IndiaMart’s Dinesh Agarwal shares how the profit doubled during the lockdown
- The company, which listed nearly a year ago, posted a net profit of ₹74 crore in QFY21, up by 129% from ₹32 crore last year.
IndiaMartfounder Dinesh Agarwalmanaged to do this even when what his company most depends on couldn’t move due to lockdown – field sales.
- In an interview with Business Insider, Agarwal shares how the company posted profits even while things were looking bleak in the beginning of April.
AdvertisementIndiaMart, one of India’s biggest online marketplaces for businesses, has achieved something that not many other companies have – during the lockdown quarter of April to June, the company has posted over a 100% jump in profits.
The company, which has been listed for just a year now, posted a net profit of ₹74 crore in QFY21, up by 129% from ₹32 crore last year. This spurred a stellar rally with IndiaMart’s shares surging 8% to ₹2327 in morning trade..
And IndiaMart founder Dinesh Agarwal managed to do this even when what his company most depends on couldn’t move due to lockdown – field sales. For the 24-year old company, work from home had never been the norm and most of its revenue comes from its field sales.
But Agarwal and his team were better prepared. From February itself they had anticipated a slowdown due to China shutting down, but a lockdown is not what they had expected. “We started figuring out as the demand for sanitizers and health essentials shot up. By the second half of March, our focus was on how to maintain business continuity and how to ensure employee safety while making sure the website was running and the call centre too was operational,” Agarwal told Business Insider.
IndiaMart has always had ‘medical’ or healthcare as a category, but within the initial weeks of the coronavirus pandemic, Agarwal realised that it would become an on-demand category. And they were quick to turn things around. “We started calling up suppliers, did some innovative thinking. We called up bike helmet suppliers and asked them that since you have a helmet shield can you make face shields and they happily agreed. We went to undergarment manufacturers and asked them to make face masks. So, we really started to build category by category,” Agarwal said.
Variety of products available
The platform has over 68 million product listings across 100,000 categories. “If you can’t find something on IndiaMart, you won’t find it on the internet,” Agarwal told us. But this variety of products available also pumped their revenue, because then companies weren’t just coming on the platform for finished products but also to discover certain elements like bottle caps, elastic among others.
Agarwal believes this also keeps them different from their rising list of
“Our target is also different. The other companies focus on the top 2000 products, which are generally branded, in the FMCG sector. That’s not what IndiaMart is going after. From steel bars to trucks and everything in between is what IndiaMart sells,” he said.
Balancing their costs and their customers’ too
In the beginning of April, their revenues were completely down as most of their customers' business had hit pause – their buyer traffic was down by 50%. “Only one-third of our sales used to be from online or telecom,” said Agarwal.
So, they went around looking at places where they can cut costs. They turned to automation of many processes and deferred plans that would have burnt a hole in their pocket. Agarwal said that while many employees offered to give up salaries, they didn’t lay off anyone. “We are a slow hiring company, so we didn’t want to fire anyone,” he said.
But that wasn’t all. They also had to prepare for their customers, who were in a similar business situation. “We offered moratoriums to customers who said they won’t be able to pay,” he said.
AdvertisementAs the economy opened up, things started to look better and because of their initiatives, Agarwal says customers and buyers both saw value in IndiaMart.
The new driver – tech
IndiaMart, over the recent years, has turned to technology to add layers to its offerings. “We are enabling seller and buyer interaction with a CRM and have also become a price discovery platform for many buyers in India. Even if they don’t end up buying from India, we have been able to democratize prices for buyers,” he said.
Out of their total expenses, 20% of it goes into investing in products and technology, while out of the 4500 employees, 20% of them are in product and technology.
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