ETMarkets Management Talk: IndiaMART traffic up 40% from pre-Covid days: CEO Dinesh Agarwal

Since the onset of the pandemic, IndiaMART has seen a significant increase in quarterly traffic to 250 million or 40% as compared to pre-Covid levels. “Additionally, we’ve noticed a higher growth rate in certain categories such as construction, consumer durables, apparels, chemicals, and pharma-related products compared to other categories,” says company CEO Dinesh Agarwal. Edited excerpts from an interview:

How much of the growth that you saw in the December quarter is due to the seasonal demand? 

In the December quarter, we experienced impressive growth across key metrics. Our consolidated revenue from operations for the quarter was Rs. 251Cr, registering a growth of 34% YoY. Deferred revenue was at Rs. 1,015Cr, showing a growth of 29% YoY, and cash generated from operations was Rs. 115Cr, with a 36% YoY increase. Consolidated collections from customers also reached Rs. 283 crores, with a YoY growth of 28% while consolidated EBITDA margin stood at 28% and net profit increased by 61% to Rs. 113Cr with a margin of 32%. Additionally, there was a 24% increase in the number of paying subscription suppliers. Our focus remains on sustained growth in our users and paying subscription suppliers and we are confident that our performance was not just driven by seasonal demand.

Which categories are seeing most of the growth?

IndiaMART is a comprehensive platform that offers listings in 56 different industries, including over 95,000 product and service categories that span the entire value chain – from raw materials to machinery to final finished products. Since the onset of the pandemic, we’ve seen a significant increase in quarterly traffic to 250 million on our platform, with growth reaching approximately 40% as compared to pre-COVID levels. Additionally, we’ve noticed a higher growth rate in certain categories such as construction, consumer durables, apparels, chemicals, and pharma-related products compared to other categories.

Any plans to enter new categories or expand geographically?

Our company has a strong presence in over 1,000 cities, thanks to our extensive network of offices, field partners, and telechannel partners. Our supplier base is well-diversified and spread across different geographies, with 44% of our paying subscription suppliers coming from Tier II and Tier III cities and the rest from metro cities.

Our buyer base is also diverse, with 32% of buyers coming from metro cities, 25% from Tier II cities, and the rest from Tier III cities. Moving forward, our goal is to continue expanding our reach by penetrating deeper across categories and geographies.

What does the outlook look like for FY24 given all the talk about slowdown and recessionary fears?

As we have seen that India’s resilience has been proven in the past with strong recoveries from the 2008 financial crisis and 2016 demonetization, I remain optimistic about the Indian economy’s resilience in the coming future and expect it to continue with decent growth in FY24.

In my opinion, the outlook for FY24 should remain positive despite the current slowdown and recessionary fears. The country’s demographic advantage, a large working-age population, and growing middle class are drivers for its growth. And the improvement in ease of doing business ranking rising from 77th in 2017 to 63rd in 2021, is a positive indicator for the business environment. I believe these factors will insulate us to a great extent from the ramifications of the global economic slowdown.

Looking back, how big a tailwind has Covid proved for your business?

While the pandemic has been a tough time for all of us, it also emerged as an opportunity for businesses and individuals to be prepared for any situation. We saw a rapid acceleration of internet adoption and were well prepared to leverage these emerging opportunities for the company and for our customers; backed by the strong business model, latest technology, and secured market positioning.

The Company actively promoted the discovery of products related to medical infrastructure during the second wave of COVID-19. Millions of users benefited from the dedicated tab on the IndiaMART platform for medical supplies enlisting all dire needs for ease of reference of buyers and suppliers visiting the platform.

This resulted in an increase in quarterly traffic on our platform, from 180 million in March 2020 to 250 million in December 2022, and a corresponding increase in registered buyers, from 102 million to 165 million. The number of supplier storefronts also increased from 6 million to 7.4 million, strengthening our network effects. Our paying subscription suppliers increased from ~147K in March 2020 to ~194K in December 2022.

During the pandemic, we also evolved the company into a hybrid workplace organization while at the same time, we adopted channel sales partners which have further helped us cover the emerging markets of the nation. As of December 2022, we have approximately 150 channel partners working with the company.

I believe we took the adversity and made ourselves and our customers more resilient and prepared for uncertainties in the future. And we plan to continue doing the same.

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