One has been barely able to understand anything on this call.
Are we audible now?
Yes. Yes. It's audible now.
[indiscernible] On a long-term basis, the margins will improve and [indiscernible].
Sorry to interrupt Dineshji. It's a very bad line. Not able to hear you at all. Dinesh, I think it's just a conference room that [Foreign Language]. May I offer a suggestion that we reschedule this call because we get to talk to you only once a quarter, and I think there were some very interesting questions that people asked. So if it's not too much of a bother Dinesh, could we reschedule the call and do it again?
Yes, we'll talk about it internally and see if.
Otherwise, I'm happy to do a call offline with Prateek or something. Yes. What I heard you say was that over time, the reduction in employee benefits, we should continue to see that over time. Is that what you said?
Yes. [indiscernible] for the next 2 quarters or so it will grow in line with [indiscernible].
Right, so, we'll move on to the next participant then. Amit, are you there?
Sir, actually, my line got lost. So on the cost part of questions have been asked on the cost aspect. But if I saw the adjusted EBITDA margins that you have given, so that is excluding the ESOP cost, if I'm not wrong. And if I exclude the ESOP cost and if I include the acquisition impact, then the margins come to around [indiscernible] so what you are seeing here is that the investments that you are running and we're targeting 30% margin because the margins is on the higher side, right? So actually, it should have a -- so how do we see the cost aspect and also the ESOP cost, what will be cost for the full year, if you can give that? And also on a standalone basis, how the costs will move up or it will be stable at these levels?
Sure. So one clarification, when we said about 30% margin that was on the EBITDA and not adjusted EBITDA. That is [indiscernible] including the stock comp expense. Regarding the ESOP prediction or how do we see this cost. So this cost is [indiscernible]. For first year, this cost will stay high [indiscernible] stay high. And after that, any amount of the amortization [indiscernible].
Okay. And my last question is on…
On the Busy side, Busy is a [indiscernible] new and very small business as compared to the overall business. And we will make investments in product and technology and sales. So Busy, while you are seeing the current profitability as 40% to 50%, I think our immediate target on Busy is not about margins, but about expanding the sales and making the product available on mobile and cloud and those things. So I would say that, that [indiscernible] would not have a larger impact on the operating margin on a consolidated basis.
Yes, yes. So again, on the Busy side, sir, so obviously, the run rate that we are showing, it's indicating around INR 40 crores like full year for the next year. But when we acquired also the revenue was actually higher. So are we seeing Y-o-Y kind of a decline for Busy or there is some accounting changes that are impacting that? And in terms of how we are recognizing the revenue for Busy? And also in terms of longer term targets, how do you see the revenue growth for Busy and in terms of cross-sell, how the opportunity is panning out?
Amit, 2 things. One, the earlier financials, if you will see were based upon our In AS. From this quarter onwards, we have shifted to NDS. And therefore, the whole policy of the recognition is now [indiscernible].
Yes, Brijesh, let's just wait for a few seconds.
The line is really bad. We're not able to hear you. Most of the answers we're not able to.
Maybe try Brijesh now.
Is it better now, Ravi?
Better, better.
So on a like-to-like comparison basis, if you look at last year, the revenues were based upon the billing. The billing in Q1 is at INR 13 crores, which means it will be at a run rate of about INR 52 crores higher than the revenues, which were there last year. Now having said this, when we look at the focus that we are having on the Busy business, as I mentioned, the first focus is to make sure that the people and the partners they continue to stick with the business and do not get alarmed by this change in management that has happened. We would be able to go ahead and start focusing on growth from Q2, Q3 onwards as we start to invest behind growing the team and growing the partner network. In the last call, we had mentioned that the [indiscernible].
So could you just repeat the last statement?
So as we had shared in the last quarter, our top 3 priorities in this financial year would be one, to double the rate of growth from the FY 10% to about 20%, 25% in this financial year. Again is to increase the overall number of new licenses, which are being sold because that would be forming the foundation for accelerated growth in the years to come. And third would be to go ahead and invest behind building the team and including the overall awareness of the product so that we can ensure better penetration in markets all across India. So these will be 3 priorities for us.
Next question is from the line of Ajay Modi, Piper Serica Advisors.
Prateek and Dineshji, quick question. So are we saying that our quarterly employee plus outsourced manpower expense run rate is -- which is now roughly about INR 120-odd-crores will go higher further? So that's my first question.
Yes. As we discussed in the past, since we are adding manpower across [indiscernible].
Sorry to interrupt once again. So let's wait for 5 seconds or so. No, you can try and turn off your video and let's see if it is better.
We've switched off our video, and we will continue with the presentation.
I think it's better. Please go ahead. Yes, it's better. Kushal, your presentation, it's not visible at the moment. So if you can just share your…
1 minute, 1 minute, 1 minute. Is it visible now, presentation?
Visible. Please go ahead.
Okay. So coming back to the question on the employee front, as we discussed the right now that we will continue to add people. And as the people will get added, this cost will increase. However, as a percentage of revenues [indiscernible] because the revenues will also grow quarter-on-quarter.
Understood. But then Prateek and I think Dineshji can come in here. So our expenses, which were largely flat, we did not do any large hiring, team increase, team size back at 2020 and 2021, which we've started doing now. My question here is, shouldn't we be sweating these employees more? Shouldn't the growth rate be higher? I mean, for example, you just said that target is to do 25% kind of IRR or CTR for Busy. But for INR 40 crore sales, 25% growth is about INR 10 crores, which is way too small for a company of our size, right?
So what my understanding that I'm trying to seek here is what is stopping us from higher growth? Right now, we are at 179,000 active users in the IndiaMART platform compared to 7.2 million store fronts, which is roughly about 2.5% paid to overall subscribers. So what is -- I mean, if we have money, if we are spending, if we are hiring, what is stopping us from saying that, look, I will drop my ARPUs lower and I will increase my subscriptions far, far, far higher. I mean, we are the market leaders. So why are we not cleaning out this market completely?
So let's look at the leading indicators of the growth. So there are 2 leading indicators of the growth. One is the number of customers. And the second is the collections in the -- if you look at FY '21, FY '21, we neither added customers nor added any collection. So if you look at the collection of FY '21 versus FY '23, it was a flat collection. And if you look at the number of paid subscribers, it was a flat year. In the FY '22 also, the first half was marked by a win. It is only whatever growth has happened, happened in the second half of the year. Now if you look at the current trends, so from -- we are trying to double our customer growth from 20,000, 22,000 per annum.
Now we are saying that we will go to 35,000 odd per annum at about 8,000 to 9,000 customers per quarter. So I think we are investing behind growth. Now why can't we go even higher, that limits my ability to manage -- and the people's adoption of Internet and business adoption, I think we remain committed to a profitable growth business. As we said earlier so even before the pandemic, our revenue used to grow at 25%, 30%, cost is to grow at 15% to 20%, and that it resulted into margin expansion. I think for now, given that we have not done any investment in the last 2 years currently, the margins will remain flat at around 30%. However, as we achieve a higher trajectory, we will again start to focus on margin expansion.
Understood. Quickly, Dineshji, so you said that why can't we go higher, that limits your ability to manage. My question is that, look, for example, we acquired Busy. Busy has a revenue of INR 40 crores. I mean, it's doing a 25% growth, INR 10 crores doesn't even move the needle for IndiaMART as a platform. Specifically for busy why are -- I mean, at what point would we expect a little more aggressive growth here?
As I mentioned, we would be able to come back with much better view on the overall Busy business from next year onwards because you would have seen through this entire time of integration and assimilation of people and partners. And we will bring visibility on acquisition and revenue growth going forward. I have already reiterated this multiple times during the Busy acquisition process itself that first year, my entire focus would be to make sure that we do not go burst with the acquisition. So I think we've most important factor is that this year, let us focus on retaining the revenue, retaining the employees, retaining the partners, retaining the customers, understanding the business inside out. And then next year onwards, let's put the focus on growth.
So then if I were to ask you what is a 3- or a 5-year view with this business? I mean, what size can -- should it become not can, but what size should it become?
I've given the long term, my own expectation that over a period of time, over the next 10 years can this become a INR 500 crore business instead of INR 50 crores business.
Next question is from the line of Vivekanand. Vivekanand, do you have a follow-up question?
Yes, Ravi, I have 2 follow-ups. So one is on the investments. There are several start-ups where IndiaMART status less than 20%, like M1 exchange or Bizom. So do you see an opportunity to increase your stake in these companies anytime soon? Also in the next 12 to 18 months, how do you envisage the utilization of cash? Will there be any major new investments or material follow-on rounds that you expect Second question is on the shift to weekly salary payout. Is that having any bearing on attrition? Is there anything else to call out in terms of attrition?
So on the weekly salary it has been received very well. And I believe that the kind of things that we are listening in the market about attrition, we are not that tightly affected. But I don't think that this can be the only reason for -- so maybe if attrition which we had on the addition would have been 1% higher. So I think everything adds up to be attrition. On the minority investment side, you're right that we wanted most of the investments to be around 26%. In many cases, we probably had either found it too early to go 26% the availability to be less than 25%, 26%. And [indiscernible] over the time, we have increased our share.
In [ Japan ] also, we started with 26% -- now we add 27.5%. In the [indiscernible] also we started with 10%, 11%. Now we are actually 15%. So as is then, we continue to assess businesses. And as and when there are any things we will continue to look for opportunities to increase our size. In 9 out of the 14 investments that you see here are about 25% or more. About -- specifically about M1 Exchange, it's an RBI controlled regulated entity and no single entity can take more than 10% being an RBI controlled banking exchange. So we are only allowed to take up to 10% there. We already have 7.7%. And as when we will find the opportunity, we will increase it to 9.9%.
Just one last follow-up. Any updates on Vyapar and how the offtake has been? And how you are thinking about it alongside Busy?
Both operate in a very different segment. While Busy operates more of a small and medium businesses Vyapar operates mostly at a micro and small business. Less than 50% of Vyapar customers are digital businesses. In Busy, I think more than 80% or 90% [indiscernible]. So Vyapar and Busy actually solving very different needs for very different customer segment. Busy probably more to do with carry kind of a market, whereas Vyapar is the very self-accounting software or DIY accounting software.
Moving on to next participant. Ajay Modi, do you have a follow-up question?
Dineshji, a quick one, you have a very large exposure now to accounting. We have Livekeeping, Realbooks, Busy and Vyapar. Can you just throw some light on what is your long-term thought process with these -- all these? And while I understand which pieces of the puzzle do they fit in. What are we looking at from a longer term? I mean what is the opportunity size that we're looking at?
So opportunity piece, if you look at today, the today's market about -- about INR 2,000 crores is what the customer pays. About INR 1,000 crores is what the company's revenues are because most of the companies have been working on box model, box license model and the transfer pricing model. So from the customer side, we -- and I'm not talking stack and other -- only the small business accounting. So that's about INR 2,000 crores of the market. And -- this market has grown rapidly in the -- after GST.
In the year, GST year, this market actually required us from being at INR 300 crores, INR 200 crore market to INR 2,000 crores. And ever since then it has been growing. And now with mobile and cloud, we believe that this market can become a $1 billion market over the next 10 years or so. Out of that, if you look at major market share has been Tally, and Tally has been primarily accountant led, Desktop only accounting software. Our take is that, that is going to change. Vyapar came from a mobile-only and DIY accounting and now slowly and slowly started to offer a hybrid cloud onto Desktop as well as mobile. Realbooks is a multi-branch multi-location, simultaneous accounting system.
Busy, it has a historically box-based pure Desktop model. But I think our vision is to convert that over a period of time into a mobile and multi-location cloud-based growth model. So we believe that this is a good -- anyway, it has all the good business orders like stickiness, customized stickiness is there. It has a recurring revenue stream. Earlier, it was in the name of AMC or upgrades. Now I think over a period of time, as we have seen most of the software is moving into a revenue system. So I think we are looking at -- frankly, when we get business in IndiaMART, the ecosystem are using our software. So the bar is being used by almost 0.5 million people. Busy being used by -- 3 lakh licenses have been sold. Many, many people have 2, 3 funds being operated on the same license. And similarly, Tally has published resources are about 5 million users on Tally. So I think this market is going to only grow. It's been there for almost 50 years now. This market is going to grow only.
But have we -- I mean, are we already seeing the kind of adoption here as in -- from an expert point of view, what you would have expected in terms of reductions? Are you seeing that already?
So in Vyapar, when we first saw Vyapar in the somewhere in the middle of 2019, it had less than 10,000 customers. Now we are just 3 years from then in July '19 versus the like July '22, there are already 20,000 odd customers. So they have added 1 lakh plus customers in 3 years.
So I'll now read out a couple of questions on the discussion panel. The first question is, do you charge commission as a percentage of sales from your platinum subscribers to understand the ARPU of 7 point like subscribers.
No, we don't.
Okay. And now moving on to the next question. What is the registered supplier versus paid supplier ratio? And what is your current conversion rate from the free supplier to the paid supplier?
So about 2 lakh 70,000 paid customers and about 70 lakh free customer. So that makes about 2.5% the customer base, which is paid. If you look at worldwide classifieds, they typically have anywhere been 2% to 5% penetration, whether you look at -- many of the 2% to 5% celebration. In our case, being B2B in certain, we look at GST data out of the GST data about 12 million people. There are about -- there should be about more than 1 million possible customer base over a long period of time.
Okay. Sir, just a follow-up, sir, on this. What would be the strategic focus area or how do you plan to improve this conversion apart from advertising what would be the key drivers to improve this conversion rate?
We continue to make it easier for people to do DIY as well as continue to expand our touch points, whether it's an online, telephone base, field base, now we have expanded through channels also. So we'll continue to do that. I would say, one of the most important factors in this 3 to 10 conversion is people's own ability to take out value from a internet-based business. There are -- within the same category within the same geography, there are some people in the same geography same in these are able to take on better value from IndiaMART and some people are not because of the way they are adopted to internet. And as and when more and more people are adopting more and more businesses are adapting, that is also going to improve over a period of time. We have seen were only 5, 7 years in this mobile phone has become quite popular. And I think it will continue to improve over a period of time.
Thank you very much, sir. So maybe now I would like to hand over the call to you for the closing remarks.
Ladies and gentlemen, thank you very much for joining our quarter one FY '23 conference call. I'm sorry about the Internet disturbance that we have had. In case you have more queries please be afraid to reach out the Investor Relations department, and we will be happy to answer your queries one on one. And we will try to have a better connectivity session, connectivity next time. Thank you very much. Have a great day, and have a great evening.
Thank you, sir. Thank you, all the participants. On behalf of IndiaMART we now conclude this webinar. Thank you. You may disconnect your lines now.