Just Dial’s dismal quarter-on-quarter results have raised doubts among investors over the e-commerce growth story. Bloomberg TV India spoke to the company’s CFO Ramkumar Krishnamachari, to get an in-depth view of what has slowed earnings growth.

Why is your earnings growth slowing quarter-on-quarter?

The revenue growth has been 20 per cent for the second quarter. We had some one-time adjustments and if you remove those, the growth is 20 per cent. From our perspective this has not been so good a quarter from the revenue standpoint. We do recognise that. We have taken steps to accelerate sales growth. It was more due to the fact that we had some delay in expansion on the sales front that caused a dip in volume and impacted growth. Can you elaborate on the pricing action and the changes in strategy?

One, to address the volume, we are looking at aggressively expanding on the sales front across remote and main cities. And, as far as the pricing is concerned, we have rationalised it to make it attractive for more and more advertisers to advertise on our platform. We have expanded the premium position slot or the fixed position slot. So these are the two steps that we are taking. On a QoQ basis, why have you have seen drop in Ebitda margins?

No, actually the overall pie should get positively impacted. So the rationalisation of price is to reflect a greater fine-tuning of our pricing engine to reflect the demand and supply on a pin code category level combination. So it will have a positive impact on the overall pie of the revenue. So margins will not get impacted at all. On pricing, we have several thousand price points from an advertiser’s stand point.

So it is all we have done to fine tune that to make it more attractive from an advertiser’s stand point. We believe the margin got impacted in Q2 more due to the growth as well as the entire expansion we have done in Q1. The impact of that got felt in Q2. The impact of the increments we have given our employees has come from Q2 onwards, which is consistent from last year. So couple that with the reduction in the top line growth, sequentially it has impacted the margin. So we should see that these trends get addressed once our sales top line growth acceleration starts.

Margins dropped 550 bps on a QoQ basis. Will you cut back on investment?

We are not going to stop investment in talent acquiring, top talent and investment in technology. These, we believe, are critical from a medium to long term.

Internally, what would be your own target for paid listings growth?

Currently we are at 2.2 per cent. Definitely the potential is there to substantially increase the number of paid listings. It is only a question of internally making sure that we have the right approach and strategy to expand into many locations to accelerate the volume growth. So our belief is that there is tremendous headroom for growth.

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