Please note that this conference is being recorded. I now hand the conference over to Ms. Disha Shah from Adfactors PR. Thank you, and over to you, ma'am. Good evening, everyone, and thank you for joining us on Vaibhav Global Limited's morning conference call for the second quarter and half-year end at 30 September 2024. Today, we have with us Mr. Sunil Agrawal, Managing Director, Mr. Nitin Panwad, Group CFO, and Mr. Prashant Saraswat, Head of Investor Relations. We will begin the call with opening remarks by Mr. Sunil Agrawal on the business operations, key initiative, and a broad outlook, followed by discussion on the financial performance by Mr. Nitin Panwad, after which the management will be open for the floor for 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, Disha. Good evening, everyone. Thank you for joining our Q2 FY 2025 earnings call. I hope you've reviewed the results and investor presentation. I'm pleased to report a 13% revenue growth, reflecting our continued momentum. Consistent with our guidance, we maintained strong gross margins at 63.5%, supported by strategic pricing and favorable product mix. Our vertically integrated supply chain has also enabled us to achieve stable and market-leading gross margins. EBITDA margin came in at 8.7% of revenue, compared to 9.5% for the same period last year. This decline reflects planned investments in digital marketing aimed at new customer acquisition, higher airtime costs to secure a better channel position in the U.S., and airtime costs in the Ideal World. These investments are expected to drive long-term gains in new customer acquisition, as reflected in our record unique customer base of 682,000. Now, let me take you through our key retail markets. The U.S. revenue declined 1.6% year-over-year in the September quarter, affected by increased attention on the election activities and Olympics. With consumer confidence improving and the elections now behind us, we expect demand to pick up in the upcoming holiday season. In the U.K., revenue grew by 15% year-over-year, majorly contributed by the Ideal World. With signs of improvement in the U.K. economy, like the consumer confidence index inching up, inflation and interest rates going down, we expect recovery in consumer demand in the coming months. Additionally, Rachel Galley, an e-commerce brand we acquired in the U.K. three years ago, has now achieved EBITDA profitability. This highlights our capability to scale e-commerce brands and achieve profitability, demonstrating our disciplined approach to growing digital businesses. Germany continues to perform well, recording 15.3% YoY revenue growth in Q2 FY 2025. Q on Q revenue grew by 25%, while operating losses declined substantially by 41%. We are confident of achieving break-even at the operating level by the second half of FY 2025. Our 4R strategy (widening reach, new customer registration and acquisition, strengthening customer retention, and repeat purchases) continues to deliver positive outcomes. Our TV network now reaches 130 million households, and our unique customer base has increased by 51% year-over-year to approximately 682,000. Even without any new acquisitions, the unique customer base grew 6% YoY. Customer retention stands solid at 41%, with an average of 23 pieces per customer annually on a trailing 12-month basis. We have now completed one year since acquiring Ideal World and Mindful Souls, and I will provide a brief update on the progress. Ideal World operates 24/7, reaching 27 million UK households. We recently upgraded our Sky broadcast to HD network. The business is currently profitable on a direct cost basis, achieving INR 17 million in sales over the past one year. We expect Ideal World to reach full cost profitability from the current quarter onwards, that is, Q3 onwards. Mindful Souls continues to perform well, with a PBT margin of 10% on a trailing 12-month basis. Mindful Souls now has a solid base of over 100,000 unique customers, which we aim to grow further. Leveraging VGL's group's supply chain, we are further enhancing its profitability through better costs and are regularly launching new subscription boxes. At VGL, community impact remains the key focus. We recently reached a milestone of 93 million meals being served to school children under our Your Purchase Feeds initiative. We are currently donating 54,000 meals every school day. Our long-term goal is to reach 1 million meals every school day by FY 2040. On the sustainability front, we generated 1.1 million kilowatt-hours of solar energy this quarter, meeting 100% of power needs for two of our manufacturing units in India. This aligns with our goal to achieve carbon neutrality for Scope 1 and Scope 2 emissions by 2031. We are honored to have received the Excellence in Sustainability and Climate Action Award from the Indo-American Chamber of Commerce at the 20th Indo-American Corporate Excellence Conclave. This award recognizes our contribution to Indo-U.S. trade, business, and our commitment to ESG principles. We look forward to keeping a balance between growth, investment, and quarterly payouts to generate sustainable value for our stakeholders. The board of directors has declared an interim dividend of INR 1.5 per share for the quarter, representing 89% of payout, implying a firm belief in our business model and strong growth prospects. We remain vigilant in tracking the macro environment and market trends. I'm confident that our capabilities, team, and experience will allow us to sustain profitable growth. We reaffirm our FY 2025 revenue growth target of 14%-17% with operating leverage and project mid-teens revenue growth in the coming years with decent operating leverage. I will now hand over the call to Nitin to discuss the financial performance in detail. Over to you, Nitin. Thank you, Sunil. Good evening, everyone. Welcome to Vaibhav Global's earnings call. Following Sunil's overview of business performance, I will now cover the financial results for Q2 and half-year ending September 24. In Q2 FY 2025, we recorded 13% year-over-year growth, totaling INR 796 crore, up from INR 705 crore in Q2 FY 2024. In constant currency basis, this reflects 10.2% growth, supported by a 9.3% rise in our volume. Our gross margin remained strong at 63.5%, benefiting from our vertically integrated model and favorable product mix. The EBITDA margin for the quarter was 8.7%. As Sunil mentioned earlier, the current margin profile reflects our ongoing investment in digital marketing, enhanced channel positioning in the U.S., and airtime costs in Ideal World. Equally, content and broadcasting expenses as a share of revenue fell to 19.4% in Q2 from 20.6% in Q1, and we expect that this to reach 18% for full financial year. Profit after tax for the quarter was INR 28 crore. Looking at regional performance, U.S. revenue decreased by 1.6%, U.K. posted a 15% revenue growth, and Germany revenue grew by 15.3% year-over-year. As noted earlier, the existing business growth rate was affected due to audience focusing more on the U.S. election, Olympics, and cautious consumer sentiments in the U.K. In Germany, revenue growth remained strong, with quarterly operating losses sequentially decreasing by 41%, and we stay on track to achieve break-even level at operating margins in the second half of the financial year FY 2025. For Q2, TV revenue reached INR 456 crore, while digital revenue totaling INR 294 crore. TV revenue grew by 12.3% year-over-year, and digital revenue increased by 11.8% year-over-year, with digital contributing 39% of total B2C sales. This growth reflects our continued investment in digital marketing and related infrastructure. Additionally, our Budget Pay EMI option contributed 38% of total B2C revenue. We have now completed a year since buying Ideal World and Mindful Souls. Ideal World remained profitable on a direct cost basis, and we expect that it to achieve full cost allocation profitability from Q3 onwards. Mindful Souls continues to perform well, achieving a 10% PBT margin over the past 12 months. With VGL supply chain now supporting Mindful Souls, we expect further improvement in its profitability. Our balance sheet remains strong, with net cash position positive of INR 100 crore, free cash flow, and operating cash flow worth INR 11 crore and INR 26 crore, respectively, which were affected by a planned inventory build-up for the upcoming festive season. Currently, ROCE and ROE were 17% and 10%, respectively. We are also committed toward creating and sustaining value for stakeholders and are pleased to announce that the board has approved a second interim dividend for the year of INR 1.5 per equity share, reflecting 89% payout. Looking ahead, we stay committed to deliver strong returns to our stakeholders in the mid to long term. We are confident in achieving our revenue growth target of 14%-17% for FY 2025 with operating leverage and we project mid-teens revenue growth with decent operating leverage in the coming years. Thank you. Over to you, operator, for Q&A. S tart with the Q&A. Yes, please. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Rishabh Shah from Buglerock Capital. Please go ahead. Yeah, hello. I'm available. You're quite low. If you can just increase the volume. Hello? We are unable to hear you loudly, sir. If you can speak a bit louder. Yeah, yeah. So my first question is, budget pay in the U.S. and U.K. is high. So why give products on credit and why not take it upfront? Is it because of the nature of the people living in those countries? Budget Pay ratio we offer based on the customer internal credit score, and customer can opt the Budget Pay option for the different products based on the EMI available for the particular product. We are offering since 2016, and we have seen quite a good acceptance with the very low budget rate of the Budget Pay, and we've seen customer attraction towards especially buying on the high-end products where they can buy for paying upfront as a full amount and paying in installment. It gives an ease to pay to the customer. Looking to the low budget rate and customer acceptance, we are continuing to offer the Budget Pay within the internal credit assessment of the customer. Okay. And then my second question is, sir, Mr. Sunil Agrawal, sir, where do you allocate most of your time? Is it the product design, which is the most important part of the business, or is it team building, or customer acquisition? This is Sunil. I assume you're asking this question from me. In initial years, I spent quite a bit of time in product development and strategy and the product strategy. But last many years, the majority of my time goes in team development. I meet the team regularly by direct reports and my skip levels and some outside stakeholders as well. And in addition to that, I read a lot. I read trade publications and books published by renowned businessmen or strategists. Okay. So my next question is, as we know, the people pay by invoice in Germany, and there has been a delay to get a break-even in Germany. Now we are at a better level positive. So what has and what do you think has changed? Because you had entered Germany before also. So now what has changed that you have entered Germany again? Have you studied the mindset of the people, and how is it different from U.K. and U.S.? Yeah. So in television business, the costs are largely fixed. So we have about 130 people there. Those people will be needed whether you do EUR 1 sale, or EUR 25 million sales, or EUR 30 million that we currently have. And also the airtime that we contracted for about 35 million homes, you would pay them irrespective of what revenue you get. So the fixed cost nature of the initial cost nature of the business is such that once you start to get to a critical mass of customers which have good high repeat purchase intensity, then the leverage of this model is very high. But initial three, four years that it takes for this business to assemble that critical mass of customers is needed for this particular business model. As opposed to the other models where you have one store and then one store becomes profitable sooner, in this case, we have a store in everybody's living room. About, say, 35 million homes' living rooms, we have stores there. So we have to set up that store cost right at the front. And that is why it takes time. But the model's beauty is that once you reach a critical mass, a large portion of gross margin starts to flow to the bottom line. Okay. So my next question is, sir, now the calls you mentioned are revenue per household just $2, and the closest competitor is about $7, and the leader is at $60. So how has that evolved, and what steps have been taken to go nearer to the leader? Yeah. So we have gained market share over the last many quarters, maybe last four, five years. We continue to gain market share. So our current run rate is around $3.5. Yeah, so three something. I don't have the exact number in front of me. So let me tell you, rather than per household, our current market share is about 4% compared to Qurate and ShopHQ that we calculate internally, and that grew from less than 2% a few years ago. We continue to gain market share over the years, and I'm confident that we'll continue to gain market share for many years to come owing to our vertical model and agility to bring the trendy products to the customer in very short time because we are so closely aligned with supply chain. So just a thing on market share. You think we have gained market share continuously over the years. So suddenly, we have gained market share at a more rapid pace since you only say we sell products at 50% price of our customers. So has the leader lost quite a bit of market share in the previous years, or we are lagging in some way, sir? So I don't remember saying we sell at 50% because many other retailers sell the branded products. For example, they sell Bose, or Apple, or Samsung, or other branded products. Our strategy is more like Zara, where we make our own brands, in-house brands, and we sell products that seem much lower than their nationally branded products. Now, we also have set the guardrails of 60% plus gross margin and leverage to give to the shareholders. So if you were to go out and buy the customers that many e-comm companies have initially, then we can scale the business rapidly, but that will entail lower gross margins and maybe high marketing costs that will dilute our EBITDA margins. So we keep our guardrails in place, continue to gain market share, and continue to gain leverage at the bottom line. So that is our business model. Within that guardrails, if we can achieve higher growth rate, we will. Okay. Okay. Thank you again. Thank you. Thank you, Rishabh. Thank you. The next question is from the line of Nirvana Laha from Badrinath Holdings. Please go ahead. Hi. Thank you so much for the opportunity, and congratulations again, sir, on a steady quarter. So the first question is more of a macro question. So any impact on our business model due to Trump getting re-elected? As As in, we import all our materials into the U.S. So from your past experience with the earlier Trump administration and current developments, any comments on that? Yeah. Thank you for the question, Nirvana. We believe that we are the lowest-cost producer, and the tariffs would impact equally everybody. So we don't foresee us getting impacted any adverse. In fact, with our gross margin of 62% plus, our cost will be lower than other competitors because their gross margins are lower. So we'll be at advantage if at all the tariff across the board comes into picture. Sorry to interrupt. May we request Mr. Laha to please rejoin the queue? Okay. Thank you. The next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead. Hello, sir. Am I audible? Yes. Okay. Sir, first question is on this Budget Pay or financing. So, sir, very fundamental question is, why do we finance these purchases through our balance sheet? Is it not better to do some partnership and let the financing be on someone else's balance sheet? Maybe I don't have historical context of it, but maybe if you can explain that a little bit. And then the second question is, I see related to that only, in FY 2023, we had 26% as impairment. In FY 2024, we had 33% as impairment. This is significant compared to our profit after tax. I mean, if I look at it, it's almost 20%-30% of our profits. So maybe you can explain what kind of ROA we make or what kind of interest rates we charge, and how are we covered? I mean, how are these impairments considered in our model? Yeah. Yeah. So thank you for the questions. I'll go to your first question, the Budget Pay. So we have fairly good experience with the financing we initially started. Initially, when we started, we explored the option to financing from a third party, but there were two things, two issues we have found, where the financing cost was higher. Also, the customer experience, while many of the customers were not getting credit as their credit allocation from the different financing companies was higher. So then we have found out that it's better to offer ourselves as we give a better experience, as well as our bad debts and the financing costs lower than the third party. So over the years, we managed to keep the lower bad debts safe. Even with the financing cost of, let's say, interest cost of two, three months, we went better than the other financing companies available out there. That is why we went for the option, and over the years, we have optimized quite pretty well, and we are pretty steady on our doubtful debts ratio and the financing cost side. The other point you mentioned about impairment, I'm not exactly where you are mentioning that this number in FY 2023, actually 2022, actually we have a gain of 28%, which was a PPP loan that we have shown in our exceptional items. It was actually a subsidy that we have received from the U.S. government at that time during the COVID year. So I'm looking at the annual report. Sorry, sorry to interrupt, sir. I'm looking at the annual report. There is a line in other expenses, impairment losses of financial assets, allowances for or write-off of doubtful debts. There is a line item in other expenses in your annual report. Yeah. It is actually bad debts on the Budget Pay EMI options that we offer to the end consumer. It is roughly around 1% of the cost to sales ratio, and it is in line with, I think, past many years, if I'm referring the correct number than what you mentioned. Sir, 32% in FY 2024, if that is 1%, then the total asset under management will be 3,200%. I don't think that is the correct number. Yeah. 32%, if I refer on the financial annual report, 32% is 1% of our 3,000% top line. No, no, no. But you are financing 40%, right, sir? So this is roughly 1,200%. 1,200%. Okay. I I got your point. I got your point now. So our financing 40% is the ratio of the customer who opt the Budget Pay. So Budget Pay varies from two installments to five different installments. So first installment, we collect upfront. Okay. So that's why the outstanding is different than the sales ratio, which I mentioned in my commentary. It is 39%. So outstanding varies based on two months to five months different installments. But the outstanding installment debt, as you refer in the financial, which is 32%. So what is the interest rate that we charge, sir? I mean, because this number sounds really high to me. Yeah. So we don't charge interest to the customers. It is interest-free for the end consumer. And you can say that the balance sheet bears the cost of interest. The customer doesn't need to pay. But the advantage is that customers get pretty well adoption of wherever we offer to the customer a Budget Pay option. And many of the cases where we have opted to the third parties, so credit third parties don't give to the good customer as in our internal credit score, but third parties don't give the credit to them. So eventually, we may lose the sales. That is why we went for our own financing. Okay. Okay. I also see in my financials. If you see me, Rupesh, so I see in my financials about for H1, FY 2024, the bad debt was $1.652 million for H1, FY 2024. So the velocity of the bad debt is approximately $3 million a year. Sorry, sorry. So it was $2 million in H1, FY 2024. It was INR 16.52 crore of H1, FY 2024. And for H1, FY 2025, it was INR 13.55 crore for H1 bad debt. So what you might be seeing is just the doubling of that for the full financial year, about 32% of the bad debt amount towards the Budget Pay. Yes, sir. All three organizations, U.S., U.K., Germany. Yeah. Just the number sounds really high to me, sir. I mean, 1,200%. Let's say, I mean, I don't know, 40-50% you're financing. On 1,200% financing, 32% is roughly 3% hit to the margins. And that number sounds really high to me. So that is my point. Maybe I don't know if you can claim it. So let me give you one more reference. Any third-party financing company we go, there is one more company available like FlexiPay in the U.K. They charge straight away 7% of sales. Regardless of EMI options, they charge 7% of sales. Different financing companies, they don't go below. Even when the interest rate was lower, around 1%, 2% before the COVID or before COVID time, the minimum financing cost from the different companies was 3% to 4%. But that is to the customer, right, sir? That is not to us. No, no, no, no. That is to us because it's a zero cost for the customer. We can't charge from customer because our competitors don't charge from customer. I see. I see. Because our balance sheet, we take it from outside factoring. Okay. Okay, sir. And the second question, sir, is on the content and broadcasting piece. So that also is a very first principle basic question that we were doing 350% spending in FY 2022. I think that number went to INR 415 crore in 2023, INR 500 crore in 2024, and now it's going to be INR 600 crore in 2025. So that number has gone up by 80%. And adjusted for acquisitions, our revenue has grown by not even by the same amount. I mean, our revenue has grown by INR 200 crore-INR 300 crore. Adjusted for, I mean, $35 million if I adjust between Ideal World and Mindful. So the revenue hasn't grown. So I mean, maybe you can talk from your experience or whatever is your internal modeling. But this incremental INR 250 crore spending that you are doing on content and broadcasting, can it bring, let's say, INR 1,000 crore-INR 1,500crore revenue to us? And then at what time frame? I mean, if you can explain that a little bit internally, how you look at the success of this spending? That is one. And then the second question is some other Indian platform company I track, and they basically don't do any ad spending if the sales velocity is good. They basically do spending only when the sales velocity or customer acquisition numbers start going down. And over the years, it has worked phenomenally well for them. So at the first principle level, I mean, can you justify this kind of spend to yourself and probably to me, to investors? Thanks for the question. This is Sunil. There are two components to content and broadcasting cost. One is the airtime cost, and the other is the e-com marketing cost. We look at a different criterion for both these costs. Now, within the airtime cost, we started in Germany three years ago. There's an upfront fixed cost, as I mentioned in my earlier comment. We started Ideal World one year ago. That is upfront cost. Germany will break even in this current quarter and next quarter. In H2, it will be at a breakeven level. It will break even. The cost is already up there for 35 million homes. For Ideal World, the cost is there for 27 million homes as it scales at a fully allocated basis. It will break even this quarter. The upfront costs are there for the airtime. Also in the U.S., we took an airtime with a lower channel position that will give us a growth in coming years. We made these three investments in airtime that ramped up the cost for future's sake. Now, the second component is digital advertising costs. We started ramping up digital advertising about a year ago. There you see the content broadcasting costs go up noticeably because of that. We are seeing benefit of that in terms of new customer acquisition. That customer lifetime value is one year lifetime value of that customer is higher than the customer acquisition cost for us. At all the six brands that we have in the Vaibhav portfolio, at each brand, the one-year margin is higher than the customer acquisition cost. So with that strategy, we started spending, ramping up the spend on digital marketing. Now, your third point was about the Indian companies who don't spend on advertising till they see the ramp slow down. So our model may not be apples to apples with the Indian model. I've not studied the companies you mentioned. But with our competition within the U.S., U.K., and Germany, we don't see organic customers coming in at our scale. Maybe at Amazon scale or Walmart scale with their footprint or their momentum from earlier spend that they have done, they may get a lot of organic. But within our space, from Google SEO that we do or Bing SEO we do, the sales is not as meaningful from organic sources as there might be from the Indian companies that you're comparing. Okay. Okay, sir. So then. Mr. Rupesh, may we request you to please rejoin the queue? Sure. Thank you. Thank you. The next question is from the line of Nirvana Laha from Badrinath Holdings. Please go ahead. Hi. Thanks for the opportunity again. Following up from what the last participant was asking, so the content and broadcasting costs this quarter have been a fall QoQ. Has this number now peaked out for the foreseeable future? For the coming quarters, on an absolute basis, how do you see this number panning out? It was 154% in this quarter. Yeah. So for television, just me again, for television, we foresee numbers to be relatively flat unless we come across a major opportunity that we don't want to miss. But we don't have anything in the offing. So we foresee this to be flat. For digital marketing, we will continue to gradually ramp up as we see productivity gain within our digital space. But as a percentage of revenue, you won't see any meaningful increase. This year, we expect it to be 18% by the end of this financial year. And for going forward, for next few years, you can expect this to be 18%. Maybe slightly lower, but leverage may not come a lot from this particular area. The leverage will come from HR costs because our costs are largely fixed from SG&A and some from margin improvement as we scale the digital portion. Because the margin on digital portion is a little bit higher than television portion. Okay. So it will come from gross margin on digital space? Yes. Digital space has a higher gross margin than the television space. And so you said it will continue at 18%. But sir, right now, if you were at 20% in H1 and you're guiding for 18% for the full year, so for H2, you have to be at around 16% to achieve that 18% guidance. So you're saying H2, you'll be at 16%, and then you'll again ramp up to 18% in FY 2026? For the whole year, yeah, because H2 is usually higher revenue, and the cost as a percentage of revenue drops because it's a fixed nature, airtime cost. The percentage of expense, the percentage of sales drops. For the next year, H2 may be higher than 18%, and H1 may be higher than 18%, and H2 will be lower than 18%. Okay. Got it, and sir, out of this 154, can you split this between TV and digital so that we understand exactly what part will grow and what will not? Yeah. Out of this 18%, 11% is related to airtime cost, and the rest 7% related to the digital marketing cost. Sure. And this 7% is digital spend, where exactly in platforms like Meta and for SEO, if you can break that down a little bit? Yeah. So majority is spent through Meta, but there's some portion in different affiliates, SEO, Google. But majority of spend through Meta. Okay. And business-wise, is it possible to split the 7% between, say, Mindful Souls and the US business, UK and Germany? Yeah. Internally, we do. Mindful Souls is a pure D2C company which has a higher digital marketing cost compared to US and UK business. So model is different in the other brands. So percentages vary between the different brands. Sure. Would it be fair to say that half of the 7% probably goes to Mindful Souls? Not exactly half, but a good amount of portion to Mindful Souls. Okay. Okay. And on Mindful Souls, can you tell us what was the YoY and QoQ revenue and volume growth? Yeah. So Mindful Souls is QoQ flattish for what we are seeing right now. But month over month, in recent months, we have started seeing improvement in Mindful Souls. And profitability is also getting better with the regional supply chain, which has started benefiting from October onwards. And then the upcoming seasonal events that we are seeing and four different new products we have launched a couple of months back, subscription program. Expecting the subscription numbers will improve, which will reflect in improving our quarterly and monthly revenue going forward. Sorry to interrupt, Mr. Laha. May we request you to please rejoin the queue? Sure. I agree. Thank you. Thank you. The next question is from the line of Anuj Sharma from M3 Investments. Please go ahead. Yes. Thank you for this opportunity. A couple of questions. If you look at the broadcasting cost, basically the airtime over a long period of time, what is the inflation we can expect in this particular cost? So the per home cost doesn't go up unless we take the home in a better channel position. And also, the number of homes is not really expanding. So from cable, it's shrinking, but we are moving from cable to OTA homes, over the air homes. So those homes can be a little more expensive than the cable. So as the mix changes, then the cost may move a little bit. But per home, wherever we are, hasn't really gone up to us per home basis. Okay. Okay, and when there's a shift in the mix from TV to OTA or OTT, what's the inflation or what's the premium you have to pay per household, suppose? So depending on channel position, from cable, the normal cable we used to have in the hundreds and the OTA usually is in the 30s, 40s, 50s. The cost is almost double or sometimes even more than double. But that universe is smaller than cable. Cable is about 60 million homes in the U.S., and OTA is about 22 million, 23 million. So it's just about one-third universe. Got it. Got it. Also, we have been investing in digital printing. But can you just explain how do you go about budgeting this digital spends? How do you really forecast or what goes through your mind deciding the budget on digital? That will be helpful. Yeah. Digital usually is linked to productivity of the spend. If you see the spend, productivity is coming down, then we ramp down the spend. If you see the productivity is strong based on our criteria, what is the ROAS we look at? Different platform has different ROAS. Meta has different. Google branded is very different. Google paid shopping is different. Affiliate has different. We look at those productivity measures and ramp up and down. Overall, we look at a total band of, say, if you have a $1 million spent budget for the month for all the brands put together, some brands sometimes spend more because they see more productivity. Some brands spend less because they are seeing less productivity. Overall, we are pretty close to our position. And this question is around the Budget Pay. So what disincentive a customer has? So assuming there is no interest and there is option for two installments, three installments, five installments, and outright pay, wouldn't it be logical from the customer viewpoint to take five installments or the maximum installment? And do you see that shift happen? I mean, people from upfront going to, let's suppose, the maximum possible installment, which is free of interest. How is that shaping up? We leave the result to the customer. We offer that customer has an option. If we are offering for Budget Pay, ideally, we would like that customer can opt it because margin of the product decides based on that. But it's up to customer if they want to pay a full amount or go for EMIs. Some of the customers, they don't want to take a risk for credit default, which may take their credit ratings lower. They pay full amount. But it's up to us, up to the customers who want to take the budget options or not. But we offer it uniformly for the products for all the customers, not distinguished from particular customer based on their whatever credit score. Okay. But logically, if it's interest-free, won't the customer gravitate towards the maximum installment option? Yeah. Yeah. Logically, you're right. And we see that customer opt also, majority customers go for the Budget Pay. But some of the customers are also they don't go for Budget Pay. Okay. But would you disclose the breakup between the two installment, the three installment, and five installment, and how they are shaped up over a period of time? We do for the product, two installments, three installments, five installments. Customer can select based on the available installments. No. No. No. No. I'm saying from an investor viewpoint or shareholder, would you classify what percentage of that 40% is availing the five installment versus the two installment as a bucket? So it depends on how much we offer. So every product has a unique feature of from two to five. And whatever we are offering, they can either take that or they have to pay full. So for 40% customers, we offer Budget Pay. Some products, we don't even offer anything. So for that product, they have to pay full anyway if they want to buy, especially lower-priced products, $10, $15 products. We don't offer any Budget Pay. Okay. And my last question is, let's suppose a customer defaults. What are the recovery options we have? Generally, what process do we follow for recovery? And when do we generally give it up saying that the cost of recovery is higher than the estimated recovery amount? So there's a system already built accordingly after how many days the payment needs to be retried, after how many days of interval payment needs to be adaptive acceptance or card updater or token updater happens, and after how many days that we send the reminders to the customer via email or physical letter, then later on, transferred to the debt collection agency, so this was the process, pretty long process, robust process that we have that we follow for when we see failure in the installment payment. Okay. My last point is, if the customer really defaults, his credit scores are impacted. Is that correct? Yeah. So unless we pass on to the debt collection agency, then the score is impacted. And we don't transfer that if it is a really substantial amount to the debt collection agency, but only impact once we transfer to debt collection agency. Otherwise, it doesn't impact the customer credit score out there. But internally, as soon as customer does a default, then customer can no longer buy on the Budget Pay option while they can buy a full payment. Got it. All right. Thank you so much. Thank you. Thank you. The next question is from the line of Pradeep Mehta from RGI Meditech Private Limited. Please go ahead. Hello. Hello, Pradeep. Hello. Yeah. Thank you, sir, for giving me this opportunity. I have a couple of questions. My first question is, what is the gross margin for digital revenue? Can you comment any exact number? Gross margin for Meta products or Google products is anywhere from 65%-75%, depending on product to product. Okay. Actually, one thing about total, actually, average gross margin, total digital revenue. Now, total digital revenue has a lot of components because we also have Rising Auction, $1 option, where we sell product at 5% or 7% margin only. There is a clearance mechanism because we come up with 100 new products every day, and the small quantities are not sufficient to sell on television. We sell through auction. So. Average gross margin, sir, for digital revenue? So, I think including RA and excluding RA. Yeah. So, I'll have Prashant pull out that number. In the meantime, you can ask some other questions. Okay. When the digital revenue becomes 50% of total revenue? Yeah. So the Rising Auction will be limited because it won't rise as a percentage. But the other margin, other component, whether it's a fixed price catalog or Meta or Google product, overall margin will grow up even further. We are not giving separate guidance on that, but that margin will go up higher. Okay. And my second question is, why company sold the NGT Global Private Limited? What is the issue with that company? For the NGT, we are finding that earlier our idea was to get a China Plus One strategy and get cheaper packaging products that we use in the U.S., U.K., and Germany for the end consumer. Now, we are finding that many of the products are available out there in China itself with even lower pricing after duty. The margin is not in line with what we guided to our investors. About double-digit margin that we are guiding to investors is not coming with that business. That is why we decided to exit that and source it from the third party, China. Okay. And with that, last one question. What was its acquisition cost when we bought that? Our company bought that. And what is its selling cost? Yeah. So we invested in this company roughly around INR 4 crores, and we sold that in around INR 50 lakhs. Okay. That means INR 3.5 crore approximately company lost in that acquisition. Yeah. So, we already booked that loss in March 2024 accounts. Okay. Okay. That's it. Nothing else. Thank you. The next question is from the line of Angad Kandhari from Samiksha Capital. Please go ahead. Thank you for the opportunity. The first question is, in our cash flow statement, there is a grant of loan of INR 7 crores and also an impairment of loan of around ₹1 crore. Can you throw some light on these two line items? Sure. Sure. So this was the loan related to the NGT packaging, which was outstanding for a long time. It is the same loan. That we have done a mortgage of the property lying with the NGT Packaging, the land and building and plant and machinery. Though the mortgage and the property valuation was coming and fully covered with the loan outstanding, but for the conservative accounting, we have taken a loss and booked the impairment of INR 1.1 crore for this outstanding loan. Okay, and my second question is on the inventory days. It has increased from 72 to 86 days. I know it's due to the upcoming festival season, but fair to assume this as a base going forward? If not, then what can we take as a sustainable inventory risk? Yeah, so we expect the after season, that is, at the end of December as well as end of March, the inventory comes down because we run two clearances. We run December clearance and we run March clearance. And inventory steadily comes down, so from the days point of view you should look at the last year's days as a guidance for your future position. Yeah, and even if you refer the cash conversion cycle, so we have maintaining around 170 days cash conversion cycle in payable, receivables, and days. Internally, we are keeping the similar kind of cash conversion cycle for the upcoming period, around 170 days. Okay. So if there is a clearance after December and in March, just assuming, will the gross margin have an impact on that? Will we have an impact in that quarter? That is why the first quarter margin was pretty healthy, to 66%, and the second quarter and the full-year guidance, full year guidance that we have given 200 basis point improvement than last year, so full year, we are guiding 64%. That guidance was incorporated in Q3 and Q4 clearance that we have planned, so it is baked in already. Okay. Thank you so much. Thank you. The next question is from the line of Rishabh Shah from Buglerock Capital. Please go ahead. Yeah. Thank you for the opportunity. So my question was, when a customer buys from your platform, then he doesn't have a repeat purchase. So do you offer him any incentives for the retention of the customer? Yeah. Definitely. We have pretty robust email text flows in place to get the customer back. So we increasingly increase offers for them to come back. The first offer is to offer a complimentary product. Not complimentary, it's a complementing product to what they bought. The second is for the free gift, and then percentage discount, then $10 gift card, and then $20 gift card. So we have a lot of these processes in place to get the customer back. So my next question is, you said target audience is 50+ age group, and you are constantly investing in the OTT platforms also. So have you been able to convert the audience in the TV or rather add new customers in the new generation platforms? Yeah. So that's a good question, Rishabh. Now, we have a lot of OTT sales, and sales growth is also pretty robust. But we have been able to move many of our existing customers over to OTT. But to acquire new customer OTT still is a new area. We get a lot of app downloads, but still there's no ecosystem to convert those downloads into customer. So the new customer acquisition OTT is relatively low, but the customer conversion, existing customer conversion over to OTT who are buying from us and have got the cable connection, or even existing customers who are still buying from television or e-com and then buying on OTT is pretty good. Thanks. Just on the customer part of it, what is more important for you? Is it adding new customers or the conversion of the customers from one platform to another? We both have KPIs on both fronts. So if we slow down the new customer acquisition, then the funnel will dry. So we don't want the funnel to dry up. So we want the funnel to be fully populated. And then once the customer comes in, we want to retain the customer and then also move them to other platforms so that the lifetime value goes up. And when we move from one platform to another, lifetime value shoots up quite substantially. Okay. Thank you so much. Thank you. Thank you. The next question is from the line of Rupesh Tatiya from Intelsense Capital. Please go ahead. Thank you for the follow-up. So my question is, let's say for INR 4,000 crore sales, whenever we reach, what would be the content spend velocity we need? Is INR 600 crore spend enough, or we have to go to, let's say, INR 720-INR 750 crore kind of number? For the television broadcasting, we expect that to stay relatively flat. It may go up a little bit, but relatively flat. But the digital cost may go up because as we scale up our digital customer acquisition and retention, so that may go up. So as I mentioned earlier, in the long run, this 18% may stay relatively flat. So our internal prediction is showing 17%-18%, but the guidance I want to give to you is relatively flat. The leverage will come from HR cost, SG&A, and margin improvement. So just to summarize, even at ₹4,000 crore, you expect 17%-18% content and broadcasting cost? Yeah. So that's the guidance I want to give you because it may go lower, but at this time in our journey, I don't want to give a guidance below 17%. Okay. And then, sir, I mean, if I look at the model from gross margin to EBITDA walk, right? I mean, 60% gross margin, 20% employee cost, 20% content and broadcasting cost, 10% maybe manufacturing, packaging, shipping, all that cost. So 60% gross margin results into an 8%-9% EBITDA margin. And I mean, whatever operating leverage you are talking about in HR and all, that is like 1-2% kind of thing. So to meaningfully see a jump from 10%-15% margin, to me, looks like gross margin is the biggest lever. I mean, your gross margin, I think, has to go above 65, probably close to 67-68. And only then we can see mid-teens kind of margins. So what are your thoughts on that? So first lever is the HR cost. We have two new businesses with Germany and Ideal World, and we staffed up substantially for these two relatively new businesses. As they scale up, the HR cost will drop down quite substantially across the group. We also believe as we are creating efficiencies through AI, we'll gain efficiencies in our knowledge workers across the group as well. You'll see substantial gain in HR costs from currently 19% to it has a potential to go down as well as 13%-14% in years to come. Now, the affiliate cost, that is the content and broadcasting cost, which is currently we expect it to be 18%, that may go to 17%. SG&A, as we scale up, we'll see leverage there because as you scale, the shipping cost goes down, the other areas go down as well. The rents, the other expenses go down substantially. And so margin may go up from 64% that we are projecting for this year. It may go up a couple of percentage or maybe 2% or 3% over the years, but other areas will also have leverage opportunities. Okay. Okay. Thank you for answering my question, sir. Thank you, Rupesh. Thank you. The next question is from the line of Parth, an individual investor. Please go ahead. Hello. Can you hear me? Yes. Please go ahead. Sir, for the Mindful Souls slide, we have mentioned there are four new products for the quarter. And earlier, I think Nitin sir said that a lot of expense goes in there. So how to read this? Only four new products for the quarter, whereas our U.S., U.K., you said that we have a big churn, like 100 new products a day. Yeah. Yeah. Yeah. Mindful Souls is a subscription business. For subscription business, there's a lot of thought and a lot of promotion that goes into a new product launch. Rather than on television, you make some changes to the ring or pendant or earring based on the stone that you have or the accent stones you have or the color of the scarf you have. So you get a lot of velocity coming in for television because that customer watches us hours every day. So we constantly need to bring new for them without a lot of depth that a subscription business needs. And the promotion cost for the new product that we get in is very low or almost non-existent on television business. Whereas on e-com business, you have to promote a lot before that customer, the product gains traction. So it's a bit different business model and not really comparable to television to subscription model. Okay. So the four new products that is mentioned is then subscription products? Correct. Okay, and so do we have Budget Pay in Germany? The same setup that we have for other two regions? Yeah. We don't have Budget Pay. Actually, it is a pay-by-invoicing. So it is for 21 days payment after receiving the item. So installment payments, we don't have that. It's just a payment, 21 days credit to the customer for pay-by-invoicing. Okay. So what is stopping us to, I mean, start the Budget Pay setup there? Is there any regulatory limitation? Yeah. We're finding it is not easy to operate with the pay-by-invoicing. And the other competitors are also not offering to the end customer. While in UK and US, we have a major competitor offering the Budget Pay. So we are not going until we see a profitability, a good margins over there, then we can think of offering installment payment program. Got it. Got it. Agreed. And in the same slide for Germany, it is mentioned immediate GM increase by 20%. So is this recent thing? Anything that has happened recently, or how are we comparing this 20% year on year, or what is the time period? It means that when we started Germany, so comparing to U.K., U.S., where we have our existing market, starting Germany has increased our addressable market by 20%. Got it. Got it. And final one from my side. So any other acquisition on the cards, sir? Anything on the table with the management? So not anything on the horizon. Our aim is to get Mindful Souls starting scaling up and Ideal World giving us meaningful positive data before we go for new ones. But nothing on the horizon right now. Sir, because there was this social media post somewhere which said Vaibhav Global looking to acquire Create and Craft in U.K. So I don't know if there is anything to read in that. No plans right now. Okay. Got it. That's it from my side. Thank you. Thank you for asking. Thank you. This will be the last question, which is from the line of Nirvana Laha from Badrinath Holdings. Please go ahead. Hi. Thanks a lot for the follow-up opportunity. Sir, the digital growth this quarter, YoY, was only 11.8%. This was without Mindful Souls in the base. So next quarter onwards, we'll have that in the base. So what is your comment on this growth and organic digital growth? What kind of number are you targeting going forward? Yeah. So we had some new airtime coming for Ideal World in the U.S. So those new airtime gave us more television growth, and the digital was not as robust on that one. But going forward, we expect digital growth to be faster than TV growth. Sure, sir. So just doing some math, the numbers that you said, about 18% content and broadcasting and the 11% part remaining more or less fixed, which is to do with TV. So I think you're planning to grow the digital spend by 15% year- on- year for the next few years. So will the digital growth therefore be higher than this 15% in line with 15, or how will it be? Actually, if you refer to the past 10 years, digital CAGR is 18%. It was actually without the aggressive investment on social media marketing. And we expect that this growth rate will continue to grow as we are investing more on social media marketing. So we are expecting that the growth rate will be higher than the investment of 15% that you mentioned year- over- year. Okay. Okay. And sir, when you say that gross margin for digital sales is higher than TV sales, what is it driven by? Are we able to sell costlier products via digital, or how is the gross profit per unit going up in digital versus TV? So in digital ecosystem, even when we compare ourselves to, say, Amazon or other B2C players, we find that the players have to absorb higher marketing costs, Meta costs or Google costs or affiliate costs. Therefore, the margin potential is higher in digital space than television. Okay, sir. Not sure I understood the explanation. I'll take it offline. Last question from my side. Any plans on lightening the balance sheet, sir? I believe we invested, we made some investment in land, etc., in the U.S., which we are not using since we have an ROE goal also along with margin. So any plans of working on the balance sheet to make it more slim? Yeah. For that land, we are looking for rezoning of that land into partial commercial and partial warehouse-cum-light office use. Once we have rezoning done, then part of that land will sell for local retail. And that may lighten the balance sheet from that extent. And we don't foresee much CapEx in coming times, so balance sheet will continue to be lighter than we had in the past few years. Got it. Got it. Thank you so much, sir, for answering the questions, and all the best to you. Thank you, Nirvana. Thank you. As this was the last question for today, I will now hand the conference over to Mr. Sunil Agrawal for closing comments. Thank you. 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'll be happy to answer your questions. Thank you once again. Thank you. On behalf of Vaibhav Global Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.