Just Dial Ltd
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Earnings Call Transcript

Earnings Call Transcript
2022-Q4

from 0
Operator

Good day, and welcome to the Q4 FY '20 Earnings Conference Call of Just Dail Limited. We have with us today from the management, Mr. VSS Mani, MD and CEO; and Mr. Abhishek Bansal, CFO. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Bansal, CFO. Thank you, and over to you, sir.

A
Abhishek Bansal
executive

Hi, everyone. Welcome to Just Dail's Earnings Call for Fourth Quarter of Fiscal '22. Our operating revenue for the quarter stood at INR 166.7 crores, declining 5.1% year-on-year, but was up 4.9% sequentially. Our adjusted EBITDA, excluding ESOP expenses, stood at a minor loss on account of increase in employee costs and advertising spends.

Our employee expenses increased 22% year-on-year, led by approximately 20% year-on-year increase in headcount across sales, technology, content and marketing functions. Our advertising expenses stood at about INR 8 crores for the quarter. Other income stood at INR 35.2 crores and overall net profit stood at INR 22.1 crores. Coming to business update, FY '22, as we all know, started with onset of second wave of COVID-19, which had significant impact on SMEs across the board, especially in B2C services.

However, situation started stabilizing from third quarter, and we have embarked on aggressive monthly plan monetization, coupled with ramp-up in sales hiring. During 4Q, we signed up about 71% customers on monthly plan basis, which was just about 23%, 24% last year. Our sales headcount has grown 23% on Y-o-Y basis and 26% sequentially during the quarter.

We have seen monetization continuously improved significantly on a month-on-month basis since November, December. Our paid campaigns grew by about 24,100 campaigns to 461,500 total campaigns at the end of the quarter. While paid campaigns are still about 14% short of pre-pandemic levels, this quarter-on-quarter addition has been highest over the past several quarters, and we should be closing this gap soon and growing further.

Our 4Q collections stood at about INR 179 crores and it witnessed 19% quarter-on-quarter growth despite 70%-plus deals coming on monthly plans, where upfront collections are typically lower. Consequently, deferred revenue witnessed 3.8% quarter-on-quarter increase to INR 338 crores. Now, since the mix of upfront versus monthly plans is changing, in order to assess how our monthly sales is panning out, we calculate or we measure what is the total annual collections that we expect to get from all the sign-ups that we have done during the quarter, be it upfront plans or monthly plans.

We call it realizable value, which is essentially total money that we have received from upfront plans right now and money that we expect to be received via monthly plans over the next 1 year. This realizable value of sign-ups that we did in 4Q has witnessed a healthy 24% year-on-year growth and 29% sequential growth. So this, in a way, acts as a leading indicator for us to see where our collections and future revenues are headed.

Our monthly ECS collections, which is money received via direct bank debates for monthly plans stood at about INR 29 crores for the recently concluded April month versus it had reached a low of INR 13 crores back in October '21.

Further, the recent ramp-up in sales hiring to -- should aid our monetization in coming months as we should see improved productivity of new hires as they get tenured. In a nutshell, as far as reported, P&L is concerned, our top line reflects monetization performance of last few quarters, which were COVID impacted, whereas most of our costs essentially hit our P&L immediately. As we see our top line ramp up in coming quarters, we should see profitability improving as well. Overall, cash and investments stood at about INR 3,820 crores as on 31st March.

Coming to operational highlights. Traffic stood at 144.8 million unique users for the quarter, growing 12.2% year-on-year. On strength of database, total listings now stand at about 31.9 million. Overall, as I see, expenses have picked up in FY '22 led by resumption in hiring for sales and various new initiatives and resumption of our advertising.

Recent recovery in sales should reflect in FY '23 revenue, which would aid recovery of profitability too. The core business is clearly on a recovery path, and new initiatives are currently under various stages of development and user experience enhancement. With this update for further discussion, we shall now open the floor for questions.

Operator

[Operator Instructions] The first question is from the line of Pranav Kshatriya from Edelweiss.

P
Pranav Kshatriya
analyst

Abhishek, a couple of questions. Firstly, you talked about the revenue growth. So should we expect this revenue growth to start flowing in from the Q1 FY '23 itself? Or the productivity, it will take some time. And secondly, for this quarter, the operating expenditure was roughly INR 170-odd crores, which was broadly INR 140 crores to INR 150 crores increase previously. So should we expect this operating expenditure to stay at this level or there is some one-off? And how should it trend considering you have added a fairly large number of employees to your workforce?

And one last question from my side will be on JD Mart. Can you tell us where do the things stand in terms of the monetization of that platform? And at least on various platforms, you don't really see traffic for JD Mart really picking up. So what is the status there?

A
Abhishek Bansal
executive

So Pranav, on your first question regarding revenue growth, yes, revenue growth will start showing improvement from coming quarters as soon as 1Q also, assuming we are able to sustain the recent momentum that we are witnessing.

So this particular quarter also, as can be seen, there is a sequential growth in revenue that we are already witnessing. And the most recent month run rate is also better than the quarterly run rate.

On your question around operating expenses, so operating expenses definitely have picked up because of significant hiring. So our sales head count, which had gone to as low as about 6,800 employees 2 quarters back, that is now 10,000-plus. And the reason of ramping up this particular sales force is that we are seeing situation stabilize on the ground, and we are also seeing SMEs willing to come back on an advertising speed.

So while hiring has happened in a chunky manner, this should give us good dividends going forward. And on your query around JD Mart, so JD Mart currently draws traffic in 2 ways. One, the dedicated portal itself its traffic. Second, on Just Dial, also, now we have all the B2B products on Just Dial platform itself.

Since Just Dial has a very strong brand affinity, it draws a very good amount of organic traffic. So out of total about, whatever, 145 million users that we had last quarter, decent 7%, 8% of that did come for JD Mart related new pages that we have on both platforms combined.

Apart from that, at this point of time, we have over 1 million rich catalogs with about 15 million unique products. So as far as content enrichment is concerned, traffic is concerned, there is a steady improvement on a quarterly basis. On even monetization, we currently have a dedicated 400-plus member team, which focuses on our B2B monetization initiatives, a combination of both telesales as well as feet on street. So as we are seeing overall business come back to normalcy, we should see good contribution from B2B in coming quarters?

P
Pranav Kshatriya
analyst

Okay. But if I can just have one follow-up question. On my question on cost, can you just tell us that how much of your G&A was spent on the advertisement? And how do you plan to spend it? And that's why I was looking more from a run rate cost basis that how should we see the cost going from INR 170-odd crores in this quarter in the upcoming quarters?

A
Abhishek Bansal
executive

So on the cost side, we spent about a total around INR 7.5 crores, INR 8 crores on advertising in last quarter. For coming fiscal, we have budgeted about, say, INR 60 crores, INR 65 crores as full year advertising. Subject to this particular budget going up depending on how we are faring on monetization, depending on how our newer initiatives are panning out.

And at any point of time, we would take sort of calibrated approach in terms of core business. We'll see more of digital spends. New initiatives, we'll see ATL campaigns as and when they are at an optimal stage.

P
Pranav Kshatriya
analyst

Okay. So -- and except advertisement cost, should we expect to stay at the current level given most of the hiring is already done?

A
Abhishek Bansal
executive

So there will be some hiring that we will continue to do. So there are certain cost optimization activities also that we are taking -- undertaking. So at this point of time, the thought process is that we want to chase growth, as we saw last year as well even in a COVID-impacted year where our top line went down by about 27%, 28%. We were still able to have 25% plus EBITDA margin.

So we do have cost levers which can be optimized. But at this point of time, when things are picking up, we would want to ensure that our monetization top line picks up, our newer products get their fair share of investments. And at opportune time, obviously, profitability should return for the core business as well as newer initiatives.

P
Pranav Kshatriya
analyst

Okay. One last question from my side. If you can comment on the partnership with Reliance Retail ventures -- or sorry, the synergies with the parent that is Reliance Retail Ventures Limited. Any plans on that, which you can talk about?

A
Abhishek Bansal
executive

So as we all know, RRVL already is on our board. We actively engaged with RRVL and even RIL leadership teams for various our initiatives. For example, JD shopping is 1 area where we are very closely working with them.

Now as far as synergies are concerned, there are certain newer initiatives such as our reseller plan that we are learning that RRVL and even Jio platforms have successfully implemented. So we would want to replicate the same for JD monetization as well. So some of these particular strategies are being closely worked on by us as well as RIL teams.

Operator

The next question is from the line of Vijit Jain from Citi.

As there is no response from the current participant, we move to the next question from the line of Naman Jain, an individual investor.

N
Naman Jain

I have a couple of questions. First is around the 2 products that we spoke about in the last call as well. One is JD shopping and the second is JD exports. So wanted to know what's the update on JD exports? How has it been picking up?

And on JD shopping, I noticed that in the Just Dial app, there is a specific tab for shopping. Now when I click on that tab, you can select or search for an item or a product, but then the search results will show you all the nearby shops who are selling that product. The option is to call that shop and place an order. Is this how we plan to move to e-commerce? Is this the way our strategy is vis-a-vis other players, e-commerce players, where you can directly place the order with -- from the price and the app itself? So this is the first question, if you can answer this first, please?

A
Abhishek Bansal
executive

Sure. So Naman, firstly, on JD shopping, what you see on the live platform is an existing avatar, which is essentially search. It primarily does not have transaction capabilities. However, what we are doing is hyperlocal e-commerce. So at this point of time, onboarding of vendors has started in 3 cities, and shortly over next few weeks, we would have the user interface as well.

So the way it will work is that we will onboard vendors. Those particular vendors will share their inventory, pricing, et cetera. And then in a phase-wise manner, both in terms of categories and geographies, we would open it up for users to place orders, get it fulfilled via either third-party logistics or by vendors themselves. So that is how JD shopping will be.

Coming to JD experts. At this point of time, there are multiple services pertaining to repairs category and test control services, which are live in multiple cities. At this point of time, the focus is on optimizing user experience. So this is recent feedback that we have got about -- most of the users have rated the service 4.2, 4.3 on a scale of 5. So we want to ensure that we have good coverage, good user experience before we are able to scale it further. So that's the brief update on both these products.

N
Naman Jain

Okay. And JD shopping, when do you expect it to go live even on a trial basis for the customers?

A
Abhishek Bansal
executive

So sometime in 1Q or early 2Q is what we are expecting.

N
Naman Jain

Next year?

A
Abhishek Bansal
executive

This year, 1Q '23, the ongoing quarter or the...

N
Naman Jain

The ongoing quarter? Okay.

A
Abhishek Bansal
executive

Yes.

N
Naman Jain

Okay. Okay. And the second question is -- so we -- our promoter also has a company called JioMart, which provides not exactly e-commerce facility, but you can place orders online and all. So would we be competing in some way with them? Or how is it going to be? Or are we mutually exclusive in that sense?

A
Abhishek Bansal
executive

So in a way, we would be mutually exclusive because first of all, JioMart operates in, say, a different set of categories. The primary set of categories are, say, grocery-related. Second, most of the sales that are done on that platform are primarily first-party sales.

It's not the mom-and-pop stores or SMEs that are selling via that platform, whereas Just Dial will be a pure 3P, third-party marketplace, where any SME can list their products on the platform and sell through us.

N
Naman Jain

Okay. Okay. Just one more clarification or a follow-up on JD shopping. When we plan to do a hyperlocal delivery, Reliance has also done acquisition of Dunzo. So would that help us in any way for the logistics in terms of partnering? Or are we going to have our own?

A
Abhishek Bansal
executive

So we are integrating with multiple logistics partners, including Dunzo, Grab a third-party hyperlocal logistics partners as well, such as Shadowfax, Shipyaari. And at the same time, we would give option for vendor itself to deliver also, in case vendor is willing to do so. So it will be a blended model wherein logistics will be either third party or vendor himself can do it.

N
Naman Jain

Okay. And any take on the e-commerce policy that is in the works? What is our take on that? Where are we -- are we aligned to it? Or as per whatever discussions have been held till date?

A
Abhishek Bansal
executive

So broadly, as we understand that the new e-commerce policy wants marketplaces to operate as pure 3P marketplaces and not as a blend of 1P versus 3P. So Just Dial -- as Just Dial, since we do not intend to hold inventory in the first place, so for us, it's a simple straightforward thing. And we would definitely be complied as a third-party marketplace.

Operator

[Operator Instructions] The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.

V
Vivekanand Subbaraman
analyst

I hope I'm audible. A couple of questions. One is the unique visitors that we have now 145 million. This had gone up to around 157 million pre-pandemic. Is there any change in methodology of the reporting of unique visitors? Or am I missing something in terms of the recovery? That is question one.

Secondly, if you could help us understand the split of campaigns by volume, the paid campaigns by volume across Tier 1 and 2 -- top 8 cities and the rest of the country -- sorry, top 11 and rest of the country and revenue contribution as well?

A
Abhishek Bansal
executive

So Vivek, firstly, on unique users, there is no change in methodology. Last particular quarter, 145 million that we had, a couple of things to be noted. One, our advertising spends, especially on digital used to be much higher when we were at 157 million to 160 million run rate. So at that point of time, we were spending approximately INR 17 crores, INR 18 crores a quarter; whereas on digital, we have spent broadly about INR 7 crores in last quarter.

Second -- so our fourth quarter specifically, January month was indeed impacted due to third wave of COVID. While it did not impact our monetization much, but second half of Jan was partly impacted as far as traffic is concerned.

As we are getting into first quarter of this year, summer months anyway tend to be strong. We are seeing good recovery in our organic traffic. So we should be back to pre-COVID peak levels also shortly.

On your second question around campaign split. So top 11 cities, they had about 44% contribution to volumes and about 64% contribution to revenue.

V
Vivekanand Subbaraman
analyst

So on the traffic -- so when you say that you have spent INR 7.5 crores in A&P this quarter, was it for the Just Dial app? Or was it for above the line spending on -- to support JD Mart?

A
Abhishek Bansal
executive

So it was primarily digital campaign. So if you are searching for, say, packers and movers in Bangalore, the results that you see on third-party search engines. If someone clicks on those particular results and lands on our platform, that type of advertising is primarily what we did during the quarter. So that -- and that would be across categories, would be for B2C as well as B2B categories.

V
Vivekanand Subbaraman
analyst

Okay. And what about the A&P that you have envisaged for the next year? You said it's INR 60 cores, INR 65 crores. So will -- is it fair to assume that most of the A&P will be for the new businesses rather than for the core business?

A
Abhishek Bansal
executive

So the INR 60 crores, INR 65 crores that I mentioned, a good chunk of it we have planned for core business itself because we believe core business does require 7% to 8% of top line to be spent on advertising spends. As far as newer initiatives is concerned, those will be calibrated as and when we think that there should be ATL spends for the sales. So this particular INR 60 cores, INR 65 crores can actually go up basis how newer initiatives are panning out.

Operator

The next question is from the line of Vijit Jain from Citi.

V
Vijit Jain
analyst

Can you hear me?

Operator

Yes, sir, please proceed.

V
Vijit Jain
analyst

Sorry about earlier. I think my sound was on mute. Yes. My first question is just a clarification. You said the 4Q collections were at INR 179 crores. Did I get that right?

A
Abhishek Bansal
executive

Yes, that's right.

V
Vijit Jain
analyst

And sorry, I don't have the trend rate on that. If you could give the trend rate on that, that would be great.

A
Abhishek Bansal
executive

So 4Q collections of INR 179 crores were up about -- 1 second -- so they were up about 19% sequentially and they were down about 10% on a year-on-year basis.

V
Vijit Jain
analyst

Got it. Yes. That's because of the mix, I guess.

My second question is just on your relationship and the plans with Reliance Retail. If I think about it in this way that you could do B2B business, which is, I guess, what you are referring to when you mentioned the reseller opportunity, and then the B2C services, e-commerce and then the whole shopping thing. How would you prioritize those in terms of what is most important for you guys to do in collaboration with them first? I mean is there a priority order there? Or the plan is to hit all those 3 things in line and align them kind of with what Reliance Retail is doing?

A
Abhishek Bansal
executive

So Vijit, the first priority, obviously, is to get the core business, which is our cash cow back on track ASAP. And as I mentioned, the traction is already very much visible. Now the reseller plan that we propose is mainly to be able to support this particular core business itself in terms of reaching out to as many SMEs as possible across India.

While so far we have been reaching them out via our own employees, we think that we could get a much wider reach if we get freelancers to actually get us customers. And our teams shall primarily focus on farming those customers to higher levels. As far as other initiatives are concerned, we have initiated them. Some of these projects are highly promising, but they will take time for user experience to get stabilized, especially considering there are vertical players out there. So both things will happen simultaneously with dedicated teams in place.

V
Vijit Jain
analyst

Abhishek, one just last clarification from my side. I think you mentioned 44% contribution to revenues and 64% to campaigns for Tier 2 and below cities, right? 44% to revenues and 64% to campaigns?

A
Abhishek Bansal
executive

No -- sorry, 44% contribution to campaigns and 64% to revenue by top 11. So top 11, they have a higher share to revenue 64%, but they form 44% of -- by volumes.

V
Vijit Jain
analyst

Got it. Yes. And just sorry, one final question if I can put sandwich at in. So you said 400 member B2B-focused sales force team. I think last quarter, this was about 180 to 200. And you have added about 2,000 employees in this quarter. Can you give a break of where your tech staff currently stands at, total tech staff? I think it used to be 300, 350 about a couple of quarters back?

A
Abhishek Bansal
executive

Yes. So the tech team also has been ramped up. Total team strength is about 450-plus employees right now. .

Operator

The next question is a follow-up from the line of Pranav Kshatriya from Edelweiss.

P
Pranav Kshatriya
analyst

Yes. I just want to know that you talked about INR 60 crores, INR 65 crores. Will bulk of that be spent on the digital campaigns? Or you want to continue some of that because? I remember you had not spent the entire amount which was allocated for JD Mart during IPL. So any color on that?

A
Abhishek Bansal
executive

So Pranav, at this point of time, we have a full-fledged marketing team, which specializes both on digital as well as ATL advertising. So the core business, while we think that digital gives decent good ROI, but we would not be averse to ATL spends as well. So I'm sure 50%, 60% of this will surely go towards digital, could be higher also for core business.

P
Pranav Kshatriya
analyst

Okay. And my second question is regarding -- you talked about this committed revenue, which has grown. Can you give us Q-on-Q how it has grown just to get a sense on what is the traction in that? Because that is not getting reflected in the unearned revenue anymore.

A
Abhishek Bansal
executive

Right. So on a quarter-on-quarter basis, this particular committed revenue or what you call as realizable value grew about 27% quarter-on-quarter.

P
Pranav Kshatriya
analyst

And on a Y-o-Y basis?

A
Abhishek Bansal
executive

On a Y-o-Y basis, it had about 19% growth.

P
Pranav Kshatriya
analyst

Okay. And I mean -- because there is no history of this, I mean, should that be considered as the indicator of what could be potentially the revenue growth?

A
Abhishek Bansal
executive

Right. So the key reason of discussing this particular metric was that the 2 metrics that so far get disclosed, one is the P&L revenue. That is obviously a sort of lag indicator. That reflects what we sold over the past few quarters?

And second is collections, which we can even calculate by our deferred revenue and revenue metrics, and collections in a monthly plan environment does get affected.

So my sense is that this -- we -- to evaluate the monthly performance of our business actively track this particular realizable value metric. If this metric continues to sustain with the kind of growth trends that we are seeing, definitely, we should see our top line growth also converging to these particular growth rates.

Operator

The next question is a follow-up from the line of Vivekanand Subbaraman from AMBIT Capital.

V
Vivekanand Subbaraman
analyst

Yes. Just a couple of questions. So extending the discussion on the realizable value, would you have a sense of where you had reached in terms of realizable value prior to COVID? And how far are we from that level?

A
Abhishek Bansal
executive

So prior to COVID on a quarterly basis, our realizable value used to be about INR 235 crores a quarter. And for last quarter, we did about INR 230 crores to INR 232 crores. So almost very close in that sense.

V
Vivekanand Subbaraman
analyst

So what you are saying is that our revenue number should also now soon go back to the pre-COVID levels, say, sometime in the first quarter itself? Is that a clear assessment given this strong trend in improving realizable value?

A
Abhishek Bansal
executive

Okay. So let us understand this conceptually. So if I sell a upfront payment plan to a particular customer today, I get the entire money upfront. And if it's typically an annual contract, I recognize it as revenue over next 4 quarters -- over next 12 months. If I sell it as a monthly plan, I get, say, 2 months of down payment and the rest, 10, 11 months -- 10 months of payment come via monthly ECS every month.

However, accrual of that particular money also happens on a monthly basis. So whatever trends we are seeing, it will not reflect immediately as that particular pre-COVID run rate over next quarter. It will happen over next, say, 3 to 4 quarters. There should be a quarter-on-quarter improvement, assuming these particular growth rate sustained for coming months as well.

V
Vivekanand Subbaraman
analyst

Okay. I think I understood a bit better. And if you talk about -- you spoke about what percentage of the subscriptions are monthly. I think you said 71% versus 27%. And is this on an overall paid campaigns basis or the new paid campaigns that you're adding, just to clarify on that?

A
Abhishek Bansal
executive

So 71% was whatever new sign-ups that we did in last quarter. On overall paid campaign basis, obviously, it will take time for that percentage to increase. That currently stands at about 32%, 33%. So of the 461,000 paid campaigns that we have, monthly payment base would be 32%, 33% out of that, which had gone to, say, about 22%, 23% 2 quarters back.

V
Vivekanand Subbaraman
analyst

And are there any discounts still that the SMEs are getting on Just Dial versus pre-COVID because...

A
Abhishek Bansal
executive

No. At this point of time, we have withdrawn almost all discounts. So what we encourage the customer is to sign up on a monthly plan basis, and when sign-ups are happening on a monthly plan basis, typically, there is hardly any discussion that happens on discounts.

V
Vivekanand Subbaraman
analyst

Okay. And okay, this is useful. And when you look at the realization on that you report, that number is around [ 3,600 ] right? And compared to -- prior to COVID, it was around [ 4.7, 4.83 ] right? So why is it that the average realization is lower now despite there being more discounts? Is it because of the mix trade? Or is there any other factor here that we need to consider?

A
Abhishek Bansal
executive

So the realization -- quarterly realization that you are calculating is basis reported quarterly P&L revenue divided by number of campaigns. Now we have to understand that the reported revenue is basically coming from customers who signed up over last 4 quarters because revenue recognition happens over the tenure of the contract.

The realization that we see is basis, what is the realization of customers that I signed up in last quarter. So what I signed up in last quarter was about INR 18,000 on an annual basis, which was similar to pre-COVID levels. As we move into future quarters, when revenue improves, at that point of time, this particular realization will start improving.

V
Vivekanand Subbaraman
analyst

Understood. This is very clear. Just one last question, if I may. So the 13,300 head count that we have, would you have a sense of the split across the core business, JD Mart, Exports and Shopping at an aggregate level, not as the sales?

A
Abhishek Bansal
executive

So primarily, we do not segregate it by business because there are certain functions which are common across businesses. So out of the total sales team, as I mentioned, about 400 are dedicated for JD Mart. Then in our technology and content teams, there are certain teams which work dedicatedly on newer initiatives. So right now, I wouldn't be in a position to specifically mention number for core versus non-core employees.

Operator

[Operator Instructions] Next question is from the line of Ameya Karambelkar from Kotak Investment Advisors.

A
Ameya Karambelkar
analyst

So this quarter, we've seen a strong sequential addition of around 24,000 paid campaigns. So on a sustainable basis over the next 3 to 4 quarters, can we sort of see that you can maintain a 20,000 campaign addition per quarter kind of run rate?

A
Abhishek Bansal
executive

So Ameya, this particular quarter, yes, campaign addition was strong considering we aggressively sold on monthly payment plans, and that is getting good traction. Assuming we continue to get similar traction, yes, it is very much possible. So our peak campaigns were at about 536,000. So if we want that we exit the year at that particular level, definitely, we should be able to add at that particular run rate.

A
Ameya Karambelkar
analyst

Got it. And secondly, of course, this quarter, because of the strong hiring that we did, margins were sort of impacted. But on a more normalized basis, what are the kind of margins that you're sort of aspiring for over the next 3, 4 quarters? Any sense or any perspective on that would be helpful.

A
Abhishek Bansal
executive

See, I wouldn't comment on next 3 to 4 quarters. Historically, last, say, 3 to 4 years, as everyone can see, we have -- the core business has delivered 25% to 30% EBITDA margin. So 30% adjusted EBITDA margin is very much doable by this particular business.

This particular year, since we are on an aggressive hiring spree, margins will be relatively subdued also because of newer initiatives that we are undertaking. But as monetization ramps up, I think margins owing to operating leverage that the business has should start to see recovery as well.

Operator

[Operator Instructions] The next question is from the line of Abhishek -- sorry, [ Drishti Poddar ] Dhunseri Investment.

U
Unknown Analyst

Can you hear me?

A
Abhishek Bansal
executive

Yes, please go ahead.

Operator

Yes, mam, please proceed.

U
Unknown Analyst

Sorry, sir, I don't know if I missed this. I just wanted to understand a bit on the strategy and the synergies with the parent that are there any merger prospects? Or how does Reliance Retail want to take this forward? So just wanted to understand in more details regarding the synergy benefit and the strategy on that side?

A
Abhishek Bansal
executive

So Drishti, as I mentioned in my earlier comments, at this point of time, RRVL's involvement is primarily at Board level. Just Dial continues to operate as an independent listed entity. We are in active discussions on what all synergies can be exploited.

Now the key focus is to get the core business back on track as soon as possible. In the core business to aid our particular monetization, we are in the process of evaluating and rolling out reseller model. This particular reseller model has been successfully implemented by RRVL and Jio platforms. So that should help us reach out to much more number of SMEs pan India, which would help our monetization.

Secondly, there are certain newer initiatives that are being undertaken such as hyperlocal e-commerce. So in those particular initiatives also, we could gain from synergies in terms of the SME reach that Reliance Retail platform has.

Operator

The next question is from the line of Naman Jain, an individual investor.

N
Naman Jain

Just one more question from my end. I wanted to know how do we plan to utilize the large cash reserve that we have, where exactly the company plans to utilize it because it's been already clarified that it is not going to be distributed to the shareholders. So how is it going to be utilized?

A
Abhishek Bansal
executive

So Naman at this point of time, the cash balance that we have, the thought process is that whenever this cash is required for initiatives pertaining to product building, content enrichment and marketing of some of our newer initiatives, part of it will get utilized. The good part is the core business is free cash flow generating. So part of that support can directly come from incremental free cash flows that core business will generate.

So at this point of time, this is what we have in mind in terms of using this part of this cash for newer initiatives. And as and when in case there is any change in situation in future, we will let you know.

N
Naman Jain

Okay. So does this also mean that -- suppose when you launch the hyperlocal product that we have you may start offering some discounts to attract customer base or gain market share?

A
Abhishek Bansal
executive

See, at that point of time, we will evaluate whether, say, some bit of discounting versus advertising, what is advisable. From day 1 as a company, we are clear. We don't want to give incentives solely to buy consumers such that today the consumer is coming, seeing those discounts and incentives. And tomorrow, as soon as discounts disappear, those users disappear. So a blend of good ATL advertising and mix of discounting to get users to use our platform would be a prudent strategy.

Operator

The next question is from the line of Mohit Motwani from Edelweiss Securities.

M
Mohit Motwani
analyst

Am I audible?

Operator

Yes, sir, please proceed.

M
Mohit Motwani
analyst

So my question is on JD Mart. So we have had the setup for JD Mart where you have invested in technology, have invested in sales and ad spends and everything. But just wanted to understand where is the strategy like -- what is the strategy for taking this forward? Is it that we are finding it difficult to penetrate the B2B services market? Because clearly, some of our competitors are making good traction with many SMEs coming on board.

So where is the difficulty line currently for you? Is it like on the pricing or on the penetration of being having difficulty in penetrating this market?

I understand that in some of the previous calls, you said that the idea is to bring them as a customer of either just that or JD Mart. But having a separate setup or a company setup a complete website for this, is there any strategy for JD Mart in particular?

A
Abhishek Bansal
executive

So Mohit, there is no specific difficulty in monetizing, et cetera, for JD Mart. We need to understand that B2B category contributed about, say, 20% of Just Dial's revenue. And while we were implementing JD Mart, at the same time, we were impacted by these 2 waves of COVID, most importantly, the second wave, which impacted our -- the rest 75%, 80% business as well.

So at this point of time, endeavor is to get that particular B2C segment -- B2C services segment back on track as soon as possible, at the same time, keep enriching JD Mart content, that enriched content is driving traffic and also keep gradually building a monetization team, which is now a 400, 450 member team.

So it's not that we want to just go after B2B monetization sacrificing B2C. Overall, we want the entire whatever, INR 650 crores that top line that we had for last year to reach pre-COVID levels as soon as possible.

M
Mohit Motwani
analyst

So do you envisage like a contribution from B2B increasing a bit over a period of time? Like is that your focus like to have increased contribution while at the same time also having traction in B2C?

A
Abhishek Bansal
executive

So definitely -- so even for recent quarters that 20%, 22% contribution-wise went to 25%, 26%, but that was primarily because the B2C side was more impacted versus the B2B. Once the overall business comes to pre-COVID levels, thereafter, it will be interesting to see that the growth -- so incremental growth will possibly be driven more from B2B categories versus B2C.

Operator

The next question is from the line of [ Abhishek Rathi ] from Millennium Partners.

U
Unknown Analyst

So Abhishek, my first question is on the synergies with the parent again. So I understand from your previous answer that there will be synergies on the vendor side. Are there going to be synergies on the traffic side also, given that your platform attracts a certain amount of traffic and the parent has a [indiscernible]? How would the traffic synergies work?

A
Abhishek Bansal
executive

The traffic synergies, in my assessment, obviously, Just Dial platforms are stand-alone platforms in itself. Traffic synergies could be if we could leverage some of their platforms to get more app downloads. That, in turn, could increase usage of our particular platform. So those could be certain areas where we could get their particular users to have Just Dial platforms as well.

U
Unknown Analyst

So you mean like an app in app in JioMart, MyJio something of that sort?

A
Abhishek Bansal
executive

Yes, there could be multiple things. There could be, for example, you have the Jio Ecosystem, MyJio app, where there are multiple Reliance apps there, so there could be JD app there as well. Even on the retail side, wherever possible, JD app could be put in places, which could help -- which could aid download of JD app. So those are some of the things that could be worked upon.

U
Unknown Analyst

Understood. And my second and last question was on -- so in terms of the capital that you're allocating in terms of investment in JD shopping, you would have a certain road map, right, in terms of what your monetization plan is so if you could share something along the lines of the potential TAM, the kind of GMV that you could be looking at or anything along those lines, that would be very helpful to understand the size and scale of our ambition?

A
Abhishek Bansal
executive

So Abhishek, size and scale of this particular venture, I would say that we all are aware that the kind of GMVs players like Amazon, Flipkart, et cetera, are doing. And even at that scale, India is still in very nascent stages of people doing online shopping. So as far as scale is concerned, I mean, I think e-commerce shopping is probably the largest e-commerce vertical that is out there in India. At this point of time, we are focusing on onboarding vendors getting our floor right, getting our process right.

So once we get that -- see that particular traction, I think it is a bit too early to be able to comment what kind of GMVs we are targeting. Definitely, as a sector, there is a huge potential for this particular vertical.

U
Unknown Analyst

Got it. This is very helpful, Abhishek. Just last thing if I understood right, the launch for JD Shopping will happen at some point in this quarter or the next quarter, right?

A
Abhishek Bansal
executive

Yes. So currently, as I said, that we are onboarding vendors. And as a pilot, we would open it for users as well to place orders. That particular pilot should take place sometime in this or next quarter.

Operator

[Operator Instructions] The next question is from the line of Lavanya Tottala from UBS.

As there is no response from the current participant, we move to the next question from the line of Naman Jain, an individual investor.

N
Naman Jain

Yes. So just 1 small clarification, the JD shopping pilot launch that you mentioned, I assume this is for 3 cities that you are targeting, which are these 3 cities? Can you please help with that as well?

A
Abhishek Bansal
executive

Mumbai, Bangalore, Hyderabad.

Operator

[Operator Instructions] As there are no further questions, I would now like to hand the conference over to Mr. Abhishek Bansal for closing comments. Over to you, sir.

A
Abhishek Bansal
executive

Thank you, everyone, for joining us. In case you have any further queries, please do reach out. We would do our best to address. That's it from our side. Thank you.

Operator

Thank you. Ladies and gentlemen, on behalf of Just Dial Limited, that concludes today's session. Thank you for your participation. You may now click on the exit meeting to disconnect. Thank you.