JUST DIAL LTD (JUSTDIAL) Q1 FY23 Earnings Concall Transcript

JUST DIAL LTD. (NSE: JUSTDIAL) Q1 2023 Earnings Conference Call dated Jul. 18, 2022

Corporate Participants:

Abhishek Bansal — Chief Financial Officer

Analysts:

Vivekanand Subbaraman — Ambit Capital — Analyst

Pranav Kshatriya — Edelweiss — Analyst

Ankur Jain — Individual Investor — Analyst

Naman Jain — Individual Investor — Analyst

Anmol Garg — DAM Capital — Analyst

Abhishek Banerjee — ICICI Securities — Analyst

Arjun Ashar — Individual Investor — Analyst

Swapnil Potdukhe — JM Financial — Analyst

Nayan Thakkar — Ashika Group — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Just Dial Limited Q1 FY ’23 Earnings Call. [Operator Instructions]

I now hand the conference over to Mr. Abhishek Bansal, CFO, Just Dial Limited. Thank you, and over to you sir.

Abhishek Bansal — Chief Financial Officer

Hi, everyone. Welcome to Just Dial’s earnings call for first quarter of fiscal ’23. Our operating revenue for the quarter stood at INR185.6 crores, witnessing 11.4% sequential growth and 12.2% on a Y-o-Y basis. Our adjusted EBITDA, excluding ESOP expenses, stood at INR11 crores versus a loss of INR80 lakhs in previous quarter and a loss of INR10.4 crores in June quarter last year. Our employee expenses have increased by approximately 33% on-Y-o-Y basis, led by 45% Y-o-Y increase in headcount across sales, technology, content, marketing functions and increments in recent quarters.

Our advertising expenses stood at about INR6.5 crores for the quarter. Other income stood at negative INR60 crores during the quarter due to MTM loss on our INR3,700 crore treasury portfolio due to rise in bond yields during the quarter. Yields on two to three year AAA bonds, which mostly reflects the underlying of our treasury, went up by 135 to 150 basis points on quarter-on-quarter basis during the quarter. On year-on-year basis, the same stood at about 205 to 220 basis points increase.

With yields stabilizing, treasury income should return to normalcy. And in any case, treasury yield should be looked at on our two to three year basis rather than quarterly basis. Since we typically hold our investments for three year plus period to ensure they are tax-efficient. Led by this MTM loss, we had a loss of INR48.3 crores at net profit level.

Coming to business update, we continue to focus on selling on monthly payment plans. We signed up approximately 70% customers on monthly plans in last quarter. Our sales headcount has gone up by about 53% on year-on-year basis. We have seen our monetization continuously improve significantly on month-on-month basis since last November-December, and the same has started showing up in top-line sequential growth as well. Our paid campaigns grew by approximately 22,000 count to total of about 484,000 active paid campaigns.

Collections stood at about INR201 crores during the quarter, witnessing 12.2% sequential growth. Deferred revenue stood at about INR353.4 crores, which was up 4.5% sequentially and 15% year-on-year. Sequential growth in deferred revenue despite focus monthly payment plans where upfront collections are typically lower is encouraging. The realizable value of sign-ups that we did in the first quarter stood at about INR235 crores to INR240 crores. So realizable value is essentially total money that we expect to receive in one year from both upfront and monthly plants that is sold during the last quarter. So this, as I’ve mentioned earlier, acts as a lead indicator for us to see where our collections and future P&L revenues are headed.

Our monthly ECS collections, which is money received from direct bank debits for monthly plans, stood at about INR33 crores for June month versus a low of just INR13 crores in October ’21. The ramp up in sales hiring is yielding good results and we should see better monetization going forward. Overall, as far as reported P&L is concerned, our sequential top-line growth reflects improvement in monetization over last couple of quarters. Margins are currently suppressed because most employee costs hit our P&L immediately. As we see our top-line ramp up in coming quarters, we should see margins improving as well. Cash and investments stood at INR3,740 crores as on 30 June.

Coming to operating highlights, traffic stood at about 148 million unique users for the quarter, growing 19% on a year-on-year basis. 84% of this traffic comes on mobile platforms. Total listings in database stands at now about 32.8 million. In a nutshell, the core business is clearly on a recovery path and endeavor is to get it back to pre-COVID levels of top-line and profitability as soon as possible and grow thereafter. Our new initiatives are getting rolled out to users in a phase-wise manner. Focus there is to get user experience right for these products and broadening coverage in terms of product, services and geographies.

So with this update, we shall now open the floor for questions for further discussion. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Vivekanand from Ambit. Please go ahead.

Vivekanand Subbaraman — Ambit Capital — Analyst

Hi. Thank you very much for the opportunity. I have a few questions. So starting with the book-keeping ones, could you give us a split of the campaigns and revenues by the top 11 cities and others? That’s one. And the other book-keeping question is, the ESOP costs in the current quarter appear to be much lower than the grade that we were seeing in the last seven, eight quarters. So any thoughts on how we should look at this number going ahead as well as advertising? Those are my book-keeping ones. I want to ask a few others after this.

Abhishek Bansal — Chief Financial Officer

Sure. So Vivek, firstly on campaigns and revenue distribution. So top 11 cities, last quarter contributed about 43% to campaigns and about 64% to revenues. This particular distribution for last two, three quarters has largely been in this particular range.

On ESOP expenses, yes, current quarter ESOP expenses are lower, primarily because the expenses that are getting recognized right now are from tranches that we had allocated almost two years ago. There haven’t been any substantial ESOP or fresh ESOP allocations in last one to two years. And the way accounting works is that ESOP expenses tend to be front ended. So for example, if there is a ESOP scheme which was set 25% each year, the expense booking in first year is first 25% plus half of second 25% plus one-third of third 25% and so on. So by the time you come to third or fourth year of ESOP expense recognition in P&L, they sort of taper down substantially. So going forward, basis whatever fresh ESOP allocations are done, these particular expenses will accordingly go up.

On advertising spend, last quarter we spent about INR6.5 crores. For the full year, we have budgeted around INR60 crores or so. So as we get into future quarters, we could have certain branding advertising, digital will anyway continue. So there could be quarters where it could be lumpy in nature. Last quarter primarily was almost fully digital in nature.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. This was very useful. Just couple of additional questions. So on the…

Operator

Sir, sorry to interrupt you. There is a slight disturbance coming from your line.

Vivekanand Subbaraman — Ambit Capital — Analyst

Is it better now? I’m closer to the mic.

Operator

Sir, I think it’s the airy sound coming from your line.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay, fine. I don’t know if I’m audible or not, but…

Abhishek Bansal — Chief Financial Officer

Yeah, Vivek, it’s okay. Please go ahead.

Vivekanand Subbaraman — Ambit Capital — Analyst

Yeah. The other question I had is with respect to your traffic and the content enrichment. So it seems that you have added lot of new listings in the current quarter, much more than what we had seen in the past. So if you can just give us some color on whether these new listings are helping you get any visibility on monetization? Is this part of your content enrichment strategy or was it related to any sort of pent-up or catch-up as far as COVID is concerned? That’s one.

Second is on the A&P. You said that most of the A&P was on digital. So I’m guessing that some of the traffic that you got in the previous quarter would include inorganic traffic also. Can you help us understand your traffic better and the trajectory? Thank you.

Abhishek Bansal — Chief Financial Officer

So firstly on content enrichment. So you’re right, we added about 900,000 listings to our database. As I have mentioned in the past as well — see India overall has about 70 million to 80 million SMEs out there. And we despite being the largest local search engine, we cover only say 40% of the population at this point of time. In last three, four quarters, the addition of fresh listings was relatively lower. There was more focus on enriching content in existing listings. And before that if you would see, we were adding about 1 million listings every quarter for a good eight to 10 quarters. So this particular quarter, again, we have focused on broadening our coverage. And once we add listings, obviously, those particular listings start getting prospected by our sales team and over time that aids monetization as well. It is difficult to say whether listings that got added this particular quarter are directly aiding monetization.

To your other question on advertising spends, so yes, there is — there was some particular paid traffic that came during this particular quarter. So out of about 145 million users, approximately I think around 15% or so would be from paid means and rest is coming organically.

Vivekanand Subbaraman — Ambit Capital — Analyst

Great. Thank you. I’ll come back in the queue.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Pranav Kshatriya from Edelweiss. Please go ahead.

Pranav Kshatriya — Edelweiss — Analyst

Yeah, hi. Thanks for the opportunity. My first question is, we’ve seen a very strong employee addition in this quarter, but if I look at the revenue productivity or the collection productivity, it seems to be significantly lower than what we had pre-COVID level. So should we expect that pre-COVID level productivity to be achieved in next two to three quarters or it could take longer or we should assume lower productivity off of this workforce?

Abhishek Bansal — Chief Financial Officer

Okay, Pranav. So first of all we need to understand on which particular metric are we measuring productivity. The two metrics that you mentioned, revenue and collection. So firstly, coming to revenues of INR185 crores. So INR185 crores revenue is getting recognized in P&L from customers whom I had sold in last three to four quarters when my sales strength was not that higher. So as a result, this particular revenue divided by number of employees will not be the right indicator, because this particular revenue is not really the revenue achieved by current sales force.

Second, as far as connections are concerned, collections of INR200 crores, while they are better than revenues, they are relatively lower currently because a lot of customers are getting signed up on monthly payment plans. There upfront collections is lower. The realistic metric which we look at it is, as I mentioned, the realizable value, which is the expected revenue that I expect to get from sign-ups that I did in this particular quarter, which stood at about INR235 crores to INR240 crores. So that particular INR235 crores is what I will likely get over next one year from sales done by my existing sales force in last one quarter. So that will be a more relevant metric.

Considering we had about I think 10,000 odd employees at our peak pre-COVID and now we have about 10,600 something in sales, so productivity slightly is still lower. But considering additions have happened in last three to four months, in next two to three months, these particular employees will likely start getting us even better productivity. For example, against INR235 crores of realizable value for the quarter, my exit run rate was about 250 plus. So that way we are on a month-on-month improving trajectory.

Pranav Kshatriya — Edelweiss — Analyst

And if I look at the contribution of the monthly payment plan to the revenue, how much will that be?

Abhishek Bansal — Chief Financial Officer

Contribution of — so contribution to revenue is…

Pranav Kshatriya — Edelweiss — Analyst

70% is — is the a number of customers, right?

Abhishek Bansal — Chief Financial Officer

70% of customers that I signed up in this particular quarter came on monthly payment plans. If I were to look as distribution of my overall active campaigns of 485,000, there, approximately 40% are on monthly plans and 60% on upfront plans. As we keep going into future quarters, that 40% will keep moving up. That 40% was 32% in March quarter — at March quarter end.

Pranav Kshatriya — Edelweiss — Analyst

Sure. So do you see any challenges in reaching to the pre-COVID margin? I mean, we were consistently 25% plus-minus 2% kind of range. So is that margin possible in next few quarters or there are certain headwinds to it?

Abhishek Bansal — Chief Financial Officer

So definitely once we reach that kind of pre-COVID top-line, I think we should be reaching those kind of margin levels. Currently, margins are lower because there is a sort of mismatch between revenue recognition and salary expenses. So I think once we reach that INR230 crores, INR240 crores range, whatever incremental revenues will come in from current levels versus that pre-COVID levels, a good chunk of that should directly flow to EBITDA.

Pranav Kshatriya — Edelweiss — Analyst

And should we assume the salary levels to be higher than what pre-COVID level was or we can actually go to that level?

Abhishek Bansal — Chief Financial Officer

Yes, salary levels would be definitely higher. Couple of reasons. One, basis regular increments, over last two years, salary levels have gone up. Second, every state keeps coming up with the revised wage levels for either minimum wages or other statutory compliances. So basis that, there is obviously an increase in wage levels versus pre-COVID.

Pranav Kshatriya — Edelweiss — Analyst

Okay. Last question from my side. Any comment on regarding the synergies with the parent and how you are working together to build any business or anything which you can tell us?

Abhishek Bansal — Chief Financial Officer

So as far as synergies with RRVL are concerned, we currently are sort of looking at our business in two buckets. One is the core search business where the endeavor is to get it back to pre-COVID levels of top-line and profitability ASAP and there is a clear visibility on the same already. And then the second bucket is to add a transactional layer on the local search platform that we have. So on the second side, where there is good expertise of RRVL as well, we are working closely with them. So one of the products, which is a hyper local marketplace, we are already — we have already rolled out a pilot for users in three cities; Mumbai, Bangalore, Hyderabad for certain categories such as electronics, mobiles, etc. So we are working very closely with them on those particular projects.

Pranav Kshatriya — Edelweiss — Analyst

Okay. And do you think that ONDC can be of enabler or a challenge for you in any way?

Abhishek Bansal — Chief Financial Officer

So once that particular ONDC gets implemented, we’ll have to see. Since we are just rolling out these transactional services, we’ll have to see how it pans out.

Pranav Kshatriya — Edelweiss — Analyst

That’s it from my side. Thank you so much.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Ankur Jain, Individual Investor. Please go ahead.

Ankur Jain — Individual Investor — Analyst

Yeah, hi. Good evening, everyone. Thanks for the opportunity. I have two questions. One, even before the Reliance Ventures, Reliance Retail came into picture into Just Dial, I’ve been an investor into Just Dial based on what I was hearing about JD Mart and the B2B transactions thing. I think you just explained that you also look at your business into two buckets. You look at the search, the traditional business and then the value that you try to derive from those clients that you get through search in your B2B business or something. But it’s been at least seven quarters, if not more, and you had pilots in three cities you mentioned, it is highly disappointing to note that your investor deck contains no information at all on any of such disclosures on the two segments.

Ideally, you are actually looking at two segments. Even as per the accounting standards, you have to be reporting about those two segments. I mean, you may choose to say that no, we don’t, but internally you’re very well aware that you have to, but you don’t. So I would like to pick your thoughts on that? Because as an individual investor I find it disheartening. I put in my valuable money into it, a lot of money based on the story, but I don’t get to hear an update on that story. That story is in some closed doors. Obviously, not everything can be opened, but there is some responsibility that the business has towards the minority shareholders. So that’s one.

Number two, if I heard correctly, you said your mark-to-market losses is about INR48 crores, if I heard correctly. And also your loss for the quarter is about INR48 crores. So if the both the numbers are same, are we saying that we actually did not make any money in this quarter, this was just a breakeven quarter? So these are the two questions I had. Thank you.

Abhishek Bansal — Chief Financial Officer

Hi, Ankur. So quick clarification on the second point first. So mark-to-market loss during the quarter was about INR60 crores and INR48 crores was loss at PAT level. So excluding other income, the overall profit was about INR12 crores, INR12.5 crores.

Ankur Jain — Individual Investor — Analyst

No, I thought that even the — sorry to interrupt you, but even the mark-to-market would be adjusted for tax. So that’s what I thought.

Abhishek Bansal — Chief Financial Officer

So mark-to-market would be adjusted for tax, but that tax essentially would be reversal of past gains that we would have recognized.

Ankur Jain — Individual Investor — Analyst

Right, right. Absolutely. So it will be closer to 48. If I look at it, maybe 20%, 25% tax gain. But anyway, I’ll leave that gap.

Abhishek Bansal — Chief Financial Officer

Right. So coming to your first question on regarding looking at the business in two buckets and relevant disclosures for the same. So firstly, see JD Mart, the monetization model is subscription-based listings itself. At this point of time, out of the total unique users that we had for last quarter, about 8% to 9% of those particular users came for JD Mart-related new pages. Why I’m referring to new pages, because as part of JD Mart what we have done is, we have essentially brought products on our platform, though listings we already had. Earlier, about 20%, 22% of our revenues used to come from B2B-related categories. At this point of time, for last quarter, that number stood at about 25.5%, 26%. On JD Mart, the dedicated team which works on monetization for the same, is now about 600, 650 people, which previous quarter was about 400 people.

So considering JD Mart’s particular monetization works as a listing fee itself and JD Mart products are available on both JD and JD Mart platform, so that obviously gets recognized as overall revenue. The key is that this particular platform’s monetization should aid us with revenue growth, which is happening at this point of time, as can be seen with the sequential growth.

As far as transactions businesses…

Ankur Jain — Individual Investor — Analyst

I’m more worried about the disclosure about it. If you see, your stock has taken a beating of more than 50% from its peak. Well, in this scenario, every stock has taken a beating, but some have taken more than the others and you obviously belong to the more category. So there needs to be some introspection and some responsibility shown towards the investors who are not sitting in the board room discussing some secretive things. There is so much cash in the balance sheet. And for eight quarters, we’re reading the same story. So obviously, there needs to be something shared with us.

Abhishek Bansal — Chief Financial Officer

So you are right, but please understand that as management, we obviously cannot simply control what happens to our stock prices. Yes, operating performance is fully in our hands, which is what we are working on. And I think if we continued to deliver numbers both on top-line profitability as well as new initiatives, this particular current gap should ideally get braced in coming quarters. As far as disclosures, etc. are concerned, so feedback taken. Whatever is relevant which we should disclose, we will continue to do so.

Ankur Jain — Individual Investor — Analyst

Yeah. So correct, you cannot control the price, but maybe the introspection means that because of your silence, your complete secrecy, if I may use that word, the stock has taken a beating and people have not believed in this story any longer. So that’s what I meant. And obviously, I’m not asking you to control the price, which you cannot, of course. That’s all I have.

Abhishek Bansal — Chief Financial Officer

Sure.

Operator

Thank you. The next question is from the line of Naman Jain, Individual Investor. Please go ahead.

Naman Jain — Individual Investor — Analyst

Hello. Am I audible?

Operator

Yes. Now you are.

Naman Jain — Individual Investor — Analyst

Yes. So Abhishek, I just wanted to ask a small question. As we saw the pilot launch of JD Shopping, right, saw that there are three category broadly where you guys have launched products; mobiles, electronics and home and kitchen products. So how are we planning to — what are the initial feedbacks? And what is the plan to scale it up? How long are we going to take?

Abhishek Bansal — Chief Financial Officer

So Naman, on JD Shopping, as you rightly said, three particular categories have been launched. At this point of time, vendors are being onboarded in each of these categories. The key USP that we are working right now is that for our delivery and basis whatever pilot orders we have been receiving. In almost 98%, 99% of the cases, we are able to achieve the same. Over next two to three quarters, endeavor is to broaden product selection across other categories and also onboard vendors in other cities as well. So we are already in the process of adding three more cities and on a month-on-month basis. So some time by the end of this particular fiscal year, the product selection catalog and number of cities should be meaningful. The target is to cover almost all metros by then.

Naman Jain — Individual Investor — Analyst

Okay. And so on the last call we discussed about are we going to give discounts from the cash that we have. And it was clearly mentioned that we are not in the business of giving — attracting a customer by giving discounts. So now in these categories, three categories, I can see there are some discounts offered. So just a clarification. Are these from the merchant’s end or is this our company giving discount on the products?

Abhishek Bansal — Chief Financial Officer

So whatever discounts that you see in the platform are solely from the merchants. And while we have advertising budget, so we base the way you look at advertising is of customer acquisition cost. So in case we think that for certain categories where we have decent margins, we can afford to pass on a part of that margins back to consumers, we would look to do so. The discounts that you see currently at this point of time, they are fully borne by merchants.

Naman Jain — Individual Investor — Analyst

Okay. So in that case then, again, two things. One is that you have allotted a large advertising budget in this year. So how are we planning to — are we going to do TV commercials for JD Shopping specifically, because I understand the core business anyways is doing very well and we are getting back on track? Since this is a new launch, are we planning to do majority of our spending on this, advertising spending?

Abhishek Bansal — Chief Financial Officer

So advertising budget that I mentioned, majority of that is planned for core business itself for JD Shopping. The thought process is, unless there is a substantial Pan India coverage and the cross category coverage, we would mainly focus on digital advertising because via digital you can target specific category, specific geographies. Once we have desired user experience in place, etc., then obviously ATL campaigns will follow.

Naman Jain — Individual Investor — Analyst

Okay. And what is the targeted or a vision to how much transactions per month do you want to reach in JD Shopping? As in some vision that may help us understand the prospect of the opportunity?

Abhishek Bansal — Chief Financial Officer

See, this particular segment, per se, has huge opportunity in terms of there is no pure play, 3P marketplace currently. All SMEs dealing in products want online presence to get new customers, etc. So I wouldn’t put specific numbers in terms of what the ambitions are. I think on a month-on-month basis, we want to see that we keep improving both the user experience side, fulfillment side. And then over next few quarters, we will see how numbers, etc. pan out.

Naman Jain — Individual Investor — Analyst

Okay. So — and just one more thing on this. What is going to be the plan to monetize this? Basically, is this going to be commission-based on each product that we are going to make money or is it going to be a subscription-based model, because from other competitors I understand it is more of a commission-based business?

Abhishek Bansal — Chief Financial Officer

So at this point of time, we are signing up merchants on a commission-based model itself. Once we have substantial traffic than other streams of revenue such as advertising, etc. to can form part of revenues in this particular vertical as well.

Naman Jain — Individual Investor — Analyst

Okay. So it is not going to be like our core business where we have a monthly plan or something like that? It’s not going to be the same for JD Shopping, is it?

Abhishek Bansal — Chief Financial Officer

No, this will be pure like commission on every transaction.

Naman Jain — Individual Investor — Analyst

Order. Okay, okay. And just one small question on the cash balance that we have. So what are we planning to do with that, because obviously it’s a large balance that we have? Any plans to distribute it or use it for buybacks or something?

Abhishek Bansal — Chief Financial Officer

So no such plans at this point of time. We have exciting products in pipeline. We would want to spend on building those particular products, content enrichment, advertising those particular products in future. The good part is we have a core business in place, which is a healthy free cash flow generating business. So we’ll see after maybe 12 to 18 months how the situation is. At this point of time, we think our core business itself should be able to fund a good chunk of these particular new initiatives.

Naman Jain — Individual Investor — Analyst

Initiatives. Yeah, which is why I’m asking the question. So if your core business is able to support all these initiatives, why not deploy cash at such lower returns? Why not pass it on to investors or do something better off it?

Abhishek Bansal — Chief Financial Officer

So some of the new projects that we have undertaken tend to be long gestation projects. There could be a situation where we think that an aggressive advertising plan could help us scale exponentially. So we don’t want to be — we want to be in a situation that we can comfortably take those decisions with the cash on our balance sheet.

Naman Jain — Individual Investor — Analyst

Okay. And just one small feedback, so I think it has also got to do with the previous participant who had asked the question. I think what is needed from the company is like you did your pilot launch in three cities. If there could be some small press release or something to at least keep the investors updated, because even I had asked in the last call when is the launch going to happen. And it was mentioned in the first half — so the end of the first quarter or maybe the beginning of the second quarter. It did happen then, but I had to go to the app and check whether it has been done. A small press release of the updates that are happening in the company would really help keep information flow regularly to the investors.

Abhishek Bansal — Chief Financial Officer

Sure, definitely we will do so. In this particular case, simply the thought process was that we launched this particular product with a few sort of vendors on Vivid. So we are on a day-to-day basis onboarding more vendors and expanding the catalog. So the thought process was once we reach a certain critical mass such that people are able to search for products in their relevant cities, it would be more prudent at that particular point of time to put out a public disclosure.

Naman Jain — Individual Investor — Analyst

Okay. And just one small clarification. So I tried ordering some product from JD Shopping, but a hyperlocal really I thought was that it should get delivered in about three to four hours. But to me on the app it showed it will be delivered by 3:00 PM and on the next day. So it’s not really hyperlocal in that sense, right?

Abhishek Bansal — Chief Financial Officer

Okay. So currently, in these particular three cities, there are certain pin codes where we are able to achieve that particular four hour timeframe. There are other pin codes where we are still onboarding vendors. Once we have vendors in each particular category, in each particular pin code, ultimately we’ll have that three to four hour delivery in each pin code. The incident that you mentioned is the exact reason that we have not been putting out a public disclosure, saying that this is live. So while the platform is live, to gather feedback from users who are using it, at the same time there is content expansion that is underway.

Naman Jain — Individual Investor — Analyst

Okay, okay. Point taken. Wish you all the very best for the future quarters. Hope we see the operating revenue growing with the bottom line.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Vivekanand from Ambit. Please go ahead.

Vivekanand Subbaraman — Ambit Capital — Analyst

All right. Thank you again for the follow-up. Abhishek, can you give us some color on the cash operating cost that you foresee, the inflation that you foresee in fiscal ’23 and ’24 for the cash operating cost? And secondly, could you comment on the operating margins of the company if you hadn’t been investing in these multiple new initiatives, broad senses putting up? Thank you.

Abhishek Bansal — Chief Financial Officer

So firstly on cash operating cost escalation in FY ’23, ’24, difficult to say. Having said that, I think on the employee expenses, clearly with overall inflation being quite high, 7% to 8% on an overall basis, definitely needs to be rolled out. Similar could be for other expenses. On your second query regarding these new initiatives. So new initiatives, about INR12 crores to INR13 crores of spends are actually capitalized as assets under development. So since these particular products are still in the building stage, these particular costs don’t hit our P&L at this point of time.

Vivekanand Subbaraman — Ambit Capital — Analyst

That’s useful. Could you also comment on what portion of the new initiatives investments are hitting the P&L or is it entirely going into the assets under development?

Abhishek Bansal — Chief Financial Officer

So entirely it’s assets under development for new transaction-related initiatives.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. And — but the JD Mart costs are in the P&L, right?

Abhishek Bansal — Chief Financial Officer

Yeah, they are already in the P&L. Yes, they are complete in P&L simply because there the revenue model is listing fee and the product had been obviously launched long time back.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay. And just to recount the new initiatives apart from JD Mart, which is already hitting the P&L because you have launched the product. They would include JD Shopping, JD Xperts and I believe there was product on the real estate side, right? Am I missing something?

Abhishek Bansal — Chief Financial Officer

Yeah, primarily these particular products. JD Shopping, JD Xperts. So basically, products-related transactions form part of Shopping. Services-related transactions form part of Experts.

Vivekanand Subbaraman — Ambit Capital — Analyst

Okay, understood. Thank you.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. Next question is from the line of Vijit Jain from Citi. Please go ahead. Vijit, may I request you to unmute your microphone from your side, please? Vijit, may I request you to unmute your line, please? Due to no response, we move on to the next participant. Next question is from the line of Anmol Garg from DAM Capital. Please go ahead.

Anmol Garg — DAM Capital — Analyst

Hey, hi Abhishek. Abhishek, just had few questions. Firstly, if you can split the advertisement cost during the quarter between the paid campaigns and the brand-related advertisements that would be great?

Abhishek Bansal — Chief Financial Officer

So out of the INR6.5 crores that we spent, almost about INR5.5 crores to INR6 crores went as part of digital initiatives.

Anmol Garg — DAM Capital — Analyst

Sure. And secondly, if you can also give your views that if you are planning to do any acquisition related to — in the JD Mart space particularly to acquire more customers or to have more value-added services?

Abhishek Bansal — Chief Financial Officer

No, there aren’t any such thoughts on acquisition as of now.

Anmol Garg — DAM Capital — Analyst

Sure. And thirdly, just wanted to ask that largely what would be the average realization of JD Mart right now? And how many will be the paid suppliers in the category? And in continuation with the same, has there been any increase in the customer acquisition cost from — right now as compared to a year back? That’s it from my end.

Abhishek Bansal — Chief Financial Officer

So average utilization for JD Mart or B2B-related campaigns would broadly be in the range of about INR20,000 per campaign on a annual basis. And regarding your question around the customer acquisition cost, so customer acquisition cost currently is would be bit higher versus what it was last year due to higher salary levels. But as and when the current batch of sales team achieves desired productivity once they get tenured, I think our particular cost of sales will be at par with what it was one or two years ago.

Anmol Garg — DAM Capital — Analyst

Sure. And I mean, if you can also give the paid supplier numbers in JD Mart?

Abhishek Bansal — Chief Financial Officer

So paid suppliers there broadly would be closer to about I think 100,000 or so.

Anmol Garg — DAM Capital — Analyst

Sure, sure. Thanks, Abhishek. That’s it from my end.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Abhishek Banerjee from ICICI Securities. Please go ahead.

Abhishek Banerjee — ICICI Securities — Analyst

Hello. Am I audible?

Operator

Yes, sir. You are audible.

Abhishek Banerjee — ICICI Securities — Analyst

Okay. Hi, Abhishek. Thanks for the presentation. I’m relatively new to the company, so might have a few basic questions. First of all, I will start with the ad spends part. So what did you say you had budgeted for the full year, I missed that number?

Abhishek Bansal — Chief Financial Officer

About INR60 crores.

Abhishek Banerjee — ICICI Securities — Analyst

Okay. INR60 crores is full year and this would include your digital initiatives which has gained some offers on your JD Shopping platform?

Abhishek Bansal — Chief Financial Officer

No. So this particular INR60 crores does not include any customer acquisition cost or advertising spends for new initiatives. So this INR60 crores we have at this point of time, we amount for core business itself.

Abhishek Banerjee — ICICI Securities — Analyst

Okay. Got it. Thanks. Now moving to what you have spoken about, monthly subscription plans. Could you explain what is the rationale per head? I mean, did you see any liquidity concerns with your supplier base?

Abhishek Bansal — Chief Financial Officer

So Abhishek, what typically happens is, so Just Dial sells its listing move-in to payment plans either you could pay upfront or monthly payment plan. So for example, you could either pay INR4,000 down payment and sign a mandate which allows us to charge you INR2,000 per month on your bank account or you could directly pay us a annual subscription of INR22,000. Now post-COVID or during COVID what has happened is some of the customers might be averse to actually shelling out the entire INR22,000 upfront. So we thought that, okay, for us it is important to sign-up customers. Once they sign-up, once they test our services, definitely they would be willing to stick around for a longer period of time, plus the ecosystem is also evolving in a manner that everything is being sold on EMI plans, monthly instalment plans. So that is what has made us gravitate towards monthly plans, and which so far is working out pretty well.

Abhishek Banerjee — ICICI Securities — Analyst

No, no, absolutely understandable. So you’re basically saying that for a person who is going to the monthly plan, they are actually INR28,000 to you in a year? So that’s…

Abhishek Bansal — Chief Financial Officer

Over time, over a period of nine to 10 months, they would end up paying that particular amount.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. And what is the retention level? I mean, so for a customers who is going with the monthly plan, so what is the average realization you’re getting from them in a year?

Abhishek Bansal — Chief Financial Officer

So average realization that we get from our monthly customer is very similar to what we would get from upfront customer. So last quarter whatever we sold on monthly plans, approximately INR20,000, INR19.500, INR20,000 annually is likely to be the annual realization. So what happens is, in a monthly plan, my ticket size tends to be slightly higher. So upfront plan might be say INR21,000, INR22,000 for the year. But in a monthly payment plan, I am able to get them to sign-up at INR2,000 a month, which effectively is INR24,000 for the year. So even if the customer does not honor full payment or honors for say nine to 10 months, I still end up getting INR20,000, INR21,000.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. But — I mean, is there a time lag? I mean, what does it account to? Is it coming a little lower?

Abhishek Bansal — Chief Financial Officer

Not really. So in fact, in this particular case, whatever are our particular monthly plans, they tend to be perpetual in nature. So they get auto renewed at the end of each year. So even today, we have certain customers who signed up on monthly payment plans five years, seven years ago. And in fact, there is zero cost of sales in those particular plans. So the time value of money relatively is not a factor — a significant factor in this.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. Okay. So coming from slightly different angle, so what was the annual plan cost say a couple of years back? Has that increased your earnings?

Abhishek Bansal — Chief Financial Officer

Annual, sorry?

Abhishek Banerjee — ICICI Securities — Analyst

So the annual subscription cost that we were talking about, how — what have been the inflation in that over the last three, four years?

Abhishek Bansal — Chief Financial Officer

So we — during COVID times, we had actually rolled out certain discounts to customers. So the first thing that we did in the month of October-November was withdraw all those particular discounts. Our pricing varies by geography, pricing varies by category. Pre-COVID, if you see our realizations used to be at the peak was about INR18,000 per campaign annually. Right now, while the P&L realization would be lower, because P&L revenues as I mentioned are lower, but the realization that I’m getting from customers that I am signing up right now is ballpark in the range of about INR19,500, INR20,000. So there has been about 8% to 10% increase versus my pre-COVID peak levels.

Abhishek Banerjee — ICICI Securities — Analyst

That’s really good to hear. But see, the reason why I was asking it is that while on a yearly basis when you’re asked to make a payment, it’s actually easier to pass on inflation whereas if you’re doing it on a monthly basis. Because as you’re saying, if there is an auto debit, right, and if you need to increase that INR2,000 to say INR2,500 that would require a customer approval investing, which might be a little bit of a question mark, which is what I was trying to understand there.

Abhishek Bansal — Chief Financial Officer

So there also it is not necessary that you need a customer approval in the sense that, yes, you need a customer approval, but it is the — but if the limit on the previous mandate is higher. So for example, versus a INR2,000 per month plan, if the limit set is INR3,000 per month, you can actually bill post customers’ consent for a higher value. And right now also there are 30% customers that come on upfront payment plans. Monthly payment plans are lucrative to get a new customer into the ecosystem. And thereafter, once customers are satisfied with the services, want to take up higher value plans, a good chunk of them want to opt for upfront plans. Their renewals obviously happen with a inflation built in.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. Got it. Understood. Very clear. So is there any new passing on this thing to NBFC perhaps, I mean taking a loan out in that sense? Can you facilitate that or have you done that in any way?

Abhishek Bansal — Chief Financial Officer

So we provide various payment modes. For example, our payment mode is EMI on your credit card, EMI on your debit card. In fact, those plans work in a manner that customer has to pay on a monthly basis to their respective bank credit card, whereas we get the money upfront. There in fact we incentivize by bearing that particular interest component. So we tell the customer that you will anyway pay INR2,000 per month on your credit card and we are — you don’t have to pay any extra interest. As Just Dial, the benefit we get is, we get the entire whatever INR22,000, INR24,000 less whatever is the interest upfront. So all those particular payment plans are being made available to our customers.

Abhishek Banerjee — ICICI Securities — Analyst

And that is accounted for in the 70% or it’s in the 30%?

Abhishek Bansal — Chief Financial Officer

I count it in 30% because I got the money upfront.

Abhishek Banerjee — ICICI Securities — Analyst

Okay, okay. Okay, sir. That was very helpful. Now moving to the new initiatives, will it be possible for you to share any of the take rates for JD Shopping and JD Xperts?

Abhishek Bansal — Chief Financial Officer

So JD Shopping take rates broadly should be — like it will vary by category, but overall should be in the range of I think 7% to 8% depending on certain categories such as mobile phones could be lower, whereas categories such as apparel, etc. would be higher. And in case in future unbranded products come in, there obviously, take rates would be higher. And on the services side, it is typically in the range of around 20% or so.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. So in terms of services that you’re providing, what are the touch points that you’re interacting with the customer? And what are the touch points — what are the services that you are helping your suppliers?

Abhishek Bansal — Chief Financial Officer

So while the vendors are onboarded, they are given proper checks, etc. at the time of onboarding. We have also started some bit of training also for these particular vendors. They go through complete SOPs that they need to follow, while fulfilling orders that are passed to them. As far as user is concerned, we keep them completely aware of when is the vendor likely to arrive. In case of any delays or any rescheduling, etc., there are particular — either that automatically gets done via the app or there is a team that proactively reaches out and does that. So whatever a user and a vendor need to do or need to be assisted in order to fulfill that particular transaction, either that is done in an automated manner via the platform or if the automated stuff is not able to assist them, then there is a manual intervention that takes place.

Abhishek Banerjee — ICICI Securities — Analyst

Okay. So this you are obviously talking about JD Services, right?

Abhishek Bansal — Chief Financial Officer

Yes.

Abhishek Banerjee — ICICI Securities — Analyst

So see vis-a-vis somebody [Indecipherable] I mean, what proportion of the services an urban company gives would you be [Indecipherable] that has been 70%, 80% of that.

Abhishek Bansal — Chief Financial Officer

Proportion in terms of number of services or how?

Abhishek Banerjee — ICICI Securities — Analyst

No, no. I’m talking about — if say, I want a tumbler and if I’m say ordering on urban company, vis-a-vis if I’m ordering on JD Xperts, what are the services that urban company — will the services of urban company be more than what you are giving or same?

Abhishek Bansal — Chief Financial Officer

So in my assessment, services would be almost the same because there is a standardized tariff card for each particular service. You will be as a user informed pre-hand which particular provider will come to fulfill that particular transaction. You will have similar options for payment. The key lies in what other value-add services that we can provide. So mainly the idea is that earlier users were calling up these particular professionals then negotiating a tariff or a rate at their particular doorstep, now everything is done by a click of a button with three information to both the user and the vendor how much needs to be charged. And once the transaction is concluded, user can pay via cash on the spot or pay online and all those particular features are in place.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. So how many services do you happen on JD Xperts right now?

Abhishek Bansal — Chief Financial Officer

Currently, eight categories are life.

Abhishek Banerjee — ICICI Securities — Analyst

And how many do you foresee in the near-term?

Abhishek Bansal — Chief Financial Officer

So eight would probably go to around I think 10 to 12 categories. We’ll keep taking a look basis. The idea will be to sort of master the existing set of categories first.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. And this is my last question on JD Shopping. You mentioned 7% to 8% take rate. So for that, did you help in order fulfilment in any way?

Abhishek Bansal — Chief Financial Officer

So we have tied up with third-party logistics service providers. Essentially, we are a marketplace where vendors are listed. The logistics is also third-party. And this particular platform connects those particular users with sellers. So user places an order, seller is informed, seller keeps the product ready. The third-party logistics provider goes and takes up the product and delivers it to the user.

Abhishek Banerjee — ICICI Securities — Analyst

Okay, right. The money is held in an escrow account and after…

Abhishek Bansal — Chief Financial Officer

Yes, money is held in an escrow. And once the timeline for returns or refunds are over, then it is released to the merchant.

Abhishek Banerjee — ICICI Securities — Analyst

Got it. And you have no…

Operator

Mr. Banerjee, sorry to interrupt you.

Abhishek Banerjee — ICICI Securities — Analyst

I’m so sorry. That’s fine. That’s fine. Thank you so much for your time, Abhishek. Really appreciate it.

Operator

Thank you so much, sir. The next question is from the line of Arjun Ashar, Individual Investor. Please go ahead.

Arjun Ashar — Individual Investor — Analyst

I wanted to ask how long will you be in the content enrichment [Technical Issue]

Operator

The line for the participant dropped. We’ll move to the next participant. The next question is from the line of Swapnil from JM Financial. Please go ahead.

Swapnil Potdukhe — JM Financial — Analyst

Yeah, hi. Thanks for the opportunity. So Abhishek, just wanted to understand your strategy change. So last year same period I think we had spent a lot in during the IPL to promote our B2B JD Mart business. This year we have added — the last two, three quarters, we have significantly ramped up our sales team. And I think basis the numbers that you shared, you have been able to — you have seen significant traction in your JD Mart business or the B2B side of it. Will that be fair to say that your sales team is more — has been able to deliver better results compared to the advertising spends that we did last year?

Abhishek Bansal — Chief Financial Officer

So Swapnil, the advertising spend that we did almost at the same time we got hit with the second wave of COVID which further impacted SMEs across B2C, B2B segments. Last two to three quarters, we have spent time in terms of fine-tuning our pricing or sort of withdrawing all sort of discounts, ramping up our sales force. So both B2C and B2B are coming back on track. But with the increasing proportion of B2B and dedicated focus by our 600 plus B2B monetization team, definitely these particular categories are giving better revenues.

Swapnil Potdukhe — JM Financial — Analyst

Okay. And second is a question, so we used to have around 535,000 campaigns pre-COVID that dropped to around 430,000 since some time in the second quarter last year. Now out of this mortality that we are seeing, roughly 100,000 odd, how much have we been able to recover back or how much is pending? Can you give some sense on that?

Abhishek Bansal — Chief Financial Officer

So currently we are at about 485,000 campaigns. So half of the drop is sort of covered. And endeavor is that we should exit the year at closer to our peak campaign counts. So last two quarters itself we have added about 45,000 campaigns.

Swapnil Potdukhe — JM Financial — Analyst

Actually my question was from the perspective like of 100,000 odd that went out of the system, right, how many are part of that 45,000 that you have added in the last two quarters? And what is the potential recovery that we can think about beyond the new additions that you might have seen?

Abhishek Bansal — Chief Financial Officer

See, we are dealing with the small and medium businesses where what happens is a particular business might be or a particular person might be doing a certain XYZ business two years ago. Later they might be doing some other business and they might be advertising with us at both time periods. So we do not directly look at it as or it is not possible for to look at it as that 100,000, which actually went out or did not renew, how many of them have come back. In any case, in case of Just Dial, even if a customer has not renewed, be it pre-COVID period or current period to whatever it is, it does not mean that the customer has gone away forever. So the way Just Dial has an advertising budget, for example, FY ’19 we spent about INR65 crores, next year, COVID year we spent only INR6.5 crores. Then again we spent about INR65 crores last year. So that will be sort of similar behavior for SMEs also. Whenever they are comfortable to advertise for their particular business, they would come and see whichever platforms they want to advertise. And there could be periods where they may not want to do so. So the way we evaluate is what is the total current number of active campaigns that we have.

Swapnil Potdukhe — JM Financial — Analyst

Okay. And given that we did 20,000 — 22,000 additions this quarter, do you think we will be able to sustain such additions in the forthcoming quarters also? Typically, what — if I go historically, so one good quarter is followed by some subdued numbers in the following quarters, but it’s been two consecutive strong quarter that we have had. How do we think about the forthcoming quarters?

Abhishek Bansal — Chief Financial Officer

So as I said that the last particular quarter considering exit run rate was better versus full quarter. That sort of gives us assurance that some of these particular trends should keep improving on a month-on-month basis. And if we are thinking that we want to exit the year at peak campaign run rate, then definitely a healthy quarter-on-quarter campaign addition is what we ideally foresee.

Swapnil Potdukhe — JM Financial — Analyst

Right. And just the last question. So you mentioned INR60 crore of budget for core business A&P. How can we think about the non-core business enrichment that you’re thinking about? Like how much should we factor in or any sense of guidance on that?

Abhishek Bansal — Chief Financial Officer

So that I think we are still working out that once these particular products are in a decent stage to be advertised, both on digital and subsequently ATL, I think we will have to wait for another probably a quarter or so before we can sort of have some clarity on how much spends we are likely to do on those initiatives.

Swapnil Potdukhe — JM Financial — Analyst

Okay, good. Thanks a lot for taking my questions.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Nayan Thakkar from Ashika Group. Please go ahead.

Nayan Thakkar — Ashika Group — Analyst

Hello.

Operator

Go ahead, sir. You are audible.

Nayan Thakkar — Ashika Group — Analyst

Yeah. Thank you sir for taking my question. Sir, I would like some — I would like to have some clarification on the plan of parent entity with respect to JD’s platform, whether the JD platform will be integrated to the JioMart or any other application of parent entity?

Abhishek Bansal — Chief Financial Officer

So, Nayan, yes, there can definitely be synergies or integration. So we are sort of in touch with them. For example, on our particular platform, we have already integrated the access for Jio SIM Cards. Similarly Just Dial apps could get integrated with BYJU application, which already has access to multiple other RIL Group applications. So some of those particular integrations are already being discussed.

Nayan Thakkar — Ashika Group — Analyst

Sure, sir. Thank you. Sir, you were just explaining us with respect to the logistics third-party delivery partner. So can we understand, is it like the RIL’s logistic company is being used by the Just Dial for providing the services?

Abhishek Bansal — Chief Financial Officer

No, these are completely whatever third-party services such as Dunzo, Grab, Shipyari and whatever other logistics service providers that are out there who do e-commerce fulfillments for various companies.

Nayan Thakkar — Ashika Group — Analyst

Okay. Sure, sir. Thank you so much.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you. Ladies and gentlemen, we’ll take the last question from the line of Arjun Ashar, Individual Investor. Please go ahead.

Arjun Ashar — Individual Investor — Analyst

If I’m audible now, I wanted to know how long will we be in the pilot phase for the first three cities for JD Shopping and JD Xperts in terms of content enrichment so that we have gone wide as well as deep in various categories of content being listed on the app?

Abhishek Bansal — Chief Financial Officer

So in terms of JD Shopping, that went live for users just about I think one month ago and we are already in the process of adding more cities. So current quarter, it would get added. As far as Xperts is concerned, those particular — current set of services are already live in about 10 to 11 cities.

Arjun Ashar — Individual Investor — Analyst

No, I’ll just illustrate. So for instance, I visit a store like a Benzer or Abersons on JD Shopping, I see only a few categories. Like in Benzer, you just had shopping bags, whereas it’s an entire superstore or if I look up any local hardware store, when do I reach a stage where I can find at least 100 to 150 SKUs of that hardware store listed on JD Shopping? When do we reach that phase?

Abhishek Bansal — Chief Financial Officer

So I think it will take around six to nine months for us to reach that particular stage where there is a reasonably broad selection of products and available across all major pin codes and top metros.

Arjun Ashar — Individual Investor — Analyst

And what would be our strategy to funnel users to these listings because right now there is no awareness? If I want to buy say a door knob, many don’t know that there is an option like that. And then what happens is that our customers also don’t have an incentive to load their entire catalog of inventory on JD Shopping. It becomes a chicken and egg kind of situation. So what is our strategy to attract new users to the website and app?

Abhishek Bansal — Chief Financial Officer

So couple of things. One, these particular products and these particular vendors will have access via our particular homepage on existing platforms. So from the Shop Online section users can explore these particular products. Second, there is already a traffic that comes organically searching for these particular listings. So once users come for these particular listings, they get to see that, okay, there are transactions or shopping-enabled. Third, there will be dedicated apps also for these particular initiatives. And once we start advertising, that is how users will basically get to know that — more users will get to know that these particular optionalities exist and that is how product will get scaled up.

Arjun Ashar — Individual Investor — Analyst

Okay. And the advertising will be like national campaigns or there will be again hyperlocal advertising campaigns like in front of store fronts and all that? Like how PayTm used to have these stickers on every cashier’s desk?

Abhishek Bansal — Chief Financial Officer

So in the first phase, it will be digital in nature, because that will help us to target certain geographies, certain categories of products. Once we have decent selection and more geographies covered, then it will be a ATL campaign. Thereafter, then it can be a mix of hyper local marketing. I mean, there will be annual budget part of which will go towards branding advertising and part of it will go towards digital other sorts of hyper local advertising.

Arjun Ashar — Individual Investor — Analyst

Sure. All the best for the future.

Abhishek Bansal — Chief Financial Officer

Thank you.

Operator

Thank you very much. Ladies and gentlemen, that was the last question. I will now hand the conference over to Mr. Abhishek Bansal for closing comments.

Abhishek Bansal — Chief Financial Officer

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

Operator

[Operator Closing Remarks]