Vaibhav Global On Global Rate Cut Theme | Can U.S. And U.K. Boost Vaibhav Global's Growth In FY25?
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00:00We have Nitin Panwad, who is the Group CFO at WebOfGlobal joining us.
00:13Welcome, Mr. Panwad.
00:14Just want to quickly zoom in and check.
00:18We are expecting further rate cuts.
00:21We've already seen a 50 basis point rate cut coming in from the U.S. Fed.
00:25We're seeing more rate cuts globally as well.
00:28For export-oriented, export-facing, talk us through how you're expecting demand to play
00:34out in this environment, maybe over the next six to 12 months.
00:37Yeah.
00:39Yeah.
00:40Thanks for asking the question.
00:41And thanks for having me.
00:42Good morning to you and all the viewers.
00:43But like the talking about more inflation scenarios, we are seeing that the sign of
00:50inflation pressure is easing out.
00:53And then Fed and the other major central banks are giving a signal of rate cuts.
00:58Some of them already done and some of them already doing.
01:00It's a good sign that the banks are now focusing on economic growth, which will help us in
01:07sector like us in retail.
01:09But obviously it is to evaluate that how the businesses and the consumers both will react
01:17and how long it will take to react that.
01:19But definitely the rate cuts, the lower interest cost will obviously give us a stimulus to
01:26the businesses to invest more and also the consumers as they will have more money in
01:31their pockets.
01:32So they will spend more in the mainly in retail sectors.
01:35Sure.
01:36So you've given a mid-teens kind of growth guidance.
01:39Do you expect that to at all get better?
01:42Because US has been, you know, it's been tough in terms of growth for you, single digit is
01:48what you've done.
01:49Do you expect that to start to go to double digit?
01:52Maybe?
01:53Yeah.
01:54Right now, it is really hard to predict as the environment is pretty uncertain.
01:58This year's election cycle is also coming and well, the more eyeballs move to the news
02:03media from the entertainment media, but the kind of consistently offering the value proposition
02:10we have to the end consumers with the vertical integrate supply chain, which is giving us
02:16the competitive edge compared to the direct competitors we have in the market.
02:21So it will help us in terms of gaining the market share, but we are keeping the guidance
02:26that we have given for the full financial year mid-teens growth, even with the tight
02:31scenario of election year and the still high interest rates in this financial year at least.
02:37Bulk of that coming from Europe even now, you reckon, UK as well as maybe Germany as
02:43well and some of the other European countries you're falling into?
02:47Yeah, so part of the growth, good growth is coming from existing businesses, but part
02:53of the growth is coming from the new acquisitions that we have done in one in UK and one in
03:00the US.
03:01Basically, the company is Dutch based company, but operates in US.
03:05So the part of the growth is coming from the existing businesses and the new businesses
03:09both and we expect that the both will continue to grow and increase our market share, especially
03:14that the UK acquisition is panning out well and then I think the last nine months of acquisitions
03:21that the company is making the profit on direct cost basis and we expect that in the next
03:27three months, it will be profitable on the fully allocated cost basis.
03:31So which will give us some more margin improvements.
03:35Right.
03:36You know, in terms of cross margins, what are you seeing?
03:40What's the trend with regard to both raw material as well as how is that playing out
03:45on your gross as well as your beta margins?
03:48Yeah, so in past quarter that we have what we have reported in quarter one, we have seen
03:53a pretty good improvement in gross margins, 500 business points improvement in gross margin
03:57that we have reported, which is mainly coming from the improved product mix, product portfolio
04:03and the higher revenue generation from digital segment, native digital, which I would say.
04:08So that has resulted 500 business point improvement in the past quarter, but we expect this financial
04:13year also to improve overall gross margin by 200 business points with the improved product
04:20portfolio and pricing strategy that we have.
04:23Apart from that, the some of the improvement in gross margin that we have invested in our
04:26content broadcasting cost.
04:28So which is mainly in line with our elevated expenditure in digital segment.
04:34It is part of the strategy that we have.
04:36We are getting more market share from digital side as we see the bigger time available out
04:41there.
04:42So normally digital spend in the short run cycle impact the net margins, but once it
04:51span out and pay off, once we see more lifetime value and revenue generation growth in upcoming
04:56periods.
04:58And this shift more or rather your revenue shift towards the UK, a possible FTA with
05:05the UK.
05:06How does that change things for you and how do you believe that the revenue mix will change
05:10as a result of that if that were to happen?
05:12Of course, we're waiting more clarity on that.
05:15Yeah, FTA will be good.
05:17Definitely the export companies who is doing business in UK.
05:22But what we see that the benefit will be good amount of benefit in terms of duty, but we
05:27don't see it will be a substantial, but the benefit will be there around roughly average
05:32out three to five percent duty we pay for the goods import in UK.
05:38And that will help us, I think, across our industry who are importing from India in terms
05:44of gross margins improvement.
05:46Okay.
05:47And what about this shift from B2B to B2C is what you're doing?
05:53That shift is underway.
05:54You're going from 27 percent in terms of revenue mix in B2C to 50 percent, maybe in the next
06:00year or two.
06:01Firstly, how quickly do you get there and what are the levers you're going to use to
06:04get there?
06:05Because it's not easy to do that.
06:07Yeah, sure.
06:08Let me correct you on this.
06:09It was not a B2B.
06:11I believe you were mentioning about digital and television share.
06:14Yes.
06:15Yeah.
06:16Yeah.
06:17So, so digital is keep continuously growing, not only in terms of our multichannel strategy
06:24where we are moving our television traditional customers to more experienced on different
06:29digital platforms, not only just our proprietary website, but on mobile apps, smart TVs, OTT
06:36platforms that we are moving in, but also the native digital customers that we are acquiring
06:41through different social media platforms from Meta to Google.
06:46So there is a much higher market share available out there.
06:49And our investment that we are doing in past one years, that will pan out in upcoming period
06:56and more lifetime value will generate from the same consumer as we will have the multichannel
07:01experience that we will give to the end consumers while the normal B2C player will not have.
07:07We can, we can move this customer not only just to give experience or website, but also
07:13on television, OTT platform, mobile apps, smart TV apps in different platforms.
07:18So that in this area, it will help to improve our digital penetration all across the territories.
07:25And is that better margin?
07:27Just a yes or no?
07:28Yes, definitely.
07:29The digital has a higher margin.
07:31Got it.
07:32And therefore, where should your EBITDA margins move to?
07:34Can you clock double digit plus by end of FY25?
07:37Is that something which is realistic to expect?
07:40Yeah.
07:41So the specific guidance we have given, but we expect that we will have a leverage in
07:46this FY25 and we will achieve in next three to five years our previous historically higher
07:52margin of 13 to 15%.
07:55Right.
07:56And just with regard to product, what's the kind of new product pipeline you have?
08:00Just talk us through that.
08:02Yeah.
08:03So as a traditional retail company, we are not fully dependent on a single product success.
08:09Every day, 50 to 100 new products we launch, which we give to the end consumers and then
08:15consumers would see every time, every hour and newness and they keep buying on the different
08:22kinds of products.
08:23In product portfolio, we have from fast fashion jewelry to beauty products to lifestyle products
08:29from accessories to apparel, handbags and different kinds of categories.
08:34So all of the product portfolio bouquet, we have around 40,000 different SKUs in throughout
08:39the year we offer to the end consumer.
08:42So we keep going on looking to consumer trend, consumer behavior with the kind of the current
08:48environment we are seeing in all across the world.
08:52But we keep on looking the consumer trend and behavior and offering the product accordingly.
08:56Understood.
08:57Thank you so much, Mr. Panwath for having this conversation with us, giving us that
09:01perspective especially on export and possible levers with regard to rate cuts, which might
09:08come through, I mean, even more in a more accelerated fashion likely going forward.
09:12Anyway, completely out of time on this edition of the SMID show.
09:16From everyone who puts the show together, thanks so much for watching.
09:18Stay tuned to NDTV Profit, more action on the other side.