Financial Results Presentation Q4 & FY15 May 2015 Safe Harbor - PowerPoint PPT Presentation

Vaibhav Global Limited Global Retailer of Fashion and Lifestyle Accessories on Home TV and e-Commerce Platforms Financial Results Presentation Q4 & FY15 May 2015

Safe Harbor Certain statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. Vaibhav Global Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward- looking statements to reflect subsequent events or circumstances. 2

VGL Overview Vertically-integrated electronic retailer • End-to-end B2C business model in the electronic retail industry • Proprietary TV home-shopping and e-commerce platforms Liquidation Channel and The Jewellery Channel are strong brands • 100 million (FTE) households on TV shopping in the US, UK and Canada • Positive customer engagement metrics – customer base, retention rate, repeat purchases Robust customer engagement • Sizeable B2C franchise in developed markets • Growing recognition of deep value enables scaling to adjacent categories Hybrid supply chain infrastructure • Outsourcing from China, Thailand, Indonesia and India, manufacturing operations in Jaipur, India • Aggressive trend spotting initiatives Solid infrastructure backbone • Investments in customer interface, production, warehousing facilities, supply chain and CRM • Low opex model is scalable with limited capex requirement Strong management team • Professional, experienced management team having in-depth knowledge and industry experience • Talent pool across marketing, merchandising, operations, technical and strategy functions 3

Table of Contents Q4 & FY15 Financial Performance 5 Financial Performance Trends 12 Business Background Details 20 4

Key Highlights for Q4 & FY15 Home TV Network Reaches Over 100 Million Households, FTE Increases 5% • • 100 million households on full time equivalent (FTE) basis 25 million households in the UK • • 72 million households in the US 2.3 million households in Canada In FY15, Retail Volumes Improve 4.4% YoY to 9.8 Million Units • • 6.3% higher volumes on Home TV shopping Volume growth driven by Fashion Jewelry • • Flat volume on Web shopping at 3 million Deeper customer engagement drives repeat purchases Financial Performance • FY15 Total Income higher by 6% at Rs. 1,376 crore YoY • PAT at Rs. 17.6 crore in Q4 FY15 • EBITDA increased by 5.7% at Rs. 35 crore in Q4 FY15 • EPS of Rs. 5.45 in Q4 FY15 & Rs 32 for FY15 Strong Returns on Investments • Return on Equity at 31% • Return on Capital Employed at 44% Operating Highlights • USA Call Center Outsourced – training/integration process successfully executed • Next Generation TV Auction/Scheduling/Customer Service software launched and integrated at Liquidation Channel • Competitor intensity still high. Offers of instalment payment and free shipping giving them completive benefit • We are trying to diversify into other categories but it may take another 2-3 quarters to come to fruition • Hybris / M-commerce in UAT phase and to be launched soon Debt Repayment from Operating Cash Flows • Free Cash Flow in FY15 Rs. 106 crore • Term loans fully repaid in Q4, Net Debt at Rs. (20) crore in Q4FY15 as compared to Rs. 52 crore in Q4FY14 5

Chairman’s Message Commenting on Q4 & FY15 performance, Mr. Sunil Agrawal, Chairman and Managing Director, Vaibhav Global said: “During the year, we made some key investments to further strengthen our operations that we believe will cement our position as a global retailer of high repute. We outsourced the call center operation which has helped improve efficiencies and freed up some management bandwidth. We also implemented a SAP-based HYBRIS platform and upgraded the TV business management platform in our US operations. These initiatives are helping us deepen our engagement with customers. The business focus is on profitable growth and robust cash flows. Free cash flow of Rs. 106 crore was generated in FY2015, which enabled us to become a zero net debt company. We returned to the list of dividend paying companies by paying an interim dividend of Rs 2.89 per share. However, we were unable to declare final dividend due to recent amendments in Companies Act 2013 which required past losses to be fully set off against current year’s profit before declaring dividend. The company will be undertaking a Capital Restructuring exercise in order to declare dividend in FY16. We continue to maintain robust return ratios, ROE and ROCE for the year remained strong at 31% and 44%. We continue to judiciously upgrade our customer initiatives and the next significant opportunity comes from the launch of our mobile app for the US market planned in the coming months. This will soon give us access to a whole new client base and a new medium for reaching out to our existing loyal customers. Looking ahead, we are confident that the operational and financial transformations of the last year will help us deliver on the next level of growth in our business. ” 6

Financials – Q4 & FY15 Performance (Revenues) Revenues (Rs. crore) 1,376 1,298 360 359 Q4 FY14 Q4 FY15 FY14 FY15 Jewelry & Lifestyle Products TV Sales Web Sales B2B Sales 958 911 256 225 237 248 162 161 72 56 67 39 Q4 FY14 Q4 FY15 FY14 FY15 Q4 FY14 Q4 FY15 FY14 FY15 Q4 FY14 Q4 FY15 FY14 FY15 7

Retail Performance Trends TV Sales Sales Volumes ('000s) Average selling price US$ 24 23 6,829 23 22 6,420 1,796 1,644 • Web sales now contribute 30% of sales Q4 Q4 FY14 FY15 Q4 Q4 FY14 FY15 volume in FY15. FY14 FY15 FY14 FY15 • Volume growth driven by expansion of fashion jewelry and lifestyle accessories Web Sales lines within the existing household coverage and reduction in average selling price. Sales Volumes ('000s) Average selling price US$ 14 14 13 2,955 2,960 12 892 823 Q4 Q4 FY14 FY15 Q4 Q4 FY14 FY15 FY14 FY15 FY14 FY15 8

Financials – Q4 & FY15 Performance (Margins) Gross Profit Gross margin Rs. crore 900 70% 800 61% 65% 61% 59% 700 58% 60% 600 55% 500 • Gross margins largely stable. 50% 400 45% 300 40% 200 35% 100 210 211 789 838 0 30% Q4 FY14 Q4 FY15 FY14 FY15 Note: Direct costs for calculation of gross profit includes material cost, job work charges and manufacturing cost EBITDA EBITDA margin Rs. crore 90.00 14% 12% • EBITDA impacted due to additional 12% 11% 70.00 10% costs of US call center, more 10% households in US, larger manpower in 9% 8% 157 planning, logistics, merchandising and 50.00 144 6% sales in US and UK. 4% 30.00 35 2% 33 10.00 0% Q4 FY14 Q4 FY15 FY14 FY15 Note: EBIDTA excludes exchange gain/loss; EBIDTA margin including exchange gain/loss stood at 10.7% in FY15 v/s 13.7% in FY14 9 EBIDTA margin including exchange gain/loss stood at 8.7% in Q4 FY15 v/s 9.8% in Q4 FY14

Financials – Q4 & FY15 Performance (Profits) PAT * PAT margin Rs. crore 100 18% 15% 80 • PAT is lower due to higher tax and 12% depreciation cost. 10% 10% 60 9% 7% 40 6% 6% 20 3% 34 21 133 101 - 0% Q4 FY14 Q4 FY15 FY14 FY15 * Profit after tax without exchange gain(loss) fluctuation. Return Ratios – FY15 80% 70% • 60% Maintain high returns on capital employed and shareholders ’ equity. 50% 40% 30% 44% 20% 31% 10% 0% ROE ROCE 10

Table of Contents Q4 & FY15 Financial Performance 5 Financial Performance Trends 12 Business Background Details 20 11

Financials Performance Trends (Revenues) Revenues (Rs. crore) 1,376 1,298 893 647 526 FY11 FY12 FY13 FY14 FY15 Jewelry & Lifestyle Products Web Sales B2B Sales TV Sales 911 958 687 256 483 225 395 162 161 91 85 117 89 73 46 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 12

Retail Performance Trends TV Sales Sales Volumes ('000s) Average selling price US$ 6,829 6,420 41 5,239 30 • Good volume growth driven by strong 23 24 3,268 23 customer engagement 2,039 • ASP has been stable even with portfolio transition from fine jewelry to fashion FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 jewelry and accessories Web Sales • Internet sales volumes complement TV shopping and create a balanced portfolio Sales Volumes ('000s) Average selling price US$ 27 2,955 2,960 19 14 1,700 13 12 762 357 FY11 FY12 FY13 FY14 FY15 FY11 FY12 FY13 FY14 FY15 13

Financials Performance Trends (Margins) Gross Profit Gross margin Rs. crore 900 62% 61% 61% 61% 800 60% 60% 700 59% 59% 600 • Gross margins improved from 55% to 58% 500 61% over a period of 5 years 57% 400 56% 55% 300 55% 200 54% 100 53% 289 384 533 789 838 0 52% FY11 FY12 FY13 FY14 FY15 EBITDA EBITDA margin Rs. crore 13% 180 14% • 12% EBITDA impacted due to additional 160 13% 12% costs of US call center and TV business 11% 140 9% software integration. Aggressive 10% 120 marketing tactics by competitors 8% 100 impacted to some extent. 80 6% 60 4% 40 71 Note: 2% 20 EBIDTA excludes exchange gain/loss; 86 81 157 144 0 0% FY11 FY12 FY13 FY14 FY15 14