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Good Evening Ladies and gentlemen. I am Ravi Gothwal from Churchgate Partners and on behalf of IndiaMART International Limited, I would like to welcome you all to the company's Q3 FY '21 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; and Mr. Prateek Chandra, Chief Financial Officer. 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 #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. Good afternoon, everybody, and welcome to the IndiaMART's quarter 3 FY 2021 earnings webinar. I would like to wish everybody a very, very happy new year, and hope you and your loved ones are staying safe and healthy. We are hosting this conference through FLOOR, a platform by our associated company, 10times.com. The earnings webinar is also being shown live on IndiaMART's Facebook page and YouTube channel. We have already circulated our earnings presentation, which is available on our website as well as our stock exchange websites. I'm sure you would have gone through the presentation, and I would be happy to take any questions afterwards. In the third quarter of this fiscal, we saw a recovery in the economy and business across the board. I'm pleased to report a strong financial report -- performance of IndiaMART during the quarter. Our consolidated revenue from operations stood at INR 174 crores, representing a growth of 5% on a year-on-year basis. Collections from the customers for the period reached INR 179 crores, a sequential growth of 9% quarter-on-quarter, but marginally a decline of 2% year-on-year as compared to quarter 3 FY '20. December '20 collections were better than December '19, pre-COVID levels. The jump in the buyer traffic was visible in the last quarter and has sustained this quarter as well. Total traffic has grown by 35% year-on-year, reflecting approximately 85 million visits per month. Business inquiries delivered increased by 37% year-on-year to 154 million with our 90-day repeat buyers standing at approximately 60%. During this quarter, there were approximate 7,000 clients addition into the net paying subscribers, resulting into 148,000 customers at the end of the quarter. Now we are back to the March '20 paying customer levels of 147,000. Indian Internet growth has accelerated further after the pandemic and many new opportunities will emerge in the coming times. Keeping this in view in yesterday's Board meeting, shareholder resolution to raise funds was approved on 18th January for approximately up to INR 1,100 crores. The proceeds will be utilized for organic or inorganic growth opportunities in the spaces strategic to IndiaMART. 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 particular quarter. Consolidated revenue from operations was INR 174 crores in the quarter, a growth of 5% year-on-year, which was primarily driven by a similar increase in paying subscribers year-over-year and a marginal improvement in our average realizations per supplier. Consolidated EBITDA was INR 88 crores, representing a margin of 51%. Net profit for the quarter was INR 80 crores. We've been able to sustain these margins as our offices stay closed and hiring has recently started. As and when the business volumes reach normalcy, we expect some of these costs to increase. Cash flow from operations during the quarter was INR 77 crores. As of 31st December, cash and investments stood at INR 1,143 crores. Thank you very much. We are now ready to take any questions.
Thank you, Prateek. We will now begin the Q&A session. [Operator Instructions] First question. Please go ahead with the question. Please unmute yourself and go ahead with the question. Next question is from the line of Manan Shah.
My first question was that we had recently filed a case against one of our competitors for IP theft. So can you update us on this case? And like where is this case right now at? That will be my first question. My second question was that with the increasing in the competitive intensity, would we start spending on advertising because currently, we are not spending anything on advertising. And my last question was on the recent fundraising. We are already sitting on adequate cash and cash equivalents in our balance sheet. So why is there a need to raise such a huge cash right now?
So with respect to your 3 questions, the first question you asked about the legal proceedings we have initiated against one of the competitor. So as you know, it's next hearing is scheduled on 25th of January, and we filed this case sometime in the month of November, wherein we have highlighted to the court about our grievances through which court has granted an interim injunction in our favor. And the next date is on 25th of January, so it will proceed as it goes along.
How confident are we on our claims? Like...
So on this one, it's only 1 hearing that has happened so far -- Sorry, am I audible?
Yes.
Yes. So in this only one hearing which has happened so far, in which we have presented our case to the honorable court, and honorable court has granted that injunction in our favor. The competitor or the other party is yet to revert with their response to our grievances in front of the court. Hopefully, by the next time of hearing, they would revert with their response and then the proceedings will take place accordingly.
Okay. And on the ad spend?
So on the advertising, if you see, we haven't done any significant advertising since FY '17. 100% of our traffic, which is about 80 million visits a month that we get is organic traffic. And even the last time when we did advertising in 2015 to '17, it was for brand building and recall value. And we feel that currently, especially in the last year, the traffic has gone up by 30%, 40%. And also the need for IndiaMART has been significantly used by many people, whereas we don't feel there is a need for advertising as of now. But if as and when there would be any need for advertising, we will definitely let you know and do the same. On the cash side, as I said earlier, that Indian Internet growth opportunities further accelerated during the last year and many new opportunities are likely to emerge as the transformation progresses, with 700 million mobile phones and a step function jump into the SMEs and businesses using internet for their purpose. We believe that there will be many more opportunities that will come. We intend to make a long-term organic and inorganic strategic growth opportunities. And in the area of IndiaMART operation and its adjacency. On the cash part, you can see that there is a INR 625 crores -- INR 633 crores in our deferred revenue out of the total net balance we have, which leaves us at a remaining cash balance -- cash reserve of INR 500 crores. So that is how -- and we have seen and met multiple companies and multiple sectors over the last year. And based upon our own assessment, we feel that INR 1000 crores, INR 1,100 crores kind of a fund raise should be necessary to fund our growth ambition for the next 2 years or so.
Will they be like in a controlling stake or would be an investment kind of acquisitions that we're looking at?
So it is difficult to say as of now. We intend to make long-term investment in strategic spaces. And we will try for 1 or 2 acquisitions, along with the couple of minority investments, and we'll continue to evaluate proposals, and we will let you know as and when anything comes.
Next question is from the line of Anmol Garg from Motilal Oswal.
Yes. So just -- I had just a couple of questions. First is just on the previous question, if you can delve on -- dwell more on which are the areas that we are targeting for the acquisitions for the fund raise that we are doing?
So as I said, we intend to make investments or acquisition in this strategic spaces where we can leverage IndiaMART's ecosystem. So whether it is the reach or whether it is the customer, and it should improve customer experience, engagement and monetization. The broader spaces that you can see, we have always been talking about Fintech and SaaS. And vertical commerce is one such thing which is also very important. We have recently seen a lot of activity in the conversational commerce. And we believe that there could be opportunities. We have already done an investment in Vyapar, which is into the accounting and tax invoices. And there are receivables management, sales and distribution management, and we have already done an investment in Bizom, which is on the sales and distribution side. And then there are cloud communication, payroll, logistics aggregation and taking platform. Within Fintech, if you see there would be payment facilitation and credit facilitation. We already have a payment subsidiary called paywithindiamart.com. However, we haven't yet done any kind of a buyer or seller facilitation of the credit on the transaction side. And then there are API banking, which we would like to offer to our SMEs. That is another area. Business insurance is another area. So there are multiple areas that we have seen in the past. And within the vertical side spaces -- within the vertical spaces, there are agricultural, there are industrial products, there are items like shoe wholesale or many other kinds of items are available. And the basic theme has to be either it has to be a transaction enablement or ease of doing the business by way of business process enablement. So I think it enables the commercial to how do we become one-stop shop and keep improving our customer experience engagement and expanding the network for monetization. That should be the overall theme.
Yes. Sure, sure, sure. Thanks for the elaborate reply. And secondly, just wanted to ask that have we any plans to increase our pricing of the base packages that we are offering right now?
So we have been doing price changes multiple times, as I said, in the past also, last year, we have seen how do we offer a shorter duration and more affordable package because the people were facing great cash crunch and we wanted more and more people to come on the platform. You can see that if you go to our deferred revenue slide, you will see that the current portion of the deferred revenue has gone up from 60-odd percent to 65-odd percent. And similarly, on the base package, we have done 2 changes. One, the base package was initially INR 5,000 set-up fee and INR 3,000 inclusive of tax on a monthly basis. Now we have made it simplified so that there is a INR 3,000-plus tax, which offers 2 things. One is it simplifies to sell one kind of a package. And second, it lowers the entry price from upfront INR 8,000 to now INR 3,540. So we have done that change. Apart from that in the previous quarter itself, we had introduced the concept of daily buy leads. If you remember, we had all our packages like silver, gold, platinum, they had buy lead packages, which were on the weekly basis. So now we have introduced the daily quota as well to make their customers come back on a daily basis as well as the weekly quota. So the overall buyer base sales has gone up by 40%. We have also increased the weekly quota for silver monthly packages, 1 every day plus 7 per week, and for annual and multi-year, 1 every day plus 10 per week. Similarly for gold, 2 per day and 20 to 30 per week, depending upon which tier of gold, and platinum, 3 and 4 per day and 50 to 100 depending upon the of tier of gold (sic) [platinum].So we have done certain changes in the pricing and we have seen very good result. Many of our suppliers won because of the pandemic, I think, they have done a good internet adoption and they found useful value in IndiaMART incoming on a daily basis. And we have seen that people who are consuming buy leads/RFQs on 7 days a week or 10 days a -- 7 days a month or 10 days a month has gone up to 15 days a month by introduction of these daily expiry buy lead packages.
Yes, yes. Sure. Sure, Dinesh. And just lastly, from my end is that, so earlier we have talked about that half of the margins will be sustainable on a longer-term basis. So what are the factors that are letting you say that what on the cost optimization front that are we doing that will be sustainable on a longer-term basis post we started -- start paying out variable pays to our employees and also start hiring?
Sure. So Anmol, if you look at our cost structure in the pre-COVID level was opening around INR 120 crores per quarter. Last year, in the same quarter, we did INR 122 crores approx. In this particular quarter, our total cost was around INR 85 crores. So there is roughly around 30% reduction in the cost on an overall basis. And even if we look at the split of the cost broadly, we had 2 types of costs, one is the people and people related, which is manpower and outsources. So therein the cost has come down from INR 90-odd crores to roughly around INR 65 crores in this quarter. And the other overheads and G&A where the cost has come down from roughly around INR 30-odd crores to INR 22 crores in this particular quarter. If you see the headcount cost, the change has largely been because of the reduction in the headcount or the manpower, what we had been operating with the lesser people. Second is on the G&A side, since we're continuing to work from home, our offices stay closed, so there is a lot of savings on the G&A side we have seen. All in all on a permanent basis -- so I am just saying that -- and there are certain variable costs, which was related to the businesses, which we were seeing in savings. Going forward, as we come back to our normal levels of businesses, some of these costs would certainly come back. And the cost which would not come back would be optimization that we would have done, which is largely the G&A cost of offices, from 80 offices, now we are operating with roughly around 40-odd offices now. Then there are certain automations that we have done on the processes, which would also result into some sustained savings. And there are certain efficiency improvements, which would also be there on the manpower side. So all in all, our estimate was that roughly around 50% of these costs would sustain and 50% of these savings would come back at the operation side of the business.
Yes. I would add some permanent kind of items that we are seeing. One, I think over the last 6 months, we have seen that some of the sales can be done using channel sales partners, who are tele-based channel sales partners as well as field sales force-based channel sales. There the cost has gone completely variable. We have seen today, if there are 500 -- if there are 1,000 people who are working on the new client acquisition which are employed by IndiaMART and on the outpost, they were on a fixed cost basis, around 500 people are working as channel sales partner. Second thing, we used to have a lot of BPO and call center operations, which were being operated out of the physical call centers and there were travel and office cost for seating and all those costs were involved. Now that all of that has moved to the cloud telephony-based system, we are seeing approximately 10% of saving per seat on -- when the agents are working on work-from-home model. And we don't plan to return those call center-based or BPO-based operation back to the large call center -- actual center coming in. So I think there is a -- we have moved certain products, which we were using in the server end. We have moved to the open source softwares and we have seen significant saving coming from their side also. We have also seen how our meetings can be done on the Zoom or on the video call today. So we believe that whatever travel costs that we were doing either for the investor relation purpose or for the sales coordination purpose, at least half of that would -- will look like a permanent saving. And now also we are expanding hiring, out of the hirings that we are hiring today, we are hiring almost 50% of the people in the work-from-home operations. There, we believe that the capital cost and the office going and coming in the office per seat cost is much lower. And in fact, we are able to pass on some of that cost to the employees and some of the benefits also to be employees. So on one side we can increase their take home, on the other hand, we are able to decrease the overall cost to the company. So these are some of the costs and that is why I believe that out of the INR 30-odd crores that we have saved in the cost, we'll probably get back to INR 15-odd crores and we'll probably save INR 15-odd crores per quarter.
The next question is from the line of Sujit Jain, ASK Investment Managers.
How would you determine what is the ROI of a subscriber or supplier? Lets say if I'm a supplier and a subscriber, how much business I get generated through IndiaMART, because that is crucial to know and to judge eventual stickiness of me with IndiaMART?
Sir, ROI is very different for different customers. We are a lead generation platform. So, the way we measure ROI is how many buy-leads a customer is consuming, how many days he's coming to the platform and consuming buy-leads, how many calls he's receiving, and how many inquiries that he's receiving. Nowadays, because our CRM system has also become quite useful and quite daily used, we also come to know how many times people have replied to the inquiries, and how many times people have made a call back from our CRM system. So all in all, we are able to measure the ROI in terms of number of calls or inquiries or buy-leads received by the person and number of calls and replies being done by the supplier. In terms of the actual ROI, it will depend largely upon different, different industries and different, different geographies. So we do not know exact transaction volume. Some of the data that we get is where people use our platform for payment service. There also we come to know what kind of transactions are happening on the platform. So these are the some of the ways that we calculate the ROI. And if the engagement level continues to increase or continues to remain there, then we understand that people would invest their time only if they are getting an ROI. Otherwise, they would not be investing their time. These are the some of the ways that we -- Brijesh, you want to add something? Yes, please go ahead.
Sir, one of the ways we also go ahead and look at this, is what is the overall number of inquiries that every paying subscriber essentially gets. So we have that number, typically ranging about 400-odd paying base. The other parameter which becomes important to measure the ROI is at what rate do we see these inquiries getting converted into order. We have a proxy value around this measure whereby we receive more than 150,000 plus feedbacks every month from buyers who send inquiries. And using that data, we can articulate that, you know, about 40% of these buyers essentially have done business with IndiaMART supplier. If we translate that conversion number at supplier level, we believe that about 6% to 7% of these inquiries received by supplier would get converted into an order. So a multiplication of this conversion, along with the average inquiries received by a paying subscriber actually gives us a good indication of that. Of course, it's an average so you know, we will have customers having better order values being received versus some customers having lower ROI. But it does give us a good view on where this trend is moving.
Is there a way to capture more and more data of conversions of inquiries into sales for the subscriber that will give you early signals as to the stickiness of the subscriber, that's also a point?
Of course, that is the direction we continue to work upon. And in that direction only we introduced preferred number service as the first step and then buy-lead as second and the CRM reply and CRM callbacks and payment facilitation. So all off that efforts is in that direction. Because as you can understand B2B is a very different thing you know, there are thousands of categories -- 100,000 categories and different geographies. And then there are custom products, then there are made-to-order products, there are wholesale products, there are products being going from manufacturer, there are machines which are made to the specification. So it is not easy to do a simple buy now kind of a product and then restrict your industries to only shippable and off-the-shelf readymade product. So we are trying these different methods to find out more and more ROI. I think the best ROI that we are able to see is the engagement on the platform. If the supplier is engaged on a platform 3 days a week, we believe that he is getting the ROI.
How does one correlate the daily unique business inquiries, which is 25 million in this quarter, let's say as an example, to total business inquiries delivered 154 million in this quarter?
So 25 million unique buyers have sent an inquiry which has been received as a buy-lead or as an inquiry or as a call by total number of 154 million inquiries. So you can imagine that 1 inquiry -- 1 supplier -- 1 buyer would typically either send an inquiry to 2, 3 different suppliers and 2, 3 different suppliers would consume a buy-lead of a particular buyer. So 1 buyer converts into almost like 6 inquiries.
And 1 last question INR 1,100 crores of fundraise, how big is your M&A team? How many prospects do they meet every quarter? And their compensation and their reward structures?
We're in early days of our team. We have a 3-member full-time team as of now. One very senior person, whom you would have interacted, he was earlier taking care of investor relation also. And compensation details are not relevant at this point of time. We meet and evaluate almost like 25 to 30 companies every month. And we do secondary research on another 25 to 30 companies where we do not meet. So all in all, we are able to meet almost like, 25 to 30 companies personally and 25 to 30 companies where we do the research. So in the last year alone, I think we would have done almost 150 per quarters of about -- 200 in a year. So we have done about 200 in a year. And I am sorry I said per month, it is per quarter actually. So we do almost like 25 per month personal meeting and 25 secondary research. And all in all, we have done almost 200 different company meetings.
Next question is from the line of Tejas Mehta, Old Bridge Capital.
Sir, 1 question is, again taking a lead from the question which was just asked, if you could just give us some -- maybe some qualitative understanding about how do you go about -- how do you figure that a customer is right to either being made a paying customer or to move him up to a gold or a platinum level customer, how do you really go about that process?
Well, you're asking about our sales process?
Yes, yes. How do you really try and mine your entire supplier base of 6.5 million to actually paying subscribers and the stickiness?
Interesting thing you asked. This particular year, a lot of significant work has gone into that mining of the -- because historically a lot of that work was being done by our field sales force, and they would meet the customer and continuously keep in touch with the customer. However, when we faced the challenge of working from home and we could not have gone to the customer, we have put a lot of data science towards this particular. So if I tell you how do we convert a free to a paid, we have multiple indicators on industry-based, geography-based, whether he is a GST registered person or not, how many times he has visited our platform in the past, how many times -- how many products he has added, how many buy-leads has he seen. Based upon this, we prioritize our database and create a hard lead and then we have a complete CRM which is in-house built, which we called mobile-based ERP as well as web-based ERP, where we have this automatic allocation to our sales team, and it comes in the prioritized order, whom they should be calling and where there are chances of conversion higher and where there are chances of success for that customer is higher. Where one is customer stickiness whether the customer is more likely to benefit, and the second is where the customer is more likely to convert. On the combination of the two, we do that. And second part is the upsell part or upgrade part. Again, it happens 2 ways. One we come to know based upon the ROI engagement levels that a customer is having on the platform. And then again, we see that if he is consuming buy-leads regularly, if he is using the CRM reply tools and callback tools to manage his customers well, then we are able to ask him whether he would like to upgrade. On the other hand, many calls come inbound and they want to ask for higher packages, how do I take a premium listing or how do I take a service listing or how do I get a TrustSEAL badge. So there is an inbound customer request also, on which we are able to upsell.
Okay. Sir, the other thing I wanted to understand was how does, say, 2 parties negotiate the terms of trade on the platform? Or is it completely offline for them, once you make them meet, your job is over and they do that offline, is that how it works?
We have a CRM tool, which many of these suppliers use for managing their interaction with the buyer. And -- but as I said, we do also offer a payment mechanism. But most of the B2B transactions are very, very high value in nature and many times range into multiple weeks or multiple months. So thereby, a lot of those transactions happen offline.
Okay. Okay. Then, the third question is, to what extent is the Vyapar and Bizom now integrated in your platform and how many customers are actually using those services?
Vyapar, let me first tell you. I think on the Vyapar side, they continue to grow well. They are still a small company. I think their current quarterly revenue run rate is about INR 3 crores a quarter. And that is a significant improvement from 1 year back. Their number of customers have also gone up significantly. Last I told you probably, it was about 25,000 customers. Now they're closer to like 70,000, 75,000 customers. We are helping them getting leads through IndiaMART. We are also thinking of, you know, using our seller data network to further increase that reach. But we have not yet fully integrated into IndiaMART. We believe that they still have some distance to cover before we could integrate. And I'm also learning more about this new side of the business, how best is to integrate this over a period of time. Coming to the Bizom, Bizom has multiple facets. One is, Bizom acts like a sales force management tool for the brands, large brands, to manage their sales force and dealer distribution system. And second, they have an insight tool where they are able to get some insights on what retailers are asking for. We believe that out of the 3 systems: the field sales management, distribution management and the insights, that is BI and analytics, I think from the distribution side, we would like to work with the brands to see if we can get all their distributors on the IndiaMART platform as well. But that is also is going to take some time. As of now, I think they were badly hit with the lockdown and corona times. They have recovered well, and I think they continue to be at a similar level last year in terms of revenues. And last year, their revenues were about INR 35-odd crores.
If -- can I just squeeze in 1 last question over here. Sir, your number of paying suppliers have now gone up back to 148,000, but your deferred revenue hasn't really grown much in the last few quarters. It essentially tells me that all these new customers are basically monthly or quarterly paying customers. They are not long -- multiple-year paying customers. How do you intend to get back to an earlier run rate of growing the -- of growing long-duration customer?
So if you see the first quarter of this financial year, the first quarter of this financial year there was a huge difference between the revenue and the collection. We were on one side, where revenues are coming from the deferred revenue and the collections heavily dropped in the first quarter. So most of the deferred revenue loss or decline that you see is coming from the first quarter. In the current quarter, there is INR 178 crores of collection from customers and INR 173 crores of revenues flowing. So again, the deferred revenue has gone up by INR 5 crores. I think in times to come, it will go up again probably in the same quarter. If you see I've been telling you that we're -- earlier, we were selling mostly annual and the 3-year package when it came to gold and platinum subscribers. But during the pandemic, it was our duty to help the suppliers opt for a lower-priced package. We couldn't reduce the actual price of the product, so we reduced the duration of the product. So now those products are being offered in a 6-monthly, 1-year and 3-year packages. Since the 6-monthly packages have gone up, the deferred revenue has declined a little bit and the current portion has gone up from 60% to about 65%.
Okay. Okay, great. And sir, just 1 last question, you have been adding about 4,000-5,000 customers -- paying customers on a monthly -- sorry on a quarterly basis. When do we start seeing more additions at a higher ARPU level? Because, you know again, the number of inquiries have largely been flat for the last many quarters. Only in the first 3 quarters that we seen inquiries going up, and thanks to COVID. But one worries that as the situation normalizes, would the inquiry levels come off and then how -- what is the trajectory of the customer addition?
I think this is a very imaginary question. I mean, the number of -- when the suppliers -- number of suppliers increase, the number of buyers increase on our platform. The suppliers have been increasing slowly so the buyers have been increasing slowly. Now that the buyers have gone up significantly by 30%, the suppliers data will follow in times to come. And that also remains on our ability to sell and the nation's ability to the make the economy opening up a bit. As I said, 90% of the categories have started to do business almost like a pre-COVID level. 10% categories are still badly suffered. You can imagine offices like ours are completely closed and there are so many supplies related to the offices, related to hotels, related to the airline industry, related to the railway industry which have still not recovered. So the channel sales effort that we have started to do and people's affinity to purchase a B2B product online has gone up only recently. So we believe that in times to come, this will slowly and slowly inch up. And as it will happen, you have seen that this current quarter also, they have done almost like 7,000 net additions, whereas, only 1,500-odd came from the previous recovery, about 5,000 plus came from the -- when most of our sales people are working from home or even remotely. So as we are able to open offices and as the economy goes back up, I certainly believe that there should be a growth of -- similar growth, like buyers, in the supplier trend also. But let us wait for that.
Next question is from the line of Vaibhav Agarwal, Basant Maheshwari.
Sir, we are raising around INR 1,100 crores through QIP, so this will result in a sharp drop in our ROEs. So by when do -- when can we expect the return on equity to get back to the normal levels, like what are the -- like it can get back to the current level exactly? And what time frame do we expect that?
Yes. So Vaibhav to your good question. Right now, the board has approved the fundraise plan for the shareholder approval or they have recommended for the shareholder approval. Once we get to -- once we receive the shareholder approval, we'll look back as to at what time -- what would be the opportune time in which we will look at doing the fundraise and completing the fundraise activity because the approval would be valid for a period of 1 year from the date of the AGM or the date of the approval. So the ROI, ROE and all those computations will also depend on that particular timing. But overall, if you look at it historically, we have been able to improve our margins and improve the profitability. So hopefully, if this similar trend continues and even if at a lesser pace than what we have shown in last 9 months, hopefully, we should be able to cover up for whatever the dilution that may happen as a result of this fundraise activity. And more so, over a longer period as this fundraise or whatever the funds will be raised, will get deployed in the different businesses. I'm sure we would also generate returns and create value from this funds itself.
So do we have a ROE target internally, like in 3 years or 2 years where are we supposed to be?
I don't think we have gone into that level of ROE targeting.
What would be that route?
What? I'm sorry, could you repeat the question please?
No, I'm just asking you do we have any internal targets with regard to the ROE within 2 to 3 years, what kind of ROE target we have?
I think the currently the target is to create value, to create stickiness for customer, to create a meaningful platform which can be monetized in longer duration, and how to make it easier to do business. I won’t be worried about the short-term ROE percentage going up or down by a few percentage points. So I think we will continue to create value and look for long-term growth.
Next question is from the line of the Dipen Mehta, Elixir Equities.
Congratulations on a very good set of numbers. From what I understand and what I've been observing, I think it's the vision of the company to be an end-to-end service provider for the SME, which means you may provide payment services, maybe accounting services, logistics. So if that in fact is the goal, have we done some beta testing or have we done some experimentation as to how the whole process can be done? And any time frame by when we can offer all these adjacent services to your large database and then try and enable them on those various platforms and services as well and then perhaps trying to get more revenue from them?
Yes, if you see, all the efforts have been going in that direction only. The current slide which may be visible to you, we started with the CRM tool that was completely built in-house, and today that CRM tool is very effectively being used. We also formed a subsidiary called paywithindiamart.com Private Limited, and that is working in facilitating payments, albeit slowly because B2B payments are generally done over multiple tranches by way of NEFT, RTGS and traditional methods. But still, we are able to do some portion of that experiment on the platform. We have also invested into the order management system in our subsidiary called Pooraa, where we are developing a manufacturing order management system. We have invested in Vyapar, where they are providing invoicing and accounting-based software. Bizom, we talked about that does -- in Bizom, we talked about dealer distribution management and sales force optimization. So, think, slowly and slowly, we are trying to build the jigsaw puzzle. In the last quarter, you see we have added reviews and ratings on to our platform also. I think we are slowly and slowly building. There is no 1 day when all of it will start to happen. We continue to build pieces of this and hopefully all of that will come together in times to come.
[Operator Instructions] Next question is from the line of Manan Shah.
Earlier, we had plans of having differential pricing across different geographies and across product categories. Can you expand on that?
Yes, so we did implement it at the top tier of...
Hello, am I audible?
We did implement differential pricing at the top tier of our service at the platinum level called industrial leadership product. However, when we were planning to do it for the star suppliers and leading suppliers’ packages in the platinum, by that time the pandemic has set in. And I don’t think that this is the right time for going forward with that differential pricing. We wanted to make the product far more affordable during this time. I think let us wait for 6 months. Let everything be stabilized and then we will start experimenting on those sides again, because on one side, the entire workforce has started to work from home, and we needed a lot more training and rationale on that side to be trained because we have been selling one-size-fits-all product for a long period of time and that is what our customers and sales have understood. Incidentally, only last quarter, we have also started to take out export-based buy leads and started offering it to exporters separately from one-size-fit-all. So we're slowly and slowly working in the -- so export-based buy-leads are differentially priced you can say so now. So we will be working on more such products in times to come, but as of now we are going slow -- a little slow on that. I think, as of now, we want to go with the acquisition side better because we feel that a lot of people have favored digitization during the last year and probably the time is right for us to double down on the digitization of the SMEs at the bottom of the pyramid.
Okay. Earlier, you used to guide for net addition of around 5,000 subscribers per quarter; however, in the past 2 quarters and also due to more affordable products available, we have been able to add 7,000 to 8,000 net subscribers per quarter. So should we expect this run rate to continue going forward? And also if you could you provide what was the gross subscriber that was added or rather what was the churn during the quarter?
So providing the churn information would not be adequate at this point of time because as I said we had gone through the moratorium of a lot of subscribers, a lot of subscribers have taken a temporary off from the platform. So we are not able to calculate the exact churn numbers as of now. In terms of net subscriber addition, last time when we had 7,000, I had told you that only 3,500 or so came with the new subscriber addition, whereas the 50% came from the recovery of the moratorium subscribers. Similarly, this time when we added 7,000 subscribers, again about 15% to 20% came from the recovery of the moratorium subscribers and about 5,500 came as new additions. So we believe, yes, new addition has gone up from 5,000 to 5,500. We believe next quarter it should be anywhere between 5,000 to 6,000, for sure.
Okay. And are we still offering discounts for gaining back our old subscribers?
Yes, if they would like to come back, they can come -- still come back at INR 3,000, inclusive of tax price.
Next question is from the line of Sanjay Ladha, Concept Investwell.
Congratulations on a good set of numbers, sir. So my first question will be on -- since we are targeting the growth vision for 2 years, can you throw some guidance as to what growth we're planning? Can you share ballpark range as to plus 25%, 30% growth, anything of that sort, sir?
No, sir, I'm not allowed to do any projections.
Okay. And sir, my next question could you throw some color on as to what changes taken place in this year in terms of technology or in terms of business or in terms of planning? What changes we have done?
Yeah, I think there are a lot of items to share. This year, almost 50% of the time we have done these technological changes only and process-related optimization and efficiency only. I suggest you please go through the new updated investor presentation, which is available on our website, as well as on the stock exchange's website. You will see multiple new things. When I talked about the more deeper use of artificial intelligence and data analytics, whether it is in sales, whether it is in match making, whether it is in language detection, whether it is in translation, whether it is in the bank product detection or user keywords. We have also done a lot of progress on both CRM tool and conversational commerce and on the payment side. So today, all the debit transactions are available for free on our payment gateway if you are a paying customer. We have also seen a significant adoption of the Vyapar accounting software going up only on mobile app -- on mobile as well as on the stock site. And we are continuing to build a cloud-based products on that site. So multiple process-related optimization, multiple cost-related optimization and multiple technology-related breakthroughs have been achieved in this particular year. And we believe all of these together should poise for a better adoption of our products and services in times to come.
Sir, my last question will be on acquisition front. As we noted one the -- sir, is my voice audible or...
Yes, you're audible. Please, go ahead.
Sure, sure, sure. So my question will be on acquisition front as to previously before IPO came, we make a goodwill acquisition or goodwill write-off in our books, so how we are making sure that this will not happen in our books right now? Can you please throw some light on that?
Yes. So to your question, the goodwill that you are referring to was pertaining to our business Tolexo business that we started in 2014, and sometime around in 2017 we merged that with our business. Tolexo wasn't 100% subsidiary of us since day 1. So if you look at, from a consolidated financial standpoint, there is no goodwill write-off because these expenses would be part of consolidated -- part of that year's P&L itself. It’s only in the standalone books wherein this business was showing up as an investment. When we merged this business, as part of that merger, the goodwill was generated and was subsequently written off before we decided to go public as a part of the cleanup exercise. So if you look at it, it was more of an accounting adjustment rather than any -- accounting adjustment between the holding company and the subsidiary company -- 100% owned subsidiary company rather than any particular business being written-off on account of any particular business. So they didn't have any financial implications as such on that year's P&L. And that was the most tax-efficient way again.
Next question is from the line of Mrs. Ishpreet Kaur, Motilal Oswal.
Sir, if you could just throw some light on your thought process on transaction-based platform versus a subscription-based platform?
So we pioneered the zero-commission marketplace. And we believe that subscription brings stability to our revenue and gives a lot of visibility to the customers also. There could be some areas where transaction-based pricing could be applicable. So for example, payment is one area where there is transaction-based pricing is applicable, but our intent is not to increase the cost of transaction by charging on every transaction a commission fee. We are not a commission agent or rather we are a business enabler, and we would like to make it easier and cheaper to do business in India. And we will continue to offer more subscription-based services and less transaction-based revenue. Even if these are going to be transaction based, they are going to be within 1% or 2% transaction charges rather than going into 10%, 20% transaction charges.
Is there any unit economics to mind or something for the preference for a subscription-based platform?
Can you repeat your question? We are getting a lot of echo.
Is there a unit economic-based calculation or something for the preference for subscription-based platform?
Yes, if you look at into our standalone financials, there is a gross margin calculation which is there. It is available in the detailed financials. So any of the quarterly financials you can see and there is a notes to account, within that you'll find the entire unit economics and how our gross margins have gone up over a period of time. So if you refer to that you will come to know. And in case you have -- you need any more understanding, you can please get in touch with our investor relation team and then they'll help you.
Just one last thing on my end, since the deferred revenue for now is roughly flat and a lot of the revenue accounting happens from the deferred revenue, would the next year revenue growth be back to a marginal kind of a growth because the deferred revenue is flat this year?
It depends on -- I have been guiding on this time and again, that our -- average age of our deferred revenue is about 20 months. Now, if we continue to do badly on collections for multiple quarters, obviously, the revenue -- it will be visible on revenue. But as you can see, as I have guided you, by the month of December, our collections were even higher than the previous year December. And we believe that we should be able to beat our last quarter numbers. So I think in case the collection remains subdued for a longer period of time, this will definitely impact. But as of now, I won’t be able to give you any guidance on revenue.
We will now take a couple of questions from the discussion panel. I'll read out the question for the management and audience. Can you please outline current business scenario for companies IndiaMART has invested in, that is a SaaS company? How this investing model evolve and how we see this investment tying up the customer base, at least the cross-selling potential?
So as I said we are -- we would like to offer services of business enablement and marketing to our customer base. Some of it we are providing on our own. So you can see the preferred number service, the cloud telephony service before order management system is being developed by one of our subsidiary. The payment services are done by another of our subsidiary. For certain use cases, we believe that there are other entrepreneurs who are better off solving those issues. And we are better to take a minority or a significant minority investment. And over the period, we would like to integrate them from our customer base and their customer base overlap method. So I think I've already explained a similar rational in one of the other questions.
Okay. And one last question, how has been the renewals in the shorter duration packages? Also, the long-term packages will also come up for the renewal, first time post-COVID, so what has been the renewal and churn there? Also, are we planning to focus on providing customer protection, which is more of a capital-intensive model?
So, yes, as I said the last year has been very transformative and very -- so many ups and downs for different kind of SMEs in different industries and different geographies. So churn is going to be on a higher side. It continues to be on a higher side and will continue to be on a higher side until the economy settles down to a better -- for good. Currently, a lot of people are -- people's businesses are being transformed into a completely new businesses. So as I told you in the first quarter earning call, many more subscribers came in especially for face mask, safety products and hygiene products. And many of them could sustain and many of them could not sustain. Similarly, you rightly said that many of the longer-term renewals, we'll come to know. And as and when their renewal will come, we will come to know if they have migrated to a different business or their current business has survived and thriving. So that pain would be known in this particular year over a period of next 9 months or so.
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. Over to you, sir.
Thank you very much, ladies and gentlemen, for joining our earnings webinar. If have any further questions, please feel free to reach out to our investor’s team, either on e-mail or on WhatsApp. Thank you, everyone. Stay safe and very happy new year to you all.
Thank you, everyone. On behalf of IndiaMART, that concludes this webinar. Thank you.