More than 70 stocks hit 52-week high, 22 of these put up their best performance so far.
The Bulls had a free run on February 4 as the market realised there was no negative news in the Budget though it failed to meet high expectations.
Oil, trading at $55 a barrel, down $10 from January’s high, too, remained favourable for India. Global markets also rebounded as sentiment improved after factoring in coronavirus spread.
In two trading days, the benchmark indices recouped Budget Day losses and were back to above pre-budget levels.
The BSE Sensex rallied 917.07 points, or 2.30 percent, to 40,789.38 and the Nifty rose 271.80 points, or 2.32 percent, to 11,979.70. The broader markets also gained strength, with the BSE Midcap and Smallcap indices rising around 1.3 percent each.
“The Budget failed to provide any short-term relief, the market experienced massive carnage on the Budget Day. This was a knee-jerk reaction but as investors realised that the Budget will aid in the long-term growth of the economy, the market picked up. With the Budget overhang gone, investors are breathing a sigh of relief and are back to making fresh calls,” Umesh Mehta, Head of Research at Samco Securities, told Moneycontrol.
January auto sales numbers were comparatively better and with no other negative news, the Indian bourses saw a sudden rally, he said.
As a result, more than 70 stocks hit their 52-week high on February 4. Twenty-two of these were at a new all-time high.
Stocks that hit record high included Affle India, Bata India, IndiaMart InterMesh, IRCTC, GMM Pfaudler, Godrej Properties, Honeywell Automation, MAS Financial Services, Shree Cements and Info Edge India.
The market breadth also remained in favour of the bulls as about two shares advanced for every share falling on the BSE.
All sectoral indices closed in the green, with Bank, Metal, Oil & Gas, FMCG, Healthcare, IT, Auto, Realty and Power rallying 1-3 percent.”Market witnessed a V-shape recovery post the overreaction on the Budget Day, as the expectation was too high. These are typical tendency of the market to over and under-estimate, given its volatile trading pattern. The market is focusing on the earnings growth and the global trend, Q3 has provided a positive trend to earnings while global market is positive,” Vinod Nair, Head of Research at Geojit Financial Services, said.
At the DAN e4m Digital Advertising Conference, Agarwal, Founder & CEO of IndiaMART, sheds light on the importance of tapping the MSME sector and the adoption of digital among them
In today’s business ecosystem, a majority of global entrepreneurs talk about adopting deep tech such as Artificial Intelligence (AI), Machine Learning (ML), Big Data, Internet-of-Things, etc to become more efficient, gain more user trust, and stand apart from the competition. But Micro, Small, and Medium Enterprises (MSMEs), on the other hand, are generally viewed as slow to the adoption of technology, preferring to do business in the traditional and conventional method. But in fact, one of the biggest change drivers for the MSME lending ecosystem over time has to be digital adoption among the Indian MSMEs.
At the third edition of the Dentsu Aegis Network-exchange4media Digital Advertising Conference, Dinesh Agarwal- Founder and CEO of IndiaMART, deliberated on the adoption of digital among these small to medium businesses.
“When it comes to advertising or ROI, we always talk about corporates, large brands. But we never talk about so small businesses that are across India because they do not have the power or money to spend across media. And that’s where the Internet or digital changes everything because it allows a small business operator to experiment and target a particular audience without too much spillage,” Agarwal asserted.
According to him, MSME’s are the backbone of the Indian economy. If recent figures are anything to go by, they provide employment to 120 million people and there are about 6 crores of them. Currently, the MSME contribution to the Indian GDP is 29%.
Shedding light on how IndiaMART and the MSME sector have grown together, Agarwal shared, “In 2009-10, we decided to serve small, domestic businesses because domestic internet by then had grown good enough. And today, just 10 years later, we are 98 million buyers currently, we are close to becoming 100 million buyers soon.”
Despite being a B2B platform, 10% of Indian Internet population he revealed visits IndiaMART. He contended that the platform is digitally enabling small businesses as well as large enterprises.
“From Godrej to Dr Fixit, some of the largest brands are now advertising on IndiaMART,” he said. Emphasising on the role of digital on platforms and the role of aggregation, he remarked, “Earlier there were two different ecosystems: rural and urban. The Internet has created digital economies across borders and across different sections of society. So you have more availability.”
Agarwal expounded that the power of aggregation is that it brings you a variety of products and a variety of suppliers in just seconds. He also signalled the rise of businesses going online due to various tailwinds and government policies like GST, UPI and how even drivers are learning how to use the Internet. “Digital has opened up the possibility for small businesses, for large businesses, for generating buyers across India with the click of a button. Last year alone, IndiaMART witnessed 18.8 cr traffic, 4 crore enquiries, that translate into 15 enquiries per second with 6.6 cr products. According to our estimates, almost half a % of Indian GDP flows through the platform with buyers and sellers matchmaking that we do,” Agarwal stated.
Founded in 1996, IndiaMART has a presence in over 100 cities pan-India. With approximately 1000 employees, IndiaMART.com offers an extensive range of value-added products and services to over 500,000 members and over five million global buyers across industries and verticals
After the failure of its transaction-led B2B venture, IndiaMART is now experimenting with a SaaS product suite and credit facility. While the company is sitting on a data trove, the same could turn out to be a double-edged sword as it is difficult to roll out new technologies and products at such a huge scale.
Anish Munjal runs a car accessories business out of Bawana industrial area in New Delhi. Like most of his peers, Munjal has listed his business on all major B2B platforms including IndiaMART. Over the last five years of his relationship with the company, Munjal would routinely receive calls from its executives, often reminding him to renew his paid package. A month ago, Munjal was pleasantly surprised when an IndiaMART executive called him up with the company’s latest offering.
Munjal was introduced to Pooraa.com, a platform that enables businesses better manage orders, inventory, invoicing, and so on. As a company that has focused only on listings for the two decades it has been in business, IndiaMART’s latest offering indicates that the Noida-based company now wants to spread its wings beyond the ambit of its traditional discovery business.
To be sure, despite its market leadership IndiaMART has been long due for a technological reincarnation, backed by SaaS (Software-as-a-Service) and lending capabilities. When ET Prime first wrote about one of the oldest B2B online marketplaces in India, the company was gearing up for an IPO. Ever since its blockbuster listing in July 2019, IndiaMART’s stock has generated handsome returns for investors, and the company has realised that it needs to do more than just helping buyers and sellers discover each other to keep its growth engine chugging.
So, can IndiaMART 2.0 recreate the success of its previous avatar?
According to the company’s chief operating officer Dinesh Gulati, its core focus had been on solving for access to market, technology, and finance — common problems that businesses have been facing for years. The IndiaMART platform that we see today is built on that strategy and it has clicked. The company had 5.5 million registered suppliers and 82.7 million registered buyers, as per its latest annual report.
“Post the IPO, the focus area is the next level of problems to solve. We want to go beyond matchmaking by expanding our core services, so that they (the SMEs) find complete solutions on IndiaMART,” says Gulati.
In the latest earnings call with analysts, IndiaMART CEO Dinesh Agrawal had said that the company will continue to remain a technology-based platform, helping buyers and sellers meet and interact with each other while facilitating payment and providing credit financing whenever possible. “So, we continue to move closer towards the transactional route, but in a very different fashion than saying that we will work only for few categories and will do the cash on delivery and pick up the good as well,” he had told analysts.
In IndiaMART’s case, the cautious tone when it comes to moving towards a transactional route — something that every B2B platform has adopted since inception — has its roots in the company’s earlier attempts to diversify beyond listings. In 2014, IndiaMART launched a marketplace called Tolexo, run by its CEO’s brother Brijesh Agrawal. The platform was shut down in 2017 owing to dwindling sales.
“Ad business is from the Internet 1.0 era, which is very basic. Internet 2.0 is all about transaction and facilitation. But Tolexo realised that it cannot do all the transactions because logistics was not fully developed and managing inventory was very tough,” an industry watcher says.
Reasons cited for Tolexo’s failure range from the lack of a mature market for full-stack B2B models to the demonetisation of high-denomination currency notes.
According to an Edelweiss report, “In the B2B business, a fine balance between management of working capital, credit risk and growth is imperative to maximise the return on capital. Due to these challenges, only few B2B e-commerce players have been able to scale up; others have had to either entirely shut down (like Tolexo, Justbuy Live, mSupply) or adapt their business models from end-to-end transactions services to supplementary services (OfBusiness and Bizongo)”.
The Tolexo experiment will have its bearing on IndiaMART 2.0. Instead of carrying out the transactions on the platform (just like on Tolexo), it now wants to be the enabler. In fact, the sheer number of categories (1,38,000 at the last count) that IndiaMART operates in makes it difficult to own the transaction process at all times, thereby making it nearly impossible to build a reliable full-stack delivery model.
In fact, Agrawal perhaps alluded to this in the earnings call when he said that under B2B sourcing, many a time products are customised between the buyer and seller while some are non-shippable. “So we have products like trucks, cranes, elevators, JCB machines etc. So, a small portion of the products may be readily transacted… instead of picking up a few categories and going deeper there, we have taken an approach that lets us open all the categories for pricing and better cataloguing, and over the time find out a minimum common denominator,” he had said.
The common denominators for IndiaMART, it turns out, are credit facilities and SaaS, and experts believe the company is moving in the right direction. “You have to do it some time. They have the scale now and the network effect will play out. They had to do this to keep customers and suppliers interested,” says an analyst who closely tracks IndiaMART. This, according to him, can also help the platform improve stickiness as it would now have multiple touch points with several businesses which would have few alternatives.
Most B2B platforms have built at least a skeletal SaaS platform that supports buyers and sellers in carrying out transactions. For instance, Singapore-based industrial supplies e-commerce platform Moglix offers additional solutions under its enterprise and SaaS verticals. The SaaS vertical provides end-to-end vendor-management software, a contract-management platform, and a procurement-analytics platform, while the enterprise division offers cataloguing and packaging solutions besides front-end solutions for both buyers and suppliers. Gurugram-based ‘buying club’ for small and medium enterprises (SMEs) Power2SME offers additional services through its FinanSME and SMEShops verticals.
“Full-stack B2B platforms can create synergies across sales, distribution, working capital, and fulfilment, making it easier for SMEs to grow their businesses,” says Rahul Garg, founder, Moglix.
In its next stage of growth, IndiaMART wants to have a presence at different operational levels in a wide range of businesses. “Many of these SMEs don’t have a customer-relationship manager or a receptionist. So, we give cloud-telephony services while organisations with some scale do use our lead-management system. These are an integral part of the SaaS plug-and-play suite that you get on IndiaMART. This completes the entire loop of the transaction,” says Gulati.
Pooraa, IndiaMART’s new order-management system, allows businesses to manage several tasks from pricing to dispatches from a single dashboard. The service starts at INR8,800 per month and goes up to INR50,000 per month, depending on the number of customers. The 40-member team running the platform under Tolexo’s registered entity (Tolexo Online Pvt Ltd) is currently focussed on growing business in select cities such as New Delhi and Mumbai.
Courtesy of Poora
In September 2019, when Pooraa was being conceptualised, IndiaMART invested INR36 crore for a 26% stake in Simply Vyapar Apps, which provides business-accounting software for billing, GST invoicing, and stock inventory.
For IndiaMART, Vyapar was a direct fit into its model since 80% of the company’s customers used the mobile-based app on a regular basis while nearly half of them used it on a daily basis. “We believe this investment is a strategic fit to IndiaMART considering it can integrate with our lead-management system and provide a holistic customer-management platform for SMEs,” the company had said in its earnings call.
Considering the sheer size of transaction data that IndiaMART is sitting on, providing credit was the obvious next step for the company. In fact, the lack of credit was one of the reasons why the marketplace model of Tolexo did not find any takers back in 2014. “I think the challenge in B2B is that a lot of people want to operate on credit… traditional e-commerce channels operate on a prepaid or cash-on-delivery model. So, there was a fundamental disconnect,” Brijesh Agarwal explained in an earlier interaction.
And now, IndiaMART is experimenting with lending services to garner a larger share of its customers’ wallet. “We have started to aggregate all kinds of credit-based payment options on the payment gateway…. we would try and work with NBFCs to see if we can expose them to the kind of transactions that are happening on IndiaMART… but all of this will take a lot more time and patience,” the company’s CEO said in the Q2FY20 earnings call.
But IndiaMART’s entry may be a tad too late. Its peers are far ahead in the technology-adoption race. Udaan, OfBusiness, and Power2SME have been providing credit for some time now. OfBusiness even acquired an NBFC and began its lending operations just seven months after setting up the B2B marketplace in 2015. The company follows a credit-led model wherein it helps SMEs secure financing to buy from the OfBusiness platform itself. Currently, lending brings in two-thirds of its revenue. Canadian e-commerce giant Shopify has also launched a vertical, Shopify Capital, which provides starter loans to small businesses.
Obviously, the e-commerce landscape looks nothing like it was when IndiaMART started its journey more than two decades ago. But does that mean it’s too late to embrace technological evolution?
The very fact that IndiaMART is aspiring to grow beyond its core business is good news for its investors.
“If you have just one capability that is confined to listings, it is not very valuable. Listings is just discovery… you are not minting the whole lifetime value of the customer — you only have him for a transaction. He will come back to you only when the transaction is renewed,” says Asish Mohapatra, CEO of OfBusiness.
However, despite its late entry, IndiaMART does have edge on various fronts. To begin with, most new B2B companies have well-defined, narrow go-to markets, and hence they lack the scale that IndiaMART has been able to garner through its large number of categories.
Secondly, it is extremely difficult to topple a two-decade-old company whose first-mover advantage has helped it gather over 60% market share and an enviable buyer-seller database. Moreover, despite the rapid shift in B2B platforms towards transaction-driven platforms, a large section of SMEs still prefers settling payments in the traditional way rather than on a third-party platform.
And lastly, unlike the B2C segment, B2B customers are less prone to the lure of discounts and many of them end up staying with their preferred platform for a long time.
However, IndiaMART will have to deal with two big challenges. B2B is no longer the ignored cousin of hotly pursued B2C segment and investors are writing bigger cheques these days. This shift in sentiment is owing to the emergence of more sophisticated business models. For example, Udaan, with its credit and logistics support, breached the USD1 billion valuation mark in a record two years. In comparison, IndiaMART’s market capitalisation is still USD0.88 billion even after 24 years of existence.
Further, though IndiaMART is building a war chest for its new businesses, it is by far dwarfed by the sheer size of funds flowing into its rivals. And while many of its competitors cater to niche industries, some are focused on having a longer presence through the transaction chain. In comparison, IndiaMART has always been merely an intermediary between buyers and sellers.
“There is a need to facilitate the transaction and IndiaMART is far behind in that journey. The organisation’s DNA today is listings and lead generation. You can’t change it overnight. Udaan made a conscious call to enable transactions as soon as they started. In comparison, IndiaMART has always been a proponent of the fact that they would enable discovery, and transaction happens elsewhere,” says Rohit Dangayach, CEO, Wholesalebox, a B2B online mobile app-based marketplace for garment retailers.
Additionally, the company’s large database may also turn out to be a double-edged sword since it becomes even tougher to roll out new technologies and product strategies at such a huge scale. Newer players, in comparison, are nimble enough to try out new strategies and dump them if they don’t work.
As IndiaMART tries to find its feet in this new territory, the newcomers have already started innovating. While one may appreciate IndiaMART’s eagerness to stay ahead, it’s going to be a tough race for a player of this size, especially when pitted against agile, new-age competitors.
नो योर कंपनी में आज रडार पर IndiaMART होगी। Indiamart के शेयर ने आज के सत्र में 2477 का उच्च स्तर छुआ है। इसका आईपीओ पिछले साल जुलाई में आया था और इसका इश्यू प्राइस 973 रुपये था। इस समय IndiaMART भारत का सबसे बड़ा online B2B Marketplace है जहां खरीदारों और विक्रेताओं को कनेक्ट किया जाता है।
सालाना आधार पर वित्त वर्ष 2020 की तीसरी तिमाही में कंपनी की आय 23.4 प्रतिशत बढ़कर 164.9 करोड़ रुपये रही जबकि पिछले साल की समान तिमाही में कंपनी की आय 133.6 करोड़ रुपये रही थी।
सालाना आधार पर वित्त वर्ष 2020 की तीसरी तिमाही में कंपनी का मुनाफा 28.5 प्रतिशत बढ़कर 62 करोड़ रुपये रहा जबकि पिछले साल की समान तिमाही में कंपनी का मुनाफा 27.7 करोड़ रुपये रहा था।
सालाना आधार पर वित्त वर्ष 2020 की तीसरी तिमाही में कंपनी का एबिटडा 43.6 करोड़ रुपये रहा जबकि पिछले साल की समान तिमाही में कंपनी का एबिटडा 27.5 करोड़ रुपये रहा था। कंपनी की मार्जिन 20.6 प्रतिशत से बढ़कर 26.4 प्रतिशत रही।
Q1 20 30.0 प्रतिशत
Q2 20 27.8 प्रतिशत
Q3 20 23.4 प्रतिशत
Q4 19 14.6 प्रतिशत
Q1 20 24.9 प्रतिशत
Q2 20 23.2 प्रतिशत
Q3 20 26.4 प्रतिशत
कंपनी के MD Dinesh Agarwal ने कंपनी के कारोबार पर सीएनबीसी-आवाज़ से बातचीत करते हुए कहा कि कंपनी का बिजनेस सब्सक्रिप्शन आधारित है जिसमें मासिक, वार्षिक और अन्य अवधि के अनुसार सब्सक्रिप्शन देते हैं और उसके लिए पैसा एडवांस में लेते हैं जिससे कंपनी का निगेटिव वर्किंग कैपिटल है। ये पैसा डिफर्ड रेवन्यू में इकट्ठा होता है और जैसे- जैसे सब्सक्राइबर को सर्विस दी जाती है वो रेवन्यू रिकगनाइज होना शुरू होती है।
दिनेश ने आगे बताया कि कारोबार बढ़ाने के लिए सब्सक्राइबर की संख्या में इजाफा करेंगे। कंपनी ने अर्थव्यवस्था को समझते हुए फिलहाल प्राइस नहीं बढ़ाने का फैसला किया है।
Sethi Finmart के विकास सेठी ने इस शेयर को 2750 रुपये के लक्ष्य के लिए होल्ड करने की सलाह दी है।
Shares of IndiaMART InterMESH rallied over 14 percent on Wednesday after it reported a two-fold jump in consolidated net profit for the third quarter of fiscal year 2020. The scrip surged 14.50 percent to touch a high of Rs 2,390 apiece on the BSE, quoting its highest level since listing on July 4, 2019.
At 10:07 am, shares of IndiaMART InterMESH were trading 13.73 percent higher at Rs 2,373.80 per share on the BSE.
The company had raised Rs 475 crore through an initial public offering (IPO) by issuing shares at Rs 973 per share.
The e-commerce company reported a net profit of Rs 63.5 crore in Q3FY20 as against 28.8 crore in Q3FY19.
Total revenue from operations jumped 22.8 percent to Rs 160.5 crore versus Rs 130.7 crore YoY primarily due to an increase in the number of paying subscribers as well as a higher realisation from existing customers.
Consolidated deferred revenue grew by 26 percent to Rs 649 crore during the quarter under review from Rs 517 crore in Q3FY19, leading to much better visibility for revenues in the future.
Consolidated EBITDA in Q3FY20 was Rs 44 crore while EBITDA margin expanded to 26 percent from 21 percent YoY.
“The company continued its growth despite the challenging business environment. Our focus on operational efficiency has helped us improve our profitability in these times. Going forward we are hopeful to witness an improvement in macroeconomy, we remain committed to strengthen our business model and enhance the value proposition for our customers,” said Dinesh Agarwal, Chief Executive Officer, IndiaMART InterMESH.
The company generated consolidated cash flow from operations of Rs 71 crore leading to cash and investments of Rs 859 crore as on December 31, 2019, as compared to 574 crore on December 31, 2018, an increase of 50 percent YoY.Traffic grew 9 percent to 18.8 crore in Q3FY20 from 17.3 crore YoY, however total business enquiries delivered witnessed marginal decline to 11.2 crore from 12 crore, a de-growth of 6 percent.
NEW DELHI : Shares of IndiaMART InterMESH Ltd surged more than 17% on Wednesday, hitting a 52-week high of ₹2,458.00 apiece, a day after company reported its third quarter earnings.
IndiaMART reported consolidated revenue from operations of ₹165 crore, up 23% year-on-year, primarily due to an increase in number of paying subscribers as well as higher realization from existing customers.
The company’s consolidated deferred revenue rose 26% at ₹649 crore. IndiaMART’s consolidated EBITDA for Q3 FY20 increased 26% at ₹44 crore.
Profit before tax for the third quarter was up 29% at ₹53 crore, while net profit was ₹62 crore post deferred tax credit of ₹22.9 crore.
The company generated consolidated cash flow from operations of Rs71 Crore, leading to cash and investments of Rs859 Crore as on 31 December, 2019 compared with Rs574 crore on December 31, 2018.
Website traffic grew to 188 million in Q3 FY20 from 173 million in Q3 FY19, an increase of 9% YoY. Total business enquiries delivered, however, fell to 112 million from 120 million. Supplier Storefronts grew to 5.9 million in Q3 FY20 an increase of 8% YoY and paying subscription suppliers grew to 141.6 thousand, a growth of 15%.
India’s largest online business-to-business marketplace Indiamart Intermesh Ltd has reported consolidated total revenue from operations of Rs 165 crore in the third quarter of current fiscal year, marking a 23 per cent growth in the year-ago period.
ndia’s largest online business-to-business marketplace Indiamart Intermesh Ltd has reported consolidated total revenue from operations of Rs 165 crore in the third quarter of current fiscal year, marking a 23 per cent growth in the year-ago period. This was primarily due to an increase in number of paying subscribers as well as higher realisation from existing customers. The consolidated deferred revenue grew by 26 per cent from Rs 517 crore in Q3 FY19 to Rs 649 crore in Q3 FY20 crore, leading to better visibility for revenues in future.
Consolidated earnings before interest, tax, depreciation and amortisation (EBITDA) for Q3 FY20 was Rs 44 crore representing a margin expansion from 21 per cent to 26 per cent, partly due to increase in revenues and adoption of IndAS 116. Consolidated earnings before interest and taxes (EBIT) was Rs 38 crore representing a margin expansion from 20 per cent in Q3 FY19 to 23 per cent in Q3 FY20.
Profit before tax for the quarter was at Rs 53 crore representing a profit before tax margin of 29 per cent. Net profit for the quarter was at Rs 62 crore post-deferred tax credit of Rs 22.9 crore on account of certain timing differences pertaining to the earlier years. The company generated consolidated cash flow from operations of Rs 71 crore leading to cash and investments of Rs 859 crore as on December 31, 2019 as compared to Rs 574 crore on December 31, 2018, an increase of 50 per cent year-on-year.
Traffic grew to 188 million in Q3 FY20 from 173 million in Q3 FY19, marking an increase of 9 per cent. However, total business enquiries delivered witnessed a marginal decline to 112 million from 120 million, a de-growth of 6 per cent. Supplier storefronts grew to 5.9 million in Q3 FY20, an increase of 8 per cent year-on-year.
Chief Executive Officer Dinesh Agarwal said the company continued its growth despite the challenging business environment. “Our focus on operational efficiency has helped us improve our profitability in these times. Going forward we are hopeful to witness an improvement in the macroeconomy, we remain committed to strengthen our business model and enhance the value proposition for our customers,” he said in a statement.
Noida, India, January 21, 2020: IndiaMART InterMESH Limited (referred to as “IndiaMART” or the “Company”), today announced its financial results for the third quarter ending December 31, 2019.
IndiaMART reported consolidated Total Revenue from Operations of Rs. 165 Crore, 23% growth YoY primarily due to increase in number of paying subscribers as well as higher realization from existing customers. Consolidated Deferred Revenue grew by 26% from Rs. 517 Crore in Q3 FY19 to Rs. 649 Crore in Q3 FY20 Crore leading to much better visibility for revenues in future.
Consolidated EBITDA for Q3 FY20 was Rs. 44 Crore representing a margin expansion from 21% in Q3 FY19 to 26% in Q3 FY20 partly due to increase in revenues and adoption of IndAS 116. Consolidated EBIT for Q3 FY20 was Rs. 38 Crore representing a margin expansion from 20% in Q3 FY19 to 23% in Q3 FY20.
Profit before tax for the quarter was at Rs 53 Crore representing a Profit before tax margin of 29%. Net Profit for the quarter was at Rs 62 Crore post Deferred Tax credit of Rs 22.9 Crore on account of certain timing differences pertaining to the earlier years.
The Company generated consolidated Cash Flow from Operations of Rs. 71 Crore leading to Cash and Investments of Rs. 859 Crore as on December 31, 2019 as compared to 574 Crore on December 31, 2018, an increase of 50% YoY.
Traffic grew to 188 million in Q3 FY20 from 173 million in Q3 FY19, an increase of 9% YoY, however total business enquiries delivered witnessed marginal decline to 112 million from 120 million, a de-growth of 6%. Supplier Storefronts grew to 5.9 million in Q3 FY20 an increase of 8% YoY and paying subscription suppliers grew to 141.6 thousand, a growth of 15%.
Commenting on the performance, Mr. Dinesh Agarwal, Chief Executive Officer, said:
“The company continued its growth despite the challenging business environment. Our focus on operational efficiency has helped us improve our profitability in these times. Going forward we are hopeful to witness an improvement in macro economy, we remain committed to strengthen our business model and enhance value proposition for our customers.”
|Particulars (Rs. Cr)||Unit||Q3 FY20||Q3 FY19||Y-o-Y Growth||Q2 FY20||Q-o-Q Growth|
|Total Income||(Rs. Crore)||181||147||23%||177||3%|
|Revenue from Operations||(Rs. Crore)||165||134||23%||157||5%|
|Other Income||(Rs. Crore)||17||13||24%||20||(19)%|
|Profit Before Tax||(Rs. Crore)||53||40||34%||51||4%|
|Profit Before Tax Margin||%||29%||27%||29%|
|Net Profit for the period||(Rs. Crore)||62||28||124%||9||615%|
|Net Profit Margin||%||34%||19%||5%|
|Cash generated from Operating Activities||(Rs. Crore)||71||60||18%||42||68%|
|Deferred Revenue||(Rs. Crore)||649||517||26%||631||3%|
|Cash and Investment||(Rs. Crore)||859||574||50%||780||10%|
IndiaMART is India’s largest online B2B marketplace for business products and services. It is a platform that connects buyers and sellers across borders and time-zones through business solutions. IndiaMART provides ease and convenience to the buyers by offering a wide assortment of products and a responsive seller base while offering lead generation, lead management and payment solutions to its sellers.
|IndiaMART InterMESH Ltd.|
CIN : L74899DL1999PLC101534
Tower 2, Assotech Business Cresterra,
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B2B businesses are thriving, gaining billion-dollar valuations and seeing blockbuster listing. Can the good times last?
If you ask us, Icarus wasted his time sticking wax onto feathers. He should have simply moved to India, built a logistics app (since he was looking for a mobility solution) and waited for demonetisation and Goods and Services Tax (GST) rollout. Wait, what? These disruptive changes brought many sectors and companies crashing to the ground! Yes, that is true. But they also gave wing to many B2B start-ups. Udaan became a unicorn in the shortest time, in three years since its founding. A handful of other start-ups, including Rivigo and Delhivery, too, got billion-dollar valuations. In June 2019, IndiaMART, which runs a marketplace for businesses, saw an impressive listing — 21% premium over its issue price of 973. Within three months, its price doubled and today, its market cap is at $0.8 billion. Internet firms rarely see such success on the trading floor. The company, founded in 1996 by Dinesh Agarwal as an exports marketplace, made a clever pivot to the domestic market in 2008. Today, the listing platform has more than 130,000 suppliers. “In the early 2000s, China began to dominate international trade, which directly impacted Indian exports. At the same time, domestic consumption started to grow. That’s when I decided to change our market focus,” says Agarwal. Of course, this two-decade-old company is a bit long in the tooth to be a start-up, but its success is illustrative of the optimism around the B2B segment in India.
These start-ups largely serve small and medium businesses (SMBs) in the country, and a recent report by Zinnov says that these businesses will have nearly 7x the money to invest in about five years. India is home to around 75 million SMBs — accounting for nearly 40% of the nation’s GDP — and generate 180 million jobs currently. The report estimates that they will spend around $14-16 billion on productivity, communication, discoverability and payments solutions in 2019 and this figure will rise to $105 billion by 2024 as the SMB base expands. It pegs the SMB digitisation opportunity alone at around $80 billion over the next five years. No wonder that there is a huge spurt in the number of start-ups addressing this opportunity.
While B2B start-ups constituted 900 of the total 3,100 in 2014, the number increased to 3,200 in 2018, which was 43% of the total start-ups in India (See: Growing tribe). Investors including Tiger Global, Sequoia, Accel, Lightspeed and Nexus Venture Partners, have moved in quickly as well. According to Tracxn, the overall funding increased from $600 million in 2014 to $4.3 billion in 2019 (See: Money begets money).
The good times began in 2016 with Reliance Jio’s cheap data plans, which brought nearly everyone from your fifth-generation grocer to the first-generation electronics-store owner online. Smartphones became affordable too. Then, the note ban (affectionately called ‘de-mon’) forced smaller businesses to adapt to digital payments (or perish) and finally, in 2017, GST brought order in this disorganised sector. It not only improved the ease of transporting goods across the country but also improved the overall transparency levels.
“GST was definitely an accelerator because what was a state-driven infrastructure has now become pan-India,” says Rahul Garg, founder and CEO, Moglix. The firm, which began operations in 2015, has built an e-commerce platform that caters to about 500,000 SMEs across 45 product categories, and has raised around $100 million from investors including Tiger Global, Sequoia India and Accel India. WhatsApp and Facebook had become verbs by then, and Flipkart and Amazon were as familiar as the neighbourhood store. “But many didn’t think it was possible to sell steel, plastics and polymer online,” says R Narayan, founder and CEO, Power2SME, a company founded in 2012 that helps SMEs across construction, manufacturing and engineering sectors to reduce procurement costs. It clocked revenue of 10 billion in FY19 and has raised $60 million in funding,
Narayan says that manufacturers initially refused to work with them. “They would connect us with a distributor and say let’s do this as an experiment and see how it goes. It was only after we built volume that they began to see the value proposition of working with us and having an online presence,” he says.
However, B2B also has an advantage over customer-facing companies. For one, there is loyalty. “It is not easy to find your first customer,” says Rajesh Yabaji, CEO, BlackBuck, “but once you do, they tend to stick around for at least a year or two.” His company, founded in 2015 and valued at $950 million, provides logistics services through a trucking platform. He connects shippers with available truckers and also facilitates payments. “The decision by shippers to stay on the platform is based more on consistent user experience, and not just on initial discounts or pricing,” he adds. He should know, since BlackBuck has over 300,000 truck owners on its platform and counts Asian Paints, Coca-Cola, ITC, Tata Steel and Hindustan Unilever among its clients.
The Indian B2B e-commerce space is estimated to grow to $700 billion by 2020, which is more than twice of what it was in 2014 at $300 billion. But in a fragmented market with inflexible retailers, converting an offline B2B model into an online one can stir up a hornet’s nest. In India, procurement and distribution of industrial goods have been done manually for decades. This has led to a fragmented supplier base, which leaves little scope for inventory optimisation. Besides that, this rickety network is ridden with middlemen, namely wholesalers and distributors. This broken supply chain is one of the biggest problems the B2B start-ups are fixing. “We built the entire supply chain infrastructure and industrial clusters around them,” says Garg. These young companies run platforms on which brands and retailers can sell and buy products, to ensure better margins for both. Apart from that, they also manage the collection of goods from suppliers, storage in warehouse and last-mile delivery to customers.
That’s not all though. By providing working capital or tying up with third-party lenders such as NBFCs or other fintech companies, they also take care of their clients’ credit cycle. For instance, a small business can now get loans at an interest rate of 12-15%, as compared to 30-35% from traditional moneylenders. “Earlier, the distributor was providing credit and supply chain capabilities, and both didn’t have economies of scale. Each of them would only look at a network of about 500 shops. But with the entry of formalised players, their networks can manage tens of thousands of shop owners or small businesses,” says Sameer Brij Verma, managing director, Nexus Venture Partners. “As networks grow larger, credit will decouple. And we can already see this happening,” adds Verma.
Sabka Vikas then, but then how do the B2B start-ups make money? Some of them charge per transaction and others levy a fixed subscription fee. The founders of Udaan are taking a leaf out of their former employer Flipkart’s playbook and funding their aggressive growth through VC money. The poster child of this booming trend provides end-to-end services — from logistics to credit — besides giving access to its trading platform. Incorporated in June 2016 by three former Flipkart executives Amod Malviya, Sujeet Kumar and Vaibhav Gupta, the start-up has expanded its operations to 900 cities, connecting three million retailers and 20,000 sellers. In just three years, the firm has raised $870 million from marquee investors such as Tencent, GGV Capital, DST Global and Lightspeed Ventures. In its last round, it raised $585 million, which bumped up its valuation to $2.3 billion.
Udaan uses free services as the customer acquisition model. The co-founders believe that once enough small businesses experience higher revenue growth through the platform, they would eventually be willing to share a part of that revenue. That’s why, for now, it is reliant on its credit business for revenue than its marketplace business despite clocking an annual GMV of $2 billion. In FY19, the company spent 3.63 billion, almost 5x more than it did in FY18 to earn revenue of 250 million. More than 50% of it came from lending activities. At the other end, IndiaMART, which charges a subscription fee of 3,000/month or 30,000/year, clocked FY19 annual revenue of 5 billion with an operating profit of 800 million. In fact, it also posted a profit of 200 million.
Making money as a horizontal player in the B2B space isn’t as easy as it is in the consumer space. “In case of B2C e-commerce, the same customer on Flipkart or Amazon will buy a phone, apparels and even electronics, but in B2B, a customer who buys steel is unlikely to go for plastics,” says Nexus Venture Partners’ Verma. While Udaan services businesses across various categories including home appliances, apparels and staples, Ninjacart from the same city runs a platform that helps retailers and merchants source fruits and vegetables directly from farmers. This means better prices for 45,000 farmers, and reliable supply and efficient sourcing for 70,000 kirana stores. The start-up collects and distributes fresh produce through its network of fulfillment centres, which are stocked based on demand. “The biggest problem is perishability. So, we stay closer to the market and have been doing that from day one. It also helps us understand how the market works,” says Thirukumaran Nagarajan, CEO, Ninjacart. The story goes that two of the start-up’s founders would go to Kalasipalyam market (Bengaluru’s main fruit and vegetable market) in the wee hours to observe how prices are fixed and the way trade is done.
Those were the initial days of learning. Today, the start-up relies heavily on technology, right from setting the purchase price, and how the crates should be sorted and packed, to running its logistics network. It makes the whole process more efficient, of course, but the best part is that the start-up is able to assure payment within 24 hours to its farmer-partners, who had to earlier wait for weeks. “The customer is happy, the farmer is happy. The only real challenge is adding more hubs and training people day in and day out,” adds Nagarajan and says that they are also looking at adjacent categories to expand into, using the network they have built. Analysts believe this could mean non-perishables such as FMCG.
These young entrepreneurs make the whole process, of converting an offline model into an online one, look easy. It may seem like a simple two-step process — observe and digitise. But don’t be fooled. It takes a lot of patience and much negotiation to change business behaviour. Ashish Jhina, co-founder and COO of another B2B start-up Jumbotail, founded in 2015, also in the Garden City, says, “Initially, shopkeepers would ask us if we could take orders on the phone, since they would have exhausted their data pack. We would insist on app-only orders and recharge their phones, the cost of which would be added to the bill.” Jumbotail is a well established start-up in the FMCG space, serving 20,000 kirana stores in Bengaluru and a few in Hyderabad. These retail stores form the backbone of India’s $600-billion grocery and FMCG business, while modern trade (department stores, supermarkets and hypermarkets) makes up only for 10% of the overall market. Small neighbourhood stores make up for the rest.
According to Jhina, both demand and supply for food and groceries are highly fragmented, and the start-up began by aggregating demand. Using its platform, retailers can pick from 3,500 SKUs and Jumbotail promises delivery within 24-48 hours through its network of fulfillment centers. It has also tied up with third-party lenders to provide working capital for buyers, and the start-up determines their credit-worthiness through their transactional data. “We realised that providing pricing information and a platform for buyers and sellers is not enough. We have to assure our buyers timely delivery and the seller, timely payment. Traditional intermediaries have been doing this for years, but it is difficult to scale up beyond a point when you do things manually. You cannot scale up without technology,” says Jhina. The company, which is close to clocking $100 million in sales, makes its money by charging a commission to sellers and providing credit to buyers and running promotions for brands. The initial resistance from retailers and suppliers to move online gradually faded and Jumbotail’s founders say the entire procurement process has now become paperless.
Amit Sharma, founder of ShopX also swears by technology. His start-up, founded in 2015, too, has hitched its wagon to small-format stores. With the start-up’s digital catalogue, retailers in Tier-II and Tier-III towns can order directly from big brands such as HUL and P&G. ShopX also handles logistics with third-party partners, who use its proprietary technology, allowing ShopX to track the movement of goods. “You cannot solve a problem with deep discounting or by having a large fleet. We are present in 23 states and our entire sales and marketing engine is almost completely digitised,” he says. Within four years of its founding, the start-up has won the trust of over 100,000 retailers, who are connected to 100 brands. According to Sharma, ShopX’s retailers have seen their fill rates improve from 70% to 99%. The start-up makes 14-16% margin from the sellers for distribution and marketing, part of which is shared with retailers. The company is currently clocking GMV of $800 million and is also looking at other markets such as Indonesia, Vietnam and a few African countries in the next two to three years. “Just like India, general trade in these markets is also very fragmented,” says Sharma.
Even as investors continue to pump money into B2Bs and some of them are not even thinking much about generating revenue, forget profit, the sector’s biggest challenge could from Mukesh Ambani-led Reliance Industries. After changing the landscape of the Indian telecom industry, the conglomerate is looking to enter the B2B ecommerce space. As a first step, its retail initiative JioMart launched its services to online shoppers in Navi Mumbai, Thane and Kalyan. The venture will also partner with local grocers and equip them with point of sales terminals, low-interest working capital, inventory management skills, and help with GST compliance, all of which many of the B2B start-ups are solving in parts. If the financial muscle of Reliance Industries can shake biggies such as Vodafone-Idea, many B2B start-ups will also end up as casualties once Reliance starts to expand its footprint.
As many of the B2B start-ups brace for the entry of Reliance Industries, a handful of them are finding niches and building a business model around them. KhataBook has digitised the very Indian khata system of informal lending and borrowing. The start-up, founded in 2018, even takes its name from it. Its mobile app helps small business owners track money owed to them with a digital ledger, and sends reminders when payments are due through SMS and WhatsApp messages. “The lending mechanism is a problem that affects every business irrespective of the category they are in, and that’s why we decided to solve it,” says Ravish Naresh, CEO, KhataBook. Since many merchants are first-time internet users, Naresh says that the UI and user experience needed to be extremely simple. In addition to that, KhataBook supports 11 local languages including Hindi, Gujarati, Tamil and Telugu.
“Instead of making the app text-heavy, we have made a lot of our FAQs video-centric and offer regional language options as well,” he says. With over three million merchants using the app and recording over $3 billion in transactions, the company is yet to charge its users. The idea is to create a dense network of suppliers and retailers. “You know what they are buying, the frequency of their purchases and their payment track record. Once you have enough data, there are all sorts of services you can offer to the members on the network,” says Dev Khare, partner, Lightspeed Ventures, which has invested in OkCredit, a competitor of KhataBook. Over the next 12-18 months, KhataBook plans to offer credit and other financial services to its users. “They have never had a paper or digital trail and hence, the banks have ignored them. This makes the entire banking suite an untapped avenue for us,” says Naresh. Since the company already has transaction details of the users, it will also be quicker to grant loans. Having raised $29 million from GGV Capital, DST Global and Sequoia, the start-up will also foray into e-commerce, software services and legal services.
Just as Udaan, B2B start-ups such as KhataBook and OkCredit aren’t losing sleep over monetisation just yet. They believe they will be able to build a revenue layer by offering credit services. Seems like a no-brainer but the catch is, a whole host of fintech firms are already courting cash-strapped SMEs and these B2B start-ups will either have to apply for an NBFC license or tie-up with existing banks and NBFCs for capital. The NBFC crisis has already shown how fickle surplus capital can be. In fact, as India deals with an economic slowdown, SMEs are the worst hit in terms of demand and their receivables stuck, as large companies delay payments. SMEs will have to stay liquid and long enough for these start-ups to charge them. Hence, those relying on a future transaction-based model will need their investors to write more fat cheques.
Thankfully, the financers seem happy to oblige. They are betting on the fact that India has more than 100 million farmers, 15 million small manufacturers and 30 million traders and retailers, and only a fraction of them have been covered by e-commerce so far. But Nexus’ Verma warns that the transition will not be an easy one. “The supply chain in India is broken and inefficient. You cannot digitise these existing inefficiencies and expect them to become efficient. You have to reorient the supply chain,” he says. While the revenue model of many B2B start-ups is yet to be put to the test, investors seem willing to back their scaling up plans generously, like they did with B2C start-ups (See: Chasing glory). You can see that from the valuation they have assigned Udaan, despite its modest revenue stream. It is nearly 3x what they have assigned the 20-year-old IndiaMART. All the signs point out that their optimism is reminiscent of the euphoria around B2C start-ups that led to mindboggling valuations. Yes for Flipkart, Walmart did come to its rescue and Amazon India has deep pockets to keep it going for a long time. But in the B2B space, while the market opportunity is large enough, a similar outcome might not play out. Weaker players may go out of business but much of the growth will have to be organic, and relying on investors’ cheques alone may not be a prudent strategy. So, while they soak in all the love and remain the flavour of the season, all players must also keep in mind the perils of flying too close to the sun with a hack.
Here’s a gripping account by Dinesh Agarwal, Founder and CEO, IndiaMART, of how digitalization has changed MSMEs and how much more still needs to be done to adopt the technology.
My journey began back in my graduation days in the late 80s when working in the US was seen as the ultimate success for an Indian techie. After working for CMC and C-Dot, I joined HCL technologies and moved to the US in 1992. However, the day India announced the launch of the Internet on August 15, 1995, I decided to quit my job with HCL Technologies and move back home to build something of my own.
Upon returning to India, I started my entrepreneurial journey from my house in Patparganj, Delhi. My intention back then was not to create a large IPO-led business but start a small business of website making. When I started in 1996, the turnover was Rs 6 lakh in the first year and Rs 24 lakh in the following year. The website business was growing rapidly in 1998, following which we moved from proprietorship to a limited company in 1999.
By 1999, we grew at a very rapid pace. However, with the dot-com bust and 9/11 attacks in America, our business revenue fell by nearly 40 per cent but we overcame the slump. We knew that we would have to add more value to the already existing website creation business, and hence we decided to create a searchable online directory of exporters from India that would replace the print magazines that were the only source of information till then. This proved beneficial for us.
From 2002-08, we grew big in business, generating a revenue of Rs 50 crore along with making good profits. The major turn in the business came in 2008 when China began to dominate the international trade which directly impacted the Indian exports and the rupee-dollar exchange rate fluctuated from Rs 38 to 54. Meanwhile, Indian domestic consumption started to grow, so we decided to pivot our focus on domestic markets. With $10 million in funding from Intel Capital, we re-launched IndiaMART as a domestic B2B marketplace in 2008, keeping its mission intact to “make doing business easy”.
In 2008, the economic crisis delayed our IPO plans. It was only Naukri.com that was able to do an internet IPO back in those days. It made its IPO cap with Rs 800 crore at that time, which today has a market cap of Rs 30,000 crore. It took them 15 years to achieve this.
By the end of 2011, we expanded aggressively and just when we were about to sign a new term sheet of about $100 million, an investor walked out. We were burning a lot of cash at that point in time and were witnessing high employee attrition and high customer churn. Over the next few years, we consolidated our business by focusing on customer experience and became profitable again.
Currently, we have 93 million registered buyers and 5.7mn suppliers who display about 63 million products. Every month, we do around 41 million business matchmaking on IndiaMART. One in every 15th Indian is already using IndiaMART. Today, I’m humbled to see ourselves as a listed entity. Going for an IPO not only takes your time but also your lifetime.
(This article was first published in the December 2019 issue of Entrepreneur Magazine. To subscribe, click here)