Dinesh Agarwal, Founder & CEO, IndiaMART InterMESH, talks about Q3FY21 numbers, fundraising plans and organic/ inorganic growth opportunities among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:
Q: You have reported good numbers for the third quarter. First of all, provide the key highlights of the numbers and what led to this growth and do you think that this is sustainable? Also, tell us about your outlook for FY22?
A: First of all, our collection from the customers stood at Rs 179 crore in this quarter, which is marginally lower than the last year of Rs 184 crore, around 2 per cent. In December our collection was better than the same month of last year, whereas the offices are still closed and we are not able to have a face-to-face meeting with the customers. So, I believe that the collection should be good. Secondly, if you have a look on the net customer than it stood at 1,47,000 in March 2020, which went down during the lockdown but there has been a recovery in it in the last two months. Now, we have reached at 1,48,000 by now and it is expected that going forward, 5,000-6,000 customers will be added every quarter. Even, the collection will also go up from the last year. Going forward, if the revenue continues to improve then the growth will be maintained. As far as profitability is concerned, our pre-COVID cost base on the front stood at around Rs 115-120 crore quarterly, which reduced during the COVID, as our business went down and few operations went in work from home and offices were shut down, due to which is standing at Rs 85 crore in this quarter and I expect that it will go up to Rs 100 crore from next quarter onwards. Possibly, the profit margin which used to be around 25-30% in the previous years will increase to 30-40% but this is of 50% and would not be a sustainable profit margin.
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Q: Your board has approved the plans to raise up to Rs 1,100 crore. What is the cash on books and how the raised fund will be used?
A: In the last year, the growth story of India and the internet has accelerated a lot. We have studied a lot of companies and sectors, and feel that going forward this transformation will bring many opportunities. So, it seems that at the later stage, we will need more money to fund our organic and inorganic growth opportunities in the strategic space. Our of the total cash that you can see Rs 625 crore is deferred revenue and customer advances, which is just kept on the behalf of the customers and we cannot touch it. If seen from that perspective, then we have cash of only Rs 500 crore with us due to which we will try to raise up to Rs 1,100 crore and it will be used in strategic organic and inorganic growth opportunities, which are adjacent to us, can improve the experience of our customers, increase our engagement and monetization. We have the vision to ease doing business in India and with the help of e-commerce can emerge as a one-stop-shop and will work in that direction.
Q: Do you have some immediate plan for inorganic growth or it will take some time?
A: These things take time. We are meeting with many companies and many sectors and I think we should look at a period of a year or two, by which probably we will make one or two acquisitions or minority investments or would increase our scope in the existing business area. So, you can consider one-two years as a period to consume the funds.