Vasa Denticity Limited (DENTALKART) Earnings Call Transcript
August 12, 2026
Earnings Call Speaker Segments
Good afternoon, everyone, and a very warm welcome to all of you. On behalf of Vasa Denticity Limited, I welcome you to the earnings conference call to discuss the operational and financial performance of the company for the quarter ended June 30, 2026. From the management team, we have with us today Dr. Vikas Agarwal, the Managing Director; Mr. Sandeep Aggarwal, the Whole-Time Director; Mr. Mayank Bawari, VP of Supply Chain; and Mr. Shahid, VP of Marketing. The financial results and the investor presentation for the quarter 1 have already been filed with the stock exchange. We hope you have had the opportunity to go through the same ahead of this call. Before we begin, I may state a few instructions for all the investors for your convenience. So the instructions are as under. [Operator Instructions] We will request you to please avoid raising question on any information that has not already been placed in the public domain since the management will not be in a position to comment on the same. Please note that this call is being recorded and the transcript will be made available on the company's website in due course, in line with our disclosure obligations under SEBI regulations. I would now like to hand over the floor to Dr. Vikas Agarwal for his opening remarks. Over to you, sir.
Thank you, Esha. Am I audible?
Yes, sir, you are.
Yes. Good morning, everyone, joining us today. Thank you for making the time. Some of you have been with us since we listed. Some of you joined more recently and a few of you are dentists who own the shares as well as buy dental products from us. Whichever of those you are, thank you for your patience over the last year. It has been not an easy 12 months to hold the stock, and I do not take your confidence lightly. The results and the presentation are already with the exchange. So I'm not going to read numbers out to you. I want to use these few minutes to take you -- to tell you what actually happened inside the business this quarter and why I think it matters. This was a repair quarter that finally showed up in the results. Last year, we had a problem, and I said so plainly at the time. Our in-house brands, the products we design, source and stand behind ourselves went short. When they went short, our customers bought third-party products instead and those carry a thinner margin. That one operational failure ran through our entire second half. So for the last several months, a large part of this company has been doing deeply unglamorous work, rebuilding supplier coverage, fixing forecasting, recutting delivery routes, none of it makes a good press release. This quarter, that work started to show. Gross margins improved for the first time in 3 quarters. Our cost base is meaningfully lighter than it was a year ago, and it is lighter while we are shipping more, not less. Both of those are in the numbers you already have. I want to be careful here. One quarter of improvement is a direction, not a destination. We are early in this, but after a year of asking you to believe that the problem was operational and not structural, it is a relief to be able to point at something rather than explain something. If you take away only 3 things from this quarter, literally these. First is, which is the control. The strategic reason we build in-house brands is not margin. Margin is the outcome. The reason is control. When we own the brand, we own the control of the quality, we control the price and critically, we control whether the products is on the shelf. Last year taught us what happens when we do not. This is why the in-house portfolio is where our capital and attention are going. The second thing is leverage. Our cost base grew far more slowly than our business did this quarter. Employee cost barely moved. Our cost to serve each order came down. That is not a cost-cutting story, and I want to be precise about that because I know some of our team may be watching. We are not shrinking the team. We are automating the repetitive part of the work so that the people we have spent their time on customers, on sourcing, and on building products. The goal is that when volumes double, the routine workload does not. And the third thing is the new business is real. The digital dentistry division we started last September has stopped being an experiment. Intraoral scanners, milling machines, 3D printers, imaging products. India's clinics are digitizing and they are doing it at a very low base. Adoption here is in the low single digits against roughly 40% globally. A clinic that buys equipment from us does not stop there. They come back for consumables, for service, for training. And that is a much deeper relationship than a onetime sale. Let me also say what I'm not happy with because I would rather you hear it from me. We had marketing spend very tight this quarter. That was the right call for the cost base, and you can see the benefits in the results. But it has a cost of its own at the top of the funnel, and we can see that cost. Getting that balance right, spending enough to keep bringing new lenders onto the platform without giving back what we have just recovered is the judgment we have to make, and we have to make it well. I do not think we have perfected it yet. We also have work to do on delivery times. We expanded into Tier 2 and Tier 3 India faster than we optimize the routes to serve it. We are fixing it, and I will report on it. Now let me step back because a quarter is very short unit of time to judge a company by. India spends somewhere between $4 to $5 per person per year on dental care. The United States spends around $350. That gap is not a statistic to me. It is that a woman in a district town who loses a teeth, she did not need to lose because the right material was not available to her dentist or because what was available was counterfeit. Most dental supply in this country still moves through fragmented local distribution. A dentist in South Delhi and a dentist in small town in Odisha do not get the same assortment, the same price or the same speed. There is no good reason for that. It is simply how the industry grew up. What we are building is not an e-commerce store. It is the procurement and knowledge infrastructure that Indian dentists can run on genuine products at a fair price delivered anywhere with the education and the community around it. 23,000 products, hundreds of brands and a decade of understanding what a dentist in each pincode actually needs. If we get that right, the market does not need to grow 4x for us to do well. It is already large and it is already underserved. We simply have to be most reliable way to reach it. That is a decade-long project. We are running it from a clean balance sheet without working capital we do not have. And this year, we are deliberately not chasing acquisitions. Focus for us is the strategy and people. So a quarter where the repair work showed up a cost base that is genuinely like us and a new division that has found its feet and a funnel that needs our attention. I would rather bring you a quarter like this one with the good and the unfinished both stated plainly than a quarter of good headlines and quiet problems. We will keep reporting to you the same way, including when the news is not flattering. Thank you for your time and for your continued trust. My colleagues and I are happy to take your questions.
[Operator Instructions] Our first question is from Mr. Sidhart.
My first question is why are so many directors are leaving the company and Key Managerial Personnel?
Recently the Company Secretary left and Mr Ravi Parmeshwar who was an Independent Director left the company. Ravi Parmeshwarji was actually retired from ReNew Power 2 years back when he joined us as an independent director. Now he is joining another company instead of being retired. So he requested us that he cannot work as an independent director according to the new company policy. So that's why he left. Nidhi who was the Company Secretary found a better opportunity, better salary. So she left.
My second question...
If there's anyone I did not address, please tell me the name I'll address.
No. That's it. And Dr. Vikas last time we had a long conversation I'm the dentist. And I noticed that from the con call transcript from the you have removed our conversation. Why this transparency issue?
I have to check that. I have no idea about it. Normally something which is irrelevant like a name of a competitor or something that is removed. That was discussed it might be removed.
No, but we discussed more other important issues like opening of showrooms when you are an online-first platform. Second issue was you coming to the NSE main board than 3 years have been completed and you have still not completed, you have still not decided on coming to the NSE main board other issues were also there like you have not kept a professional CEO. But the whole conversation was removed. That shows some real transparency issue from your side.
Okay, I'll look into it and get back to you.
So the next question is from Deepak Poddar.
Just wanted to understand what would be our stock out percentage? I mean, I think it was close to 15%, 13% last year. And as you said in your opening remarks, it has improved, right?
Deepakji during the stock out peak, it was as big as 33% last quarter, it went down to 13%. Our target is to take it below 5% and we are taking all the necessary steps.
Okay, to reach below 5%?
Yes.
And this first quarter it was around 13%.
Yes, 12.87%.
And how many quarters you will require to reach the normalized 5% level?
Literally I cannot give an answer on that. We are trying our best to progress near 0. But I don't know how much time it will take. Internal target is by December, we reach 5%.
Yes. That's what I was trying to understand. I mean maybe 2 quarters, we are saying -- I mean we are trying.
Yes there are some unforeseen instances like there is a cyclone in China recently or there are stock out from the vendor itself, the manufacturer stopped producing a particular product. Things like that happen. We'll try to go as much as possible.
Okay. And secondly, on the growth part, I mean how should one look at growth? I mean if I have to see deeper this quarter, our average order value rose by about 27%. That is because your higher ticket size digital dentistry product came through, right? And order volume grew 8%. So this growth was largely driven by the high ticket size. So how should one look at your volume growth and overall revenue growth over the next 2, 3 years?
Sir we are positive on growth sale we hope that we grow as much as we have grown in 3, 4 years in the first quarter to see similar results in the second quarter as well.
Okay. So similar growth that what we have seen in past quarter is what we look to kind of achieve.
Yes.
And then your high-ticket margins, how was the margins placed in your high ticket volume?
Margins only very high-ticket items is less. And on consumables, the margins are the highest. However, we try to pass on the best possible price in the market to the dentist to the customers. It is always the idea to have a fair price on each [indiscernible]. so I've given a guidance of 27% to 30% gross margins in [indiscernible].
And what would be the level? I mean your high ticket size, what is the margin range?
Between 8% 10% gross margin.
And how much revenue mix we can expect from this high-ticket digital dentistry products over the next 2, 3 years?
Currently, it is less than 10%. And our idea is to drive the sales of consumables through high-ticket products. So once a doctor buys a high-ticket product, they might require the consumables long term for us.
And the mix over the next 2, 3 years, how will this mix stabilize between consumables.
Consumables will remain the highest assortment mix. I don't want to tell the future numbers on the mix, but consumables will remain the focus area always.
So our next question is from Mr. Swaraj Mehta.
Congratulations on a good set of numbers. So my first question was on the expected improvement in margin over the next few years. So what would be the drivers of that? Apart from increasing in gross margin, how do we look at OpEx per order and how will it trend going forward?
Yes. Swarajji, we have Mayank with us, who is the VP, Supply chain. Mayank, can you take the question?
Yes. So Swarajji, so what we are doing is that we are trying to just operationalize and get everything in order. So we are trying to increase the delivery TAT and the order ratio, at the same time, increasing the overall inventory health of the system. So these are the 3 things that we have made to resolve these kind of issues.
And how do we see the OpEx per -- should it plateau or should it decrease going forward?
It will decrease. If you see the first quarter also the cost to serve is drastically down, the overhead expenses going down. We have optimized the warehouse to a good extent, and we see a lot of potential for it to go down. So if we work on the -- if we just take a picker, picker takes around 3 minutes to pick a particular order, which has 4 SKUs. So if we can optimize it from 3 minutes to 2 minutes, we'll have a huge cost saving because less number of people will be required to -- for a larger set of orders in the future. So with time, as the volumes grow, I think the percentage will continue to go down.
Got it. And so one other question was how is the membership scaling up? And we saw some -- quite some education seminars being done. I think we've done around 200 events and webinars. So how is that scaling up? And how does that help grow our business.
So education is a very important lever to sell a scientific product. So for example, if we are launching a new endomotor and if we educate the postgraduate students or dental new clinicians about the tips and tricks of a root canal, also tell them which endomotors you can buy. So ultimately, the outcome is root canal. And there we also tell them which kind of motors you can buy. So ultimately the outcome is that we can sell our products and we are benefiting the community by giving them more education on their practice, on the clinical skills. So that is turning well. You can see that they are growing with time, we are doing more education. And regarding the membership, the numbers are some x higher than what we had.
Sir, what are the internal metrics that you track for your business from what you had shared from your PPT track the growth of your company? Because earlier, we were -- there was a lot of data, which was very useful, but it has been narrowed down. So we would really appreciate to which data should we look -- what point should we look at to gauge the business?
Internally, most important data for us right now is the OTIF, which is on-time in-full deliveries of items, the cost to serve per order and the overall cost to serve an order, including the overhead cost. So regarding the expense side, these are the metrics. Regarding the revenue, it's average order value and ARPU are 2 important metrics. ARPU average revenue per user.
I think because when you reported the last H1 FY '26 numbers, volume given in that PPT was 158, 182 for quarter 1 and quarter 2 last year, but that was changed to quarter 4 in quarter FY '26 to 175 and 204 for the first 2 quarters. So just wanted to know what was what led to those changed order numbers?
Yes, there was an internal error. So that's why it happened. But the latest PPT in the last quarter PPT have the correct numbers for the previous quarters.
And so with the shortage of inventory private brands last year, I'm sure you did a root cause analysis of this inventory shortage. So can you briefly explain us what has happened and what measures has the company taken so it does not happen again?
Yes. So what has happened, I will tell you and what measures -- Mayank is sitting Mayank will tell us. There were -- that was a mix of people issue, compliance issue about licenses and the supply chain issue. So overall, this led to a lot of stock outs. And one led to the other, and there was a cascading effect. So normally, it was 8% to 10% of out of stock on the platform and it went up to 33% majorly led by own brands. Mayank what are we doing now to sort it.
So currently, we've instituted forward deployment. So we are planning for demand forecasting for the next quarter. We will be also managing with the sales and operations planning just to get these numbers in order, and we should have a clear picture when to expect, what to expect in order to minimize these sort of stocks.
We have data in place to forecast what -- and also last quarter, FY '26 also, we had signed new brands for which minimum order quantity was required for which we added INR 16 crores. So the inventory increase in this quarter was the same reason or due to we are adding our own private brands.
First of all, we are growing. The sales is growing. So cash on delivery orders are also growing. We need to keep extra stock until the payment comes back to us, and we use that. So we keep extra buffer stock for that. And definitely new brand additions. And we have recently launched Instant as well, which is delivering the or same-day delivery or next-day delivery. So we need to have relevant stock, suitable stock available in the regional warehouses so that we match the customer same. So Swaraj, the thing is 97% of the market is still offline, and we are only 3% of the market. And the reason is that we take time to deliver. Despite having a large assortment, we need to reduce the delivery time lines. For that, we have come up with the Instant, you check on Dentalkart website, you will see a toggle Dentalkart Instant. So if you are delivering faster in your pincode some products will show up there. So roughly around 3,000 to 5,000 products currently will show in Instant, which we would like to optimize to 1,200 products in future, which are the most important clinical requirements, and we will try to deliver it same day. So for a mix of these reasons, inventory has gone up. And we have given a clear instruction or guidance in the presentation what inventory days we think we'll be within and what is the optimization going forward.
Right. Got it. And how is the -- instant deliveries were only for Tier 1 cities or Tier 2, Tier 3 as well or across?
Right now, it is Tier 1, but our target will be Tier 2 and Tier 3 as well. So very soon, we will look to start in Tier 2 and Tier 3.
And how was the order return rates this quarter we mentioned in the PPT, we started self-service refunds, which was a pain point earlier as many people were not receiving. So we have addressed this. So what did we do to improve this?
Yes. Sandeep, you can take this.
Sorry, can you repeat the question.
Yes. So what were the order return rates this quarter year-on-year and qu-on-quarter -- and we mentioned in the PPT that we started self-service refunds. So this was a pain point earlier, which has been addressed as many people were not receiving refunds. So what did we do to improve this?
So like we have 2 kind of returns. One is the RTO, which is like not delivered orders. Than other is issue that you're telling is the due to the product which are returning from the customer. So what we have done is we are doing the root cause analysis of the product based on the troubleshooting guides. If the product is less than a particular amount and there is no point to the product back we are issuing the refund hand to hand. There is automation involved, for example, like earlier, we used to have manual refund and manual reverse pickup from the customer. Now everything is automated. So once the dentist request the return reason request from the panel, right, automatically the reverse pickup happened. And once we check the reverse pickup has happened, automatic the refund has been issued to the customer. And there's an issue with the notification to the customer. So now the customer can see the entire info on the website and app as well. And other than that, we are sending the WhatsApp notification the communication the customer has. So customer is well aware about the situation. That was the major issue last.
And also Smileworks right now, I think we are at a quarterly run rate of INR 1 crores, which is a 100% increase from last year. But I think for the rate of today it's very small to make a difference on consolidated numbers. So what is the plan here? And how do we see it going forward?
So Smileworks currently is in its nascent stages. We are currently working on the fundamentals of making an internal software, managing the whole team in it, managing the whole process within the software. Once we are ready to scale, we will start marketing it through Dentalkart. So the same set of customers who are buying from Dentalkart also need services of a Dental Lab, and that was the idea to start Smileworks. Once we reach that stage where we can scale it, we will -- we expect that the numbers will multiply from here.
Got it. And another brilliant feature we added this quarter on Dentalkart being the image search. So what other tech investments are to be doing on Dentalkart to, as you said, to improve -- reduce redundancy and improve the resources required for order?
The biggest thing we are looking at right now is personalization that you see what is relevant to you. The next important thing we are building is the AI chatbot and voice bot. AI chatbot is already live that takes care of roughly 60% of the queries right now in Dentalkart. There are improvements which we understand. We are working on that. But AI chat and voice will serve a lot of customer queries, which currently the manual team is not able to handle to the best expectation of the customers. Thirdly, we are working on search optimization as well. Apart from image search, we are coming out with -- the doctor can send a photo written on a piece of paper and the items will be added to cart, which the doctor can finally approve. Then there will be recommendations in the cart itself that what products will be -- might be finished in your clinic, which you should look at. Then we are giving a dashboard to the dentist to see the what they are buying, why they are buying, what they should have bought, that kind of dashboard to a doctor so that they can make a better informed decision. There are a lot of things in pipeline, which are coming up like that. Doctors can also type their order and just text to us. So generally, in the unorganized offline market, people generally order on WhatsApp, they order on call or they just type it and send it. So we are trying to give all these options to the doctors, but through tech so that -- and through automation, no humans will be involved in this.
Just my last question...
Just to add is like session to order time. So our aim is to reduce the session-to-order time. So every -- like any customer of any type, if it is coming to Dentalkart, he must have the way to place an order from any way. And the total time duration of the entire order should be less as much as possible. So for example, if a person is like want to write something and place the order, he can do that in a very fast way. So personalization will give us [Foreign Language] more visibility [Foreign Language] Because regularly, these customers used to buy those products again and again. [Foreign Language] on a click, they can buy the entire stuff very fast and can get the orders placed. So it will give a moat to the experience of the customer, which is very important for us if we want to increase the ARPU of every customer.
There are some marketing initiatives also which I would like Shahid to tell us about.
So what we see that from a business itself, it's a high -- there's a high stickiness to our business to whoever -- whichever dentist is transacting with us. And having realized that we are already working on multiple automations to help, A, decrease the time to order that Dr.Sandeep was mentioning; B, give him an informed decision on making the right purchase call; and C, ensuring that he has all the personalized right information available to him as soon as the person -- him or her as soon as they enter the app. There are identified growth pillars we have for the business, right from a brand to the -- working on new customer retention, which is what you will see as compounding in the coming quarters.
Great -- and just my last question, how do we decide which products do we add to a private label.
There is a metric to that, Swaraj G. We know what a customer wants in a particular pin code, what price points they are looking at, what features they want for a product. And we generally not only try to replace an existing product in the market, we also try to add new values to the clinical practice. So there are a lot of products we sell, which are not available anywhere or which are clinical problem solvers. So something which is done in 3 steps might happen in one step. So we were the first to launch a system where you can count the number of times you have used the rotary file. So when you do a root canal treatment, there is a certain number of times a file can be used. Otherwise, we have to discard that. So there are certain kind of products we launch, which are new to the market. Generally, we experiment with a lot of products that will they work on a particular target audience or not. So alpha beta testing goes on for a lot of products. And some products, we are sure about that they will certainly work. So it's a mix of a lot of metrics that we launch products.
So our next speaker is Mithun G.
My question is mostly answered by you all. My only question is regarding to the guidance, revenue guidance, which was initially provided, then we have withdrawn it. So do we have any formal guidance for FY '27 and FY '28?
We have not removed any guidance, Mithun. Can you please tell us more about it?
Okay. So I suppose the initially revenue guidance for FY '27 is around INR 500 crores to INR 600 crores and FY '28, it is around INR 800 crores to INR 1,200 something like that which was provided initially, is it?
Actually, 1.5 years plan in our earnings call, I stated that we look up for INR 800 crores to INR 1,200 crores of revenue in next 5 years. And I think it is achievable if we use the data metrics we have. If we would take the right step, that is definitely achievable.
Great. Sir, we -- sir, I'm sorry, but I'm new to this company, so I'm trying to understand. We tried to acquire another company called IDS, and then we mutually terminated this agreement. Are we looking for any other buyout in coming days or we will just grow organically?
As of now, we are not looking to buy out. We have understood that we have to focus on our core first. Set a lot of things right now. And then in future, if we think that the organic growth in a particular category will be difficult to achieve, we will look for inorganic opportunities there. But as of now, there is no plan.
Okay. Sir, my next question is with regards to the sales. Are we doing 100% sales within India? Or do we have any export as a contribution?
I think 100% sales is happening in India. Maybe there might be some orders coming from outside India, maybe like some numbers like 10%, 15% maximum. We are not promoting ourselves outside India, and we don't sell majority of the products outside India.
Is it because of the logistics issue? Because most of the export driven has higher margins. That's the reason I'm trying to understand.
Yes. But there are -- actually, exports is a different game, which we currently are not playing. There are compliances involved in our industry for exports. And however, we have many products which are having that compliance, but we're not looking at exports right now because there's so much of opportunity inside India.
Great to know. Sir, my last question would be, within India, where are we focusing more predominantly towards Western side or Eastern side or the South side or the North side? I've seen your business is more related to the Northern side, but are we focusing only on the North or we are evenly distributed across India?
Actually, it's not about the geography. It's more about the type of customers. Shahid, you can share better after I finish. I think it depends on what price points or where the right to win is more in which category of customers. So we would like to convert the customers who are buying just 1 category of products into 2 categories. We have overall 11 categories. So we have seen that the customers who are buying more than 8 categories from us, their ARPU is more than INR 1.5 lakh. And the average ARPU is much lower than that. So instead of geography, within the customer metrics, there is a lot to look into.
Go on, sir.
Absolutely. So I concur with Dr. Vikas. We look at it from a different lens altogether to see what the customer actually wants and where [Audio Gap] mutually grow together. But however, if I have to give you directional input, we see that there is a lot of potential to be unlocked both on the metro side of the geography as well as the Bharat side. And there is a larger potential to be tapped on the Bharat side, which is what will be getting covered as we move more towards automation and personalization for the dentists.
Got it. So -- but for 1-day delivery, how does this logistics work as in are we okay with -- as in the same day of logistics within Maharashtra and within South something like that? Or we won't have that kind of function available for these kind of regions because our factory is not located in that region.
First, we'll start with wherever we have our warehouse and later look at what logistics support we have from the existing vendors. Than in future, we can think on opening our own dark stores or having a third-party keeping stock and doing third-party logistics for us.
So our next question is from Ms. Himanshi.
Dr. Vikas, congratulations on a good set of numbers. Could you share an indicative mix of the revenue that you get from Tier 1, Tier 2 and Tier 3 cities, please?
Majority of the revenue is coming from Tier 2 and Tier 3 cities. Tier 1 mix is still small. We know that there is a large room for growth in Tier 1. Going forward, we have strategies in place for that. But as of now, Tier 2 and Tier 3 have the largest share.
Okay. And that would be, what, about 80%, 90% or say more than 50%? I'm just trying to get a sense.
More than 50%.
Okay. More than 50%. All right. And as far as I recall, last year, you had reached about 1.4 lakh, 1.5 lakh dentists across the country. As per your estimation, just a range, how many dentists do you think would be there in India? And what would this number be now in terms of how many have you reached now as of, say, today?
So in terms of reach, we have reached almost all the dentists of India. There are -- as per the Dental Council of India and National Dental Register, there are close to 4 lakh registered dentists in India. And there are close to 100,000 or 1 lakh dental students in India. And taking the other dental professionals like assistants, technicians, the number is 5.5 lakh total customer base we have. We have reached almost everyone, close to 280,000 dentists or dental professionals registered with us. And out of them, half of them have ordered with us. A lot of dentists have not chosen to purchase from us because of some values which we are not providing to them like the expected delivery time lines or expected prices on certain products.
Okay. Sir, in terms of the average order value, I understand that right now, the average order value is about INR 4,000 to INR 4,500. On an average, how much does a dentist say, spend in a month? I'm just trying to understand the wallet share. And how do you plan on increasing the wallet share per existing customer?
So buying an equipment is a random decision, but I can tell you about consumables. Generally, a dentist in Tier 2 purchases INR 10,000 worth of consumables per chair they have in the clinic.
Okay. So that's about INR 10,000 per month. All right. And what would be your cost to serve, say, INR 4,500 or INR 4,000 order, just a range?
I have mentioned that in the presentation also. Correctly, it is less than INR 1,000. I think it should go down much below that as we grow.
Okay. And what would be our current -- I know you've already given us an average delivery time line, but say, across Tier 1, Tier 2, Tier 3, what would be your average delivery time line in those areas? I'm just trying to compare with how much the offline suppliers would supply and if that would require the dentists to shift online or not?
Yes. The national average is below 4 days now. And the majority of it is because of the long tail, which we have in Tier 4, Tier 3 towns. And especially like in seasons like these where monsoon and rains happen in Maharashtra, Kerala, in other parts of the country and floods are there in some parts of the country, there is a very long tail. That increases the average. In Tier 1 and Tier 2, generally, we deliver at 2.5 days.
Okay. Other than that, what -- I understand your aspiration is about INR 800 crores to INR 1,000 crores of revenue in the next 5 to 7 years. But just to get like a relatively shorter-term understanding, what would be our aspiration in the next 2 to 3 years?
We want to grow steadily and without compromising on the future growth. So idea is to acquire the customers' wallet share more than what we have already and to venture into new categories inside India clinic. And the revenue will be an outcome of this.
Our next speaker is Amitji.
So I spoke to many dentists, my wife itself is a dentist. And many times, whenever I visit the clinic, I ask them how much do you buy from Dentalkart. And most of the time, answer is not much. And then I ask them why not? Their main concern is always [Foreign Language] and versus the local distributor supports very well. One dentist told the distributor gives them different parts to try on and then makes them buy. Now I understand there is a learning curve and there's a behavior change that needs to happen. But what are you doing proactively to gain confidence of these kind of dentists? And I'm talking about the Ahmedabad dentist, which is I think it will be in Tier 1. So there are so many dentists -- everybody has heard of Dentalkart, but nobody is buying from Dentalkart, mainly because of the warranty and returns fear. So how do you address this?
Thanks a lot for bringing this question. It's a very important metrics we track the NPS and CSAT of the customers and the reasons why somebody is not buying from us or why somebody is buying only a small percentage of their whole wallet share. So we understand there is a gap in returns, refunds and warranty claims. That is the main reason that we are trying to shift things to AI chat and voice bot because the SOPs are clear internally, but we are finding it difficult to train humans on so niche level of products. However, there are different kind of customer expectations, different kind of customer experiences. So the 4, 5 or 10 customers you have inquired on this might not be the real scenario. 80% to 90% of the warranty claims, returns and refunds happen within the TAT. It is the edge cases where we lack, and we have to minimize the edge cases going forward.
Understood, sir. So my question is, you may be doing it, but what are we doing -- what are we doing to communicate that effectively? Don't worry, we are here. I mean is there any -- that needs to happen so that [Foreign Language] when you tell and you don't worry about the returns, we'll take care of it, then you build the confidence. So are we doing something on that?
Idea is that if a customer has informed us in any way that he has a problem, then it is our responsibility to sort it, be it a warranty issue, any -- even if somebody is not able to use the product well and we find it out, we have to solve it. So we are taking necessary steps to come close to the expectations as much as possible. So first of all, what you mentioned is hygiene. It is not even expectations. And first, we correct the hygiene, then we'll work on the expectations as well.
Sir, I was talking about something like an advertising campaign only on returns.
Sure, sure. I'll just add a couple of points of how we are addressing it. So we keep a very close track of the customer pulse and try and understand what is it that the customer is liking about us and what is it that is distancing -- bringing distance between us and the dentists. And basis that we take corrective measures. Now the points that you mentioned, while if I look at the overall number, as Dr. Vikas mentioned, we resolve most of the cases within time. But how do I ensure that this is communicated during prepurchase and post purchase, that is already getting addressed right now by making these points aware to the customers in their prepurchase buying journey, be it on the website or on the app that they are using to purchase. And of course, we'll look further and see if we can also ensure that this can be further communicated and enforced in the post-purchase journey as well.
Okay. Sir, last question, what are our above-the-line advertising or in communication actions and spend? If you can just talk about that?
Sure, sure, sure. So we are always conscious about our spends. We ensure that every spend that we do either helps our customer to make an informed decision or -- and makes a sense to the business. So while the absolute numbers are not with me currently, but what I can tell you is that our ATL communications are primarily to make the customers aware of the products that is there and how they can be used because we are working on a lot of advanced tech products also bringing on the platform. For example, our digital dentistry part that Dr. Vikas was talking about initially. So creating awareness about it across digital mediums like YouTube and all is a key part of our activations.
So Amit, just want to add one thing is every customer to come to Dentalkart, we thoroughly categorize into multiple chunks. So if we take a deep dive into every problem, so the edge cases are so -- there are so many edge cases behind that particular scene, right? So we are working on all those cases. We are finding out the priority every quarter and trying to fix the same thing in every quarter. Just like we are analyzing it, whether we are sure that we have closed that particular issue, then only we are like market that particular scenario. And like as many customers are coming on Dentalkart on a daily basis and placing orders, they actually get to know how much services like included get every quarter. So if you can see earlier, there are a lot of reviews -- like if you see App Store and PlayStore, like there are so many tech errors where people are mentioning [Foreign Language]. But if you see last quarter data, you will not find like more than 1 or 2 queries in the entire quarter for the same. So it's like -- some problems are like very easy to solve, solve. Some problems take time or may take multiple iterations across multiple departments as well. But we are thoroughly on it, and we'll definitely try to improve our services. So every customer in India should order from us on a regular basis. keep pushing us for the same.
Yes, I'm your advertiser, don't worry.
So next question is from Mr. Ankur Gulati.
A quick data points. Can you give me the revenue percentage from own brands and dentistry in this quarter?
Please repeat your question. You were not talking...
Revenue from own brands and dentistry segment in this quarter percentage or absolute?
It is close to 50% on both the sides.
Sorry, 50% is own brand and 50% is distribution.
Yes, non-owned brand.
And equipments.
We have not given that disclosure and not revealed it yet. Yes, I'll take this question on record and would like to -- we'll send it if we can.
Okay. So good control on cost. How do you -- if you guys can give more color that how can we see customer count and order count increasing? The cost side seems to be getting in control. So just double-click on the customers.
Sorry, Ankur, your voice is not audible to us.
Yes I'm saying that -- sorry, if you can double-click on order count increase and customer count increase strategy, the cost side seems to be getting controlled, right? So one side of the equation is getting in place. If you guys can give more color or if you can also guide something on that side, it will be really helpful.
Yes. So more important on this is not to acquire new customers, but to increase the average revenue per current user. And our current strategies are based on having more wallet share of the same customers.
Vikas, if I look at it, number of orders per customer hasn't gone up. What it seems like at least in this quarter is that the order value per order went up, right, which I'm assuming is some large value orders got shipped. So 3 levers, the only lever which worked in favor was average order value. What about the first 2 levers, which is the orders per customer and number of customers?
Yes. So we are working on that. There are strategies in place. I think the average number of orders should be increased in the coming quarters.
So can you guys guide to some sort of number? Will it, let's say, will it increase what, 5%, 10% or more 20%? How should we model out at least this year and next year?
Ankur, I would not like to guide on something which I don't have a final number with me yet. We want to increase that. We see a huge potential in the growth of number of orders, the frequency of orders that the customer places. So if you can see on the cart of Dentalkart, you'll see a slider where if you add more items, you will get some discount like to increase the average order value. So that went up in last quarter. That's why we can see an AOV increase. Similarly, there are some tech solutions, which we are building for ARPU increase as well. If you buy next time, you'll get a certain product of free or that kind of hooks. Once we have these things in place, we see the ARPU going up. One more number, which I did not mention in the presentation was with the members and nonmembers, there's a significant difference in the ARPU and AOV. Membership customers have a slightly lower average order value, but double the ARPU. So if we can sell more memberships in future, it is beneficial for both the customers as well as the company.
Our next question is from again Swaraj.
Just one question. Now that we are not going ahead with the acquisition, how do we plan to use the cash that we have?
We use it as a working capital in the company going forward.
The next question is from Dr. Ketkeeji.
So I am myself dentist. So I've been purchasing a few items from Dentalkart. The only thing my friends don't opt for Dentalkart is they are afraid of on-site service and support. Like if you're going to buy a chair or any other machines online, how do we claim for that warranty claim or on-site service, how do we go with that?
Dr. Ketkee, generally, we sell the high-value items like dental chair or autoclave offline also. And that is the reason we started with the off-line division of Waldent, where we give analysis of the area, then we do installation, training and everything for setting up a new clinic. I think we have not marketed it well so you might not be aware. But in future, we are going to take up the new clinic setup and the large equipment installations, AMC, CMC, all to a good level in India.
Okay. So you mean to say they are available right now?
They are available, yes.
Offline, they are available. Fine. Apart from this, can I trust on the authenticity and sourcing of the products?
101%, all the products on Dentalkart are genuine authentic. And we double check what we buy even from the authorized distributor of the company where we don't buy from the company.
Okay. So one more thing that if I want to opt for -- just an example, if I want to go for an intraoral camera and if I call the distributor, he says, I'll come right away, you can use it once see. If you like it, you can go for it. How about that when we buy products online?
So if you buy an intraoral camera online, you can call our customer care and ask for a support of installation. We don't provide on-site services online. We provide remote calls or tech support through our customer care and the technical team. For cameras, for X-ray machines, for RVGs, we provide remote installation services as well. There are book demo services also available on Dentalkart.
So our next question is from Nachiketji.
Interesting turnaround in the quarter and kudos to the management for really delivering and also guiding on the key KPIs properly. I have -- like most of my queries got answered, but one small query is on international brands foraying into India. And how are -- how is the lineup on that front? And going forward, do you see -- because that kind of is a small conflict for them where you sell your own branded products and you sell others as well. So how do the international brands view you on that front? And is the demand picking up on that front? And any strategy, if you could reveal on that front?
So we have our own brands of products and all the other brands in India know about it. But we don't lose the neutrality of Dentalkart. If you search something on Dentalkart, you will see the right [indiscernible]. If a customer wants to buy an X company, we don't force the customer to buy our Y or Z product. We just give you an option. So we don't remove products which are working well on the platform or in the country. If there is a MNC product, which is not even selling properly on Dentalkart, which is not highly profitable for us. We still show it in the search. We still make it available for the doctor. So whatever as a dentist you want to buy is available Dentalkart. We don't force you to change it to our brand. We maintain the neutrality, and we will continue to do so.
Okay. But when you put this forward to some, say, international brands are looking at India as a big dental market. I like from my checks, I know a few of them are planning to expand in India and you are really helping them increase their targets. So do they view you as a preferred partner to foray and grow in this market? And will that be an increasingly bigger component going ahead?
So in the past, whichever brand, which is international or domestic, have tied up directly with Dentalkart has seen growth in their overall top line because of indirect promotion of the products on Dentalkart, a very good sales in Dentalkart as well. So I give you an example. There's a French company called Septodont.
Septodont yes, I'm aware.
It's a very famous and a very old customer-based company in India. So we had a tie-up with them almost 1 year back. And we were doing, for example, INR 100 with them. Now we are doing INR 250 with them. And the overall sales in India is also growing. Their products are reaching to places where there is no distribution. And the product -- the whole assortment is reaching even the Tier 1 towns, which was not available with the local distributors.
Absolutely.
So I think there is a positive note to this for all the MNCs. And we tell this upfront to all the commitments we do that we will maintain the neutrality of the platform. If the doctor wants to buy a product, they can buy. And we are coming up with the ads monetization feature also on Dentalkart where people can place their advertisement, and we will show it as an advertisement.
Our next question is from Manishji.
Yes. Can you hear me? Okay. Great. Sorry. Sorry about this. So Dr. Vikas, firstly, thank you for the candor. Always appreciate it. The question I had was the Tier 1 market as a percentage of the total market, how big would that be approximately you think, Tier 1 cities as a percentage of total?
I think it is as big as the Tier 2, 3 and 4 combined.
So about half-half?
Yes.
Okay. Now you mentioned earlier in the call that your first focus is to ensure that you crash the delivery time in Tier 1 cities first and then you will approach Tier 2, 3, 4 cities in that order. Was my understanding correct?
Actually, I mentioned that with the context that time, Manish, where wherever we have our own warehouses, it is easier for us to deliver faster because we already have the investment done. So we have to just have the logistics in place. We already have the tech ready. We'll install it. So it is easier for us to pilot that. Once we see the results once we see the average order values or the frequency of the orders going up, some matrices which we plan to see. If we see the positive results there, definitely, Tier 2 is our right to win as per what currently we think. Tier 2, Tier 3, Tier 4, everywhere where we have our customer base, everywhere where people sign up for Instant to come, we will focus there. So if you go on Dentalkart and toggle Instant, you will see a form which you as a dentist or as a customer can fill that you want these services, you want a faster delivery. And based on the forms, based on our customer data, we will decide accordingly.
Okay. And how many warehouses do we have at present?
So we had 7 warehouses. Now we have almost closed a few of our warehouses because we think there is no benefit of having 2 warehouses in a similar locality. As per the logistic partners costing, they both fall in similar zones. Logistics in India runs with A, B, C, D, E categories. So it falls in the same zones. And it is not making us any good to keep the same inventory at 2 different parts. So right now, we have 5 warehouses. And we would like to deliver to those instead through those warehouses.
So do I understand you right that if you were to open warehouses in Tier 2 cities, that would not be helpful in crashing the deliveries. Is that what you're saying? If you open more warehouses?
No, that will be very helpful in crashing the deliveries. But first, wherever we have made the investment already, you would like to try that. And once we have the numbers, maybe another quarter to see those numbers and maybe a couple of quarters to see those numbers, then we can start investing more on new dark stores to deliver faster.
Okay. So actually, Dr. Vikas, maybe I was trying to get the data to frame my question so the context is clear. Maybe I'll just frame the question directly. It appears to me that you have a much stronger right to win and a value proposition for non-Tier 1 cities, right? Because the local dentist, the local distributor there will perhaps not have as much of the assortment as you will have. So just from a land grab perspective, I'm just curious why you would not want to completely dominate Tier 2, 3, 4 first in terms of investments and then approach Tier 1. It appears to me, and I may be wrong here, that either you're trying to do everything simultaneously or a lot more effort is on Tier 1, where structurally your right to win is weaker. And the market of non-Tier 1 is 50% of the market, which is fairly huge. So is my understanding incorrect?
To some extent, it is correct, but I cannot agree that our focus is in Tier 1. What I meant, Manish, was that since we have already made the investment, I would not like to make an investment without I have the data handy. Definitely, my gut feeling says there will be a lot of potential and a lot of faster land grab if I immediately start opening small warehouses in Tier 2. But let me take some time on it. Let me take a couple of quarters to see the data and then plan better for Tier 2, Tier 3 cities. So wherever I have a warehouse, I can know what improvements I have to do on my tech, what changes I have to do in the services. Once I'm ready, we can take it forward. So we don't want to hurry in something this big.
Okay. Could you also talk a little bit about if you've made any additions to your senior team or any plans to hire or strengthen the senior team?
Yes. So I mentioned during my speech that the focus will be strategy and people. So people is a very big metric. I remember when we were going for listing and I met an investor, senior investor, one thing I asked them that sir, what will be the problem I'll face when I'll be -- like we were around INR 100 crores then in a journey from INR 100 crores to INR 2,000 crores, what will be the problem? And he told me specifically people will be a problem. So now I understand that very well. And from last quarter, we are on identifying the right people for our team. So Shahid joined in last quarter as VP Marketing. Mayank joined as VP Supply chain. They both come with 15 years of experience in their respective categories. And we have added some more people in the management. But time, I'll reveal that. And we are looking -- we are not looking to -- as one doctor at the beginning said that hiring a professional CEO. We're not looking for a CEO right now. That might take some time for me to delegate everything. But we are looking for vice presidents and senior leadership across all the departments. HR will be most important metric -- most important person for us to have. We are looking for a senior HR person. Similarly, in all the major departments, we are looking for some people, which we were not -- these were the kind of hirings we were not doing earlier. And we have good recruiters in place to help us with that. Maybe within this year, we will complete the hiring and having the right leadership in the company.
Okay. Can I ask 1 or 2 more questions? Is there time?
Yes.
You mentioned medium-term gross margin road map or your target is 27% to 30%. I mean if we think longer term, what are the other levers that you have to increase gross margin? I'm not thinking short term. I'm saying let's think 5 years out. Where do you think gross margin could be? And what are the levers still available to you?
We are still not sure that we should go beyond 33% gross margins in future. We want o pass the benefit to our customers in long term. So wherever we feel that we have higher margin, we would like to pass it on to the customers. It is about the products first. And the other streams of having the margins will be monetization. We can -- we have a lot of real estate on our platform, which we can sell to the Colgates and Oral-Bs of the world. They will send a lot of MRs to clinics to demonstrate the product. It could be easily done through Dentalkart. Demos, free samples can be added in our boxes at a cost that will be another revenue stream. Education is something which can bring us revenue. So we charge very small right now, INR 200, INR 300, INR 500 for webinars. If we bring international facyou'llty with us, we can charge higher and have some good margins with us there. So these are the kind of levers which are nondental product or nonphysical dental product-based margin engines. If we include that, we see a higher growth above 33% on the gross margins.
Okay. So as there are no further questions from any of the investors, I would now like to request Dr. Vikas Agarwal for his closing comments.
Thank you so much for all your time and having such a wonderful session today. So many questions were asked, and I'm really happy that there are so brilliant questions in the minds of dentists and our shareowners. There are a lot of potentially growth areas in the company, and there are a lot of areas where we need to improve. We are working hard on that, and we would report to you with transparency going forward. Thank you so much, everyone.
Thank you, sir. On behalf of the entire management team of Vasa Denticity Limited, I thank each one of you for taking out the time to join this call for your incisive questions and for your continued confidence in our vision. A recording and transcript of this call will be made available on our website shortly as required under applicable regulations. We remain committed to disciplined execution and long-term value creation for all our stakeholders. We look forward to connecting with you again the next quarter. Thank you all, and have a good day.
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