Vaibhav Global Limited Global Retailer of Fashion and Lifestyle Accessories on Home TV and e-Commerce Platforms Financial Results Presentation Q2 & H1 FY2016 November 2015
Safe Harbor Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. Vaibhav Global Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward- looking statements to reflect subsequent events or circumstances. 2
Vaibhav Global – An Overview Vertically-integrated electronic retailer • End-to-end B2C business model in the electronic retail industry • Proprietary TV home-shopping and e-commerce platforms Liquidation Channel and The Jewellery Channel are strong brands • 104 million (FTE) households on TV shopping in the US, UK and Canada • Positive customer engagement metrics – customer base, retention rate, repeat purchases Robust customer engagement • Sizeable B2C franchise in developed markets • Growing recognition of deep value enables scaling to adjacent categories Hybrid supply chain infrastructure • Outsourcing from China, Thailand, Indonesia and India, manufacturing operations in Jaipur, India • Aggressive trend spotting initiatives Solid infrastructure backbone • Investments in customer interface, production, warehousing facilities, supply chain and CRM • Scalable model with limited capex requirement Strong management team • Professional, experienced management team having in-depth knowledge and industry experience • Talent pool across marketing, merchandising, operations, technical and strategy functions 3
Table of Contents Q2 & H1 FY16 Financial Performance 5 Financial Performance Trends 12 Business Background Details 20 4
Key Highlights for Q2 & H1 FY16 Home TV Network Reaches Over 100 Million Households, FTE Increases 9% • • 104 million households on full time equivalent (FTE) basis 25 million households in the UK • • 77 million households in the US 2.4 million households in Canada In Q2FY16, Retail Volumes at 2.1 Million Units • • Volume on Home TV shopping at 1.5 million units Volumes driven by fashion jewelry • • Volume on Web shopping at 0.6 million units Deeper customer engagement drives repeat purchases Financial Performance • Total Income at Rs. 298.4 crore • Gross Margin expansion to 66% from 65% • EBITDA at Rs. 19 crore • PAT at Rs. 12 crore Strong Return Ratios • Return on Equity at 22% • Return on Capital Employed at 24% Operating Highlights • EMI payments launched through Budget Pay in September • Initiated launch of in-house jewelry and non-jewelry brands to target younger and more affluent customers • Puru Aggarwal appointed as VGL’s Group Chief Financial Officer • Appointed Harsh Bahadur and Santiago Roces Moran on VGL’s Board of Directors • Expansion of portfolio and other customer-centric initiatives to aid stronger volumes in H2 FY16 Debt Repaid from Operating Cash Flows • Continues to be cash surplus at net debt level despite some recent capex initiatives • Gross Debt at Rs 92 crore 5
Chairman’s Message Commenting on Q2 & H1 FY16 performance, Mr. Sunil Agrawal, Chairman and Managing Director, Vaibhav Global said: “Continuing to strengthen our customer experience, subsequent to the launch of our advanced mobile website on SAP/HYBRIS platform in the US, we have also launched Demandware mobile website platform in the UK which can be accessed from any desktop or mobile device. We launched ‘Budget Pay’ EMI scheme in the US with positive response from customers. Prior to this, we had launched an easy returns policy. We have also undertaken a new initiative to develop a series of in-house brands in the jewelry and non-jewelry segments. These initiatives are bringing us closer to our customers and, after considering the related costs, are making a positive contribution to our business prospects. To remain globally competitive, despite our smaller size of operations, we have invested in a strong core business base involving a fixed cost commitment that is built for robust future growth. We now see better momentum in H2 that may see revenues from our retail business in line with H2 last year. This will be a positive step-up from H1 performance, and we hope to increase the momentum further next year. ” 6
Financials – Q2 & H1 FY16 Performance (Revenues) Revenues (Rs. crore) 623 575 321 298 Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 Jewelry & Lifestyle Products TV Sales Web Sales B2B Sales 444 428 235 116 221 106 63 57 52 29 41 26 Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 7
Retail Performance Trends TV Sales Sales Volumes ('000s) Average selling price US$ 23 23 22 22 2,992 3,156 1,734 1,493 • Q2 Q2 H1 H1 Q2 Q2 H1 H1 Q2 volume lower by 14% in TV and 16% FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 in Web on yoy basis. • Web sales contribute 30% of sales Web Sales volume. Sales Volumes ('000s) Average selling price US$ 14 14 14 14 1,401 1,194 672 562 Q2 Q2 H1 H1 Q2 Q2 H1 H1 FY15 FY16 FY15 FY16 FY15 FY16 FY15 FY16 8
Financials – Q2 & H1 FY16 Performance (Margins) Gross Profit Gross margin Rs. crore 66% 450 70% 66% 65% 63% 400 65% 350 60% • Gross margins improved yoy due to 300 55% improved margins at channels towards 250 50% costs of returns and Budget Pay, and 200 operational efficiencies at VGL India. 45% 150 40% 100 35% 50 208 196 395 381 0 30% Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 Note: Direct costs for calculation of gross profit includes material cost, job work charges and manufacturing cost EBITDA EBITDA margin Rs. crore 90.00 14.0% 12.0% 11.9% • EBITDA margin impacted by 70.00 10.0% 10.4% investments committed to drive future 8.0% growth momentum. Stronger business 50.00 6.3% 5.9% 6.0% visibility in H2 and thereafter may 65 expand margins. 4.0% 30.00 38 34 2.0% 19 10.00 0.0% Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 Note: EBIDTA excludes exchange gain/loss; EBIDTA margin including exchange gain/loss stood at 6.5% in H1 FY16 v/s 11.1% in H1 FY15 9 EBIDTA margin including exchange gain/loss stood at 6.8% in Q2 FY16 v/s 12.2 % in Q2 FY15
Financials – Q2 & H1 FY16 Performance (Profits) PAT * PAT margin Rs. crore 100 18.0% 15.0% 80 • PAT impacted by lower EBITDA and 12.0% higher depreciation. 60 9.0% 7.5% 6.8% 40 6.0% 2.8% 20 3.0% 3.5% 24 11 42 16 - 0.0% Q2 FY15 Q2 FY16 H1 FY15 H1 FY16 * Profit after tax without exchange gain(loss) fluctuation. Return Ratios – H1 FY16 80% 70% • Good returns on capital employed and 60% shareholders ’ equity. 50% 40% 30% 20% 24% 22% 10% 0% ROE ROCE 10
Table of Contents Q2 & H1 FY16 Financial Performance 5 Financial Performance Trends 12 Business Background Details 20 11
Financials Performance Trends (Revenues) Revenues (Rs. crore) 1,376 1,298 893 647 575 FY12 FY13 FY14 FY15 H1 FY16 Jewelry & Lifestyle Products Web Sales B2B Sales TV Sales 958 911 687 256 483 225 162 161 428 117 91 89 106 73 41 FY12 FY13 FY14 FY15 H1 FY12 FY13 FY14 FY15 H1 FY12 FY13 FY14 FY15 H1 FY16 FY16 FY16 12
Retail Performance Trends TV Sales Sales Volumes ('000s) Average selling price US$ 6,829 6,420 41 5,239 30 24 3,268 23 22 2,992 • TV ASP reduced slightly in H1 but is expected to improve in H2 with FY12 FY13 FY14 FY15 H1 FY12 FY13 FY14 FY15 H1 FY16 FY16 introduction of Budget Pay. Web Sales Sales Volumes ('000s) Average selling price US$ 19 2,955 14 14 13 12 1,700 1,194 762 357 FY12 FY13 FY14 FY15 H1 FY12 FY13 FY14 FY15 H1 FY16 FY16 13
Financials Performance Trends (Margins) Gross Profit Gross margin Rs. crore 900 68% 66% 800 66% 700 • Gross margins increased in H1 due to 64% 600 lower B2B sales, addition of import duty 62% 61% 500 61% in stock value at channels, improved 60% 400 59% 60% margins at channels towards costs of 300 returns and Budget Pay, and operational 58% 200 efficiencies at VGL India. 56% 100 384 533 789 838 381 0 54% FY12 FY13 FY14 FY15 H1 FY16 EBITDA EBITDA margin Rs. crore 180 14% 12% • 13% EBITDA impacted due to lower topline, 160 12% 11% net of returns, more household coverage 140 9% 10% in US, larger resource base in planning, 120 8% sales and merchandising in US and UK 100 6% 80 6% 60 4% 86 40 Note: 2% 20 EBIDTA excludes exchange gain/loss; 81 157 144 34 0 0% FY12 FY13 FY14 FY15 H1 FY16 14
Financials Performance Trends (Profits) PAT PAT margin Rs. crore 180 14% 12% 160 12% 12% 140 10% 120 8% 8% 8% 100 80 6% 60 3% 4% 40 2% 20 79 78 153 103 19 0 0% FY12 FY13 FY14 FY15 H1 FY16 EPS Rs. per share 48 32 25 24 6 FY12 FY13 FY14 FY15 H1 FY16 15
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