Vaibhav Global (NSE:VAIBHAVGBL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Vaibhav Global Limited Q2 FY 'twenty seven Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Ms. Deepali from Aryans Capital Markets Limited. Thank you, and over to you, ma'am. Please proceed. Thank you. Good evening, everyone, and thank you for joining us on Vaibhav Global Limited earnings conference call for the q two and h one FY twenty seven. We have with us Mr.

0:48 Suneel Agarwal, Managing Director Mr. Nitin Panwar, Group CFO and Mr. Vaibhav Chan, Head of Investor Relations. We will begin the call with the opening remarks by Mr. Sunil Agarwal on the business operations, key executives and board outlook, followed by discussion on the financial performance by Mr. Nitin Panwar. After which the management will open the forum for the q and a session. Before we get started, I would like to point out that some statements made or discussed on today's call may be forward looking in nature and must be viewed in conjunction with the risks and uncertainties that we face. A detailed statement and explanation of this task is included in the earnings presentation, which has been uploaded and shared with you all earlier.

1:36 The company does not undertake to update these forward looking statements publicly. I would now like to invite mister Sunil Agarwal to make his opening remarks. Over to you, sir. Thank you, Deepali. Good evening, everyone, and thank you for joining Vaibhav Global Limited's Q2 and H1 FY 'twenty seven earnings conference call. I hope you have had the opportunity to review our results and investor presentation. Q2 was a quarter of commission and an important one. During the quarter, we completed two of the major operational projects. The migration of all our retail websites to Shopify enterprise and the consolidation of our UK four different sites into single headquarters.

2:30 Both are now behind us. They came at a near term cost, which I will quantify, but they leave us with a simpler and more scalable business as we enter the seasonally important second half. For the new platform unlocks, I want to spend a moment explaining why we made the move to Shopify as the cost of these transitions are visible in the current quarter, while the benefits will build over coming quarters. This was a conscious and considered strategic decision, keeping our long term commitments and business objectives in mind. First, we now operate one platform across all our six retail brands.

3:17 A feature built once can be deployed in every market so we can move faster and at lower cost. Second, we have a unified view of our customers across TV and digital based on first party data, which supports better personalization, higher repeat purchase, and greater customer lifetime value. Third, the platform integrates natively with modern marketing technology and AI tools, which are scaling our advertising creatives, product descriptions and SEO content. Fourth, we expect a lower long term technology cost than our earlier legacy platform. And finally, we can launch new brands, categories, and geographies far more quickly.

4:09 Let me be specific about that cost. When we spoke in August, we flagged some initial disruption as we move off our legacy platform. The stabilization took longer than we had planned and affected traffic and conversions across all the four business units where we made this transition. Based on our internal assessment, the revenue impact in the quarter was approximately USD 2,800,000 or around 2.8 percentage point of growth. This is also why Vaibhav's share of B2C revenue moved down by around three percentage points compared with Q1. At the same time, in The UK, we consolidated four warehouses and two studios into a single site.

5:00 This temporarily took some inventory offline and had a modest impact on sales. What gives me confidence is how the underlying model performed in the tougher consumer environment. Retail volumes grew approximately 2%, driven by strong demand for our lower price point items. Customers are clearly seeking value. And because we design, source and manufacture much of what we sell, we can meet the demand and still expand gross margin, which goes by close to 197 basis points this quarter. Revenue for the quarter grew 7% to INR 938.4 crores, with reported growth supported by weaker rupee.

5:54 Gross margin expanded by approximately 197 basis points to 65.5%. EBITDA was INR 76.2 crores, down 13.6, with a margin of 8.1% compared to 10% in Q2 last year. Our EBITDA could have been 2% higher, whereas the same was not accounted due to reduction of 100 basis point related to Shopify and UK warehouse migration and 30 basis point related to lower ForEx gain than last year and remaining due to higher volume growth resulting in higher shipping costs. For the first half, revenue grew 9.7% to INR 1,855.4 crores.

6:45 EBITDA rose 9.5% to INR 178.2 crores. The decline in quarterly profitability is mainly related to operating leverage in The U. S. And UK due to transition. We see these pressures as transitional. Sustainability and community impact remain embedded in our business model. VGS Ithra combined ESG rating further improved to 75 from seventy two two years ago, rating strong. Through our Your Purchase Fees program, more than 119,000,000 meals have been distributed to date, and we now serve approximately 56,000 meals every school day, up from 55,000 a year ago.

7:43 We remain committed to our long term ambition of 1,000,000 meals per school day by FY 2040. The Board has declared a second interim dividend of INR 1.5 per equity share, following the first interim dividend of INR 1.5 per share in Q1 FY 'twenty seven. Our capital allocation approach continues to balance investment in growth, shareholder returns and balance sheet strength. Outlook. On guidance, we want to be transparent and prudent. We are taking into account the migration impact in Q2, The UK consolidation, a weaker UK consumer and the upcoming U. Midterm election.

8:32 We now expect revenue growth of 7% to 9% in FY 'twenty seven compared with our earlier guidance of 9% to 11%. While the ongoing platform transition has impacted near term growth, we believe the investments and structural improvements underway will strengthen our digital business and create a more scalable foundation for sustainable growth. Looking ahead, we remain confident in our ability to return to nine to 11% revenue growth in FY twenty eight, supported by our new digital first platforms, enhanced marketing capabilities, and greater operational efficiency. The transition to Shopify is a strategic step towards achieving this objective, positioning us to accelerate digital growth and drive sustainable, profitable growth over the medium term.

9:27 We expect FY 'twenty seven EBITDA margin to be broadly in line with FY 'twenty six compared with our earlier expectation of 50 to 100 basis point of expansion. We believe this is the right call, and it does not change our medium term view. A unified digital platform, proprietary brands, lab grown diamonds, and our vertically integrated operating model positions us so far for stronger customer engagement, better quality of growth and improved profitability. With that, I will hand over to Nitin to take you through financial performance in more detail. Over to you, Nitin. Thank you, Sunil, and good afternoon, everyone.

10:14 I will take you through the financial and operating performance for the second quarter and first half of FY 'twenty seven. Revenue from operations grew 7% year over year to $9.38 crores. Retail revenue grew 5.3% to INR 867.5 crores and B2B revenue grew 32% to INR 70.9 crore. Currency was significant tailwind. The rupee weakened approximately 9% against the U. S. Dollar, resulting overall 1% degrowth in terms of constant currency basis. In U. S, revenue grew 4.3% to INR 500 crore in rupee terms and declined 4.1% in constant currency.

11:05 The shift towards value is clearest here. Unit rose 4.8%, while the average selling price was 8.4% lower as consumer moved to lower price point. Digital share was 44% of revenue and EBITDA margin was 5.7%, reflecting sales deleverage of our investment in connected TV, OTT, app based advertising to extend our reach beyond media TV. Our vertical integrated supply chain continues to help us mitigate the impact of tariff. For the first half, U. S. EBITDA grew 24.9% to 86.6 crore with margin up 102 basis points to 8.4%.

11:58 The UK had a most challenging quarter. Revenue grew 2.3% to INR 257.2 crore in rupee terms, but declined 7% in constant currency. Three factors were at play in the platform migration, temporary product unavailability during the warehouse consolidation and noticeably weaker consumer sentiments. UK inflation rose to 3.5% in September, driven by a higher fuel cost, known food retail sales were almost flat. And in October, consumer confidence recorded its sharpest monthly fall since 2020, As households had back ahead of autumn budget, discretionary category such as our field is first.

12:50 Over time, the India, UK, FDA offer further upside through lower duties, sourcing flexibility and margin improvement. Europe, excluding UK, delivered a strongest underlying growth. Revenue rose 18.3% to 110 crores and 8% in constant currency terms, led by 11.5% in units growth. Shoppelti Germany grew 5.8% and Mindful Souls grew 12.7% year over year. The first half loss narrowed to 0.7 crore from INR 6.6 crore of a year back. And the Germany remain on track to continue positively to the group profitability in FY 'twenty seven.

13:43 Our B2B business delivered another strong quarter with revenue up 32.4% to INR 70.9 crore. Digital revenue was INR $3.67 crore, up by 5.6% year over year into rupee terms and declined 4.2% in constant currency because of the Shopify migration. With the transition complete, we expect digital to return to its earlier growth trajectory, and we continue to work towards our target of digital share at 50% of B2C revenue by Q4 FY twenty twenty seven. Lifestyle products contributed approximately 40% of B2C revenue, and we continue to work towards a medium term objective of 50% share.

14:34 Budget Pay accounted approximately 35% of retail revenue. It remains an important affordability tool supporting conversion and accessibility, particularly for higher value purchases. In house brands contributed 57% of B2C revenue and the lab grown diamond share rose to 12% of total retail revenue from about 10% a year back, strengthening our differentiation and pricing tool. Under our four hour framework, we reached more than 127,000,000 households with approximately 687,000 unique customers on trailing twelve month basis and 360,000 new customers acquired over trailing twelve month.

15:25 38% retention and an average of 23 pieces per customer buying per year. Group's gross margin improved by approximately 197 basis points to 65.5% from 63.5% in Q2 FY 'twenty six, supported by vertical integration, in house brands and growing share of lab grown diamonds. The first half gross margin was 65.5% compared to 63.6% in H1 FY 'twenty six. EBITDA was 76.1 crore with a margin of 8.1%, lower by 193 basis points year over year despite the gross margin expansion.

16:19 The movement reflects the retail sales deleverage during the planned transition. The first half revenue increased 9.7% to INR $18.55 crores. EBITDA increased 9.5% to INR 178 crores with a margin of 9.6% and profit after tax increased 10.1% to INR 98.1 crore with a growth of 15% year over year. Moving to our balance sheet. As of 09/30/2026, our net cash stood at INR 186 crores compared to INR $2.79 crore of March 26. This reduction is mainly related to seasonal inventory buildup and CapEx related to UK warehouse migration of INR 36 crores.

17:14 The ROCE stood at 22% and ROE at 18%. As Sveel mentioned, the Board has declared the second interim dividend of INR 1.5 per equity share. Our capital allocation remain disciplined with priority given to digital growth, proprietary brands, lab grown diamond, Germany's progress towards profitability and profit led operating performance operating improvement. To conclude, Q2 was a quarter which we absorbed the cost of necessary changes. We complete our platform migration and UK consolidation, expanded gross margin by 197 basis points, grew volume in difficult consumer environment, delivered strong B2B growth and continued to strong constant currency growth in Europe.

18:12 With the heavy lifting done, our focus through the second half is seamless customer experience in digital platform, customer acquisition, increased repeat and efficiency improvement in U. K. Operations. Thank you. We can now open the floor for questions. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

19:28 The first question is from the line of Kashy Kanjvar from HIA Association. Firstly, I just wanted to ask, Suraj, what are the top priorities for us in coming festive season? And also, can you also throw some light on FY '28? How we can leverage maybe AI and get more revenue through that? This On these two, can you just share? Yes. Thank you for your question, Kashyaji. So first question is, what are the priorities in the festive season? So for us, the festive season is the Christmas period right ahead of us.

20:17 And even the quarter four is a winter months where people stay indoors and buy product from us. So the coming six months are better. H two is usually quite better than h one for us. And the priority for us is to make sure that the priority for us is to ensure that the investment being made... Vaibhav, can you can you hear me? Sir, we can hear you clearly. Hello? Mister Kaushik, can me? Hello? Can you hear me, mister Kaushik? Mister, can you hear me? Yeah. Yeah. Yeah. Yeah. Yeah.

21:03 So So highest highest priority for us is to leverage the new platform that we launched in Shopify and scale our digital presence across all the geographies we are in. The second thing is make the product appropriate for the current consumer sentiment. So we are very agile in getting what consumer needs and bring that product back to them. Your next question was next year. What are our leverages to get next year revenue and performance as per our guidance? We believe that the digital will be the main growth driver for us. For television, there is some attrition in the television homes, and is a main reason we made this investment into digital to address the consumer through the platform where they are more residing.

22:02 They're residing on Facebook, on Instagram, on other social media, and we can address them and reach them for... With Shopify's help to those mediums and acquire them cost effectively. So scale the digital business and bring... Constantly bring innovative products to the customer based on what their current needs are. Okay. Sure. And one more, Sunil, I wanted to be very blunt and honest with you. Firstly, as being a shareholder, what is true for Vaibhav Global? Because if you see the highs, it has made highs three years back, and the stock is down 80%.

22:49 And our performance is also daily growth rate of 10%, which is okay, which is understandable. There are some geopolitics, etcetera. But then I see a couple of quarters back, shareholders have been asking you about the buyback. But still, we are distributing dividends. I mean, seven we are distributing and the stock is falling like INR 5,100 every year. There is no point of that. We at a listed company, I want also how the board members provide value because board members are there to create a shareholder value. And when we talk about buybacks, we said that we wanted to first have a cash, but then we keep distributing as a dividend.

23:35 So I see there is a gap of creating a shareholder value. I'm really being honest. So, please, I want you to look into this matter. If we are not finding good avenues of growth, then we should do a buyback so that we can reduce number of equity shares that might uplift the shareholders who are there with you for the last many years. So that is very disheartening to see that we are distributing cash and not doing a buyback. So any thoughts on that, sir? Mr. Kaushik, thank you for the feedback, your point taken. We've discussed this feedback with the board as well, and board has decided to continue our tradition of the dividend paying company.

24:24 And the dividend is relatively modest. It's not a very large event. We want to build up some cash for future acquisitions or future strategic moves. And after we have built the cash, we will definitely deploy any additional cash for buyback. Good point. Well taken. Thank you. But still, it is INR100 crores of dividend we are distributing each and every year, which I think many companies in the listed are doing a buybacks. So that's where they are creating a value. I don't think so that dividend paying companies a tagline that we want to have rather than creating a shareholder value while doing a write back buyback could be the part of the Board members also. So please take a look on this, sir. Thank you. All the best. I'll be looking forward for future quarters also.

25:10 Thank you. Thank you, sir. Thank you, sir. The next question is from Chirananda Mohanthi from Samikshire Capital. Please go ahead. Hello. Am I audible? Yes, sir. Yes. So first question from my line is that if you can, the management can quantify the revenue lost during the quarter due to Shopify migration revenue lost. Yeah. As I stated in my comments, it was $2,800,000 or approximately 2.8% of growth. Okay. So the next question is, what is the reason behind the INR 63 crores of CapEx that we are doing?

26:03 Let me take that question, sir. So the the main part of this CapEx related to The UK warehouse migration. The... In commentary, it has mentioned the four different premises and two studios migrated in a single premises to improve the efficiencies and other order clubbing, which will result a benefit in coming years. But that was necessary change and easy to operate in a single premises. So that we have invested around INR36 crores over there. And the other investment is related to normal tech improvement and Shopify migration. Okay. So I have one last question.

26:48 Like in this quarter, the working capital has shown some significant rise. Any specific reason behind it? Yes. So the major reason is the inventory buildup. We have roughly around 100 crore inventory buildup compared to the last year same time, mainly related to the readiness of festive season and the uncertain environment across the world. So some readiness that we have in terms of inventory for upcoming festive season time. But normally, we see that inventory we build in that time and we're expecting by Q3 and Q4, it will moderate that and the inventory number will in line with our previous number of days inventory, which is roughly around two hundred to two twenty days.

27:42 Okay. Understood. Understood. Thank you for your time. Thank you, sir. The next question is from Himanshu Paddai from Stateport. Please go ahead. Yes. Hi. My first question was in a few quarters back, we stated that precious metal, gold, silver and all those platinum were nearly 70% of the metal what we consume. Okay? And in last two, three quarters, we have seen the price of precious metals has started coming off. What would be our strategy from here on? Will we be able to maintain some amount of higher prices what we used to charge earlier because of metal? Or do you think you will need to transfer to remain competitive in the market and drive sales growth? Or some thoughts on that will be helpful. And that was also one of the reasons we stated that some consumer sentiment being difficult, and hence, the situation was... Or the lower growth rate was there last year. So some thoughts on that will be helpful.

28:55 Yeah. Thank you for your question, Imamaji. So from precious metal point of view, we're pretty agile in what customer wants certain at given time. So in spite of precious metal going up, platinum, gold, silver going up substantially over the last couple of years, we've been able to expand our gross margin year over year from 62 to around 64, 65 currently. So our model allows that agility for us to address the current environment. So I don't see any impact of nutty prices on our margins going forward. In fact, you can continue to strive to maintain around 64, 65 going forward.

29:45 But with fall in prices, won't you expect the margins to improve further on, or do you think you will need to transfer the pricing to the customer? You never you never know where the metals will go. It's so difficult. So the metal prices for the fall down, we may need to stay confident in the market. And we'll see the opportunity. If you get the opportunity to expand the margin further, we will. But we will respond to the market in real time while trying to keep our growth trajectory in line that are... In line of our guidance. And I have a question. General on strategy and your market sizing and everything. So what we understand through various transcripts and meetings, we have a great design team, good understanding of patient trends.

30:36 We are continuously launching large number of SKUs, flexible and agile supply chain, and good control of costs. And, generally, our gross margins are better than our competitors. Okay? And we have been in US for nearly twenty years now. But still, our market share is very, very low. Okay? In that... Or the opportunity size, we are 2% type of thing in that market. What should be the focus areas, sir? And do we have a pull for the product in the market, or do you think we have not reached that stage of where there is a pull for the product in the market and, hence, getting newer customer will continue to remain...

31:23 Yeah. Or will be a challenge. So some thoughts on that will be helpful. It's a fair question. The US market is quite large, but it is highly competitive. Actually, the most competitive market in the world. So that market to be able to gain market share consistently over twenty years while expanding digital and expanding our gross margin, I think it's quite an achievement. Now when when we look at the number of two to three or 4% kind of market share, it looks easy for us to expand that market share going forward. We're constantly evolving our business to gain the... To take the benefit of the opportunity in front of us.

32:13 Now the customer acquisition cost on the certain channels are to be taken into account, and we want to acquire a customer that can become profitable for us within six months. So we don't want to overinvest into acquiring a new customer so that we get hit by the profitability within the quarter or within the next two quarters. So keeping all things in mind, the gross margin, the ROIC, the EBITDA, we invest into acquiring customers, but our market growth has been steady over the last twenty years. And one more thing. Our products have both fashion and discretionary limited and each cohort with which we deal with. Okay?

33:02 How large or what percentage of market share can we aspire for for looking at all these things over next five... Ten to fifteen years in that particular market, which is the largest market? So how are you... How do you think about your expiration for the business and market share in that particular market? Yeah. And what is viable number also? Yeah. The age cohort we have is 40 year plus largely Caucasian females. We do have certain number of other electricity as well as our customer, but largely, it is about Caucasian females. And that demographic is increasing in size in US, UK, and Germany.

33:47 The people are aging, and that demographic also has more discretionary income and time on their hand. So we want to stay focused on that demographic that is growing and becoming more and more affluent. So from the market size point of view, that is increasing and is attractive for us. Now we believe that the customer transition is happening from television over to digital media. Digital could be OTT and social media or other other digital platform that we reach through, search medium, like Bing, Google, our social media, like Meta, Instagram, TikTok, or. Is the mobile app platforms, mobile or gaming gaming platforms.

34:36 So we're reaching the customer from those platforms in a cost effective way. So transitioning is happening, and we are navigating that transition. And that's a major reason we made this investment in Shopify because we want to be digital first company, not a legacy TV company going forward. And we made this investment, and we're confident these investments will come in very useful in coming quarters and years. Just to give you context, over the last decades in business, we made multiple transitions from pure gemstone to jewelry b to b, with bigger motor retail to TV retail, and multiple product categories from jewelry to multiple product category. And now we are making this transition from e legacy to digital company.

35:25 And the transition is happening while we are giving the gross margin growth, ROIC, strong ROIC north of 20% and revenue and margin growth. So we are continuing to do and we are confident of being able to deliver as we have given the guidance too. And one last thing from my side, this lab grown diamond has been quite a success for us, and it is now nearly 13, 14% of revenue. How big is the opportunity for us on LGD? And is it a sustainable fashion trend, or how are you thinking about it? And, eventually, can it be a 20% type or 25% of business?

36:12 And has it eaten into other precious stones, or it is a new segment itself, which is sustainably growing? So some thoughts on that will be helpful. Yeah. Good question. So it is around 12% in q q two. That's 12% of our revenue or. So as I mentioned earlier, we are highly agile. And whatever the consumer is pulling or has a demand for, we are addressing that. And we'll continue to drive this as long as it continues. I... What ratio it will reach, I do not know because making prediction for the trend is difficult thing, but we have multiple product categories, color gemstone, natural diamonds, plain natural jewelries, and lifestyle products.

37:01 So we'll... We constantly measure all the products demand by way of gross contribution per minute on the airtime or per square inch of screen space on on our digital platforms. And our measurement practices are large as we look at the spend, either on ad spend. So those measurements dictate what product categories will be shown here or on screen. Now to your second question, what was the category that this rep... Displaced? So this lab cone displays the natural diamond to a large extent. Now when the natural come back... So we are testing it constantly, and we're seeing some indication of natural coming back.

37:49 We recently bought some closeout deal in natural loose diamond, converted them to jewelry, and that received good response. We'll continue to test and explore, but I won't be unable to give guidance on where the labralone can go. Okay. Okay. Thank you. I'll join with for further query. Yeah. Thank you, sir. Thank you,. Ladies and gentlemen, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the queue. The next question is from Mr. From P and R Investment. Please go ahead, sir. Sir, when it comes to transition, migration into this new platform, Spotify, is it mostly done, or do we have any hiccups anymore? How is it, sir?

38:42 Yeah. It is largely done. So the optimization, since we got into a new platform with the ecosystem of hundreds and hundreds hundreds of thousands of apps to reach out and engage customer better... To reach out to customer better. So we'll continue to explore more and more apps coming into the platform that'll help our business. But from the the negative point of view, the customer experience point of view, that is behind us. Now to utilize the new apps is ahead of us. Okay. Sir, when it comes to change... Migrating, mean, we are shifting... Given the environment, we are shifting from TV more towards web. But when it comes to TV, we had a definite competitive advantage.

39:30 Is there a diluting of that competitive advantage that we had when it comes when it comes to shifting towards web? Because we need to... We we have to shift. That is agreed. But is... Do we... Are we able to retain the competitive advantage that we had in TV in the web business? Yeah. Good question, mister. So the TV advantage for us was the vertical business model and the storytelling ability. The storytelling ability means to be able to show the product from mine to manufacturing... The designing, manufacturing, and bringing that to consumer. So that advantage stays with us, whether we are broadcasting that signal to a traditional cable set... Cable system or to OTT platform or to social media live streaming or even going on the website PDP, we can tell the story to them. And having the leverage of being vertical model right from sourcing the gemstones or sourcing the fabric, converting... Having that converted into these dresses to our partners or manufacturing the jewelry in our own factory, that advantage will be there, whatever the platform.

40:48 So as I mentioned earlier, we've migrated over the course of our career. We've made multiple transitions in the business and come out stronger with every transition. And even this transition to me is exciting because we we couldn't really gain new and new customer because we are making one one wide broadcast to all audience. In digital, we can tailor our message individually to the customer, especially with the help of AI tools. We can message individually and address each customer's needs to what they need. And the TAM is also very large to reach out to the customers. So advantage of having a new product coming in being vertical at low cost and reaching a customer at a new level, I'm quite excited with the opportunity we have in the current environment.

41:45 Okay. Sir, lastly, this TV customers who are speaking to us from a long time, are those those customers that are also migrating to web or the web customers are different from those guys who are our legacy customers from a long time? Yeah. Good question. So some of them, we are able to... They migrate from cable over to web. So some of them, we are able to get. For example, people who were spending well with us, we send them free Roku devices or free Fire TV stick for them to log in and watch us. Some of them do, but many of them don't. But the new demographics, the same demographic, but on the new platform that we are able to reach through social media, through search, through gaming apps, through app learning platforms, through OTT medium.

42:40 So those are very large TAM. Our opportunity is to get them in a cost effective way so that the profitability of the customer acquisition can be covered within six months. In our long term view that we want to be able to cover the cost within a quarter, within three months. We're not there yet. But as we are utilizing new tools of the platform, we should be able to get there in near future. I definitely don't know the date, but our aim is to get to within a quarter, make the customer profitable. Okay. So to some some of the Are we of them some of them we reach, some of them, but large part is a new customer from the platforms. Okay. Understood, sir. Lastly, are we... Given the web web... Web business, are we looking at India as a opportunity to try or not, sir?

43:36 Yes, sir. Down the road, first, we want to get Germany to robust profitability then before we get into new country. But definitely, India is on the cards. Thank you, sir. That's it from my side. Thank you, sir. Thank you, next question is from Mr. Dirk Kumar Sow, a retail investor. Please go ahead. Yes. Am I audible? Sir. Sunil. The question is regarding the geography. Why is the interruption or platform change is constant, but it looks like UK has behaved very differently than U. S. And Germany. Germany seems to be least affected.

44:30 Why is this difference in in twelve months in the the even though the the interruption is common? Yeah. So UK had two disruptions. One is the Shopify migration, and there is the warehouse consolidation with four warehouses, and then we moved into one warehouse in last last quarter, and that the condition is still continuing. It's not fully there. We moved everything to one warehouse now. There's a very large space. So two studio in the... In the same building and the full warehouse consolidated into one. So there's second and third thing in The UK economy has had more headwinds than other economies because US economy had a tremendous AI investment. So U... US has... The GDP growth in US is higher than UK or Germany.

45:22 And in UK, the cost of living crisis is really more than other geographies. So so UK is facing three headwinds in the last quarter, especially. So that's why The UK seems challenged. Germany is relatively new business for us, and customer base is larger than UK. So we are capturing those demand there as well as the customer base. Okay. So the thing you take... We see ideal world is even versus the core business specifically declining. Right? So something is in ideal world, which is not in the rest of the business unit. Yeah. So as I I mentioned, I deal with also was part of transition of the Shopify as well as the headquarter transition, so that is the reason. And I deal with also faces The U. K. Economic environment headwinds as TEC does.

46:24 Okay. Sure. So the second question is regarding the whole fact is the growth coming back through digital, right? And since less than 50% of our business is a digital, for us to grow at nine, 10% or even 7%, digital has to grow at 17, 18% because the... At least in UK and US, the the core TV business is growing at 1% or minus 2% of the business. So what gives us the confidence that we will because in a constant currency term, digital for last two, three years hasn't really touched 20% ever. So what are the things we are doing in digital in UK and US to move the growth to 20 plus percent, which is minimum required for us to reach 10% constant currency growth.

47:20 Yes. Fair comment, Mr. Vaibhav. Our data platforms gives us ability to, first of all, test new products very quickly. With the legacy platform, we didn't have that so much of ability to be agile. So constantly testing new products and then scaling the successful products to personalized AI creatives and reaching out to the audience in a cost effective way. So I have confidence that digital growth will be substantial in coming quarters in all six brands that we have right now. So we have two two brands in UK and one brand in Germany and two brands in US and one in UK as well. So three brands in UK or two bars in Europe, one brand in US.

48:16 All six clients, we expect the new platform to help us accelerate. So we made the numbers in detail, and that... That's the reason we have confidence to be able to achieve nine to 11% growth in next financial year. Yeah. So so you have a benchmark in the industry like another competitor outside who's growing at 20 odd percent. And so this is a possibility. Right? I I do think we will be unique in growing at much faster. Because the market is not going at that rate. Right? Market is two, 3%. Yeah. So when you look at a company like Revolve, r e v o l v e, revolve.com, they are a lifestyle brand in US. They are publicly listed company.

49:01 So they are growing double digit. They are already 1,200,000,000 into digital only. They're going double digit, and there are multiple unlisted companies that I'm closely friends with and be part of Masterminds. And we look at those companies that are growing rapidly in the digital space. So d two c space is growing, and as you can see the numbers from Amazon also, at their size, they're able to grow double digit on e com space. So Sure. All these peer review gives me confidence that we should be able to get there. Sure. One last question is, you know Thank you, sir., sir, please come again in the queue. We have participants waiting.

49:52 Sure. Ladies and gentlemen, please limit your questions to two per participant. The next question is from Mr. Rashmi Nalanan from Tumbai Investment. Please go ahead. Two questions. We have given a guidance and then we have to change the guidance, and it means that a lot of things are not in our control. So my question is that why to even give a guidance? Because it is stressful for you, is stressful for the investors also. And that is my first question. Second is that how does U. Midterm would actually would impact your pay because that's the point you made when you said that you want to recalibrate your guidance. And one of the factors is is The US midterm.

50:46 And, you know, overall, just want to understand, you know, as a company, as a as a as management, what is in your control and what is outside your control in terms of continuously excelling in what you do, which is expanding your products, expanding your job, etcetera. What what is the... Because, you mean, our company's existing environment. I just want to understand how you think about it, what is in your control, and what is out... Outside your control. And this would actually feed back into the guidance part. So I just want to get your perspective on these things. Thank you. Yeah. Yeah. Thank you, mister Vaibhav. So first of all, your point about giving the guidance also should not give me guidance.

51:33 So I believe that shareholders are very important stakeholders, and they should have a visibility in our thinking at any given point of time. And we share with what we see at a certain given point of time, and we openly share that without any coordination, without any padding. Then we have the visibility of, say, nine percent to 11 than we had till last quarter, we gave that guidance. And then we feel that even though currently, we are 9%, but we are still giving a guidance of seven to nine because we believe that the exchange benefits that we had earlier two quarters, we do not have that much in coming quarters.

52:18 And also the economic condition as they stand in UK, US, Germany, we will take that into. Your second question was about the US midterm elections. So during last quarter, we were not seeing them as content... As possibility of contentiousness there. At this time, we see some possibility of contentiousness there, which might take eyeballs away from our programming. Then, therefore, we included that as one of the factors influencing our guidance. It is not a major factor. Major factor has been the Shopify transition and to a lower extent, the warehouse consolidation in UK.

53:08 And also to some extent, the economic environment in UK, especially, that is contributing to our guidance. So whenever we see, I believe that we should be sharing that, and I hope that is okay for majority of the shareholders for us to share our viewpoint at any given point of time, honestly and openly. Yeah. So I mean, I agree. And and how how you think about the business? What is in your control and what is your experience control? And how you're... How you think the business is getting more predictable, or is it actually getting less predictable for the management as you drop your budget and strategy upfront?

53:54 Yeah. So you already asked that question, and I I forgot to address that. Yeah. It's a good question. Now we believe that recreating a platform for supply chain and to reach out the customer is in our control. Giving the customer experience that they deserve or or better than our competitor is in our control. Bringing the product, what they need at this point of time is in our control. Seeing the trend, what is... What the customer might get interested in is in our control. What is not in our control can be the economic environment or the political environment or, say, the metal prices or the inflationary environment, that is not in our control. So we take both into account when giving the guidance, what we feel confident to what our growth drivers will be and what we see headwind or tailwind on the outside environment.

55:01 The tailwind could have been the forex gain that we had that was a tailwind. The headwind could be political environment or the economic environment in Western world. So that is a headwind. So we take that into account. I don't know if I addressed your question. Yes, sir. Yes. Thank you so much. Thank you, sir. The next question is from Mr. Rudraksh Mehta from Financial Consulting. Sir, I wanted to understand, when we look at this 5,005 thousand 500 crore target by FY thirty, so how would the geographic mix would look like when we reach that number?

55:52 Yeah. So for that number, we've not taken into account a new geography. Not at this time. But possibly, maybe acquisition opportunity to a small extent. We have taken some potential e com acquisition opportunity. Once we have all the six brands for us, very robustly growing into e commerce space. So largely organic, but some potentially inorganic as well. But do not take any India launch into this account... Into this target yet. Okay.

56:39 But majority of the contribution would still be from US and UK. Is that the correct understanding? US, UK, Germany, all the six brands that we have currently. So they are the brand that will give us this kind of this growth. And potentially, maybe one acquisition into digital space. We do not know the geography of the potential acquisition, but that also is part of the process. Understood. And sir, what would be the effective tax rate going forward on a sustainable basis? I've seen for a few quarters, we have got some deferred tax benefit. So on a sustainable basis yes. Sustainable basis, let me take that.

57:26 We have a significant amount of losses in Germany, which will be set off in coming period, which will get the benefit and also the FTC credit that means as to sustainable because it is 18% to 20% range in midterm, like in three years. Okay. And sir, when should we expect these losses to get absorbed? Will it be over in FY 'twenty eight or will it extend beyond that as well? It extend beyond that. Understood. Understood. Thank you so much. Thank you, sir. The next question is from Mr. Madhu Sudan Reddy as an individual investor. Please go ahead.

58:13 Good evening, sir. Thanks for the opportunity. Sir, again, I'm coming to the point of your plans for expansion to other geographic and geographies, particularly to EPS. Now that US and The UK... Europe are facing the economic and political headwinds, and they're projected to continue to face the same as the time goes on. I mean, I think it is time for you to look it... Look India, bite the bullet. That is my thinking, sir. You are to use on this side. Yeah. Mister, thank you for your observation and your comment.

59:01 Definitely, is in our view, and we may launch in India in coming years. Good first of the mission earlier. Our goal is to bring Germany to robust profitability, and then we want to take up new country. Because anywhere you go new, you'll have initial losses, and we want our other brands, existing six brands to continue to have robust growth so we can support new entry for us. Okay, sir. Thank you, sir. All the best. Thank you, sir. The next question is from Mr. Umanshu Vaibhav from Stateport. Go ahead. Hello?

59:55 Am I audible? Hello? Yes, sir. You're audible. Yes. You are. Hello? Hello? Yes, mister Vaibhav. You're audible. Please go ahead. Yeah. So my one question was what drives the retention and repeat purchase? And can you give what percentage of our clients would be more than ten years old with us? Means who who have been among the, let's say, the top average clients for more than ten years. Maybe can pull out the number. I don't have a number. There'll be very few who are clients for more than ten years, but there are certain clients who have been buying multiple pieces every month, every quarter, and has been buying from us for a long time.

1:00:52 So some customers have bought more than a million dollars from us and continue to buy. Now the percentage of the clients will be very small, but the value... By by value of such clients will be quite valuable for us. Now retention and repeat, your question was how do we drive retention and repeat? Is that correct? Yeah. Yeah. What drives retention? Lot of... Yeah. So a lot of mechanisms for this. First of all, the retention, emails, text, social media reach out, the retention reach out on this... Through Google and Criteo. We do reach out to these customers and try to retain them. And then we have those mechanism in place for additional discount or free credit to their account or free gift to really valuable customers.

1:01:49 So that drives the retention. For repeat, we constantly bring new products to our audience, whether online or on TV. And the new product drives the repeat. So we... On an average, we launch 100 new products every day. So the customer sees us as treasure hunt and come to our website again and again to see what new came and then buy again or see... Watch us on after hours on TV and constantly buy products from us. We recently had a customer day in Austin where a lot of customers came, and I was able to talk to some of them. And they... Many of them said they got 20 trays full of jewelry, some some five trays full of jewelry. And they they bought a lot of pieces with them to show off to the fellow participants what they like, what they buy. So it becomes kind of a hobby or passion for them to collect the pieces. So we have different internal brands. So some get attracted to certain brand, other get get affinity with different brands. And they collect those branded pieces, all the new items that we launched in the brand, they pick up those.

1:03:05 So repeat comes with a lot of new product launch. The other aspect of Repeat is exceptional customer service. We have a concept called unreasonable hospitality and regional group, and we measure our customer service agents and businesses what their unreasonable hospitality moments were, how many moments they had during the week, during the month, during the quarter, and how they deal with the customer. And that results in high Net Promoter Score. So so each business is valued or assessed based on what their Net Promoter Score is. And so that ensures customer happiness and customer retention and repeat.

1:03:52 So there are combination of initiatives that have consultation and repeat on both sides. Okay. If you can address the question about the older customers. Do you have the data? We will share with you. I know we don't have, but we will share with you separately. And would it be the case that top 20% would be 80% of the revenue for us? Means just how would the revenue concentration be? Means... And because some of the clients are very large when you are saying a million dollar plus type of clients. Okay. So just some Yeah. Thoughts on that. Yeah. In traditional retail, twenty eighty ratio, and we have seen also similar ratio.

1:04:43 A lot of TV customer is still very big customer with us. So very close to the ratio twenty eighty ratio we also have. Okay. Okay. And one last thing, the in house brands currently contribute around 50% of the sales. Okay? At any point of time, would we like to take it to third party for distribution? Because we used to have a b to b, which was a larger business... Which was an business for us. So do the current in house brands have that pull that they can support a distribution network also, or we won't like to go through that part? And if not, then what would be the reason for that? Yeah. Very good question and good observation.

1:05:32 Now we want to take that... Those in house brands to third party distribution. But for that, the pre requirement is the customer pull for the brand. So those retailers, for example, Target or Walmart or Macy's, they want to see where we are with the social search for the brand, TikTok search or Google search, and we are not there yet with our in house brands. And at certain point of time when we believe that we are there, we will definitely approach for the distribution. And that serves two purposes. One is that that increases visibility for our brand, and then we'll get the customer when the customer search for the brand, and our offering will pop pop up on the search platforms, the AI search or Google search.

1:06:26 And the second is the extra revenue and gross margin ability. When we own the brand, the gross margin on b two b will be quite substantially more than OEM gross margin that we currently get in our b to b business currently. Okay. Okay. Thank you from my side. Thank you, sir. Ladies and gentlemen, due to time constraint, we would not be able to take any further participants. I now hand the conference over to Sunil, sir, for closing comment. Over to you, sir. Thank you very much, operator. Thank you, everyone, for your participation and for engaging discussion and insightful questions. Should you have any further question, please feel free to reach out to Mr. Vaibhav Jain at Vaibhav Global or Mr. Sumed from investor relation team, and we'll be happy to assist you.

1:07:22 As we approach this festive season, we wish you and your family happiness, good health, and prosperity. Thank you once again for your continued interest and the support of Vaibhav Global. We look forward to connecting with you again, and have a wonderful day. Thank you. On behalf of Vaibhav Global Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.