Indiamart Intermesh Ltd

NSE:INDIAMART

Earnings Call Transcript 2023-Q4

[Kushal Maheshwari, executive]

Good evening, ladies and gentlemen. I'm Kushal Maheshwari, Head of Investor Relations. And on behalf of IndiaMART InterMESH Limited, I welcome you all to the company's Q4 and FY 2023 earnings webinar. [Operator Instructions] Joining us today from the management side, we have Mr. Dinesh Agarwal, Chief Executive Officer; Mr. Brijesh Agrawal, Whole-Time Director; Mr. Prateek Chandra, Chief Financial Officer.Before we begin, I would like to remind you that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. Kindly refer Slide #3 of the earnings presentation for the detailed disclaimer.Now I would like to hand over the call to Mr. Dinesh Agarwal for his opening remarks. Thank you and over to you, Dinesh.

[Dinesh Agarwal, executive]

Thank you, Kushal. Good evening, everyone, and welcome to IndiaMART's quarter 4 and FY 2023 earnings webinar. We have already circulated our earnings presentation, which is available on our website as well as stock exchange's website. I'm sure you would have gone through the same and I would be happy to take any questions afterwards. I'm pleased to report that IndiaMART has delivered the consolidated revenue from operations of INR 269 crores in the fourth quarter and INR 985 crores in the full year, representing a year-on-year growth of 33% and 31%, respectively.Collections from customers for the entire year grew from INR 934 crores to INR 1,219 crores on the consolidated basis. Deferred revenue as on 31 March stood at INR 1,162 crores. This growth was primarily driven by increase in the average revenue per customer and the increase in the number of paying subscribers. In addition to this, the acquisition of the accounting software services segment in the first quarter of the last financial year has further contributed to this growth.Continued growth momentum in the paying subscription suppliers is largely driven by recovery across industry and demand for digital transformation due to accelerated Internet options as well as our product market fit. Total traffic on the platform and resulting unique business inquiries remained stable at INR 252 million and INR 22 million, respectively, 90-day repeat buyers also standing at approximately 53%, represents the continued trust on the platform.On the people front, we continue to build the organization. During the last year, we have added almost 900 new employees, taking the total employee headcount to 4,583. Going forward, further increase in employee base over the next year will be in line with the growth in the number of customers at IndiaMART as well as other businesses.Before I would conclude, I would like to say that we are happy to close the financial year with good growth on almost all important metrics. And we are optimistic about the next year, an improving macroeconomic environment, increasing Internet adoption by businesses and our strengthening value proposition will support the growth momentum of IndiaMART.Now I will hand over the call to Brijesh to update about the accounting business, especially with Busy Infotech. Thank you, and over to you, Brijesh.

[Brijesh Agrawal, executive]

Hi, good evening, everyone. Busy has delivered a billing of INR 17.7 crores in Q4 and INR 54.6 crores in the entire FY '23. This represents a year-on-year growth of 16% and 18%, respectively. The revenue from operations was INR 11.6 crores in Q4 and INR 43.3 crores in the entire FY '23, representing a Y-on-Y growth of 9% and 22%, respectively. The EBITDA for Q4 was at INR 0.7 crores and about 6% margins. And for the entire year, this was INR 10.3 crores with 24% margin. The net profit for the quarter was INR 1.4 crores. And for the entire year, it was INR 10.3 crores. Busy also generated positive cash flows from operations of about INR 6.2 crores in Q4 and about INR 20.6 crores during the entire year. As all of you are already aware, we had adopted Ind AS post our acquisition of Busy and hence, to facilitate comparison of FY '22 and FY '23 data. We have restated FY '22's data also as per in the year. The earlier numbers that you saw were reported based upon GAAP.So during the quarter, we also sold about 8,000 new licenses. And therefore, our total count of licenses sold is at about 3.31 lakhs at the end of March '23. The overall performance has been in line with our expectations and what we've communicated. We've met our goal of doubling the growth rate of the business in our first year of acquisition. And we hope to continue to do better in this year.With this, I'll hand over the call to Prateek so that he can talk about the financial performance here. Thank you, everyone, and Prateek please.

[Prateek Chandra, executive]

Thank you, Brijesh, and good evening, everyone. I will take you through the financial performance for the quarter and fiscal year ending March 2023. Consolidated revenue from operations was INR 269 crores in the fourth quarter and on a full year basis INR 985 crores, representing year-on-year growth of 33% and 31%, respectively. Deferred revenue for the year stands at INR 1,162 crores, an increase of 28% year-on-year basis. As these numbers include accounting software segment, which we acquired in this particular year, on a like-to-like basis, standalone revenue from operations for the quarter were at INR 256 crores and for the year at INR 939 crores, representing the year-on-year growth of 28% and 25%, respectively. And deferred revenue were, at INR 1,134 crores, representing a year-on-year growth of 25%.On a full year basis, consolidated EBITDA was INR 268 crores, representing a margin of 27%, while net profit was INR 284 crores with a margin of 24% and cash flow from operations was INR 476 crores. As of March 31, 2023, cash and treasury balance stood at INR 2,335 crores. Board of Directors have recommended a final dividend of INR 20 per share for this fiscal year 2023 and further recommended a bonus issue of 1:1, that is 1 new share for every 1 existing share, subject to the approvals from the shareholders.Thank you very much. We are now ready to take on questions.

[Kushal Maheshwari, executive]

Thank you, Prateek. [Operator Instructions]

[Operator]

First question is from the line of Vivekanand from AMBIT Capital.

[Vivekanand Subbaraman, analyst]

I have 2 questions, so the first one is on the collection. What we have seen is for the standalone business, the collection growth has been decelerating in the last 3 quarters and it's now 26% year-on-year. So just wanted to understand how to think about collections here? And I understand that fourth quarter has a lot of renewals. So could you please help us understand the way the renewals have moved from your top 1% top 10% versus the overall customer base? So that's question #1. The second question is on the margin side, we saw that the margins are still getting hit because of investments. So I just wanted to understand how to think about margins as we head into FY '24.

[Dinesh Agarwal, executive]

Thank you, Vivekanand. On the renewal side, as I've been guiding, we are probably about 90% of pre-COVID levels. And the good part is that platinum renewals and gold renewals continue to be very good, so gold and platinum renewals are/or the churn is less than 1% per month. However, between the silver side; the renewals would be split between monthly and the annual. And while on the annual side, we are running at about 30-odd percent, sir, which is about 3% per month and on the monthly side, about 5% per month. So that's the typical journey of SME. And we have seen that ever since the COVID has hit, at the bottom of the pyramid, while there is higher adoption for Internet, the churn continues to be high. While as the people move up the value chain and learned about Internet and moved to the gold and platinum subscription, the churn continues to actually be reduced.If you see our top 1% customers contribute about 17% of the revenue, which is about 2,000 customers giving us about INR 9 lakh per year and top 10%, which is about 20,000 customers. This has moved to now INR 2,36,000. I remember very distinctly this number used to be INR 1,80,000 at around COVID time.So we have moved from INR 1,80,000 to INR 2,36,000 in less than 2 years or 2.5 years or so. Even if you remember, the top 10% of the customers used to contribute around 40% of the revenue, which has gone up to the 45% and then 46% and then 47%. Despite the fact that last year, we have had the highest number of customer additions at the bottom. We used to do about 20,000, 22,000 customers per annum, if you see historically. And last year, we have added about 33,000 customers in the net customer addition.So I think if you look at overall basis, I think we are doing well. In terms of margin, quarter 4 is always because from the 1st of January, we do the annual reviews. So there's a sudden jump of 15-odd percent on the salary bill as well as since there is a higher collection, there's a higher incentive and higher expenses, which go upfront and that is why the margin is subdued. Otherwise, I think we will get back to that 28% margin soon. And then, as I have been guiding, we will try and target to reach 30% by the end of this year.

[Vivekanand Subbaraman, analyst]

Just one follow-up on the first answer. So Dinesh, on the renewals, you said they are 90% of pre-COVID levels. Is it 90% in platinum and gold or overall, I'm just trying to understand how to look at within years?

[Dinesh Agarwal, executive]

Platinum and gold -- I think it's all recovered well, more or less same as the pre-COVID level. It is only the silver customer where if you remember correctly, pre-COVID, silver, annual and multiyear renewals, we had gone to the best ever level of about 24%. Now we are still at least 10% higher, 30%, 35%, 40%. Similarly, on the monthly side, we had gone to best-ever of about 5% or 4% monthly. Now that is again trending at 5%. So these are the 2 differences that you can see at the silver level. On the gold and platinum, we are, I think, by and large, best-ever or near best-ever.

[Vivekanand Subbaraman, analyst]

Okay. Last one on the renewals, top 1% disclosure that you've been doing for the last 4 quarters. So here, we have seen that your top 1% ARPU has gone up from INR 790,000 to almost INR 880,000. So is this a result of price hikes or higher usage? How to think about this?

[Dinesh Agarwal, executive]

We haven't done any major price hikes in the platinum. What happens, people buy more city category combinations. And that is what is bringing this change. So people are used probably using more city category combinations in the platinum. And also, as I said, as people get to gold and platinum, they get more comfortable on how to spend money and how to. I think that is why you are seeing the top 1% ARPU on a quarter-on-quarter basis is no indication of any significant movement here or there. You should look at them more on a yearly basis, I would say, on a 3-year basis how things are trending.

[Operator]

Next in queue is Anmol Garg from DAM Capital.

[Anmol Garg, analyst]

So I had a couple of questions. Firstly, I wanted to understand if you can highlight some -- so among our investee companies, it's been almost a year since we acquired them. So if you can help me understand that how have IndiaMART helped them scale up by providing -- by cross-selling them through our sales team or by providing them access to our supplier base, if you can help me understand that how that has happened?

[Dinesh Agarwal, executive]

So you will see in our related party disclosure, we are working closely now with Vyapar for almost 18 months or maybe 2 years now. Whereas with every new customer onboarded at IndiaMART, we give them an option of free trial of Vyapar anywhere between -- earlier, it used to be 1 year and now it has been reduced to 6 months. And that helps Vyapar acquire a good number of customers every month. So that is one we definitely do. On the Busy side, I think we are still in the first year. I didn't want to touch too much and want it Busy to be digested well. And now I think we will do some more possibilities of cross data selling and things like that.And on other businesses, Mobisy is the only bigger business where there's enough size. Apart from that, M1xchange, we have tried doing a few things, not yet something not yet to be good enough to be talked about. And all other businesses are very, very small. We haven't yet done any cross-selling together. But we do a lot of mentoring to them through our board meetings and through our monthly and quarterly interactions as well as what kind of MIS do we maintain, what kind of -- what kind of board meeting practices do we follow? Because these are early-stage startups and they need to be nurtured and entered properly.One more thing is on the MonotaRO industry buying side. I think we have started to do some experiment, but those are very, very early. And I think because they have started to advertise on IndiaMART, get some billets and RFPs and then call their customer base and try to sell. We have also tried to do some deeper integration where their products could be visible on IndiaMART. But those are very, very early today.

[Anmol Garg, analyst]

Dinesh just a follow-up on the same. So do we provide the excess of our supplier database to these companies?

[Dinesh Agarwal, executive]

Our supplier database anyways is openly there on the website, all of our supplier database. It's openly there on the website. And if we provide any service to anybody, it has to be completely on the arm's length basis, whether it is any kind of an advertising, whether it is any kind of e-mail marketing or whether any kind of cross-selling. So everything has to be on purely and purely arm's length basis.

[Anmol Garg, analyst]

And secondly, from my side, just wanted to understand if there has been any change in the duration of collections to revenue convergence. As earlier that we have highlighted that we have been moving more towards monthly customers. So from that perspective, has there been any change from collections, how the collections are getting converted to revenue?

[Dinesh Agarwal, executive]

So Kushal, can you open the slide where 81% deferred revenue to -- no change actually. If you really see, I mean, 64%, 63% but no change.

[Operator]

Next in queue is Swapnil from JM Financial.

[Swapnil Potdukhe, analyst]

So I had 2 or 3 questions. First on the traffic side. So for the last 3, 4 quarters, we are seeing that the numbers have been kind of flattish. I understand that initially, there was an impact of COVID. But now even in 4Q, the things have not improved significantly. So do you think like if the traffic trends do not improve, say, in the next 2, 3 quarters, there could be a challenge on the supplier side or additions also?

[Dinesh Agarwal, executive]

Our supplier base was already 1.5 lakh before COVID. And then traffic jumped to almost 1 billion from 750 million. And we are currently on the same run rate, 252 million per quarter. So traffic has gone up by 33%. And it is only very recently that we have added some 50-odd-thousand suppliers. So I don't think -- and it's a -- one follows the other, because traffic is coming because there are enough suppliers and suppliers are coming because there are enough buyers. So now that we have added these 50,000; 60,000 suppliers. I'm sure in times to come that traffic should further improve. Also, the relevancy of matchmaking has improved is consistently improving. And that is reflected in our upsell towards gold and platinum as well as improving renewals in the matchmaking also. So if you see a unique buyer to supplier unique buyer to the total inquiries during the COVID, we had almost opened it up because we didn't have suppliers and we wanted every buyer to be served. But now we have done a lot of intelligence on the classification of buyer and classification of suppliers and products plus how to do intelligent matchmaking. If you type words like Hindi-English mix or Hindi written in Roman or those things are also recognized.So I think our effectiveness is improving. So it is not the number of inquiries that will drive. So I was expecting the traffic to be actually stabilizing, because if the entire traffic which went up because of the medicine demand and because of the safety products demand could have died down by now. And still the traffic is pretty much maintained. So that is because of the supplier base addition. So I'm not worried in the short run. Yes, if the traffic does not increase even after a year or 2, then yes, obviously, we will need to worry about it.

[Swapnil Potdukhe, analyst]

The second question is on the supplier addition side. Now you have been guiding that we will add around 8,000 to 9,000 suppliers every quarter. My question is like 4Q is typically the best quarter for you guys. And this quarter also, you have added only 8,300 suppliers. Would you continue to stick to the guidance for the next year as well or I mean, given that you did allude to the fact that the suppliers are the lower packages, the churn at the range is significantly higher even now. So just wanted to get your sense like is that 8,000 to 9,000 additions per quarter, maintainable even in scenario like this?

[Dinesh Agarwal, executive]

Yes, I think 8,000 definitely should be maintainable and because we are also expanding our footprint in terms of new acquisition. We have significantly reduced our footprint during the entire COVID time, whether it was our own people or whether it was the channel people, so all of that has been done in the past year or so. We continue to open new branches and new locations. So I think I would still try and see that anything upwards of 8,000 should be maintainable at least for this year. For next year, when the supply base, the base of the supplier becomes 2,40,000 or 2,50,000, then, we'll see how to address the overall churn because the churn happens on the total supplier base. But I think this year we will try and maintain 8,000 plus for sure.

[Swapnil Potdukhe, analyst]

And just one last question on Busy integration. Now you did allude to the fact that the growth in the business has doubled. My question is more on the margin side because last year, your margins were skewed because the 1Q being at around 42%, if I'm not wrong. But rest of the year the margins were pretty lower than your company average. So how are we trying to A, bring in incremental growth and maybe cross sales and all? And secondly, what are our targets for margin improvement in Busy? It's been more than 12 months, so I think we should be fairly -- be able to have some visibility on that side.

[Dinesh Agarwal, executive]

Yes, on the margin side, I can guide you because we have no targets on the margin side on the Busy. We have acquired this business by investing INR 500 crores. And I think our guidance to the Busy Management and Brijesh and everybody is that don't lose money, but don't worry about INR 5 crores versus INR 3 crores versus INR 7 crores. So I don't think we should measure and over the next 2, 3 years as long as they are cash positive and continue to improve on product and improve on sales margin side, we should not be worrying. On the sales side, Brijesh, can you help me?

[Brijesh Agrawal, executive]

So if you look at -- Swapnil, one, overall, we have adopted in -- in the last year. And therefore, when you look at margins, et cetera, on a Q-on-Q basis, we're still in that phase where we are trying to grow the business. And the growth in the overall collections will result into growth in revenues in the times to come. We have made investments behind people, specifically, so our teams, our customer support costs have all gone up. But we've also been able to see -- we've been able to double the overall growth in the billings in this year alone. Going forward, we are confident of improving upon this growth rate even this year also. So our principal focus is on looking at those underpenetrated geographies where we are still not present significantly. We will continue to spend behind building our strength in sales and distribution across all of this. I am sure that with more sales coming in with higher growth rates being achieved on the billing side of it. We should really go ahead and be able to achieve our overall objective of building up a valuable business behind which we invested this INR 500 crore.

[Dinesh Agarwal, executive]

Just to add, Brijesh, please highlight on the, how we are going to be the first desktop company to have native mobile version. No other desktop accounting software has a native mobile version.

[Brijesh Agrawal, executive]

In fact, as we talk about this, let me just also share with everyone a couple of things which are beyond these numbers that we are able to see. In the last year itself, we have now become the only the stock-based accounting software company in India, which have official mobile app that connects with your desktop accounting software. Now using this mobile app, you would be able to view data, which is residing in your desktop online. You would also be able to look at different kinds of reports that are available. And the users will also be able to now create quotations, sales orders, invoices and receipts in the mobile app. It will again sync back to the desktop. So this is -- this was launched in February '23 itself. And we think this is going to become a significant driver of customers actually looking at Busy over the other competing products.Number two, in this entire year, if you also see, we have now become the only company worldwide in fact, in the accounting class space, which offers 24/7 Customer Support. So you can call on our help line any time of the day, except for those 10 gazetted holidays, there will be somebody to assist you with all your requirements there. So in fact, we are building upon these individual fundamental pillars in the business, which will help us drive better growth in the business.

[Swapnil Potdukhe, analyst]

Just one clarification. In the beginning of the call, you mentioned that you expect margins to move towards 28% very quickly and then by the end of the year 30%. For a full year basis, would it be fair to assume that you would be somewhere between 28% to 29% EBITDA margins in FY '24?

[Prateek Chandra, executive]

Yes. So it would be difficult to comment on the specific percentages that we could achieve a year later. But our endeavor is if you see in this particular year, the margin primarily declined because we were in -- through investment phase. In fact, we were catching up on the investments that we haven't made in the previous few years. Going forward, we expect that we will be adding manpower in line with our customer growth. So certainly, given the growth in the revenues, the expenses will also go up in proportion to that. So certainly, from here on, you would start to see the margin improvements for sure. Whether it happens 1%, 2%, depends upon as to what the revenues are and what the expenses are in that quarter.

[Operator]

Next in queue is Ruchi Mukhija from Elara Securities.

[Ruchi Mukhija, analyst]

So my question is kind of building on earlier participant's question regarding the traffic in the unique inquires. So here, if you look at the ratio of total inquiries delivered to unique inquiries have changed the direction, it's been increasing for last 3 quarters. If you look coupled with about 20% plus growth in your Busy supplier base implies diminishing value of the platform for each paying supplier. Is that the right to way to look at? And I have -- I would say, a related question here. Pre-pandemic this ratio of your total inquiries are delivered to unique, and reached a top of about 6.4. Is that optimal? Or is that, I would say, a peak ratio where one needs to get worried about the traffic metrics?

[Dinesh Agarwal, executive]

Ruchi, I've already answered that the same thing as the effectiveness is increasing, our target is to bring this unique inquiry to the inquiry deliver to about 5 less than 5%, maybe 4.9%. We continue to make small changes, and that is why you see currently between 5.5 plus/minus 10% or so quarter-on-quarter. But our target is to bring it to less than 5%, because there's a relevancy and competition, go hand in hand. As the relevancy increases and supply responsiveness increases.If you do excessive matchmaking the competition can play counterproductive to the relevancy. That is why over a long period of time, in fact, it should rather trend down to maybe 4%, because the important part is to measure what is the buyer conversion on the platform.If the buyer came and gave an inquiry and what is his probability of actually buying it from the supplier who was introduced to him through the platform, either by he himself called or by way of RFQ.And that number has been slowly and slowly going up. Actually it fell down a little bit during the COVID, both the ways. But it has been slowly and slowly going up.We believe that at the buyer level if we can get to almost 50% conversions, where every buyer who comes and inquires on the platform, every other buyer ends up purchasing from the platform that should rather solve this whole problem.And that would also be improved the traffic also because they will tend to come more often for their other environments as their fulfillment rate goes up.As of now, based upon the sample that we do or the feedbacks that we received, we believe the conversion is anywhere between 30% to 40%. And we continue to measure that. It fluctuates because the measurement is only based upon the feedback of the buyers through e-mail.As we get closer to the -- closer to the transaction by way of our lead manager by way of our message center. I think we will have better ability to measure the buyer conversion. So in the near term, I'm not worried. Yes, but in the long run buyer and supplier traffic cannot move differently.They have to move in sync with each other. Yes, they may lag or lead to each other, but they have to finally be commencing. In the past also, if you see, the buyer traffic has taken a jump -- it's a function jump. One jump you can see between FY '16 and '18.And then there was some kind of stabilization. And then the second jump again that you can see. Every time there is a jump happens, there is a stabilization that happened. I believe that next year onwards, we should be able to focus more on buyer traffic.

[Ruchi Mukhija, analyst]

Thank you for that detailed answer. I get what you're trying to say that in a very short period of time, it's very difficult to match the growth frequency of buyer and supply. But over long period, they should run hand in hand. Here, what I'm trying to just assess is that at what level it turns worrisome for IndiaMART. How do look -- how you look for that signal or to trigger in your business where it's turning, I would say, concerning for you?

[Dinesh Agarwal, executive]

If I don't have an even 50 unique buyers for a supplier in a month, then probably I would start to worry. As long as I have anywhere upwards of one buyer and up to 2 buyers, I'm fine. Currently, we might be having closer to 4 buyers per unique supplier, per unique buyer. So I think I would still have at least 50% headroom from where we are. Up to 3 lakh suppliers, I should not be worrying.But yes, beyond 3 lakh suppliers, I should be worrying if the traffic does not move up.

[Operator]

Next in queue is Nikhil Choudhary from Nuvama.

[Nikhil Choudhary, analyst]

I have a couple of questions. First is on higher churn in silver category. So it's been like quite some time and churn continued to remain high. Earlier, there used to be a case where we have less number of employed per supplier in support category. So maybe the experience got impacted during those times, but we have filled those gaps. And despite of that, we are seeing higher churn. Can you give some color on that? Or is it due to higher pricing maybe?

[Dinesh Agarwal, executive]

Pricing, not necessarily because we are currently running at silver monthly pricing, which we were at in 2018-'19. In fact, possibly, we'll see if we can, whatever, INR 500 discount that we gave during the COVID, we should now recover that batch. So I don't think the pricing is a problem. The problem is how many suppliers can make use of the platform and how many suppliers don't find it useful. And it's anybody's guess how much of that is a platform problem versus people problem versus process problem and versus SMEs own problem. You are right.Why can't it be similar churn or even better churn numbers as pre-COVID, I would also be working towards that. That's the only thing that I can say. And the one little change that you can say is because the overall churn of the supplier is dependent on the first year mix versus second year mix versus third year mix.Currently, in the silver monthly, because during the COVID, we lost -- most of the customers that we lost was silver monthly customers. We were probably down to 30,000, 35,000 or so. Now in the last year or so, I think a lot more number has been added to the silver monthly-only.And the early churn is always high. And the same is true for the monthly customers -- annual customers also. Last year, we acquired so many customers which are coming up for renewal. So once the mix improves, then, also we can probably look at improvement.Another thing could be many of the customers who signed up during '21-'22, they were changing their businesses, because their current business was changed and they moved to a different business. Some of them are coming up for renewal and they might have changed their business line.So -- and that is the precise reason. Initially we thought that we need to have all the support system back and all the field support system back. And that is why we went aggressive on hiring, because if we are not able to take share of customer, there's no point acquiring more customers.I think the golden -- the good part is that the upsell to the gold and ARPU in the platinum continues to increase and which gives me confidence in the platform that the platform continues to work for people who are willing to spend time and energy on the platform.It might also be possible that a lot of people that we have hired in the servicing department are quite new and they are still on the field doing hands-on training. And some of that might also improve in times to come. I hope that answers.

[Nikhil Choudhary, analyst]

Sure, sir, very detailed answer. I think I have one follow-up related to what you mentioned about geographic expansion. We also read on the news that you expanded into Tamilnadu, some cities in Tamilnadu, Pondicherry also some of the Tier 2 and 3 cities. So how is the initial response? And can we say that a good part of or most of your paying subscriber addition is coming from this geographic expansion while more or less your lease existing geography paying addition is broadly flat. Any color on that?

[Dinesh Agarwal, executive]

Are you talking about IndiaMART or Busy?

[Nikhil Choudhary, analyst]

IndiaMART as well.

[Dinesh Agarwal, executive]

So IndiaMART was always there in Tamilnadu. I mean -- so we -- yes, we have expanded to, many Tier 2 and Tier 3 cities. Now we are present in places where we could not have ever had a proper full-fledged branch, but we have a channel, presence through channel partners. But we have increased our presence back into the metro cities also. There is a slide which tells you the -- I think the paid customer breakup in the Tier 1, Tier 2 and Tier 3. And that doesn't change much paying subscription suppliers.I think it was 56% in metro cities now it is 54%, so not much has changed. Yes, because we have gone to Tier 3 through channel partners. So the market which was totally untouched for us are totally being served on the telephone is now probably has gone -- gained 1% or 2% there. But I don't think much has changed there.

[Operator]

Next in queue is Amit Chandra from HDFC Securities.

[Amit Chandra, analyst]

So my simple question is, obviously, we have seen very strong collections. It has increased quite well. So what factors do you attribute to that? So maybe you can expand more upon the channel partners, because is it coming from higher sales from channel partners? Or you attributed to a lot to the sales efficiency or the aggressive sales investment that we have done? Or is it the existing suppliers are doing more actually going up the pyramid or subscribing to more longer term contracts or more monthly suppliers are getting converted to the platinum category. So if you can throw some light, which part is actually -- is actually leading to that?

[Dinesh Agarwal, executive]

Effectively all of our -- the answer goes is all of our, but let me see which one is the highest contributor probably. The highest contributor would be expanded customer base, because earlier we used to expand at max 15%, 16% of the customer. This time, we have expanded almost 20%, 21% on the customer base. So that obviously increases the collection.And as the people who came up for renewal, who were acquired, if you see our customer base has started to increase about October, November, December of 2021. So from October, November, December 2022, once they come up for renewal, a lot of them are met due to renewal.And at that point of time, they decide to upgrade, so many of them have upgraded. So probably one of -- most of the collections comes from 80% of the collections come from these upsells and renewals on the expanded customer base.So most of it would be -- so the first year growth the first 6 months growth or 9-month growth happens because we expanded the network, which we did not expand since March 2020. We expanded the network after 18 months. And then I think the later part of the growth on the collection started to come mainly from the renewals and upsells.

[Amit Chandra, analyst]

Okay. And on the price hike, what is our strategy here? So is it an annual price hike or we do it when we suppose.

[Dinesh Agarwal, executive]

We have 6, 7 different years of the packages. Silver Monthly is priced at currently INR 2,500 plus tax. Silver Annual is currently at INR 25,000 plus tax. And then TrustSEAL is priced for INR 40,000, INR 45,000 for 1 year and then INR 60,000 for 2 years and INR 80,000 for 3 years. Similarly, for Gold, Maximiser price and then multiple tiers in the star and leaders. So it's not that we do one price hike at across all the products at one go. We generally try and see whenever we feel like there is traction in one particular product or so then we make small changes in price sometimes in Platinum one segment or sometimes in TrustSEAL, sometimes in Maximiser. On the bottom of the pyramid, we do maybe one price hike once in 3 years. And as I said, this price hike that was done in 2018 was actually reverted back in 2020. So we will see about that. So there is no significant trend on price hike.

[Amit Chandra, analyst]

Okay. And sir, my last question is on the Busy. So if you can throw some more light on what is the cross-sell opportunity? I know there's a huge cross-sell opportunity that you talked about. So what is the success that you have got in terms of cross-sell? And how many of our existing suppliers are using Busy?

[Dinesh Agarwal, executive]

Essentially, as we said, the first year for Busy was primarily focused on stabilizing the acquisition itself. As you understand, the people, the channel, they all have their own questions and worries. We still think that Busy, as a business, initially, we would want to focus on growing that business on a standalone basis. Second step, we will take some assistance in terms of getting leads for acquiring additional customers for Busy from IndiaMART. And I think it's only in the step after that, we would start looking at possibilities of cross-selling and upselling. As of now, a year or 2, we would still continue to focus on growing Busy first before looking at these cross-sell opportunities for IndiaMART coming in from Busy.

[Operator]

Next in queue is Sanil Sarang from RW Investment Advisors.

[Sarang Sanil, analyst]

I have 2 questions. So the first one is during our last concall, you had mentioned that we'll be targeting an ARPU growth of 4% to 6% for next year, while early last month on the media, you had pushed this number a little higher. So would this be coming from price hike or the adoption of more cities category by the paid suppliers like you noticed with the platinum customers?

[Dinesh Agarwal, executive]

Both, I think there is no -- I mean I can't break it up between the 2. Price hike is easier to break up. But some people taking more number of city combinations or more number of categories versus the mix change also, because last year, most of the customers were at the bottom of the pyramid. Now they will move up to the TrustSEAL and others or even in the second year. So as the customer aging improves, their revenue also improves, because of the typically 20% of their customers upsell when it comes to renewal. So I think it's a blend of 2, 3 things that brings us about 5%, 7% -- 5%, 6% ARPU growth.

[Sarang Sanil, analyst]

Okay. So you're confident of 5% -- 6% to 7%. So my other question is on the registered buyers slide. Here my understanding is just a customer sign-up puts me on the registered buyout figure. But only once they submit an RFQ, I get into the active buyer figure, right? I completely understand how you're optimizing the business inquiry side through algorithmic changes and all. Here there is a different situation where paid suppliers are coming in from one side. But the ones interested in submitting an RFQ on the buyer side is just stagnant for the past 3 years, right? So are we planning to improve this engagement metric in some way or are we just fine?

[Dinesh Agarwal, executive]

Yes. Those who have submitted any RFQ in the last 12 months, pre-COVID, it used to be at 30%. And now it is at 37%, 38% -- 30% means 30 million. Now it is at 37 million, 38 million. So they are also the same growth as the unique business inquiries growth. I think the same question comes back to the increase in number of buyers. As I said, another 50,000 customers, if the buyers don't increase, I think I'm not worried. But as we add one lakh customer, then buyers must increase and it should increase because otherwise, the customers will not increase.

[Sarang Sanil, analyst]

But my understanding is last 3 years, the paid suppliers have gone up significantly, but the active buyers.

[Dinesh Agarwal, executive]

Only last one year paid suppliers have gone up significantly. The paid suppliers were 1,50,000 on 1,47,000 on March 2020, and they were 1,47,000 on October 2021. And if you really see the paying suppliers have been growing at 15%, 16% CAGR versus the buyers have been growing at 20-odd CAGR, so buyers have been growing much higher rate. If you go to the unique inquiries slide. Yes. So that's been growing at 21% CAGR. So I think we are fine there.

[Sarang Sanil, analyst]

So you're not worried about the active buyers' number not increasing?

[Dinesh Agarwal, executive]

Not as of now, not as of now.

[Kushal Maheshwari, executive]

Thank you very much. It has been a very engaging session. I would now like Dinesh to give closing -- concluding remarks.

[Dinesh Agarwal, executive]

Thank you, ladies and gentlemen, for joining our quarter 4 and FY 2023 conference call. We have tried to address your queries in the time available. If you still have questions, please feel free to tag with our Investor Relations team. Their contact details are available on our website. And I wish you all a very good next financial year and we'll see you soon in July. Thank you.

[Operator]

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