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Indiamart Intermesh Ltd
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Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you, and over to you, sir.Hello. Good morning, Mr. Dinesh, can you hear us.
Yes, we can hear you.
Thank you, sir. Over to you, sir.
Good afternoon, everybody, and welcome to IndiaMART's quarter 2 FY '21 earnings webinar. We are hosting this earnings conference through FLOOR, a platform by our associated company, 10times.com.This earnings webinar is also being shown live on IndiaMART Facebook page and YouTube channel. We have already circulated our earnings presentation, which is available on our Investor Relations website at indiamart.com as well as on stock exchange's websites. I'm sure you would have gone through the presentation, and I would be happy to take any questions afterwards.Last quarter had been much better than the June quarter, mainly on 2 counts. First, online adoption has taken a step-function jump as expected. Second, overall economic activity has also picked up post lockdown relaxations. As a result, we have also witnessed good growth in the buyer side traction on the platform ranging between 30% to 40% growth across various parameters measured for the buyer's KPI.For example, the buyer traffic has grown by about 32% year-on-year, reflecting over 85 million monthly visits every month, and business inquiries delivered has further increased by 42% year-on-year to 175 million. One of our important parameter is the repeat rate. Our 90-day repeat buyers have been increasing steadily over the last 2, 3 years from around 50%, 51%, then to 55% and now about 60%. This is reflecting the trust in the increasing value proposition of our platform and further strengthening the network effect of the platform.As we are aware that most of the businesses were impacted severely during the last quarter because of the lockdown and resulting into significant customer churn for IndiaMART. We had extended moratorium to many of our paying customers during April, May, June. With staggered economic recovery, many of our customers have started operations again and this has resulted into a onetime increase of our net paying customers by approximately 8,000 during the quarter to 141,000 customers at the end of the quarter. We believe our continuous support to the customers has helped us in winning back many of them.Coming to the collections. Collections from the customers stood at INR 164 crores for the quarter. Though we have significantly improved quarter-on-quarter, it is still a decline of about 7% on the year-on-year basis as compared to the quarter 2 of FY '20. Many industries are still under impact and will probably take much longer to recover. As businesses recover and online adoption grows further, we are confident to play an important role in the needs of doing business and economic growth of the country.Now I would like to hand over the call to Prateek to discuss the financial performance in detail. Thank you, and over to you, Prateek.
Thank you, Dinesh, and good afternoon, everyone.I will take you through the financial performance for this quarter. Consolidated revenue from operations was INR 163 crores in the quarter, a growth of 4% year-on-year, which was largely driven by a similar increase in paying subscribers year-over-year.Consolidated EBITDA was INR 82 crores, representing a margin of 50%. As we communicated in the last quarter call that these margins may not be sustainable as they are primarily driven by savings due to sustainable cost optimization as well as lower volume of business during the quarter. We expect half of these savings to sustain, and half of these will come back as our business volumes recover to pre-COVID levels.Net profit for the quarter was INR 70 crores with margin of 39%. And cash flow from operations during the quarter was INR 78 crores. As of 30th September, cash and investments stood at INR 1,045 crores.Thank you very much. We are now ready to take any questions.
[Operator Instructions] First question is from Pranav Kshatriya.
My first question is regarding your employee count. If I look at the outsourced employee count has come back -- come down sharply to almost 1,000 from 1,400. And even your total employee count is also down by almost 300. So clearly, do you think that this can be a hindrance in achieving the strong collections growth, considering you are seeing a very strong traction?And related questions to that is also, if I look at the employee cost on a per employee basis, that is down anywhere between 25% to 33% depending on which part of the employee I'm looking at. I mean outsourced employee cost is down 35% on a per employee per month basis, whereas for the IndiaMART employee itself is down 25%. So in what time frame this should come -- expect to comeback? And the reason I'm asking this question is that the collections are broadly -- I mean they're 7% down year -- therefore, we were anticipating a reasonable increase in that, which is not going to happen. So I would want to hear your thoughts on how should we see this going forward.
Thank you, Pranav. See, the last 6, 8 months, we haven't been able to hire any employees, and we have not been hiring, obviously, because 80% of our workforce used to work from field and used to meet the customers. As a makeshift arrangement, most of those field sales operation people were made to work like a telesales agent in the case of work-from-home.And it didn't make sense to increase field sales operations until the operations are opened across the board where we can go to the customers. So, one, would you see that there are 10times, which ceased to be our subsidiary. So there is a reduction of that employee count which is no longer part of our system. But you are right that there are about 300 people from the main employees and outsourced employees have come down.I would say that we should wait for opening up of the offices. We were expecting it to open in the 15th of August, but then it is every month being delayed because it's still -- it is dangerous out there.So given that we have started hiring on the tele side of the operation, very recently. So we are ramping up work-from-home initiative who are specially trained in the telesales operation. We are also going to be experimenting now, at least in the customer services division, client services division, where we will not be opening offices.But I think in case the customer wants them to come for service or upgrade call, some of our people will start to reach out to them post Diwali. So as of now, we don't see this as an impediment. I think that as the economy recovers and as the vaccine, et cetera, comes, I think it will become business as usual in the next couple of months.What was the second part of the question -- what was the second part of the question, Pranav?
Sir, I also wanted to understand how the dynamics on the employee cost and per employee cost we should be looking at because that is down -- for outsource employee, it is down almost by 35 -- 33% to 35% versus pre-COVID level. And for IndiaMART employee, it is down 25%. So our understanding was that as collections come back, this cost will possibly route back to the main. So what is the reason?
Yes, there are multiple items under this tab, employee expenses. One is, obviously, the salary part, which from the August onwards has been fully restored. So the salaries have been restored during the middle of the quarter. The full effect of that will start to come back, you will see in this quarter.The second part is the incentive -- sales incentive. As we are still running at about 80% of pre-COVID levels, so the sales incentives generally are applicable when a certain target is achieved in terms of renewal and there is a certain target achieved over and above the average growth. So I think the sales incentive part is slowly and slowly going to come back as we inch closer to the pre-COVID levels.Number three part is, the overall headcount has gone down, which was the first part of your question and has not been refilled. So over the time when it will be refilled, that will also come back. The second there are the overhead costs related to employees. So there are -- there are employee costs, there are canteen and kitchen costs, there are travel and tourism expenses. There are office-related items.Some of them are classified as the employee expenses and some of them are classified as the other expansion. So as we have said, the -- as soon as we open office, some of it will come back; as soon as we fill back the positions, some of it will come back; and as soon as we hit the pre-COVID levels, the incentives will also come back. I hope that would answer your question.
Yes. I think that is a very detailed answer. My last question will be, can you give some color on collections for the last months, that is September or even October months, just to understand what is the current run rate vis-a-vis where we were pre-COVID?
Collections on an average basis, I think, they are running at around 80% of the pre-COVID levels. So if you see from the last year performance, we are only down by 7%. But if I -- because I consider pre-COVID levels as January, February and March are generally an exceptional month. And March in the middle, we had this lockdown. So February is generally an exceptional month. So January levels, I think we are still about 80% of the January levels. So that will give you the idea of the monthly collection.
Next question is from the line of Vivekanand Subbaraman.
Am I visible and audible? Hello. Hello.
Yes.
Yes. Okay. So I have a couple of questions. One is the point that you made on buyer traction. We saw the increased unique buyers, increased repeat rate. So just wanted to understand because of this increased buyer traffic, it appears that your monetization has actually come down, in the sense you are now delivering a lot more value for money than before to the suppliers listed on your portal. So any thoughts on how -- and the roadmap for increasing monetization? That's question one.Second question is with respect to how do we scale up paid suppliers? What is the roadmap that you see over the next 3, 4 years? Because we saw that in the lockdown we were able to get several paid suppliers in new categories like face masks, PPE equipment and so on. So if you could just throw some light on how do we scale up paid suppliers and, of course, also discuss about the competitive landscape, Justdial also launching a product.
Yes. So let us understand the 2 kinds of platforms. One kind of platform where there's -- a buyer is monetized, where transactional platforms where buyer pays the money. And they are typically where as soon as the buyer increases, the monetization increases. However, we are more like a classified advertising platform.The classified advertising platforms typically monetize the suppliers or the supply side of the consumer part. And they typically follow a lagging -- with a lagging indicator. If you remember, when in 2016/'17 also, the buyer traffic has increased significantly, we have been able to increase the '17/'18 numbers for the supplier monetization in terms of number of suppliers who signed up and in terms of ARPU also slowly and slowly growing up.So I believe once we start to operate fully with the sales force. And I think the supplier monetization will only follow the buyer monetization because buyers are the key to our business and suppliers are the supply side. So that would happen over a period of time. I would say in the past, our overall supplier growth has been anywhere -- paid supplier growth has been anywhere between 15% plus/minus on a CAGR basis. We have been adding about 5,000 net customers every quarter.I believe our target should be to first get to 5,000 additions in the next quarter or 2, and then look at the growth based upon this increased buyer that has come. Obviously, there is a lot of adoption, online adoption has gone up. But at the same time, the entire industries and entire business models of many industries are going through a lot of transformation. So many people are -- will be trying the platform over the next year or so, and many people will have to be churning out.So I would say that next year or so, it should be faster supplier entry and faster supplier churn in order to find the right set of suppliers who will stay with us for a longer duration of the time. As you can see, most of our suppliers come into the monthly mode subscription. And then, they slowly and slowly upgrade into an annual gold and platinum subscription. So what happens is every time something like this event has happened, just like the monetization and Jio and GST, the initial supplier traction was up and then it settles down at the consistent growth level of 15%, 20% in the years to come.So that is what I can tell you from my past experience, depending -- because a lot of industries are still going through a lot of churn. I can see that travel and tourism industry is still not yet -- hospitality industry. Most of the offices are not open. Offices do consume a lot of consumption in terms of transportation, in terms of food, in terms of cleaning supplies and everything. Similarly, handicraft and those industries are -- still have not recovered, decorative industries, marriage-related industries.So I think as those industries will recover -- so whatever we are able to do today are doing with 80% of the industries. We are not able to actually focus on all the 100% of the industries. So there is one constraint that we are operating from home. We are not able to meet the customer. We are not able to educate them properly as we were able to do earlier. And second, a lot of industries are still not back to normal. As I said in my opening remarks that some industries will take much longer to recover. So as both of them will come back, I would say paid supplier growth should also come back.
All right. Just one small follow-up. The behavior that you mentioned of the supply side that some will try your platform, some will churn and then you will discover how your paid supplier growth will return to, say, 5,000 per quarter as you've been seeing pre-COVID. What about the buyer behavior? Because we saw that also surge in the last 3 months. Do you think that this buyer behavior is very, very sticky right now? Or will buyers also revert to the old way of certain online, certain off-line working? Just trying to understand because this is a lead indicator as you rightly pointed out.
Yes. So buyer behavior, generally, what we have seen that you can understand the buyer behavior -- is this slide visible, the network effect slide?
Yes, sir, I can see it.
Yes. So if you see, our repeat buyers used to be about 50% around 2 years ago. And then it was settled at around 55% until the last quarters or so. And it has gone up to 60% at a much larger registered buyer base. So the repeat rate tells you whether the buyers are going to stick around or not. Yes, you are right, maybe because of the lockdown, there was a spurt in the month of May or June. But if you see this particular quarter, it has not been the spurt-driven traffic.So you can say that the quarter 1 traffic, there could have been some spurt, specifically because of the lockdown. But from the July, most of the industries had started to open up. I don't think a significant or any significant drop in the buyer behavior. Because the buyer behavior has changed permanently for good. Most of the people have learned for the first time how to use the internet, and they have found the goodies of the internet.Also you can see, our -- people who are acting like a supplier and buyer both on our platform. That also used to be 30%. And then slowly and slowly it was up to 33%, and now it has gone up to 36%. So both of these metrics will tell you that these suppliers and these buyers are here to stay, and they are here to stay for a longer duration of time.
Next question is from the line of Anmol Garg, Motilal Oswal.
Sir, can you hear me?
Yes, we can.
Yes. So just a couple of questions from my end. First of all, are we considering to add any additional features to our platform, particularly in the logistics and lending side?And secondly, if you can talk a little bit on the capital structure -- or capital allocation, that do we have any pipeline of potential investments for -- or M&A activities so that we can scale up more on the supplier side operation?
So as you see historically, we have been trying to move closer to the transaction as much as possible. So earlier, it was only a catalog or a product catalog-driven, and then we started to provide price on that. And then we started to add a lead management system or a CRM system, which is being utilized by buyers and sellers to communicate with each other. And then we have added the payment options because most of, as you know, B2B order sizes are much higher, upwards of INR 50,000 or so. So our payment is only being used for small payment items.Now coming to your question about the logistics or credit, only when payments and lead management platform mature enough, then we will look at the providing of any kind of a credit facility. And we don't see that we will be doing logistics by ourselves ever because B2B is a variety of the products and most of the people have customer requirements with each other.And they talk to each other to arrive at what kind of products and what kind of design and what kind of quantities they deal with. It is not a 5 kg package, which can be delivered for all separate industries. There are trains and there are truckloads of cement and there are truckloads of ethanol. So I think this logistics is far more a distant item than the payment and than the CRM.Currently, our lot of focus is on CRM. And maybe going forward on trade payments. We will see as the business matures and as the people get more comfortable with the buying and selling on the -- through the platform, we will continue to evolve more features, which are used by buyers and suppliers. Now turning to your capital structure, Prateek, do you want to take...
Yes, sure. So Anmol, as we've been stating in the past, there is no change in the capital allocation policy. I mean we have roughly around INR 1,000 crores of cash sitting with us as opposed to the deferred revenues of close to INR 630 crores on the balance sheet. The way we see it is that one part of the capital, of course, we would be distributing it as a dividend, which will get decided at the year-end by the Board.The remaining part, some part -- some portion, we would like to, look, keep it as a cash reserve for ourselves. And the other part, we would like to look at the inorganic initiatives, whether if it's the investments, renewal of subsidiaries or in the mergers or the acquisitions aspect. So far, we have done 2 investments. One is Vyapar, which we did 2, 3 quarters ago. And the other one is Bizom or Mobisy, which we did announce in the last quarter. So we have made some investments in that.Overall framework has always been that we'll have to look at the areas that makes sense for us, which would be either B2B or it could be SaaS or it could be the fintech area. But it has to leverage the IndiaMART ecosystem, that is factors with which we'll continue to monitor and evaluate the upcoming opportunities.
One thing I would like to clarify back, is there anything in the pipeline right now?
We cannot comment on it. We continue to evaluate, yes, multiple businesses, but there is nothing that I can tell you right now.
Next question is from the line of Prashanth Kothari, Pictet.
I think we could move to the...
So next question is from the line of Ankit Gupta.
Hello. Am I audible?
Yes.
Yes, Ankit.
Sir, 2 questions. Number one, our cash collections are around INR 60 crores. They have recovered quite nicely. Can you tell us that most of these new suppliers are monthly suppliers? Because generally, what we are seeing is cash collection is almost equal to the revenues. There is no increase in the revenues.
So let us look at the cash collection. Cash collection, around 75% of the cash collection comes from our existing customers. We have 140,000 existing customers. And they keep renewing and they keep upgrading. So if you divide those 140,000 customers into 12 months, I mean some of them are monthly and some of them are annual and some of them are more than 2 years. We get almost, like, 5,000 renewals coming up every month. So a large portion of the collection comes from the renewals and upgrades that happen at the time of renewal.The second part that you rightly said, there's acquisition of the new customers. In the month of April, May, June, July, the mix of new customer acquisition for monthly mode versus annual mode, actually annual mode was around 40% as against the normal trend of about 20% only -- 20%, 25%. Because at that point of time, based upon the payment option, the only payment option for many of the people possible was the annual option. However, as we scaled up in the month of October -- September, October it will go back to the similar principle of about 80% coming in the monthly mode and 20% coming in the annual mode.And as and when they will upgrade, their collections will come. So this collection is some of parts of the new customer acquisition plus renewal plus upgrade into the existing customer. While the customer -- total number -- total collection has declined and is still in that INR 60 crores, which is 20% lower than the pre-COVID levels, is one. Neither our new customer acquisition has reached to the pre-COVID levels and nor the people upgrading have reached to the pre-COVID levels where people are renewing, but people are still not upgrading for a longer period or upgrading to a platinum subscription. They are just in the wait and watch mode for the industries to open up.So I guess that as the markets open up, as I said, we see the economy opening up and as industries will recover, the collections would also start to recover.
And sir, earlier in the Q1 call, we said that we are giving some discounts to the existing customers, at least deferring their payments. So is this the case now? Or also, things have really been improving now?
So let's separate the 2 questions separately. For the purpose of new acquisition as well as for the purpose of upgrades, we continue to offer creative payment plans so as to reduce the friction for people to sign up with our platform or for people to be able to taste our platform or taste our upgraded packages at a lower upfront cost.The second question is, are we still giving free extension to the people? So no, I think most of the extensions were given in the April, May, June and July. And from August onwards, we have started to ask for either a renewal or churning out. Though we are giving -- taking our normal timing because in these 4 months, many of them were accumulated to be -- to augment to be -- so they are being done on a case-to-case basis. So we are only offering a relaxed payment terms, but no longer a discount on retention.
Got it. Got it, sir. And sir, just last question, if I may. Any guidance you can give for deferred revenues just to understand where are you seeing. Earlier, we were modeling a decline in deferred revenues. But I think now after Q2 results, things are looking good, to be honest.
You can talk to our IR team, and they will help you with the modeling better. Because collections flow into deferred revenue and deferred revenue flows into revenue. So...
Next question is from the line of Manan Shah, Moneybee Investment Advisors.
Am I audible?
Yes.
Sir, you mentioned in your opening remarks that the current increase in the paying subscriber is a onetime increase. So is it that we have added our lost subscribers back? Or are there any new additional paying subscribers that we have added? So if you could clarify on that or maybe provide a mix that how many were new subscribers that we added?
So about 80% of them out of the 8,000 that we have increased, about 80% of them are recovered from the previous one. After the -- maybe about 2,000 of them are re-added as a net new customers. But -- so I already told you that.
Okay. And currently, we are offering monthly plans in our silver package. So any plans of offering monthly or, say, quarterly in our other gold and platinum packages as well?
The gold and platinum packages, we -- I think I told you last time also that earlier we were only and only offering an annual plan and a multiyear plan. Last quarter, we had released a 6 monthly plan on the platinum packages, and that is doing well. So unlike the entry cost of being full year in advance, now they can pay 6 months thing. And they can also pay that 6 months into maybe 50% advance and 50% next month kind of thing. So we have offered -- but I don't think we are planning any monthly or quarterly package as of now. In case we do anything, we'll let you know.
Next question is from the line of [ Praveen ], Goldfish Capital.
Yes. Am I audible, sir?
Yes.
Sir, a couple of questions from my end. One is that, again, coming back -- I mean going back to your Q1 call where you said our objective is to probably retain whatever the existing customer that we had at the end of March in some sense, that is 147,000 as I can see on the slide, which is there. So any change in that kind of a guidance? Do you think that -- again, the way things are improving, the way recovery is happening across the Board. Or do you see that we can surpass that 147,000 number by the end of this year?
Hopefully, yes. Our first and foremost target is to get to 5,000 net quarter addition because this, whatever we had lost out that 147,000, most of it either we have recovered in this quarter or maybe a little bit less here and there and rest have churned. Because the people have churned on 3 counts. One, their own survival due to credit or due to general demand. The second is the -- their particular industries have gone out of favor, at least temporarily, so whether it is hospitality industry or whether it is the handicraft apparel kind of industries. And the third is that they have too much of buyer traffic and they don't need right now IndiaMART kind of a support.So I guess from 147,000 to 133,000 to 141,000, we are more or less done with the previous customer base. Now whatever next quarter onwards we will be able to do in this volatile environment is acquire new customer and churn -- whatever churn you have seen in the previous quarter was the monthly customer churn.Now -- but there are 2/3 -- more than 2/3 of our customer base is annual customer who will come up for renewal as and when they will come up. So we will know there state of affair, how is their industry doing, how are they doing every month.So it is -- one part of the churn has been done away with in the June quarter and September quarter. But I think the next 6 months or next 9 months are going to be volatile and to be able to predict anything. But given the indications that we have in the month of September, October, I'm saying that let us first target to get to 5,000 net additions and then see where we go.
I got your point, sir. Second question is, sir, I remember, again, in the Q1 call, you had mentioned that some of the customers had moved to a digital mode of payment, if I'm not wrong, in terms of the collection. And related to that is also that, I mean, in general, across the industry, we are seeing a lot of digital adoption may be the use of credit cards, may be the -- I mean the way doctors are serviced in some of the pharma companies.So I was just wondering that can we not move to digital mode of also in terms of marketing or in terms of making the customer aware about the advantages of our platform and also in terms of collection? So are we running some sort of a pilot wherein rather than people going for collection, people going out to the customer's sort of site and educating him about the benefits of IndiaMART, can that not happen digitally?
So whatever this quarter INR 163 crores have come in, 95% of that has come in through digital mode only.
Would it stick, sir? Would it stick? Would it -- is it -- I mean is it onetime? Or can we assume a similar sort of a trend going ahead as well when things are normal?
If you see the pre-COVID levels, we used to do about 55%, 60% digital collection and rest 40% use to come when people go and meet customers. And currently, it is running like 85%, 95%. I would say that it will neither become 100% because a lot of our customers, especially in the platinum and gold segment, they pay us -- it is not about the method of payment. Their deal sizes are INR 200,000, INR 300,000, INR 500,000.And you have to go and meet the management of the companies. You have to go and meet the CMOs of the companies and explain them the benefit of Internet and how the Internet IndiaMART Solution can work for you. And in those cases, getting a phone-based sale done would be difficult.So I think on the high-value transactions, it is not only advisable. It is, I think, completely mandatory to do field meetings and -- it is not about collection. But on the lower-end side, for example, in our monthly mode, almost 100% of the collection happens through digital mode and tele mode only.And as I said in the last quarter, there is a greater adoption of the people and greater preference of the people now if they are to pay only INR 25,000 or if they are to pay only INR 5,000 a month, that they can pay based upon the brand value and based on the telephone conversation. So 80% will definitely shift to the telephone and digital mode. But I would say the large contracts and 30% of the customer would still need a face-to-face support and face-to-face sales and consulting.
Got your point, sir. Last question from my end would be that -- I mean we have talked about this features of logistics, of credit, for example, right? But are some of our customers asking some of the features that need to be added? And do you think some of those features, it might not be logistic. It might not be credit, but some of these features are very important for us to retain customers and there is a need from the customers' end that these features need to be added. Anything that sort of a thing that you are hearing from your customer base, especially after COVID times?
Yes. So I think the -- in these COVID times, people have realized the importance of their customer data and their prospective customer data. We have seen a significant adoption in our users of our CRM tools and usage of our buyer RFP.So we are continuously working to make those features more useful and more easy-to-use by the buyers as well as suppliers. We are also deploying multiple technologies. So for example, now you can do almost like a real-time chat. You can share your catalog with others. You can share your photos. We will also be able to -- there are some new innovations I have seen in the -- by these new-age local tech companies. They have also come up with some new innovations. We are also learning from them.So based upon whatever features -- requests or features we get to know from the survey of our customers, we are developing. And that is how our platform has been becoming stickier and stickier and becoming easier to use.Having said that, the payment is on such platform where we continue to believe that that is an important part of the ecosystem. And maybe tomorrow, some kind of a logistics platform where people can find their logistics partners or people can find their software partners, because a lot of people are now trying to find different kind of software to automate their businesses.So if you go on our seller.indiamart.com you will find a specific section listing specific logistics providers, specific software providers that has also been launched. So we continue to work on those features, CRM-related features and SaaS-related features, to make sure whatever customers want and what we can provide at the minimum common denominator across various industries. Because we don't want to become an enterprise software company. We have 2 serve the SMEs and micro and small and medium and large. So we have to operate at a minimum common denominator of a feature set, which is useful for them.
Next question is from the line of Sanjay Ladha from Concept Investwell.
Congratulations to the IndiaMART team for a good set of numbers in the tough environment, sir. Sir, my question to you is how we see the competition from the players like Google and Amazon. They are making various efforts to eventually be into the market which we operate for. So what is our strategy, and how we are looking them as a competition side or strategically related to that?The second question will be on, in the past 2 to 3 months, we are focusing on different cities on a different -- in a different way altogether. So are we seeing some of the inching of the advertisement cost as a percentage of revenue for 2% to 3%? Or what's your color on that side, sir?
So I think the first part I have been explaining time and again. First of all, B2B and SME are a summation of many different business models for different, different industries and for different, different companies. We lie somewhere in the middle of a very unique platform, which has certain goodies of Google, certain goodies of Amazon and certain goodies of the classified platform.And our strength is that 100% of our traffic is an organic traffic. Almost 60% of the buyers we come this particular month are also come in the last 90 months -- last 90 days. And many of our suppliers are also buyers. So there is a constant watch on what exactly we are doing and how they are doing. They are typically focusing mostly on the B2B wholesale, which is FMCG wholesale. So whether it is Udaan, whether it is Amazon business or whether it is Google, those kind of features.And then there are companies like Power2SME or Industrybuying or Moglix or Bizongo. They are specifically focusing on a particular vertical. The good part is that we are able to focus on -- horizontally on a particular industry and a particular city. And if you see most of the products that Amazon or likes of Amazon or Udaan, they deal into standard product, off-the-shelf product, which can be dispatched and bought and sold.Whereas most of the products which are bought and sold on our -- are discovered at IndiaMART are not standard products. They are custom products. They are custom designs because you want a bottle cover to be designed, a bottle label to be designed, printing machine with a specification to be done. So I think we are very different from that perspective. However, yes, everybody will innovate and we will also learn from each other what areas to focus upon.The second part of your question, you said that we are doing differently in certain cities. I didn't really understand what exactly are you wanting to ask?
So on that side, we see on the -- on your Twitter handle that you are focusing on different cities and targeting different cities. So just wanted to understand how your -- or what is the area or what is the strategy for the management on that side?
So we have started to experiment, in the larger 35, 40 cities, we have our own presence. And own presence means own physical presence, we have branches and all that. And then we have our telesales department, which focuses on the rest of India. So there are lot of Tier 3 cities or Tier 2 cities where we have built the full-fledged branch possible, but it is not as big the market where a full-fledged branch can survive nor our tele is also as effective as a physical branch.So we are experimenting with the dealer distributor network or a DSA network. And I think we'll be able to give you some better outcomes of those or better numbers of those maybe next quarter as we experiment. Because this, we have only done in the last couple of weeks only. So we'll let you know in the next quarter, maybe.
Sir, if I steal one more question. We are focusing on export side. You mentioned that on the previous con call or you mentioned in the somewhere. So how things are shaping on that side?
Exports has not been going the rate for the country for the last decade or so. If you know the history of IndiaMART for the first 14 years, we were 100% export/import marketplace. It is only in 2009/'10 then we saw that now domestic marketplace is going to be more important and exports is not going to grow and that turned out to be true. It is now that in the wake of supply chain diversification that many people are looking at India as a supply chain diversification item.And our Prime Minister has also put a lot of focus on Atmanirbhar and Digital India and of course, Make in India. So we have relaunched our export services. They have been launched only in the month of September. And we embarked on a few hundred customers. But I think it will take about 6 months for me to be able to give you anything complete in terms of number, if they are sustainable or is there good enough contribution to our overall revenue and overall customer base.
Next question is from the line of Aditya Badami.
Congrats to the great numbers. I just wanted to know, recently one of your competitors has come out big way of launching their B2B business line. What are your views on it? And how do you look at costs going ahead? Because they are looking at heavy marketing costs from the month of December onwards? What do you have to say about that?
Yes. Thank you. I think we have also heard and seen that presentation that they made uploaded on their website. So one, I would say that this will definitely help in expanding the market. Education, training of -- education and training of the SMEs is very important aspect. JD historically has been a great company on the telephone-based directory system.The second part is that B2B marketplaces experienced a strong network effect. As you can see on this slide, the -- there are more buyers and then are more sellers and there are more sellers display, there are more products and more specification. And we also start to gather a lot of seller data insights, which help us do a better matchmaking and save time for buyers and sellers.So I would say that this is not a -- like a 1-quarter or 2-quarter game. It takes a decade to build a strong successful B2B organization. And at the end of the day, buyers and sellers will use the platform where their ROI or the value proposition is the best, and they will allocate.Coming to your advertising cost side, I think we -- as our traffic has grown up by 30% this quarter, and it has been growing better in the last 3, 4, 5 years, we don't see any need of immediate advertising. In any case, we do not see advertising as a means to acquire traffic or to acquire customers. Advertising help us build a brand recall and the overall trust into the platform. And which we did many years back. And if we need to do that again, we will do that.Our advertising budget continues to remain at INR 25 crores, INR 30 crores per year. So I don't think that would be a bigger challenge. But let them come out and we'll know what kind of services they offer, and how can we best address or learn from their experiences also. And one thing is sure that it will definitely expand the market.
We will now take a couple of questions from the written questions submitted by the participants. I'll read out the question.So the question is from Manik Taneja. We have seen our EBITDA margins improve to 50% level versus 27%, 28% margins in FY '20. Some of the cost savings you have suggested are not sustainable and will come back as business recovers. But given that we expect growth to decelerate, the overall recovery and increase digital adoption, so what are the sustainable margins for us over the medium term?
Sure. So as I mentioned in my opening comment, certainly, 50% EBITDA margins are not sustainable. If you look at our pre-COVID quarter costs, the cost had been at around INR 120-odd crores. In this quarter, we -- our cost -- the total cost base has been around INR 82-odd crores. There is a significant reduction in this quarter cost as compared to the what used to be our normalized cost.In the last 6 months, we have worked on certain cost optimization measures as well as there has been certain savings, which have been explained by Dinesh also in one of the questions. Because of which we're seeing an INR 80 crores, INR 82 crores kind of in cost base. Going forward, we believe that these costs will certainly increase. Half of these will sustain and half of these will not sustain. So it would be more like the INR 100 crores, INR 105 crores a quarter is a more normalized cost base that we should think about it till the time we start again ramping up hiring again.In the terms of the revenues, revenues have been coming out of for the deferred revenue. So they are much more stable as compared to the collections, while the customer collections can see a bit of the volatility. We expect our revenues to stay stable for the next quarter. So based on this, I'm sure you can work out as to what would be the appropriate margins for next quarter.
One last question. Could you please explain this distinction between the daily unique business inquiries and total business inquiries delivered?
So daily business inquiries is the sum of daily item -- daily buyers who have actually sent an inquiry. Most of these buyers will end up sending an inquiry to multiple suppliers. And some of them will also end up submitting an RFQ, which will be consumed by the suppliers. So the inquiries delivered are the total number of inquiries received by the suppliers, calls and inquiries received by the supplier. And unique business buyers are the inquiries sent by the buyers.
Okay. Thank you. I think with this, we come to an end of the Q&A session. And I now hand over the call to the management for their closing remarks.
Thank you very much, ladies and gentlemen, for joining our quarter 2 financial 2021 earnings webinar. In case you have any further questions, please do reach out to our Investor Relations team and we'll be more than happy to answer your questions. Thanks, everyone and stay safe during this environment. And have a happy Diwali to all of you.