Good evening, everyone, and thank you for joining us on Vaibhav Global Limited Earnings Conference Call for the third quarter and 9 months ended 31st December 2025. Today, we have with us Mr.

Sunil Agrawal, Managing Director; Mr. Nitin Panwar, Group CFO; and Mr.

Prashant Saraswat, Head of Investor Relations. We will begin the call with the opening remarks by Mr.

Sunil Agrawal on the business operations, key initiatives, and broad outlook, followed by discussion on the financial performance by Mr. Nitin Panwar, after which the management will open the forum for the Q&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 these risks is included in the earnings presentation, which has been shared with you all earlier.

The company does not undertake to update these forward-looking statements publicly. I would now like to invite Mr.

Sunil Agrawal to make his opening remarks. Over to you, sir.

Thank you, Nishita. Good evening, everyone, and thank you for joining VGL's Q3 FY '26 earnings call.

I trust you have reviewed the results and the investor presentation. We delivered a strong performance in December quarter, with revenue growth slightly ahead of our guidance.

Our consolidated quarterly revenue crossed ₹1,000 mark ₹1,000 crore mark for the first time, reaching ₹1,066 crore, a 9.1% YoY growth. Performance during the quarter was achieved despite tough geopolitical conditions.

Gross margin stood at 63%, up 170 basis points YoY, driven by the strength of our vertically integrated global supply chain. Digital contribution was 42% of B2C revenue, and we remain on track to reach 50% digital contribution by end of FY '27.

Further, I am delighted to share that our in-house brands reached 48% of sales contribution mark during the quarter, and we are on our journey to achieve 50% sales milestone before the target of end of FY '27. Let me briefly cover regional performances.

In the US, we ended the quarter on a strong note and registered revenue growth of 3% YoY. Highly elevated precious metal prices and lower consumer confidence compelled the consumers to defer discretionary purchases.

During the quarter, we started our in-house jewelry casting manufacturing operations in US to mitigate tariff on our jewelry shipped to US. However, we still had 489 basis points increase in our overall product costs due to tariff on other products.

Despite this, we were able to increase the gross margin by 30 basis points as our vertically integrated model provided requisite resilience. In the UK, revenue was down by 1.8%.

While Ideal World continued to perform strongly and grew by 12% YoY, TJC had negative growth of 6%. Due to softness in overall consumer confidence, combined with steeply higher precious metal prices, consumer deferred their purchases.

This had a direct impact on core TJC's growth. Ideal World continued with its strong EBITDA profitability, which is driven by its healthy gross margins.

Overall, UK's EBITDA margin improved substantially by 240 basis point YoY owing to dynamic product profile and operational efficiencies. In Germany, we delivered revenue growth of 5.1%, supported by continued strength in the live TV commerce.

In digital, we have seen initial signs of improvements, and we are confident that digital will start contributing to overall growth in Germany business in coming quarters. Further, I am pleased to share that the Germany business has turned profitable during the quarter with EBITDA margin of around 6%.

We remain on track to achieve EBITDA break-even for the full financial year 25-26. We expect Germany to start contributing to group EBITDA margin from financial year 26-27 onwards.

Our growth continues to be guided by four clear priorities, which are expanding reach, new customer acquisition, retention, and repeat purchases. During the quarter, our TV networks reached 127 million households.

As of 31st December 2025, our unique customer base stood at 706,000, up 2% YoY. On a TTM basis, we added 308,000 new customers, while retention remains stable at 40%.

Customer engagement remained healthy, with customers purchasing on average of 22 pieces on TTM basis. Sustainability remains integral to our operations.

Recently, we have made a commitment to the Science Based Targets initiative, that is SBTi, and we are aligning our carbon reduction strategy within the 1.5°C increment pathway under the Paris Agreement. Our ICRA ESG rating was upgraded to 73, reflecting continued progress towards governance and environmental practices.

On the renewable energy front, we generated 1.1 million kWh of solar power during the quarter, meeting 100% of our manufacturing power requirements. The VGL Group is now Great Place to Work-Certified across all geographies.

Further, under our flagship Your Purchase Feeds program, we have served 109 million meals, currently providing around 59,000 meals per school day. We remain committed to our long-term goal of serving 1 million meals per school day by FY '40.

Capital allocation remains a key priority for us. The board has approved a third interim dividend of ₹1.5 per equity share, implying a 28% payout.

Despite ongoing adverse macros, our balance sheet remains strong, providing the requisite agility. During the quarter, we delivered revenue growth slightly ahead of our guidance of 7% to 9%.

We remain well positioned to sustain profitable growth while maintaining our FY '26 guidance. We expect to achieve 9% to 11% revenue growth in FY '26-27 with EBITDA margin of 10.5% to 11%.

I will now hand over the call to Nitin to discuss financial performance. Over to you, Nitin.

Thank you, Sunil. Good evening, everyone.

I will now take you through the financial performance and key operational highlights for the third quarter. Please note that from this quarter onwards, we have enhanced the disclosure of our segmental performance, and the same is published in our investor presentation.

As Sunil mentioned, we delivered maiden quarterly revenue of over ₹1,000 crore. Reaching revenue of ₹1,066 crore reflects a growth of 9.1% year-over-year, which is slightly above our guidance range.

It is also satisfying to see branded sales mix becoming 48% of B2C sales in Q3. Further, digital business is also progressing towards achieving our target of 50% sales contribution by FY '27.

These milestones reflect satisfactory performance towards achieving our strategic objectives. Now, I will cover the geography-wise performance in quarter three.

In the US, revenue growth for the quarter was 3% year-over-year. In quarter three, customer deferred their purchase amidst softer consumer sentiments, triggered by higher metal prices.

Despite these conditions, our margin remained strong and supported by integrated sourcing and local jewelry casting manufacturing capabilities, which got operationalized in Q3 itself. In the UK, revenue declined by 1.8% year-over-year.

The TJC operation were impacted due to taper demand owing to surge in metal prices and subdued consumer sentiments. Ideal World continues to deliver strong revenue growth, supported by wider assortment of products and in-house sourcing capabilities.

Ideal World continue to sustain its healthier profitability. Overall, UK operation has delivered a strong profit growth of 40% year-over-year owing to cost rationalization and operating leverage.

Germany recorded 5.1% revenue growth during the quarter, supported by sustained growth in live TV commerce. In line with our strategic guidance, the business delivered positive EBITDA of 6% in December quarter, driven by scale and cost rationalization.

We remain on track to achieve full-year EBITDA profitability for financial year 25-26. Overall, in US dollar terms, Q3 revenue growth was 3% 3.4% year-over-year for VGL Group.

TV revenue stood at ₹589 crores, growing 7.7% year-over-year, while digital revenue increased by 11.2% year-over-year to ₹423 crores. Digital now accounts for 42% of total revenue, and we remain on track to achieve reach by 50% by FY '27.

Lifestyle products contributed 35% of total sales with a medium-term target of 50%. As mentioned earlier, in-house brand sales mix now 48% of B2C revenue during the quarter, and we are confident to achieve 50% sales contribution before our targeted period of FY '27.

Gross margin remained strong at 63%, maintaining margin above 60% in a challenging operating environment, underscoring a strength of our vertical integrate in-house supply chain. EBITDA margin expanded by 170 basis point to 13.2%, with EBITDA growing 26% year-over-year in absolute terms.

Margin expansion was driven by improved realization and operating leverage, led by 120 basis point improvement in employee cost, 60 basis point improvement in airtime cost. Profit after tax grew by 41% year-over-year to ₹90 crores.

The business continued to generate healthy cash flows. Operating cash flow stood at ₹160 crores and free cash flow at ₹143 crores.

The balance sheet remains strong with net cash position of ₹213 crores, reflecting prudent capital management and liquidity strength. ROCE improved to 21%, while ROE stood at 15%, indicating continue improvement in our return ratios.

The board has approved an interim dividend of ₹1.5 per equity share, reflecting a balanced approach to capital allocation while maintaining adequate liquidity. In view of the prevailing operating environment, we remain well positioned to sustain our profitable growth while maintaining our FY '26 guidance and expect to achieve 9% to 11% revenue growth for FY '27 with EBITDA margin of 10.5% to 11%.

Thank you, and over to you, moderator. We may now open the lines for Q&A.

Thank you for taking my question. Sir, I have just a few questions.

One, quarterly sales volume for TV declined from 1.74 million to 1.71 million units, and digital volume dropped also. While consolidated revenue grew by 9.1% due to ASP increases, particularly a spike in digital ASP from $32 to $38.

How sustainable is the reliance on pricing power if unit volumes continue to trend downwards?

Let me take this, Sunil. Hi, Deepali.

Unit decline is mainly related to the customer adoption of the products. Right now, the lab-grown adoption is pretty high from the customer point of view, and we are seeing the productivity metrics on TV and also on website, the lab-grown product demand is high.

That is driving the higher ASP, but it is also realizing higher revenue to us. Volume has a degrowth, but the realization is pretty good with the lab-grown products.

Okay. What is the revenue contribution for LGD, and what is the average selling price of that?

The LGD is now double-digit, roughly around 10.7% of our retail revenue, and average selling price is roughly around $250 for lab-grown.

Okay. Sir, EBITDA in Europe, mainly Germany, jumped year-on-year, even though revenue in Germany grew only 5.1% in local currency.

What specific cost control measure and cost cutting helped achieve such a big margin improvement? Is the current 6% EBITDA margin in Germany sustainable going forward?

Most definitely. Germany, one reason is the improvement in our gross margins.

From past quarters, we have managed to improve gross margin roughly 300 to 400 basis points in our gross margin with better product offerings. Also, the cost measurement that we have done in all the respective areas, from airtime to shipping partners and also in a productivity increase in our warehouses.

Improvement in gross margins and our cost improvement we have done in Germany operation, resulting a higher profitability with the 5% growth. We suspect that this growth is sustainable, and we continue to improve this number with the improvement in our EBITDA margin.

Just one point, Deepali, on this one. The seasonal time, which is October to March is seasonal time for TV e-com business, during that time we expect to see continued improved gross margins, or the EBITDA margins, but during the summer months, it may be a bit lower.

Overall for this financial year, we will be slightly above EBITDA positive, and next year we expect the EBITDA margin to grow up, but the 6% may not be constant every quarter. Some quarter may be higher than that, and some quarter will be lower.

Overall will be better next year than almost flat or slightly positive EBITDA we expect this year.

Okay. We can consider above 6%?

Yeah. We are not guiding a specific number for next year yet, but we will be noticeably better than almost less than 1% EBITDA this year.

Okay. Sir, for TJC in the UK saw revenue fall in local currency.

What economic factor are slowing growth there? How will the Ideal World acquisition help improving performance in the market in the next few quarters or year?

Nitin, you want to take it?

Sure. Ideal World, as stated, is performing really well.

Last quarter, we have seen 12% growth in Ideal World, and now it is achieving almost similar EBITDA margin what TJC is generating. TJC, as mentioned, that we have seen slowness in terms of consumer demand towards the elevated metal prices.

That impacted and also the lower consumer sentiment impacted the lower sales growth in TJC. That is offsetting in our higher growth in Ideal World.

Sunil, would you like to add on the growth perspective measurement of TJC part?

Yeah. In TJC, we are seeing good traction on digital space, and we're also exploring some additional national airtime for only part-time, two, three hours or four hours a day.

We had some of these hours, two broadcast services we had. We visited them because there was some price negotiation could not be completed, but we are exploring some other shortly.

Digital continues to benefit to us, and the cord-cutting in UK is much, much slower than US. We expect the TV to continue to add value to our business, or the growth to our business in coming quarters and years, foreseeable future.

Sir. Sir, your Jaipur plant, do you have any plan to increase factory utilization?

The Jaipur

jewelry manufacturing is a low-capex model. Anytime we need to increase the production capacity for future growth, we can do that with very little capex.

Currently it is very well optimized from people point of view, from equipment point of view.

Sir. Got it.

Thank you.

Thank you, Deepali.

Hello. Hi.

For lifestyle, the contribution was 35% of total sales, and in medium term, we are targeting 50% of sales. Because of this shift, will we be able to maintain our margin because in lifestyle we are not vertically integrated?

Yeah. Although we don't manufacture lifestyle, but we are able to source it directly from all over the world.

We have offices for all the four countries to source, and we have supply chain relationships with manufacturers in 30 countries. We expect the margin to be similar growth trajectory as we are seeing in jewelry.

Okay. Got it.

That's it from my end.

Thanks, Kiran.

Hello. Hi, sir.

I hope I'm clearly audible.

Yes, you are, Garvita.

Yeah. Sir, my first question is on the content and broadcasting expenses part.

I wanted to understand if I take content and broadcasting expense as percentage of the sales, can we expect it to further reduce? If in terms of absolute number, can we expect it to remain in the same range of 190 crores and around that?

There are two components of this content broadcasting. One is the TV content broadcasting, other is digital spend.

We expect the TV portion to remain constant, but the digital will go up. As a percentage of revenue, we don't expect the leverage from this area.

Okay. Leverage is expected, right?

Yeah. From three areas we expect leverage in future as we are guiding for higher EBITDA.

One is that the gross margin we expect to continue to improve slowly over the time. The second is the employee cost.

Employee cost, as we are gaining efficiencies in process improvement and scaling to fixed base, we expect the HR cost to improve. AI is also helping in this area.

Some SG&A may have some savings as well. These three areas will give us the leverage.

Okay. Got it.

Sir, if I talk about the automation in the business model, any type of automation or AI used in the business model, any possibility of employing such thing in the business, which can help us to improve efficiency and reduce cost, and any kind of EBITDA margin improvement we can expect from that part?

Yeah. That is true.

We are implementing the process improvement, automation, and AI into our business processes, and that is the reason you saw 1.2% efficiency improvement last quarter in our HR costs.

That is in the HR cost, right. Okay.

One more question, sir, on the Germany business part. Good to see that you have achieved the breakeven on this business, but can you please give me exact figure of how much was the PAT loss on 9-month basis from the Germany business?

Nitin, can you look it up?

PAT is higher. We're guiding for EBITDA one.

EBITDA is roughly around for 9 months, 300,000 loss that we have, and we're expecting that it will cover up in the current quarter.

This is EBITDA. Can you give me the PAT loss, sir?

PAT is not significant because major cost is the interest, which is intercompany interest, not a third-party. It is a intercompany cost.

That's fine. Sir, can you give me some kind of guidance on a Germany business in terms of the revenue guidance and profitability that we can expect for FY27?

Yeah. Overall revenue guidance we are giving for next financial year to be 9% to 11%, and that incorporates all the businesses that we have.

Now from the EBITDA point of view, we gave the guidance that next financial year Germany will start contributing to group EBITDA. Current financial year it will be flat or slightly positive EBITDA, but next year it'll start contributing.

The macro environment is still a bit uncertain. We are not giving specific guidance of specific business unit, but overall EBITDA guidance we're giving for next year is 10.5% to 11%.

This is the first time we're giving EBITDA range guidance in our investor calls, but that's for overall business.

I get it. One more question, sir, with the increase in Sorry to interrupt, Ms.

Jain, but can you

One last question, sir, if you can allow, please. Really

No issue. Thank you.

Hi, sir. Thank you for the opportunity.

I just wanted to understand, the digital ASP has been consistently growing over the last few years and it is now more in line with the TV ASP. What has been driving this growth, and is there scope for further ASP growth given that the TV ASP seems to have stagnated at the $38, $39 mark for last 2, 3 years?

Yeah. I'll take the first part, the ASP.

Digital has a two portion. One is the rising auction, which is a $1 bidding model, and the rest is the fixed-price catalog and the web TV.

So $1 is tend to be a lower ASP as that is a lot of engagement with the customer and the inventory clearance mechanism. Now as the business is moving towards more the digital marketing through social media and the sales in coming through paid channels, that the other portion is increasing significantly over the years.

We have seen over the period that the high-end jewelry consumer are giving more lifetime value compared to the $10 or $5 product. Towards that we are investing our money where we are getting the higher lifetime value from the customers.

One of the example is the lab-grown product, which is continuously performing well, and that we are marketing and targeting the customer through the paid media on web. That is driving the higher ASP towards that.

ASP normally we keep a range for a business perspective around $40, but we are targeting based on the profitability of the customers. Right now we cannot guide on where the price will fall of digital consumer, but it will be on the profitability side wherever customer is giving more value.

Understood. You mentioned that LGDs are about $250 ASP and the share has been growing.

I was just trying to understand if that share grows further, this can move further beyond $40 as well? Definitely that will be the acquisition product, but then the repeat will come with the different offerings from jewelry to lifestyle products.

That will have the lower selling price. Not necessary that if this price is $250, it will remain same.

The different product bouquet we have from $5 to $1,000 with 30,000 different SKUs. That's where the average price becomes low.

Understood. What was the revenue from the OTT channel this time in Q3?

I think that number was missing in the presentation. It's not with me right now, but, yeah, Prashant will come back to you on the OTT numbers.

Okay. How are you seeing the conversion trend in the OTT channel?

We were making a lot of investments in that channel. Is that investment trend continuing, and how is the conversion trend that you're seeing there?

Nitin, would you like to take this?

Yeah. We continue to make the investments.

There are two reasons for that. We are seeing the audience migrating a lot towards OTT channels, that is the Fire TV, Roku, Samsung TV, or Pluto TV.

There's so many different platforms. In fact, the OTT viewership right now is almost four times the linear TV viewership in US.

We are continuing to make investment, and we are seeing the lifetime value of OTT customer much higher than TV customer also. The challenge in OTT is once you get customer to download through paid media, after download it is difficult to retarget that customer because the OTT ecosystem is not as evolved as the mobile app or online system is.

We're continuing to explore more and more advertising options and continue to explore those areas. The revenue continues to improve YoY.

I don't have the exact number, but we are continuing to make the investment and continuing to expand in that area. Understood.

One last question, sir. We had this target of reducing our break-even timeline for customer acquisition cost from about 9 months to 3 to 6 months.

Where are we on that journey at present, and is the trend encouraging? Yeah.

We have total six brands. Two of those brands have already achieved 3 months break-even, and the rest are between 5 months to 9 months period.

We're learning every day and experimenting with different products, different offers, different landing pages, and getting to shortening that time. As we shorten the time, we'll continue to scale those brands up.

That is one of our growth strategies going forward in future. Understood.

Thank you so much for answering my questions. Thank you.

Hi, am I audible?

Okay. Now I just wanted to understand in jewelry, how much is the sales from gold, silver, and artificial jewelry?

Hello.

Hi, Deepesh. Plain gold, we don't have much.

Majorly we do the casted jewelry, studded gemstone or diamond or lab-grown product. Plain gold, as our guardrail of keeping the margin 60 and above doesn't meet.

We don't do unless there's very designer jewelry. We do that part, but the margin guardrail just that product normally do not meet.

That is why the proportion is comparatively very low compared to our major product in gemstone jewelry. No,

no. I'm just trying to understand that in the jewelry segment, which is approximately 65% of your sales, how much is in terms of in a gold product, in a silver product, and how much of it is artificial jewelry?

Does that all have the same margins or not? See,

that I mentioned about that, these are the proportion from gold, silver, and platinum with the studded gemstones. Gold portion will not be a significant one in the product cost.

We target based on the different gemstones. We don't have right now that how much gold portion will have on those products, but the major part is used in gemstone.

How much of your products, even in studded, how much of it is done in gold? How much of it done in silver?

How much of it is done in platinum, if that have the bifurcation, Nitin?

Got it now.

Majority of the product, yeah.

Yeah. Deepesh, I can give you a rough number.

I don't have exact breakup, but approximately 70% of our jewelry would have silver, gold, or platinum component to it. By value, I'm saying.

And 30% would be base metal, that is brass or copper or stainless steel.

Great. That's it.

That's good enough.

That's just a rough number. What Nitin can do is to get the data more detailed and get that out to you later.

I think we'll contact the IR for that to have the exact numbers if you can have.

Sure, yeah. Prashant will arrange for you.

Great. Just wanted to understand also the US exports, is it going fine because you had mentioned that you are casting over there, getting it here, finishing, and going back, which is only 5.5% I think what you mentioned in last con-call?

Is that working well, or are we facing any duty challenges?

No, that is working well because we are casting there, and we have the Custom Border Protection ruling specifically for our company, stating that this process is as per the law. In this case, we are paying 5.5% tariff only on the value addition, not on the casting component.

On that is zero.

Okay. Your lab-grown is done mainly in gold or in every precious metal?

Pretty much every precious metal, silver, gold, platinum, everything.

Silver, gold, platinum. Okay.

Are you seeing any traction more in silver? Because of the high gold prices, a lot of lab-grown jewelry has started coming into silver.

Are you seeing that kind of traction, or it's working well in all the three metals?

For us, it's more platinum and silver. Gold velocity actually reduces after prices shooting up.

Now silver has recently shot up exponentially. Don't know how the silver with the new prices flare up in lab-grown, but right now it's doing well.

Going forward, we don't know. What we are doing is testing into more different metals, like base metals with lower carat weight lab-grown, and see how that consumer takes up.

We are constantly bring new product, Deepesh, 100 new products every day. This is a very high velocity of experimentation, testing, and then new product coming to customers.

Okay. Is this new FTA which has been signed by India between EU and India, how are we as a company exploring that opportunity?

Because apart from

We'll have more

focus in the other part of EU. That's why.

That will definitely help us.

Yes, yeah. We'll save 4% on our jewelry export from India to Germany.

That will definitely benefit us.

Okay. That will add to our margin directly, is that a right assessment?

Correct. It will.

Great. If you can just give us a ROE going forward, what

just asking for ROE figure, because

No problem.

Thank you. If you look at your new customer growth, I see the growth has been 2% for the 9 months across.

Just want to understand which geographies the growth has been positive, and which geographies the growth has been negative? If you can actually give some idea of whether it is from the lifestyle or in the jewelry?

I just want to understand that particular part.

Hello, Lakshminarayan ji. We are seeing the good improvement in UK, just digital customers adoption is pretty high over there.

Ideal World remained flat, and also Germany remained flat. Mainly we are seeing some low customer in US as the strategy of acquisition on digital customers, we have moved from low price point to slightly higher price point customers.

That's where the unique customers were lower. Initially, we acquired a lot of digital customers through $10 to $30 price point, but we have realized later that those customers are not giving value as we anticipated, and we are seeing that more high-end customers giving more value.

That's where we have seen last 12 months TTM basis unique customers are lower on US side.

On the US, again, there are two ways to think, right? One is lifestyle, one is jewelry, and another way is digital and non-digital.

Where do you see the decline in unique customers in the US market, which segment of this?

Digital customers mainly we have seen the change in past 1 year, as the customer inflow was very high and more mostly jewelry product we were targeting to acquire those customers in 1 year back. That is now reduced after the changing of strategy to higher price point targeting.

Mainly a US jewelry customers.

What is your outlook in terms of that unique customer growth, in a broadly, what is the internal thought process for FY27? Do you intend to keep for the US unique customer growth at somewhere like mid-single digits or how are you thinking about it?

We mainly target as the profitability of the customers rather targeting number of customer, targeting quality of customers. Not a specific number, but more a quality of customer we are targeting.

Got it. The second question is that if you look at the last 9 months, any specific projects or something which you have actually initiated and that have actually done pretty good for us?

Anything you'd like to call out the last 6 months, last 9 months, where you see either benefits have already come or you think they should come actually down the line, which you haven't done the previous year?

There's so many initiatives, just to

Anything you'd like to call out in priority, like two or three things which you think are

There's one pure D2C brand called Rachel Galley that we started 4 years ago. Last quarter, we were able to see the good traction on lab-grown diamond and couple of other jewelry products, and then we scaled up the spend and were able to triple the revenue with that brand.

Now it's a very small base, so that overall doesn't speak and not come up in big four numbers. That is a proof of concept that on digital space, if we are able to crack the code, there is a room to scale up the revenue pretty rapidly.

That we saw with Rachel Galley. Now we're putting up AI initiatives in different places.

For example, AI chatbots, all the text responses are generated by AI, the email responses are generated by AI. Even the voice response now, we're testing with 10% customer in US.

In our voice response is by AI. We're using AI for creating our TV schedules.

Our calendars is getting done by AI. We have CR&O GPT within our business in US.

Any question for internal data, we can ask in natural language and get the answer now. At multiple levels, we are implementing AI.

Content and everything everybody does, but these are more high value-added AI use cases in the organization. Warehouse process improvement in US specially has led to lower operation costs.

Now US is running with 320 people at higher revenue, which used to be 500 people 3 years ago at lower revenue. We're seeing a lot of different areas and initiatives in different places that is bearing fruit.

One initiative that you've asked, and I'm just sharing with you, there's a concept called Zero Distance, the Chinese term called RenDanHeYi, started by Haier founder, Zhang Ruimin. Last month, I went to China to meet him.

He's $55 billion company. He gave me 90 minutes.

We understood from him how they create micro-enterprises within the group with P&L responsibilities, and then how they drive efficiencies, increase sales, reduce cost, improve margin, and that leads to efficiencies. Across VGL Group, now we have over 100 micro-enterprises with P&L responsibilities, and we are developing entrepreneurs within our company to drive the business forward.

A lot many initiatives that I can list here, but all these put together gives me confidence that our VGL is poised for strong growth in years to come. Understood.

Thank you, sir. Thank you so much.

Thank you for the opportunity. I had a bookkeeping question.

If I look at your segmental revenue, there is a disconnect between what is reported to the exchanges and what is put out in the presentation. Can you please explain that?

Let me see. 1 second.

Yes. Exchange gain specifically is not present in the segment one.

It is clubbed between the all the entities. You're referring in the investor presentation segmental segment?

Yes, yes. For if I look at the investor presentation, the segmental slide, your US revenue is at 5 ₹93 odd crores, right?

Right, yeah.

Whereas if I look at what you've reported as Annexure 1 in the exchange filing, your revenue for US is 685 crores.

Yeah. I got it now.

That is why we have shown separately because the published accounts is based on the geography-wise, and here we have separated the retail and the manufacturing. US, we have a two entity.

One is also sourcing entity. That revenue clubbed in US.

Now for the better presentation the actual real reflected number in investor presentation. The other revenue is the sourcing revenue, which done by a separate entity in US.

Okay. Then it's fair to assume that those products are eventually getting sold in the US only.

The incidence of sale, the true incidence of sale in the US is what is reflected in the exchange number of 685 crores? Is that fair to assume?

Yeah. No, not that will not be a comparable number then because some of the inventory will be remaining from those products in US.

Fair to compare the retail and the sourcing separately, both sales.

Okay. Got it.

Just one more question. What is our current customer acquisition cost across channels?

Just some color.

That will be very, Naveen, that would be difficult to pinpoint because we have six brands, and within each brand, we have multiple acquisition channels. We have Google, we have Meta, within Meta different way we drive about 10 to 12 different product categories, and each have different customer acquisition costs, affiliate, and so on.

Let me just rephrase the question. Then what is the ROAS that we generate on the digital performance marketing spend that we do?

Return on ad spend.

Yeah. We look at ROAS, overall ROAS, on a store ROAS basis, we look at 2.5 as a target ROAS that we should generate because our margin is about 65%.

At 2.5 ROAS, we are break-even. Then we try to get that customer to purchase again and again in future with us.

From all marketing put together, there is Meta, Google, AppLovin, affiliate, and email, text, all those marketing. That's the overall company target that we look at, or the brand target we look at.

Individual channels may differ. Some, for example, Meta, lab-grown diamond, 1-day click, our ROAS, we're okay with 0.4 or 0.5, 0.4, 0.5 because then that eventually we know flows into the other channels and then email or direct or whichever and then goes to 2.5.

It's a bit complicated with across different product categories and different channels.

Got it. Thank you.

That was helpful. Thank you.

Thanks, Naveen.

Hello, sir. Am I audible?

Okay. Sir, my question is India and UAE FTA trade deal was concluded yesterday, removing the 2% to 4% duty on jewelry.

Your German revenue has been stagnant, and you've seen a 9% digital drop last quarter. Since your Jaipur unit are already shipping to Germany, will you use this 400 basis point margin tailwind to the lower price and fix the digital decline, or will you let the flow bottom line to ensure Germany doesn't slip back into the loss and seasonally weak Q4?

Good question, Tripti. Thank you.

Our aim would be to get to revenue growth of 10% or higher in Germany with EBITDA contribution to the group. Within that objective, we will look at what works best.

Should we reinvest some of that into the customer acquisition, or to let it flow? That will be decided on a pretty dynamic way.

At this time, it'll be difficult for me to give a guidance how exactly it'll play. Because our business is very dynamic, Tripti.

It is TV, web, and multiple product lines. We look at pretty dynamically.

Okay. Okay.

One more thing that you had multiple leadership realignment in Germany over past 18 months. Is current team permanent, or should we expect more reconstruction in cost in FY26?

We're pretty happy with the team that we have now, and they're coming together very well and they're performing. As you saw, last quarter there was revenue growth.

From quarter before, there was no revenue growth. Last quarter, there was revenue growth.

The gross margins are higher, EBITDA positive, and it's profitable. We're very happy with the team coming together and performing.

Okay. There is no change in team, right?

No major change expected. Some additional spaces to fill, but that is all middle level only.

No major changes.

Okay. There is a last question.

You consistently beat your lower margin like 7% to 9% whatever you guided. Then given that you grew 16% in US this quarter, why are you still maintaining such a low guidance for full year?

First part I'll take, Sunil. Tripti, US growth 16% is not apple-to-apple comparison because that includes the sourcing unit growth.

You can refer the investor presentation, that will be the better in line with the comparable number. US in past quarter, we have a growth of 8.7% in local currency terms.

That is the more comparable number in rupee terms.

This is rupee terms.

In rupee terms, yeah. Before next year, we are guiding that 9% to 11%.

That is definitely the other initiatives helping, and that is why we are guiding the higher number for the next year.

Thank you so much.

A couple of questions from here. Can you hear me first?

Yes, Deepesh.

Yeah. What was the labor code impact on our company in this quarter?

I'll take that. Deepesh, labor code impact was not a significant, around 1.7 crores.

That we have accounted in our employee cost.

Okay. Going forward, what is your ROE expectations?

Because in 9 months, you've done ROE of about 15%, and in 2022 we were, about 20% 20%, 23%, 32%, that kind of a number. When do you see that number actually going to 23%, from 15% to 20%, 23%?

Hello?

Yeah. Deepesh, difficult to guide the exact timeline for that, but what I expect that we already given the guidance for next quarter for EBITDA number, and we don't foresee a major capex, except some in UK, but nothing exceptional capex.

ROE and ROCE, ROI, ROIC, both should improve next year, and in medium term, they should continue to improve. What I'm guiding is that we should continue to see leverage next year and in midterm.

The trajectory will be upwards?

The trajectory will be upwards. Correct.

Right. If I can just put in one more question that how much of your lab-grown sales actually come from a carat and above?

Because that's where the real margin would be, I'm assuming.

Nitin, do you have an idea?

No, we don't have that number

handy. It's a very micro question.

It's a good question, Deepesh, but it's a very micro question. I can give you a general idea that from my back-of-the-envelope estimate, about 70%, 75% of sales would come from 1 carat and up.

Great. That's good enough.

Yeah. Thank you so much.

All the very best, guys.

Thank you, Deepesh.

Hello, can you hear me?

Yes, Shreyansh.

Yeah. Sir, my first question is since we are guiding for 9% to 11% of top-line growth, what sort of INR depreciation are we building in this guidance?

Yeah. We'll have benefit of first two quarters, assuming that now rupee slide stays where it is, it doesn't slide any further more.

First two quarter will have benefit, and we don't expect much benefit for second H2 of next financial year. I don't have exact numbers that we calculated within the guidance, but it's just a overall framework is H1 will have benefit, H2 won't have much.

Sir, given historically the rates at which INR depreciates, would it be fair to assume that 5% to 6% is our constant currency guidance in that 9% growth rate?

I don't have exact numbers, Shreyansh, but long-term rupee has depreciated about 3.5% against dollar.

Right.

First two quarters would have more than that, and next two quarters would have less than that. The calculation that we've done in detail equation is not with me right now, but there is some component of depreciation in the guidance of FY27.

All right. Sir, the other question is on our acquisition of Mindful Souls.

Since our acquisition, I think the revenue run rate has been constant at about $4 million. Given that that business is at a high gross margins of 75%, is there an opportunity to look at 60%, 65% gross margins which we typically operate at a company level and drive some growth there?

Because I think post our acquisition, the revenue run rates have largely been stagnant at $4 million.

Good observation. The main reason for revenue stagnation is the customer acquisition cost.

We want to limit it to certain percentage of revenue. Beyond that, it becomes not a profitable business.

As we are learning more and more about the business and also adding some more strength to that team in India, we expect this brand to scale in coming future. YoY, we had degrowth in last quarter, Q3, and Q4 would also may have a little bit of degrowth.

From Q1 onwards, we expect it to have single-digit growth and then getting to double-digit growth few quarters down the road. I'm quite excited with this brand that we have.

As a group, VGL Group, we learned quite a bit from the digital marketing processes from this brand, and this brand itself has a potential to grow with the demographic that we target there.

Okay. Sir, last question on the UK business.

Ex of Ideal World, constant currency, we've degrown by about 6 odd percent. Now UK, since the last few quarters has been struggling, at least on the revenue bit.

What are the opportunities you think there are going forward? Because both US and UK are a large piece of business for us, and UK was negative, and US also I think was 3% 3% constant currency.

When we're guiding for 9% to 11% of top-line growth, these two geographies have typically, they have to fire, right? Are we seeing some signs on the ground where customer sentiments have improved or something on those lines?

Yeah. I'm not seeing consumer sentiment improving.

Our guidance is without that sentiment in play. We are seeing our own internal digital marketing improving in both US and UK.

As I mentioned, Rachel Galley had 3x revenue and with profitability, and that learning from each other, all the six brands that we have, is percolating within the group in different verticals, like Meta, Google, AppLovin, affiliate, influencers, email, all these areas. That gives me confidence for TJC's growth.

In addition to that, we lost two contracts for national broadcasting in UK in last 6 months, and we are negotiating with couple of such contracts, and that contract will also give us growth. I'm fairly confident that the UK will come back to growth, and US will accelerate the growth.

Okay. All right, sir.

That helps. Thank you, and all the best.

Thanks, Shreyansh.

Thank you, everybody. I want to thank all the participants for your time and great questions.

If you have any further questions, feel free to reach out to Prashant Saraswat at VGL, or Amit Sharma at Adfactors PR India, and we will be happy to answer your questions. Thank you all once again.