In an interaction with Nitin Panwad Group CFO, Vaibhav Global Limited

Expanding Globally and Digitally 

Can you explain Vaibhav Global Limited’s business model and its evolution?
With four decades of experience, we have continuously evolved. Starting in 1980 in the B2B gemstone business, we went public in FY97, raising USD 2 million and generating a 24 per cent CAGR in market capitalisation till date. In 2005, we launched our home teleshopping channels in the US, UK and Germany, marking our entry into B2C. Since 2009, we have adopted an omnichannel strategy through digital means like applications, marketplaces, social media and OTT platforms. [EasyDNNnews:PaidContentStart]

We introduced lifestyle products and rebranded the company as Vaibhav Global Limited in 2013. In 2021, we re-entered Germany, a larger market with significant growth potential. Headquartered in Jaipur, Vaibhav Global Limited (VGL) is a digital retailer focused on value-conscious consumers in the US, UK, Germany, Australia and Canada. We offer a wide range of products in two main categories: fashion jewellery and gemstones and lifestyle products, which include home décor, beauty care, hair care, apparel and accessories. 

Our business model is B2C, reaching 130 million households through our TV home shopping channels and various digital platforms, including our proprietary website, shopping apps, marketplaces and OTT platforms. Our strength lies in offering diverse products at affordable prices, thanks to our in-house manufacturing capabilities and a robust global supply chain. Our vertically integrated business model enables us to achieve over 60 per cent gross margins, thus capturing a larger profit pool compared to our peers. 

Can you provide insights into VGL’s financial performance for FY23-24?
The past fiscal year marked a significant improvement in our financial performance. We achieved consolidated revenue of Rs 3,041 crore, reflecting a 13 per cent YoY growth and an 11 per cent CAGR over five years. Excluding acquisitions, the YoY growth would be 8 per cent. Retail sales through our TV channels grew by 8.3 per cent YoY with a five-year CAGR of 9 per cent. Digital retail performed even better, with a 17.2 per cent YoY growth and an 18 per cent CAGR over five years. The gross margin remained robust at 62 per cent, supported by our in-house manufacturing and global supply chain. The profit before tax (PBT) for the year was Rs 190 crore, up from Rs 141 crore in FY23. Adjusted for losses in Germany and exceptional items, the PBT would have been Rs 261 crore which is 9.1 per cent of the revenue and 35 per cent higher YoY, highlighting operating leverage. The operating and free cash flows were Rs 270 crore and Rs 230 crore, respectively, underscoring the strength of our asset-light business model. 

What is the update on VGL’s acquisitions of Ideal World and Mindful Souls? 

In the financial year 2023-24, we completed two strategic acquisitions, fully funded by internally generated funds:
1. Ideal World: We acquired the IP rights, broadcasting rights and studio equipment of Ideal World for £ 1.125 million. Ideal World is a major teleshopping brand in the UK with over 20 years of history. The integration with our UK operations was completed within a month, and Ideal World began live broadcasting on September 29, 2023. It now reaches approximately 27 million households in the UK. Having achieved profitability within six months of acquisition on direct cost basis, we expect this business to achieve profitability on full cost allocation basis too in the coming quarters.
2. Mindful Souls: Founded in 2018 in The Netherlands, Mindful Souls primarily serves the US market through its proprietary website and marketplaces, with over 80 per cent of its revenue accruing from there. It also has a presence in the UK and EU, Canada, Australia and New Zealand, offering subscription boxes of fashion jewellery, self-care and self-love products. We are utilising VGL’s established supply chain to enhance the profitability of this business. Additionally, Mindful Souls’ digital capabilities are benefiting our existing digital businesses through cross-learning across the group. 

What is the outlook and guidance for FY24-25?
Our continued investments in OTAs and digital ecosystems, including websites, applications, OTTs and marketplaces, are helping us expand our reach and improve customer experience. We aim to increase our digital revenue to 50 per cent by FY27 with a CAGR of around 24 per cent. Our in-house brands and innovation efforts aim to boost brand performance and increase branded merchandise revenue to 50 per cent of our total B2C revenue by FY28. 

We are optimistic about FY25 and confident in achieving our revenue growth guidance of 14 per cent to 17 per cent, with operating leverage and robust cash flows. Looking further ahead, we anticipate mid-teens revenue growth, with healthy operating leverage and improved return ratios. Our commitment to balancing growth, investment and regular dividend payouts will help us create sustainable value for our stakeholders.

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