Vaibhav Global Limited (VAIBHAVGBL) Earnings Call Transcript & Summary

Good evening, everybody. On behalf of team Vaibhav Global, I extend a very warm welcome to all of you. Thank you for taking time out to be with us. As always, we truly appreciate your interest in Vaibhav Global's story. I'm Dipti Rajput, lead Investor Relations for Vaibhav Global. Let me begin by introducing members of management joining us today. We have Mr. Sunil Agrawal, Managing Director; Mr. Vineet Ganeriwala, Chief Financial Officer; Mr. Amit Agarwal, President, Shop LC U.S.; Mr. Srikant Jha, Managing Director, Shop, TJC U.K.; and Mr. Jay Chandran, our Chief Technology Officer. Before we start, I want to touch upon the safe harbor statement prior to moving ahead. I would like to remind everyone that anything we say today, which reflects any outlook for the future or which can be construed as a forward-looking statement must be viewed in conjunction with the risks and uncertainties we take, which may cause the actual results to differ materially from those expected. A detailed statement explanation of these risks is included in the outline in our annual filings, and the company does not undertake to update these forward-looking statements publicly. This event will be archived and the transcript will be available on our website. Allow me now to walk you through the agenda of the day. Sunil will share his thoughts with you at the outset giving you market perspective, strategic priorities while touching upon the progress that we have been making. Sunil will be followed by Jay, who will present our IT initiatives, following which, Amit will share nuances of our U.S. business, thereafter Srikant will share insights on the U.K. operations, following which Vineet, our CFO, will share key financials. At the close, we will have Sunil again talking about the key takeaways for the meet day. There will be a question-and-answer session for the management presentation, where you will get to present your queries for the management speakers. Interested participants may click Raise Hand icon next to their name in the participants' pane in the Webex application to join the Q&A queue. Participants may click this option during the presentation itself to ensure they find a place in the queue. Upon announcement of their name, the participant will be unmuted by the host and the question can be asked. For the benefit of everyone, I request participants to kindly state your name and the name of the institution before posing the question during the Q&A. With that, I would now like to invite Sunil to come over and share his views. Over to you, Sunil.

Thank you, Dipti. Please start the powerpoint. Thank you, Dipti, and welcome all to Vaibhav Global's investor meet for 2020/'21. It is my pleasure to interact with all of you. To start, I would want to share our company's vision, mission and core values. Now these are statements that are not just plaques on the walls of our buildings, but we really live these. Our vision, we -- whatever business we do, we stay true to our vision of being the value leader in electronic retailing of jewelry and lifestyle products in the markets that we deal in. Our mission is through the delivery of high-quality, affordable products, made possible by our low-cost direct sourcing. We change the world and touch people's lives one piece at a time. The statement was designed to encompass our one-for-one program that is dear to our heart, our value position in the market and high-quality and vertical business model. Our core values are very dear to us, our teamwork, honesty, passion, positive attitude and commitment. These values are, again, not just words, but we hire people, we promote people, we -- if needed, we exit people based on these core values. Next, this is our business model in a very small nutshell. We have direct market access in the U.S. and U.K. to their large customer base. And as you would see, we have 425,000 customers on trailing 12-month basis as of June 2020. This was 23% up year-over-year. From those customers, our volume for the financial year was 4% up year-over-year. And for the quarter was 39% up year-over-year. Our product range, fashion jewelry, fashion accessories, lifestyle products like scarves, handbags, home accessories and recently added some essential products like vitamins, masks, fashion masks and all those necessary in these times. We have omnichannel presence in almost 100 million homes in the U.S. and U.K. through website, through our mobile app, through browser and through social media as well as marketplaces. And then our model is also comprising of our own in-house brands. We don't go aggressively on outside brands because the margin target that we have, minimum 60%, is sometimes difficult in outside brands. So we follow a strategy of developing maximum in-house brands, somewhat similar to Zara Inditex model. Adjacent category means we'll go into adjacent categories to our product that we already are expert in or good in, and then we test those out. And then try to expand wallet share of the customer by selling adjacent categories and also offering our product to customer through many different channels that she prefers to. Next slide. These are numbers. Many of you might have seen in our last earning call, but nevertheless, these numbers are here again. Financial year 2020, we had a growth of 15% on top line revenue and 23% of PAT. In Q1, we had a growth of 32% in revenue and 47% in PAT. Operating cash flows have been robust, and free cash flow have also been very robust. Sales volumes, I mentioned the numbers earlier, right? And as you will see in Q1, unique customers on a trailing 12-month basis is 425,921. ROC and ROE. Vineet will talk more on these. But they have been very robust and continue to improve year-over-year. Next slide. This is our framework that we manage our business in. We call it 4Rs. And this is our in-house developed framework. No consultant has given this framework to us. But over the years, we saw that these numbers make a difference for our business. And we track them on daily, weekly, monthly basis. First is our reach. Reach via television and television also has 3 components: linear television through cable, satellite and telcos, OTA goes through antenna, and OTT is through streaming on smart television. Web, it is very fast-growing and very widely growing through browser, through mobile apps, through social medias, marketplaces, and we are very excited in this space. On television, cable or OTA, we have reached 100 million homes between 2 markets. OTT is wide reach, but still is very nascent stage. Web is ubiquitous in these 2 markets. And we are going wider and wider through social media and marketplaces. Second is our registration. Registration is about new customer acquisition. We track it on an hourly basis. Every product, every event has to make sure that it meets the number of new customer acquisitions. Every e-comm tactics or campaign has to -- is looked at from new customer acquisition point of view and we are rapidly increasing our new customer acquisition ratio, as you saw earlier. The third R is retention. Once we acquire that customer, how many of them retain year-over-year. And this number is increasing. Only in Q1, this number as a percentage decreased slightly because we acquired very -- lot more of new customer due to pandemic. There was onetime event. And this will be actually quite good for us because those customers will become and many have had become our longtime customer, and more and more, we have strategies in place to make them a longtime customer. And fourth R is repeat purchase. Once we retain the customer, how many pieces can we sell to her on a yearly basis? Last year it was 27 pieces per customer per year on an average. Next slide. Now this will give you some breakdown of our business transition, how it is transitioning from geographies, from product, from budget pay and sales channel. First is U.S. and U.K., which is pretty steady over the last 4 years. So the light blue is U.K. and dark blue is U.S. and when you saw a slight increase in U.K. versus U.S., it is more to do our own in-house execution. But the customer demographic in both the countries is pretty similar. Product categories. As you would see, non-jewelry is rapidly increasing, owing to the customer acquiring or customer asking for those products. So we decide not preconditioned, but this is what we'll sell. We have some guidance, but we let customers decide based on our own criteria of productivity per minute per hour what product we will present more, what time or what website space more we'll give to a certain category of product. Budget Pay is EMI-based selling. So currently, we are about 39%, 40%. Q1 was anomaly because of lot of lifestyle products coming in. Q2 -- sorry, essential product coming in. Q2, we have seen essentials again coming down quite substantially. In Q1, it was around 17% essential. Now we are running about 5% to 7% essentials right now, even at elevated response rate, but Budget Pay currently around 39% to 40%. Sales channel, as you see, the web revenue has continued to expand rapidly. So 37% in Q1 FY '21 was web and 63% was television. As you will see later in our guidance, our web guidance is much faster than our overall business growth guidance. Next slide. This is the -- first section is about the economy. The light blue bars are the U.S. retail sales in dollar trillions. And the line bar is e-commerce or percentage of retail sales. As you would see, the e-comm sales have been rapidly increasing in U.S. and same in the U.K., actually, U.K., e-comm is much higher as a percentage of sales than U.S. but the growth rate in both markets are very high for e-comm sales, and that plays very well for our business model. In Q1, as you would see, the e-comm growth has been pretty robust and growth curve has really grown rapidly. In VGL, which is the last one you would see, our web sales growth rate has been about 30% CAGR over the last 4 years. They're cord-cutting in the U.S. So the linear cable there has been cord-cutting in the U.S. largely, not so much in U.K., but U.S. largely because U.K. already about 60% homes are in OTA that is free-to-air through Freeview or Freesat. So let's concentrate, therefore, in only U.S. for the cord-cutting phenomenon. So the first graph, you would see that in 2013, the 83% of homes had cable, which in 2019 was only 64%. That means the 19% homes cut the cable or they stopped paying for their cable subscription. They either cut the cord completely or they migrated over to the steam. Our demographic that we deal in, we are dealing as you'll see later what is our demographic. Our demographic is Gen X or Baby Boomers, which is 45 plus. And those demographic cut cord only 5% over these 6 years period. So the cord-cutting phenomenon on our demographic is very slow. On the other hand, the OTA, over-the-air, where they don't pay anything. They buy any television set which has built-in antenna or on the site television or on the roof antenna. Those numbers have increased noticeably. As you would see, the households in 2013, the second graph were 13.5 million in OTO, which is -- OTA which is now 19.1 million in 2019. Shop LCs, which is our subsidiary, our penetration was less than 1 million in 2013, is now at 14.4 million homes in 2020. So we are rapidly increasing in this space. So I'm sorry, this 2013 versus for 2020, not '19. Number three, third graph. Our platform in U.S. is consisting of all these 5 reaches in addition to the linear television, which is over-the-top, that is streaming. We are on pretty much every app that there is Amazon Fire or Apple or Roku or Hulu or all the different smart televisions like LG or Samsung or also different new media that is coming, for example, let's say Comcast or Time Warner, all those applications we are getting -- some of them, we are already there, some we are getting very quickly. But that is still in nesting stage. The acquisition of customer over there is still slow. Our revenue for last year was just about $1 million on OTT platform, but we are learning rapidly on that space. We are already investing last 3 years ago and we are investing every year in that space. Now next slide is VGL TV revenue. The CAGR TV revenue has been 8.4%. Now this is a high single-digit growth, which is good given that there is a cord-cutting. So there's slight -- for our demographic, there's slight cord-cutting. So our revenue growth per home is increasing much higher than 8.4% would denote. Next slide. I'll give over to Jay, our CTO. Jay?

Thanks, Sunil. Good evening, everyone. Appreciate you all following Vaibhav Global businesses flow. And this slide is to kind of show a picture in terms of how technology is partnering with the business and enabling the transformation. As you can see, pretty much technology in the middle of everything, empowering as well as enabling the business. As Sunil mentioned, digital is one of our key area in terms of the future growth. As you can see that we are enhancing the experience of the customer, both in terms of navigation, new networks as well as creating a platform where customers are confident to be able to transact with us, allowing them to use whatever method of payment they would like to, giving the wallet integration with Amazon, Apple Pay, Google Wallet that we think will have a significant impact on reducing the abandonment rate and improve our conversion. As well as we want to take our RA application, which is one of the popular applications, given the price point. We want to take it back to the mass with viral application as well as some kind of engagement to later while we probably use some gamification. We really think that this will really take us to the new level. And then continuing to enhance our social DR capabilities, creating micro website to enable the influencer as well as getting some deep insight to the analytics will help us to where to spend money, where to go deeper, where to kind of reduce spending with respect to digital marketing. And moving on to the customer growth. Sunil mentioned that as we are seeing our new customer growth really increasing in the last Q1 or so, we think that enabling the AI-based capabilities to really understand and target the customer bases and preferences, give them a treatment that is very personalized with regards to -- and kind of have them come back and retain them as well as increase their wallet size over a period of time. So IT is investing enabling the AI-based technology, which we think not only will retain the customer as well as help us to kind of move them from channel to -- one channel to omnichannel, which directly impacts the wallet size, as well as move them from one category to another category so that they have a lot more reasons to come back to us. And then all of this kind of will make sense only when we're able to continue to improve our delivery capability. So in that area, we are continuing to invest in our warehouse systems, both in terms of beginning the way to printing invoice in our AI-based and on that we will be able to get the product to the customers sooner, as well as the future plans are in place in terms of creating the system that allows us to be on par or ahead with the other retailers with respect to robotics as well as we're seriously looking at kind of replacing our homegrown warehousing system, which does a really good job, better than -- versus something that is in the market to be able to enable us to use on the robotic capability that has been developed in the last 3, 4 years or so. And then kind of this goes along with our manufacturing base as we move product sourcing base in Asia, which is a separate chain. We just completed our ERP rollout. Asia got the ERP implemented in the calendar -- Q1 of the calendar year. Now we are in the last phase of implementing the channel side. Things are really going fine. We want to take it to post ERP in all of phase in terms of operating processes within the supply chain as well as manufacturing unit. Our vision is to really transform into Internet of Things where handle the variables will help in productivity as well as efficiency of both manufacturing as well as the supply chain units. As you can see that our market presence is increasing, primarily beyond TV into digital marketplace, OTT. So we are at a point where we are looking at our existing applications, both OTT and video-on-demand, renovating the refreshed and giving them a new vibe as well as a lot more penetration into new [ households ] where we didn't exist so far. And continuing to expand our marketplace, both in terms of process automation, to be able to tackle the new scale as well as penetrate into new areas of marketplace along with what we already have in place. Other thing we are doing is to increase our product offering. And I think that the dropship capabilities is going to be crucial, given the season coming up in terms of holiday as well as a personalized product is another area where we think the technology can really bring the customer to our website and that will create a product that is a bit compelling for them and very personalized for them. I really think this, combined with our influencer ambassador program will really take us to a new level. In fact, having -- potentially, it could impact our demography in a positive way to create a bigger age range in terms of demography. All of this kind of taking us to the new possibility of omnichannel market and instead of having kind of a target digital and nondigital, we are integrating our marketing effort to be able to touch customers in a meaningful way, in a 360 way. So customer knows who they are to a level that there is a smooth transition from one platform to another platform. And this also kind of lead us to be able to segment the customer in a manner that we can target the next best action, not necessarily next best product or not necessarily next best offer, more around the next best treatment to the customer so that they feel that they are welcomed, they are rewarded or recognized. Back to you, Sunil.

Thank you, Jay. The next slide. So next point about our people. The people for us is the crucial element for our success so far, and we believe that this will be the foundation of our success in the future. We have very open culture all across the organization. I am and all the senior managers are very accessible to all the employees. We have very diverse workforce, equal employ -- equal opportunity employer all across our organizations. And we attract best talent. We have, as you know, many of you know, I would share that, we have a MBA program that we hire from best institutes in India. We've been doing that for the last 18, 19 years. And all those young people who join us without any experience or with some experience, then we groom them, coach them, train them and put them across all the different parts of the organizations. Our U.S. and U.K. heads are a part of those -- that program that we started a long time ago. And currently, our China operation, Thailand operation, within India, U.S. and U.K., there are a lot of talent that is developed from that program. We have workforce across 6 different countries. Our training -- we give formal training to our people. So average training of 43 hours per employee, which is one of the highest in India or even in U.S. -- U.S. and U.K., we are ahead of many peers. Our average longetivity of employees is pretty long compared to the peers. Women diversity is pretty high given that the manufacturing area usually been how much lower. Great Place to Work Institute, which is a U.S. institute, has certified our China operation, U.K. and India to be a great place to work. This is not easy to get. It took us a few years to qualify and to reach there. We are proud for that. And I mentioned already about the management training program. Next, supply chain, that is our strength. We are an aggregator of resource our rough, semi-precious stones or synthetic gemstones, our metals, the base metal or silver that we make, we still use some gold, less than 5%, all that we aggregate ourselves, designing, manufacturing and all the transporting we do ourselves, we process, we curate and then we retail. We have end-to-end supply chain, which is very unique for our kind of business. Only comparable that we found was Inditex that is Zara which end-to-end business model from manufacturing, designing, transporting to retailing and very quick to market, although they are in brick-and-mortar and e-comm whereas we are on only digital platforms. And we have -- our gross margins are pretty robust, and they are very similar to what Inditex does. So our business principle is we'll only go into product that will give us 60% gross margin, and we'll continue to grow that product category only. That is why we don't go outside brands or to a very high-end product that will limit our gross margins. Okay. Dipti, let's go to the video, we'll go to the COVID. We are starting a video about VGL Group. And I'll give you some overview of the company. [Presentation]

Thank you, Dipti. Go to the next slide. So during these pandemic times, I would be amiss if you don't share what all our company or VGL has undertaken. So there are 2 major themes during COVID that would come to our mind. One is inclusion. That means we've included everybody into COVID preparation, our front-line worker as well as everybody and then a quick response to whatever situation was, from an opportunity point of view or from a safety point of view, we responded very, very quickly. And as you would see between the 2, the clause of these 2 is called -- we call it exceptional response. Next slide. Now this we look at all our segments that we look at. The employees, we had more or less workforce across all different countries. So everybody pitched in during this time. When China was shut down in December, January, all the other centers pitched in and supplied to our channels. When India was shut down, China came up to the force and supplied the product, Thailand and Bali as well. And U.S. and U.K., we -- all our work was continued with complete safety and even the spaces were cordoned off, in the warehouse, in studio, everything was cordoned off and created the section with the distancing and safety measures in place. During this pandemic, we have not furloughed or reduced any employee even though in India, there was a lockdown for 1.5 months or about 5 weeks, we paid every worker full salaries. Even the contract workers, we paid them salary, which we did not have to. And even after pandemic, once it was done, we gave our increments to our employees across the organization which very rarely anybody did where we recognized everybody's work -- hard work and we continue to share the success with them. From investor's point of view, Vineet will share more how we have continued to be very transparent and giving back to investors at every possible opportunities. And cost rationalization also, Amit will -- Vineet will talk about them, how he has focused on reducing the cost during this pandemic. From customers' point of view, continuation of our operation is actually a support to customer because many of our customers watch us for hours in a day because they are living alone, we are their only live company. We respond to their texts and e-mails. So we received so many texts and messages from customers appreciating us being there for them and offering our product like masks and sanitizers, vitamins, food items, many necessary items that they do not want to go to the stores to get them, we'll get them at their door steps. Our call centers were continuously operating, we have distributed call centers in Mexico, Guatemala, U.S., in Austin, in Atlanta, also in Philippines. And they're all operating -- there were sometimes some issues in Mexico, but then other call centers took the slack -- took up the slack and continued to operate. There was 0 downtime on our IT infrastructure. It was very well robustly managed. For TV production, we had backup plan in case our studios would not be accessible. We didn't have to go to that, but we had created a complete backup. Our IT team was really robust in that. From supply chain point of view, I already mentioned how we manage the supply chain. It was very well, very efficiently managed. From community point of view, we distributed about 160,000 masks in the U.S., U.K. and India during the time of need. Even today, we continue to offer free masks for customers or institutes who would need them. Recently -- as recently as 2 weeks ago, we distributed about 10,000 masks to the local Austin school district. They did not have masks in the school's reopening, and they had a mandate from Trump administration to open to schools, and they did not have masks and sanitizers. So our team went to the schools, many different schools, or district -- the district headquarters as well as local schools and distributed about 10,000 masks. And we distributed about 3.4 million meals to migrants and poor community around Jaipur through Akshaya Patra during pandemic. Now I'll ask Amit to give some overview of U.S. operation. Amit, over to you.

Thank you, Sunil, and Jay. Now from the U.S. side, before today I start the update, I will just introduce you with the U.S. office, how it looks like. So you will be able to see the U.S. buildings. So Dipti, if you can play the videos, then I can go for the numbers.

Just please give me a minute, I'll share the video.

In the meantime, I can give a background on Amit. Amit joined us 18 years ago?

Almost 16 years, yes, Sunil.

16 years?

Yes.

So he joined us in Jaipur 16 years ago, then he moved to U.K. I think about 13 years ago.

Yes.

And then from U.K., he was Managing Director in U.K. for some time, and then he moved to U.S. just about a year ago as Head of U.S. Operation.

Dipti, if you are struggling, should we go ahead for presentations, maybe you can play at the end.

I think that's a good idea.

Yes. Dipti, go ahead with the presentation for U.S. if you would take time for the video. Okay. [Presentation]

Thank you, Dipti. We can go over to your presentation.

Yes. Thanks, Dipti. So for U.S. side, the revenue-wise, in 2016, we were at $128 million, and our web portion was 22%. We have seen actually a 9% to 11% growth in the last couple of years. And last year, clearly, we have seen 13% growth, which was $192 million. And in Q1, we have seen 20% growth. And we have seen some impact of pandemic. But after that also, even we have seen that our lifestyle contributions and overall revenue has gone up. Now in last quarter, our overall retail revenue was 40%. PBT in U.S., we have seen a healthy growth and last year itself from $11.8 million, we went to $19.8 million, which is 68% growth overall. And we have noticed, even in Q1, our PBT was $5.5 million, which was 67% growth. And we have seen actually with this growth, with very good new customer registrations as well as our volume growth actually was one of the strongest growths at Shop LC. Next slide, please. Now this is a slide that Sunil earlier mentioned about our customer profile. So we have 3 different kind of customers grouping. So live TV customers. So live TV customers, most of the customers are 60-plus age group, which are called Baby Boomers and they spend average for 120 minutes every single day. And also average purchase they make it 28 times in a year. And last week, it was around 32. Recently, we have seen actually with a lot of new customer acquisitions, that number has slightly gone down, but that is actually mostly the new customer acquisitions. Lifetime value of each customer on TV is 482. And most of the customers, they are very value conscious, retired, raised in a gemstone era, value appearance, and financially, very intelligent. They're very value savvy and that's why they're always watching it. If we offer any good values, they always appreciate it. Now we have online customer, which is a very different group, which is like sort of millennials and Gen X. So age group is 40 to 60, and we are seeing constantly that a lot of young demographics, especially on online, is improving every single week. Locations, mostly Texas, Florida; online visits per year is 150 and purchases per year is 33. Lifetime value is $213. And most of the customers are savvy online shopper that is engaged in social media is incredibly very well informed and will research items before spending. And the last customer group, which is actually 45-plus age group, which mostly lives in cities like New York, and the average time they spend, it is 150. Quantity per year is 110. So that is the omnichannel customers. The customer who started with a TV or web and then later on they migrated to multi different platforms. And that is the customer actually we are constantly growing very well. And their lifetime value is $4,974. They are very bargain hunter, shopper that purchase on any platform as long as they're getting the value. And is a little carefree with her budget, but value sincerely. And there is huge engagement from this customers group. And there is a customer group also which promotes us with a lot of other customers as well, and we get the reference out of them. Dipti, next slide, please. So now at Shop LC, we give the customers the facility to reach and watch us on different platforms. So as Sunil mentioned earlier, a traditional linear TV, which is around 75 million homes. And we are live streaming on apps, which is of course, shoplc.com website, which is growing very well, Google Pay, App Stores, Amazon, Walmart, eBay, Instagram and Facebook. And at the same time, we have launched also on Android TV, Amazon Fire TV, Roku TV, YouTube and Apple TV and our platform actually what we use is Pimcore for digitals and for our targeted marketings and emails, we use IBM Unica. And for influencer marketing, which we have recently upgraded the platforms, we are using Pixlee and TVPage. Dipti, next slide please. Now this is actually our customers. So Sunil talked about 4Rs. So I will just cover actually in 4R areas how we reach to the customers. So on the web platforms, web TV, we actually recently started giving shipping and handling promotions. So every customer who shop on the Shop LC website at $49, they get free shipping cap, and we are seeing actually customer response has gone up since we made that change. Also at the same time, Amazon sign-ins and the same customers are actually which is coming on web, they are also going very aggressively on the rising auctions app. So rising auction actually is a platform where customer can bid on the items starting from $1. Every single piece is available starting from $1. And then later on, they bid against each other. So it gives them a lot of value and also very engaging platforms. And we are slowly -- we are actually further upgrading the platforms. And in wallets, we are also giving customers now, in coming months, the options of Amazon Pay and Google Pay. Influencer is our new area, which we recently started since January this year. And we have seen very good tractions and you will see in the next slide, the information about influencers. On TV, we are actually going very aggressively on lower channel positions, and we are expanding our carriers and simulcasts. So recently, also, we have added Nexstar's platform, which is actually a very big platform and we'll start seeing the impact of that one in coming quarters. The marketplace is the one area where actually we are going very aggressively, and we are seeing very healthy growth. We have some transitions from marketplace to our main business, but we are constantly reviewing it at how we can further migrate customers from marketplace to our main business. Social DR actually is a very new initiative. But what is interesting about social DR, the customers which are coming through social DR on our website, we are seeing a huge engagement of those customers going on a different web page and buying some of the items as well. So effectively, every single social DR customer which are coming to Shop LC website are actually reminding the customer to Shop LC. So this is a very impactful area. And one of the key difference between social DR Shop LC and other companies, most of the social DR companies, they are operating from Far East countries. We are one of the few companies actually, in spite of with our -- with our vertical integration model, we're actually operating in Texas, and that is one message which we going to the customers, and that's creating a positive impact. And also, we have "Refer a Friend," which is mostly for brand awareness and power user marketings. Can you go to the next slide, please? Now this is the influencer area where you can see what we did as a company, okay, identified our team. They're contacting every day, 20 to 30 new influencers. These influencers really has a very good fan followings on different platforms where they get the product and pack it from our side and at the same time, ask for their choice, and they write about the product actually under different Instagrams or different social media platforms. And what we are seeing actually that we are getting some reasonably good new customer acquisitions in the last couple of months, but most important actually, we contracted 400 influencers just in last 3 months. And as we are seeing a number of influencers are going up, we are expecting our new customer acquisitions will become very strong. So our goal is to acquire 5,000 new customers this year just through influencer program. We're also focusing on the micro-influencers. So a micro-influencer actually is -- they have a huge fan followings, they have 2,000 to 30,000 customers or people who are following them. And the impact of those influencers are lot more higher as compared to very big influencers. Ambassador program, actually, this is the one new program which we started. We are targeting 2,500 customers this year. We recently contracted the industry-leading platforms, and we are also signing up the professional ambassadors. So in Q2 and Q3, this is one platform where we expect a very healthy growth and also new customer acquisitions. Dipti, next slide please. Now in terms of registrations. So what we are doing actually, we are making lot of changes for customer-centric solution. So low-friction interactions, any customers who is coming to our platforms, they don't want to talk about a lot for a long time. So we are making their first time landing experience so easy. At the same time, the chat and e-mail service, which are given to them, is -- we recently started also some chat service in India as well, and we are slowly actually making it so impactful for 24 hours chat facility for the customers, and AI bots also and customer forums. So customer forum actually is one of the very strong tool where customer can give their feedback and our team actually is able to react on those feedbacks very fast. Product. This is an area in Web Ex and personalized jewelry, we are growing very aggressively. We are one of the few companies right now. We have done our research that personalized jewelry can become a very huge segment for our company. And because of our vertical integration model and our agile nature, we can really start giving this particular range to our customers with a very short lead time at a very affordable price. So this is the one area which probably can give us very good new customer acquisitions. And also, the storytelling platform actually put our company at a very high level. Our marketing side, digital marketing, we are taking a lot of different initiatives in terms of acquiring customers. Recently, we hired one outside new agencies, and we are seeing actually our cost per customer acquisitions against that. We are seeing a fair amount of progress in that area. We're also starting loyalty and warranty programs. So these are one program actually where customers can actually sign up for the warranty for our product for 6 months and later on we can expand it further. We introduced initially on the marketplace now we are taking it to our main business as well, and we are fairly confident actually this particular initiatives will give us a lot of customers, which will get a confidence for our products. Affiliate marketing and gift card is one of the another initiatives, which we are also we are taking very aggressively in terms of getting new customer acquisitions. Price and value. Faster and free shipping is one of our key initiatives this year. As we are seeing right now during the pandemic time, lot of customers were looking for the fast delivery for the mask. We were one of the few companies in the U.S. where we have taken decisions of shipping the mask on the same day. And that is really being appreciated by customers quite a lot. And what we have seen, a lot of customers recommended our platforms to other customers and we have seen very healthy new customer acquisition growth. At the same time, we are also giving free shipping on the online platforms and also we are giving value model shipping on TV, which is attracting also lot of new customers recently. Lower ASP, we already would like to maintain our average selling price, which is around $26. So that is constantly and doing well. But having said that also, we still monitor the customer demand. And if they ask for the higher price on products, we do offer in certain segments, but we still try to keep our ASP within reasons and lower than competitions. At the same time, our returns facility to the customers, although we say 30 days money back guarantee, but we don't ask many questions to the customers. And we provide a constant, very easy facility for customers to return the item and also we're thinking even to make it this particular process much better for customers in coming weeks. Dipti, can you go. Now this is -- but again for the customers' experience point of view is retentions, where we are seeing quick shipping, easy returns and online self-service. So we're recently starting the online self-service also where customers can actually print their own return labels and also they can put their queries wherein they will get the answer straightaway. Warranty, appraisal and repair programs. These are 3 major initiatives, which we'll be taking it for this year. And we believe that this is going to increase the customer experience at a very different level because lot of high street jewelers and some other companies, they will not be able to offer such kind of programs because they have no vertical integration model. Reaching out to existing customer, our consistent dormant campaign. So customers actually who are not shopping with us anymore because of the some different reasons, we are constantly, our market team is driving at different dormant campaigns based on the customer feedback and analysis -- analytical tools, which Jay mentioned earlier. And also we are doing segmentation-based marketing campaign as well. Engagement through CSR. This is the one area which is actually very powerful for our companies, where constantly we are engaging our customers in our CSR activities, but at the same time, also continuous reminder of customer contributions because every single customer who buy, we provide a meal to the school children. That is a very engaging message. At the same time, customer really believe in that. Environmental responsibility, that is something which we are doing very aggressively this year. And as a company, we are actually very serious about going for recyclable packaging, but at the same time options for customers to go paperless invoicing. So IT team is working very aggressively on the directions. And we believe that we can actually really help the environment by taking these initiatives. Customer testimonials. On-air live customer testimonials. This is one feature actually where we really see lot of customers, they share their feedback every single day. Like that product we have which is a healing gemstone, we have seen that customers have sent us thousands of customer reviews and we are able to use those customer reviews on air every single day. And recently, also some of the customer volunteered during the auctions and presentation as well, where they are ready to speak on-air about their experience live on televisions. Treasure Hunt, which is a branded closeout box -- branded closeouts with Norell and innovative solution products. So Norell is one of the famous fragrance range, which is available at a very expensive price on the Amazon and some of the other platforms. But as company, we are able to provide at a very reasonable price, and we have seen good new customer acquisitions with this kind of treasure finds. Now lastly is repeat purchase. So we have a very robust platform where customer really shopped like until last year, customers was buying around 32.5 pieces at Shop LC every single year. Recently with the new customer acquisitions, we have seen it has slightly gone down, but we constantly see our repeat purchase is very high. And we are adding a lot of new categories in the U.S. So we have seen a strong growth of lifestyle like apparel. And now this year also we are adding shoes, we are expanding kitchen very aggressively and also private label brands. Lower ASP. We are also optimizing our promotional calendar planning to maintain or lower ASP, so we constantly review our calendars, where we really believe that lower ASP actually is the right thing for us to do it for constantly acquire the new customers and also keeping ourselves very strong against competitions. Engaging in story tellings. So we are one of the few companies actually where we have remote broadcast from different countries where a lot of gemstone experts, lifestyle experts, beauty experts, we are actually constantly inviting them to present on our platforms to different countries, and that is doing very well. Brand development for loyalty. So we are increasing our private level brands because brand actually gives lot of stickiness to the company. And this is the one area where actually as a company, we are going very aggressively. Now our team is working with the brand attributes and we're expanding our brands -- private label brands, both in jewelry and lifestyle segments. Rapport between hosts and guest hosts. So we see actually customers really follow certain hosts and guest hosts. And we see that also we keep our show very engaging where a lot of customers can even -- they can send their picture with their dog, or they can send their picture with their kids, and we show those pictures actually during our under $10 programmings, and that is very amazing platforms and customers really appreciate it. And the last one, which is sticky model. Live 365, 24/7, that is our model. So in spite of pandemic, also as a company, we were able to continue our platforms 24/7 without any interruptions. And at the same time, we constantly give bargain deals and also a lot of educational content. Because we provide the customers that we are selling some of the beauty hardware products. We give lot of education content to the customers. And also on our website, we have educational section where customer can go and learn about gemstone, beauty and different products as well. This is all from Shop LC side. If you do any queries, then we will answer it during our Q&A sessions. Thank you. Dipti, back to you.

I would now like to invite Srikant to take through the U.K. operations.

Thank you very much, Dipti, and [indiscernible] U.K. business. And Dipti, you can go to the next slide. So revenue has been growing consistently. As you can see that for the last 3 to 4 years, it has been growing at about 20% so 19% to 20% range. And this -- last quarter, our business grew at 32% overall. Over the last 5 years, you can also see our web sales has grown from 13% of overall revenue to now in the last quarter to 30%. Our goal is to take it to about 50% in the next 3 years. So our team is doing that in the coming years. Gross profit [Technical Difficulty] Thank you very much. So our profit number has been growing as well in a very robust manner. And last year, our profit grew to GBP 6.4 million. Which was 41% over the previous year. And this year, in the first quarter, we grew at 67% to GBP 1.9 million. So really robust profit trend, and we expect to continue the business in the same way as well. Next, Dipti. This is just one important number that we follow internally and we wanted to bring it to your attention as well. So when we compare ourselves to some of the big online retailers or digital players. So without taking the name of the player, one of the most well-known U.K. digital company and we saw their number of repeat purchases that customers make with them over a period of one year. It was 4 for them, and it is about 18 for TJC. So what we are trying to say here that the model that we have is very sticky, as Amit also mentioned. Our customers they continue to come back multiple times, almost 4.5 to 5x more compared to a regular digital business. So -- and we expect this will continue in the same way as we continue to grow the business. Next Dipti. Now talking about the customers that we have and we are going to talk about 3 different set of customers. So one is represented by Donna. So Donna is a 68-year old lady. She's retired, she has grandkids. She follows trends. She's not a trend-setter, but she follows. She shops for herself and for her family. She's a very value-conscious lady and she -- because she's retired, she's sitting at home, she's looking for companion. She wants some company. So she is watching us on TV. And she thinks of our studio as extension of her living room and she engages with our presenters in a way that they are friends and families. So she interacts a lot with them. So she is our typical TV customer. When we talk about Wendy, Wendy is a working mom, she's 38-year old. Because she's a working mom, she has kids, she has expenses of education, she is investing on the future. So she has to make a lot of smart choices. And she is also -- because she's going out. She's going with her friends. She's going to work. She wants to be on trend. But she also seeks approval from her friends. So she is engaging with them on social media, she is one of our typical web customer who is on social media, who talks with her friends and family, but is very value conscious. And the third set of customer is represented by Sandra, who is 54-years old. She's very hard working. She still works. And she's an empty nest. Her kids have gone out to either school or college or they're working. And so she is now free. She has a lot of time. So she is spending time on watching us on TV. She's also interacting us through social media. She is also buying through website. She wants to stand out and she follows her kids on social media. So she wants her kids to feel -- think of her like her friend as well. So she likes to embellish her with new fashion, new jewelry and new products. So she's also a trend-follower, but more of -- she buys more to stand out, to really stand out to her kids. So she is a representative also, omnichannel customer that we have. And we'll show you more about their spending habits in the next slide. So Dipti, can we go to the next slide? So overall, when you look at the lifetime value of our customer, overall lifetime value of the customer is GBP 548, and they normally spend on -- they normally buy on an average 26 quantity per year. Our overall customer base has gone up by 22% over the last one year. Our TV customer, which is represented by Donna, their lifetime value is GBP 751. And they buy about 31 pieces on an average per year, and the number of customers in that pool has gone up by 7%. Web customer, which is represented by Wendy, their lifetime value is GBP 129. The quantity they buy is about 11 per year. And we've seen about 49% increase in the customers in that category. And omnichannel customer which is a customer that is represented by Sandra, that their lifetime value is about GBP 3,900, 66 quantity per customer per year, and 19% increase in that pool. So we are really seeing good increase in overall customer base, but omnichannel customer is definitely one of the most valuable and is leading the way for growth for TJC. Next Dipti. So now we'll talk about omnichannel customer experience, how TJC provides the omnichannel customer experience to our customers. So what we do is we are available on different platforms where customers can watch us, they can shop with us, they can engage with us. So we are present on TV. The linear TV with 25 million household reach, including 17 million that is OTA, which is over-the-air, Freeview, they don't have to pay anything. Anyone can get that connection at their home. Second is our web, which is our proprietary e-commerce website, tjc.co.uk which is built on a very robust Salesforce commerce cloud platform. Apps, we are available on all the mobile and tablet devices through our iOS and Android app, and we are continuously upgrading the technology and the experience to improve the overall customer experience on the app. Streaming TV, we are available on most of the major streaming providers like Roku, Apple TV, Amazon Fire, Samsung, Facebook Live, YouTube and many more. Marketplace. We are selling and acquiring customers through multiple big marketplace like Amazon, eBay, Fruugo. Fruugo is a U.K.-based marketplace, really growing very fast. And we have plans to add more marketplace in our assortment in the coming quarter as well. And social media, of course, this is one of the area that every company is focusing on a lot. But we are -- from our side, we are investing heavily on social media interacting and engaging with our customers on Facebook, Instagram, YouTube, et cetera. Next, Dipti. Now as I talked about, that our goal is to increase the omnichannel customers a lot in the coming years to grow our digital business. So these are some of the strategic initiatives that we are taking for digital expansion. So #1 is our digital customer acquisition. We are focusing heavily on acquiring customers through digital channels, and I'll talk more about it in the next slide. Then the second one is free and fast shipping. We are seeing that with the -- with Amazon launching their Prime program about 6, 7 years back. They have really changed the industry and customer behavior in terms of what they expect. And how they expect to receive the product. So in U.K., we are already delivering customers their product fast but we want to go even faster. So we are focusing a lot on our operations, on our shipping partnership to reach our customers faster, and we'll talk more about it in the coming slides as well. Social video commerce, which Amit also talked about as social DR, but is more of doing infomercial-style product-focused video commerce, which we are also focusing on, and we'll talk about in the coming slides as well. Then we have web exclusive merchandising. This is an area of a big opportunity for us. We are investing heavily on bringing collections that are traditional, seasonal and personalized to engage with our customers and give them products that they're looking on digital space. And last but not the least is OTT and video outreach to ensure that we send our videos, we reach our audience in all the different channels that they can view the videos from. So whether they can view the video through social media or OTT device or their phone or their tablet, we want to be there and we are working very aggressively to get there. Next, Dipti. So these are some of the -- just a brief detail about our digital customer acquisition initiatives that we have. So first one is influencer program, and Amit talked about it as well. So there are 2 different initiatives that we are taking. One is to convert our customers into influencers for which we have partnered with a leading company in this space, a technology partner called Pixlee. We launched this program in April of 2020 and are encouraging our customers heavily to post about us on social media and share and tag us. And we're seeing good improvements and good growth in this area until now. And we are also reaching out to micro-influencers targeting those influencers with 2,000 to 30,000 followers, demographics of 25 years to 50 years and our target is to bring about 200 influencers a month to TJC platform. Ambassador program is -- this is a program where anyone can become a TJC ambassador, and they can promote our product to their friends and their families, their fans, and they will get a commission. Right now, we are offering 10% commission of the sales that is generated by their post. We've partnered very recently with a company called TVPage, and we are seeing good interaction with that, but we are still working aggressively on enhancing this program because we see that there's going to be a lot of leg in this program in the future. And then, of course, we are heavily investing in the traditional digital marketing, which includes the affiliate program with Rakuten LinkShare with Google and Bing Search and display ads, remarketing, Google Shopping, SEO, e-mail program, et cetera. So a lot of effort is going on increasing our customer base through digital channels. Next, Dipti. Now the second big initiative that we have, as I talked about, was free and fast shipping. So one of the initiatives that we are taking is we are launching a loyalty program for TJC, which will be called TJC Plus. Our team is currently working on building the technology, and we will be launching this in Q3. What this will do is this will allow customers to be part of our loyalty program, pay a small fee per month and they will be eligible to take free shipping -- unlimited free shipping on the products offered by us. Our numbers show that we will be able to get to about 70% of the packages shipped free within 3 years through this loyalty program. On fast shipping, our goal is to deliver about 90% of our orders between -- within 48 to 72 hours of customers ordering them. And this is an area where we started focusing about 6 months back, and we've already seen really good growth, actually it has come up to -- from May, it was about 25% in May that we were delivering between 40 to 70 -- 48 to 72 hours. And recently, we are touching close to about 60%. Our goal is to get to about 90% in Q3. Then the third initiative, as I talked about earlier, is the social video commerce and this is a product-focused video commerce via social media to generate sales and acquire new customers for our omnichannel platform. This is a program that our U.K. channel -- U.S. channel has already launched, and we're seeing very good traction on this. So we are also building the team right now. Our plan is to launch it this month. We've already recruited a person to lead this for us. And we already have a lot of people in our team who knows how to create these kind of videos. So we're very excited about doing this program for us and grow the business in the coming months. Next, Dipti. And these are just some of the lines that we're bringing to our web exclusive merchandising. So as I mentioned earlier, that our focus is to bring products that would appeal to the customers that are coming from digital space. So charms is a big market in digital space. We are focusing on that. There's Zodiac jewelry that we will be focusing on. We are also focusing on bringing an exclusive wedding and engagement line of jewelry. We're working on remembrance and memorial jewelry. We're working on initials and birthstone jewelry. And we've also recently launched the collection of children's jewelry, which is also getting a lot of traction on digital space. Next, Dipti. One of the biggest areas that we see for growth in digital space is personalized jewelry. And so we are also building our technology, we are also building products and marketing and branding for personalized jewelry where people will be able to buy something, they'll be able to personalize it with their name, their friends' and family's names of messages that they want to put on their jewelry to give it as a gift to their friends and family. We're working on that. We're launching it very soon in the next quarter. Then we are also working on a personalized wedding ring program where we'll be offering wide range of diamonds and gemstones to customers that they can choose from. They can also choose the setting that they want to use, and then they will be able to order the jewelry that will -- we will custom-make for them and provide to them at the best price possible. So these are just some of the initiatives that we are taking. But as I mentioned earlier, we are very confident of growing the digital business in the years to come with many more initiatives that are in the pipeline. That is all from my side, Dipti, back to you.

Thank you, Srikant. I would now like to invite our group CFO, Mr. Vineet Ganeriwala to take us through the financial performance. In a sense of time and to also have adequate time for the attendees to ask questions, we will try to close our presentation in a few minutes now.

Dipti, I'll try to be as brief as possible. As per these numbers, they are in public domain. So I guess they will already be seen by most of the people viewing out here. Moving to the next slide, Dipti. So our revenue growth have been quite robust in the last few years. If you see the CAGR, our revenue have been growing at 11.7%, B2C in this space was even better. It was close to 14% CAGR in the last 4 years. Overall, we are encouraged by these numbers, which reflects success of some of the strategies, which Sunil, Amit, and Srikant were mentioning few minutes before. It represents the success of those over the last few years. We are, in particular, like Q1 is more heartening as it is normally a subdued season. And also it was on the backdrop of the widespread impact of COVID pandemic. While TV is increasing at a rate of 8.4% in the last 4 years, web is growing at a much faster rate close to 30%. While we continue to report these numbers separately, it is important to note that both platforms are continuously converging performance in biotech omnichannel ecosystem along with several other emerging sales channels which Srikant and Amit just mentioned. Next slide, Dipti. Our strong innovation-led product development ability and our deep discounting model is validated in this slide. For TV home shopping, we have been able to maintain our average selling price between $25 to $30 across the last few years. Over the years, we have launched and developed and expanded our categories. What we have been able to maintain are price and value positioning. Within accelerated growth of web, it is also very strong volume growth and average selling price is there, also have been quite stable in the last few years. So this continued volume and value growth is a reflection of our steadily growing consumer trade spotting as well as continuously new product development and ever-evolving product mix. Next slide, Dipti. We have been able to maintain our gross margins at 60% or more, which is quite the same and which is entry criteria for any product before it gets a position in our platform. Over a period of years, we have expanded our categories. From fashion jewelery, we sell almost 36% of nonjewelry products across various lifestyle categories, yet we have been able to maintain our gross margin levels. And we expect to see this trend going forward as well. The beauty of our model is like the cost below the gross margins are more or less stable. So when we increase revenue over things, we are a stable kind of a cross base, we see operating leverage, which is reflected in the EBITDA margins, which has expanded over the period from 6% in FY '16 to almost 14% in FY '20. So expansion can also be seen in PAT and which is also leading to the increased -- continuously increasing EPS numbers over the last few years. Next slide, Dipti. So fixed assets are more or less stable, and the gain in FY '20 is largely because of the reclassification of leases, impairments by and the accounting standards. Shareholder equity is reflecting of the PAT and the share capital. In FY '20, important is to note that we distributed almost 100% -- very close to 100% of our PAT. Because of the strong cash flow generation, net debt is continuously increasing. So it's negative net debt. Negative net debt of about INR 279 crore as the end of Q1 FY '21. Also important is to note that the net assets have also been quite steady over the last 3 years. So the jump from FY '16 to FY '18 was because of the expanding Budget Pay, which Amit and Srikant also touched upon. In the last few years, the working capital have been quite robust. Both inventory and warehouse are being managed efficiently, and hence, a stable kind of a net asset scenario can be seen. Next, Dipti. Operating cash flow is quite healthy. So growing revenue or the cost [ rebates ] program, which also Sunil touched upon, operating leverage and our robust working capital management is giving us strong operating cash flows in the last few years, which can be seen out here. So 200 kind of a cash flow -- operating cash flow in the last 2 years. Also, the delta between the operating cash flow and free cash flow is very less because of the less capital-intensive nature of our business. So our routine maintenance CapEx is not huge. And hence, most of the operating cash flow also flows down to the free cash flow, which was close to INR 180 crores in the last 2 years. And the quarter 1 in FY '21 sees same elevated level of operating cash flow and free cash flow amounts. Next, Dipti. Like I just mentioned, our CapEx requirement is not huge. And the revenues and operating leverage have been quite healthy. This is also getting reflected out here in terms of increasing improving financial ratios. So ROE have improved from 12% in FY '16 to 26% in quarter 1 FY '21. What's more heartening is that ROCE, which has jumped from 13% in FY '16 to almost touching 50% in quarter 1 FY '21. The operating leverage, low CapEx and the ever-increasing net debt because of the strong cash sitting on the balance sheet is what is driving these ROCEs, and we expect it to continuously increase going forward as well. Next slide, Dipti. So we have in place, our dividend distribution policy wherein we intend to distribute 20% to 30% of our consolidated free cash flow, and we can even look at higher payout in special circumstances. In line with that, the Board recommended for Q1 FY '21 a INR 5 per share interim dividend. If you look at FY '20, including the dividend and the buyback, we distributed almost 100% of our free cash flow and PAT for that year. Our strong performance is sitting on the bedrock of strong governance. So KPMG are our statutory auditors for 3 years now. And we recently also appointed Deloitte as our internal auditor this year. So next slide, Dipti. So that's all from my side. Handing over back to Sunil for taking us through the strategy priorities.

Thank you. So, I will skip some of the slides in the interest of time. Let's go to the way forward. Yes. So key takeaways for the meet today. Next slide. So our business model is very unique. As I mentioned earlier in my presentation, there is no parallel to our business model except perhaps Zara which is brick-and-mortar and web combined. So our model creates a huge moat around our business or any competitor who come in. Customer engagement is exceptional, not only from a business point of view, but from the community service point of view. Our one-for-one model is very unique. And has high engagement from customers and many partners as well. Technology platform is robust at reasonable cost. We have good team in place. Jay joined us last year with 20 years of experience in the U.S. of working for other digital retailers. And he's assembling a very capable and robust team to take our business to much higher level. Our management and governance, as already Vineet spoke about governance, we have a very high level of governance across the entire organization. Our management, as I mentioned earlier, we have a management development program that started 18 years ago and continues to this day. In fact, taking the advantage of COVID scenario in India, we hired very capable management annual graduates from many different institutes and some with lot of experience and very capable. Our both brands, Shop LC and TJC are very robust. And we have multiple sub-brands under our brands of Shop LC and TJC. And these are all aspiration around those brands in the customers' mind. Our omnichannel sales platform, television, web, marketplaces, social DR, mobile, we are everywhere the customer is going to be. And the OTT, for example, is going to be, and we are there. So we want to be there at wherever our customer goes to be part of her life. Next slide. All the stakeholders are important for us, and we pay equal attention and they are part of our balanced scorecard. So customers, you will see from Shop LC, A+ Rating and Better Business Bureau, we have the highest rating possible. From -- TJC has 97% positive rating on reevoo. That is a platform, which customers give feedback directly and then we rate their -- they rate our product on the platform. Employees, we are rated by employees, which is independently generated assessment by Great Place To Work all over the world. So they assess all our 4 business units. And actually they assess all 6 units. The China unit -- since Thailand and Indonesia are smaller units, they are clubbed together with China units themselves. So China has received Great Place to Work Certification. India has received and U.K. has received, and we are hopeful that U.S. will receive it in coming years soon. From investor point of view, good payback. And cost and communication, [ trust ] and communication and having a high level of governance. From environment point of view, 40% of -- 45% of our energy is already renewable in India. We expect to get it to 100% within a year. All our India factories and our units will be 100% renewable. All our plastic across the globe is largely recycled, and we are going towards 100% recycling pretty soon. From society, we believe that we are one of the -- we are in the forefront of this initiative of giving back to society through our One for One program. And we have many other program within the U.S. and U.K. as well, but they are not to the level -- to those high levels, but we do have them in place as well. With that, I want to open the forum for Q&A.

[Operator Instructions]

In the meantime, we can put the slide up for all to access.

Yes. We take the first question from the line of [ Nirav Mehta ].

Sunil and team, this is [ Nirav ], and thank you so much for doing this very extensive presentation. Really appreciate it. So the question I had was just on the target segment. And I know for sometime our target customer has been like middle aged really in the U.S. or U.K., so to say. Do you see this as a strategic priority to kind of make this target segment a little wider maybe go into the 30s and 20s or late 20s for women, maybe appeal to men as well and kind of widen our target segment base at all?

I'll take that question. So [ Nirav ], thank you for your question. Our target is largely baby boomers and Gen X because they are the target audience with largest disposable income. And our merchandise also is largely targeted towards them. And it's a very large population. So these 2 demographic combined are -- I don't have exact number, but they constitute more than 60% of disposable income in America. So we target -- we want to target and we stay focused in these 2 segments.

Got it. And sorry, just a follow-up on that, Sunil was, I understand that now our social media presence, et cetera, is being built. Do you see that as an area of improvement? Because when I look at, let's say, our Instagram account of Shop LC, I see some 5,000-odd kind of followers, whereas someone like QVC has more than 600,000 followers. So is this something that you guys are thinking about spending time on? And I mean, is this something which is a strategic priority, again, in terms of channels?

That is true, [ Nirav ]. A very good observation. As I mentioned in my last earnings call, we are focusing on this area. We already set up a very capable team to address this segment. And we are seeing, as Amit also mentioned in his presentation, so we are seeing good traction in this space. Earlier, what we used to do, about 5 -- 4 years, 5 years, 6 years ago, we bought likes from Facebook, but that didn't really translate into customer buying. So there's 600,000 likes on Facebook, but didn't make any difference for the business. So now we have set up a team that goes with the presentation of a product and with small clips, video clips on web platform, about 30-second clips to 1-minute clips, and that is gaining a lot of traction, and we're very excited, and I think I see a lot of growth coming from that space. Although our growth potential in our existing space is still very large. When you said QVC -- QVC gets $60 per home, our revenue is only $3 per home. So there's large growth potential with an existing platform of TV and web itself, but social is the largest potential for us.

Next question is from the line of Mr. Lakshmi Narayanan.

This is Arun for Lakshmi [ Finance ] from ICICI Prudential. So thanks for this good presentation. One quick observation is that when I look at the number of employees from FY '17 to FY '20, it was around 3,800 employees in FY '17. Now it has come to 3,400, right? Now just want to know how many employees are actually based in India? And what kind of salaries you pay for them? And how does it work globally? And why is there reduction in employees?

So I'll answer that question. I'll go first, first question. So I'll start with the U.S. U.S. has approximately 500 employees.

Sorry?

U.S. has approximately 500 employees and U.K. approximately 180 employees. [For backlog], no because of contract workers. Our call centers are contracted now. Earlier, U.S. used to have our own contact center. And we outsourced a large portion of that into multiple centers between Mexico, Guatemala, also within the U.S. and recently in Philippines. In U.K., we have -- earlier, we were -- customer service was completely in-house. We outsourced partially in outsourced call center. In India, the number would fluctuate based on the contract employees and full time employees. Sorry, I don't have exact number from U.S., and our HR head could not join because of [indiscernible], but then that function can be shared with you in due course.

Got it. Got it. No, I mean, I -- is it fair to assume that around 2,500 employees are there in India or even more?

Approximately. That is correct. So it maybe more than 2,500. After pandemic, about 300 and some odd employees did not turn up. They left for their native places, but our productivity has actually gone up after pandemic because some of the workers actually we felt that we are overemployed.

And so you would pay around INR 1.5 lakhs or so per employee in India.

I don't have that number discussion in hand, it will have to be given later by Pushpendra.

[indiscernible] What is the right way to think about it? And because you also mentioned that outsourcing is also there. So one, I mean, I just want to understand how labor-intensive is Indian operation. And how do you look at U.S.? Do you actually have a mix of contract? Just to understand that part because the difference is quite huge between your stand-alone and consolidated, and your employees is heavy in India.

Yes. So as I mentioned, U.S. has approximately 500 employees. Full time and part time. U.K. about 180 employees. They are the largest population outside of India. China is about 120 and Thailand and Indonesia just about 20 each. So they are not very large population. Our philosophy from manpower point of view is, earlier we were contracting a lot of work out to the other players. But as you have seen, recently, training and coaching employees and developing and progressing them through the organization is actually a differentiator for us. So as year goes, we will be bringing more and more in-house and creating the larger pool of people to develop from. I don't know if I've answered your question Mr. Narayanan.

Mr. Lakshmi Narayan, we have lost your voice.

Yes, yes, I'm able to listen, some network issue, now I can listen.

I hope I answered your question.

I got your answer.

We have the next question from the line of Kanwalpreet. Kanwalpreet Singh from AMBIT Capital. We will come to you again, seems like there's some network issue at your end. The next question is from the line of Pritesh Chheda from Lucky Securities.

Thank you for the elaborate presentation. One question from the slides. We have highlighted the omnichannel lifetime value of the customer. So the omnichannel customer as a percentage of our total 4 lakhs, 25,000 customers that we have would be what percentage? And is it fair to assume that a lot of the incremental growth is going to be from the web and the omnichannel?

Okay, Pritesh, thanks for the question. I don't have the broken down number, absolute number with me here in the presentation. But the growth we look at is comprehensive. So we are acquiring customers from television and digital properties from all -- even marketplaces transitioning to our main business, which is mostly e-com, social media, also they are transitioning to the main business. But what we are trying to do is, TV customers we're trying to transition to web and web customer over to television as much as we can because the value of omnichannel customer is substantially more than either platform. So it is still -- all the efforts, our marketing, our messaging, we have still transitioned to omnichannel platform.

And when I was looking at the omnichannel customer, so there the pieces bought is. Let's see. The...

Your value is substantially higher.

Yes. So how is that calculation actually derived?

So we know customers who buy from our multiple channel, more than 1 channel. And if they do, they will take out the total number of pieces bought and total customers who are omnichannel and we divide that by the value. So right now, I don't have a piece count here but the value was given to you. And the lifetime value is the gross margin we make from the lifetime of that customer. So first of all, the lifetime of the customer is longer. And typical lifetime of a customer is about 2 years. Omnichannel customer is much longer. I don't have the exact number, but it's much longer than the normal either television or web customer. And the customer purchase behavior per year is also higher. So lifetime value is the margin that we derive out of the lifetime of the customer.

Okay. And from the cash flow utilization angle. So what is the Budget Pay there? Do we have a upper cap in terms of percentage of business to be done via Budget Pay because that would utilize a part of our cash flow than any direction or target there over the next 3, 4 years? And second, considering the low CapEx nature of the business, the cash flow in the business is fairly robust, yet the dividend payout policy pegged at about 25% to 30%. So there, what are your thoughts? And what could be the positive utilization of cash flow?

Yes. So Vineet, do you want to take the question, first one?

Sorry, can you just repeat quickly. There was some disturbance in the...

So on the first -- so considering the cash flow aspect, the possible utilization, one could be in the form of higher Budget Pay, which increases the cash utilization. Is there an upper cap in terms of what proportion of our business should come from Budget Pay? And second, considering the lower CapEx nature of the business, 25% to 30% payout is a fairly lower payout. Do we have other thoughts on the utilization of the free cash flow?

Sure, Pritesh. So I'll answer the second one first. So 20% to 30% is the committed number as per the dividend policy, and we also mentioned that we'll look at the special circumstances. And if we don't have much efficient use of that cash, we might recommend a higher dividend to the Board to consider. And last year, we pretty much distributed the entire free cash flow. Due to the nature of the business, even the working capital is pretty much like robust and healthy in the last few years, budget Pay normally hovers around 35% to 40% of the entire revenue mix. We don't expect it to exponentially go higher as this is related to the overall average selling price of the business. It is only offered to high-priced items, and we intend to maintain our positioning in the deep value segment and maintain the average selling price. Hence, we expect the Budget Pay also to hover around this kind of a range only. And that's why I mentioned that working capital we don't expect too much cash to be stuck out there in times to come. Of course, some data and inventory will increase in line with the revenue mix, but pretty much that would be it.

The computation is at 40% right now. So we expect it to be around 40%, between 40% to 45% of our sales will come from Budget Pay. And with the Budget Pay, our first installment comes right away. And then the rest of installments between 3 to 5 installments will be coming in 3 to 5 months.

Okay. My last question is, as a group, from a medium-term perspective, let's say, 3 to 5 years, do you see yourself largely doing these 2 geographies? Or you would be actually seeding a new geography for a similar business model?

Yes, I'll answer that. So we are constantly looking for opportunities. And if an opportunity presents, we will definitely be interested into Germany and Japan as additional markets.

Okay. That -- okay, constantly looking for opportunity. So can it be a situation where you seed the market on a fresh basis or?

Yes, it is possible, but if we can get an existing opportunity, then that will be easier for business.

We have next question from the line of Mr. Bharat [ K. ] Shah.

Given the fact that we aim to keep unit price of our products rather low around this $20, $25 per billing, basically the growth will have to come from more and more customers because if the unit price is unlikely to change much, then the growth has to come from the more number of customers to be acquired. Given the fact that we are basically in the business of budget jewelry at a lower end level and selling to certain kind of demographic profile, how large is the size of opportunity? How large this business can be? What it has done so far is definitely significant. But how large the business can potentially be?

So I will answer that in a couple of examples. So when U.S. market was predominantly served by Macy's or Bloomingdale's or like department store for apparel, and they were selling higher price point brands, Inditex came to the market with similar product, similar clothes, not designer label, but similar clothes at lower price point. So their price point is around $50, whereas similar product will be a couple of hundred dollars into Macy's or Neiman Marcus. And the revenue of Inditex is approximately $25 billion today in that segment. And as I mentioned earlier, the Gen X and baby boomers is a very large segment in the U.S. and the U.K. They have more than 50% of disposable income of these 2 geographies within these 2 segments. Our opportunity is not only sell jewelry to them, but the accessories and fashion products as well to them, even the home product, even the kitchen items. As you saw from the presentation, the segment -- that segment revenue has gone up pretty significantly over the years. Our opportunity also lies in acquiring more customers through different channels, and then retaining more of those customers and selling more pieces to those customers through multi-product categories, as I mentioned, into all my 4 Rs; reach, registrations, retention and repeat. So our opportunity is very significant.

You say that Macy and Bloomingdale kind of market is worth about $25 billion?

So, no, just Inditex itself is $25 billion revenue.

Sorry, your voice is faint.

So Inditex, that is Zara. If you know Zara brand, the parent company is Spain-based Inditex. So their revenue is excess of $25 billion, just in lower price point apparel and accessories. There are some home product too, but even those product category is at $25 billion.

And that Macy's and Bloomingdale you mentioned the number, sorry, I couldn't hear that properly.

No, I did not mention their number. But within that product category, their numbers are much smaller than Inditex. And another example is Walmart. Walmart came in as a [ value to wear ] and has become the largest retailer in America based on the value. So there is an advantage, huge potential for us as a business.

Sure. So I understand that you may expand geographies. You may expand distribution channels from TV to maybe web and to the social media. So that path is clear and more customers to be acquired. But when we want to expand through more and more product categories, isn't there a risk of a clutter? Because we may have a strength and understanding 1 area, 2 areas of opportunity and understand the space well and design our offerings and tailor our distribution accordingly. But when we try to get into disparate, very wide different products, from kitchen appliance to cheaper end jewelry to apparel to bags, into shoes and everything, isn't there a risk of a marketing clutter and creating sort of [ unworthy ] marketing organization and in the risk, we may not comprehend our customers well.

So that's a very good question, Bharat. To answer that, last -- I think in 8 years, our SKU base has ranged between 20,000 to 25,000 SKU. Even today, our non-jewelry segment is about 37% of our sales, our SKU number hasn't increased -- sorry, design base hasn't increased. SKU is about 50,000, 55,000. That means each design may have multiple lip color, multiple ring size or multiple bracelet size or multiple handbag or bedsheet size. But our design element has not gone beyond 25,000. And our aim is to keep that number constant, to keep below 25,000 designs in our business. So if you bring in a new design, some old design has to fall off. It is controlled by 2 areas. One is, if it is on television, there is a limited airtime. So we can't present more than that space; so it is limited. Second thing is web. Web can have more items, but in order to keep our ROCE and ROE in control, our overall inventory is very much focused. We can't exceed the number of days of inventory by any groups. So that keeps a discipline of number of SKUs in the business. So every newer item coming in has to earn its space to expand or a new category has to earn its space to expand. And if it does, something else has to fall off because of the inventory level constraint that we have in the business.

Sure. Can I ask 1 last question, if I'm permitted?

Sure, sure, please, go ahead.

So I understand that you want to keep the overall portfolio of SKUs tight. Variants can be more, but per, say, unit number of products will be limited to about 20,000, 25,000. So that says what is the portfolio pruning and keeping it in a tight ship is concerned. But when we ventured into more and more product categories, each product category has its own nuances, it's own economics and we need to comprehend that business and its marketing appeal and its relevance to our customer segment. I mean the 3 kind of customers that you narrated, both from the U.S. and U.K., they may have applicability for maybe fashion goods, accessories, for cheaper jewelry. But when we get into kitchen appliances and more and more other product categories, will the marketing finance understanding all of that will work in the same way? Because there is a risk of confusion in the mind when we try to do too much.

So there is a possibility if we did not have constraints in place. So each category or each -- or within that category has to earn its space, whether on the website or in television. If it doesn't earn its space, it is discarded pretty quickly. And we had mechanism, the rising auction that Amit mentioned and Jay has also mentioned. The mechanism is there to exit any dogs or tails very quickly from the system. And so we make mistake. I'm sure we make a lot of mistakes in product selection. But that mistake is already baked into the numbers. And that is exited out of the system pretty quickly. An item which is not really worth even on the rising auction doesn't go, we donate that item out to Goodwill or to Salvation Army and we learn from that. So we are a very fast learning organization and learn from our mistake and numbers. I mean our analytics is pretty strong. So constant learning is there.

We have our next question from the line of Pulkit Singhal from Motilal Oswal.

Good morning and good evening to the team wherever they are located and congrats on a good set of performance so far. And thanks for the analyst meet. My first question is, firstly in the U.S., where are we currently on delivery charges and the time it takes to deliver the jewelry and non-jewelry categories, if you could say.

Vineet, please go ahead.

So in the U.S., we charge -- delivery charge on TV is $2.99 for jewelry items. And for lifestyle items, we charge between $3.99 to $6.99 mostly, and it's simply added right now. So customers I think are paying the unlimited shipping charges, depending on how many pieces they are buying it. But in the last 1.5 months since 7th July, there is little change, where now customers can buy as many pieces as they wanted and pay $29.99 shipping charges maximum in a day. So they can buy 40 pieces, 50 pieces also. But on website, if any customers go and buy any order, which is over $49.99 and up is a free shipping. And average customers in the U.S. right now, all the market-based customers, we are shipping the orders with 2-day shipping time line. Once we ship the items, it will reach the customers in 2 days' time. Recently also we free shipping all the high end items, which are actually also we're shipping in the 2-day service. But still, our main delivery right now is still between 5 to 7 days, it's going to the customers. Having said that also, we are still talking to the different companies, but we are trying to make our delivery services more like in line of 3 to 4 days going from 7 days right now in coming months.

So that's what my follow-up question was, in 3 years' time, where would we see the delivery charge and the delivery time for your business?

Yes. So regarding delivery charge, actually recently at the company levels, right now, we are changing at Shop LC in 3 years' time -- not even 3 years' time. Actually within, actually, as of right now, we are planning to bring it down from $49 to again to even by at least 15% less delivery charges. Our long-term goal actually is to go on website completely towards more like a free shipping. On TV, we will slowly reduce it because shipping is still a big portion of the revenue. So we are slowly reviewing our numbers. As our number grows and our products gets better, I mean we are definitely going to reduce our TV day cap as well, more towards like $110 maximum for the day. They can buy as many pieces as they wanted. Actually, [indiscernible].

Delivery times as well, I mean are we -- in 3 years, do you think it can be something like a next day or 2 days? Or do you think the way the supply chain is you can never -- that's very difficult to achieve with the business model?

That is in our discussions right now. We recently had a big events with both DHL and UPS. Our aim actually is to go very close to 24 to 48 hours. We don't know right now. So far, we are not successful in getting and convincing the companies to go for that one. But I think in near future with a 3PL service, where we will be putting a warehouse in different part of the U.S. It's really possible that we will start covering a lot of areas in 2 days to 1-day time line. But right now, we don't have any fixed time line for that.

Okay. The second question is how do you really benchmark your TV content quality and website shopping experience. I mean this is very -- actually we can also answer it. I mean it's very subjective. How do you know that you're producing good quality enough to attract customers in terms of production and the website experience in shopping?

So we constantly look at VOC, voice of customer data. So approximately 20,000 to 25,000 customer feedback comes to us every month. And we have AI-based routing system for all the data that's coming in from all 18 different channels. And all that data is allotted to respective units or respective verticals. If it is the studio, then information goes to studio manager. If it is website, goes to the IT and e-com, warehouse, service -- customer service, call center, product, merchandising, all different areas are getting the data, and they are looking at the data very constantly and improving their services against our sales from yesterday. And other thing we match against this is the CSAT score, customer satisfaction score and NPS, Net Promoter Score. So those numbers are constantly tracked on a weekly -- CSAT is carried on a weekly basis and Net Promoter Score is done on a quarterly basis. And all different areas, all the feedback coming in is looked at very, very closely, both in the U.S. and U.K. So we constantly reinvent and upgrade ourselves.

So where would we be in terms of, say, the content quality versus, say, QVC or eBay, or wherever the industry standard is. Where are we right now in your own opinion?

I think from QVC, we're pretty close to them. We are not completely there yet, but we are pretty close to them. From website, we are also getting there. We're not fully there, that is my estimate. My team, I've not asked their opinion on this one, but it's my opinion, that we are fairly close, but still not at QVC or at Amazon level. But we are getting there too. As you saw Jay's presentation, we are changing our platform in the U.S. U.K. is already doing [its first commercial]. U.K. is at QVC level. In U.S., we are not there yet. But I think we will get there by, I think, February and March of next year, when we will transit to Salesforce Commerce Cloud.

Okay. Well, my last and final question is, I was just wondering what the rationale is for spending on a loyalty program. When anyways, you have a very high set of loyal customers who are buying a lot from you, and there really are not too many alternates. So it just seems you'll just end up providing more value to those certain set of customers who buy 80% of the time. So do you think that money could be better utilized?

So that is very true for today, but may not be true for tomorrow. So we'll test the program. We want to give an open access to everybody. We'll test the program, see how much traction we have now. If the repeat purchase goes higher, at what level does it make business sense? And if it continues to make sense, we'll continue to go towards it.

[Operator Instructions] The next question is from the line of Mr. Milind Karmarkar from Dalal & Broacha.

Thank you for an excellent presentation. I'm looking at the company for the first time. So pardon me if my questions sound basic. My first question was that you are predominantly into jewelry and accessory and it's fashion business. So the focus has to be on design. So just wanted to understand how we manage this. How we manage this attribute? Because jewelry and accessories, both are -- the main focus has to be on design. So that was my first question.

Yes. So let me answer that. So we're a supplier to all the TV shopping and digital shopping companies. We are supplying to Amazon, QVC, HSN, U.K., U.S., even Japan, Germany. So that's our basic understanding where our business came from. Even Walmart and all these big retailers, brick-and-mortar retailer was like a segment in U.K., U.S., there are major customers. So we understood the business from that. And our product development team, transporting team is all designed or have grown from the last 25, 30, 40 years. Actually, we started business in 1980, so it's 41 years. So all that understanding of business has come from all -- across the organization. But today, the transporting, merchandising, product development, product sampling is about 300 people team. And those constantly develops new products all the time. On an average day, they bring 100 new products a day, every day, into our system. And there's constantly churn to see, which is good product, which is not, which is not that gets system route to our rising auction, to our clearance section, and which is good get expanded into a larger category. And it's -- the process is unique for our company. There is a moat for our company. Nobody else has this kind of process, except, I would say, Inditex. I'm sure there may be other retailer that we do not know of. But in our visibility, there are not many companies with this robust product induction process and churning that out without increasing the inventory. As you would have seen, our capital employed or inventory is pretty constant for our business growing very rapidly. So that business model is very robust. And we are very proud and feel that very difficult to breach that moat.

Okay. My second question was that we talked about using influencers, micro-influencers to basically be on the social media. So just wanted to understand how do we reward the influencers?

Amit, your answer.

Yes. So everything is [ a test ] right now, which initially when they sign up for each store, they get $100. Almost, we are -- earlier $200, we changed to $100. And on top of it also, we offer them 5% commission on the revenue. And that's not -- we are setting the system now. So they'll be getting the checks every week. And there are 2 influencers already, they signed up for 30% of their time with Shop LC.

Okay. Yes. So my last question is that India also is a growing economy, though I know that we are still at $2,000 per capita. Any thoughts on starting operations in India as well?

Yes, we looked at Indian economics. And we feel that India, from the logistics and credit card penetration, the return rates, it does not make a business -- it is not profitable. I don't expect this industry, long-distance shopping to be profitable for another 3, 4 years or maybe even longer. So we do want to come into the country. Our model is very robust, value-based model. And I believe that we can come into India at a later date and still make profit, but it's too early for us.

We have the next question from the line of Gautami Desai from Chanakya Capital Services.

Having done -- I understand your customer profile in terms of age group and so and so whatever you explained. And have you done some kind of a study on what is the economic segment, a typical economic segment that you cater to? Like how -- like in India, we have like a lower middle class or upper middle class or SEC A, B, C, something of that sort? That is my first question. And the second question is that do you in-house manufacture everything that you sell, all your accessories and everything?

I'll answer that. So our customer is middle class to upper middle class. Average income is $55,000 to $60,000 in U.S. I don't have exact data in U.K., but that is in U.S. and I believe the demographics in U.K. would be very similar. Second part of your question about what do we manufacture and what we outsource. So approximately by value, a little more than 50% of product is manufactured by us. Jewelry, largely. Lifestyle, largely is outsourced. We recently set up a factory in Jaipur for manufacturing garments, apparels and some bedding material. So there is a small factory. But as we see, as we learn in that space, we'll expand much further. So when we see scale of a business and we see economics of value addition to our business, we will go into further backward integration. But till the time we understand the business and we don't see economic scale, we won't go into manufacturing ourselves.

Gautami, we are not able to hear you.

[indiscernible]

Gautami can you hear me? [Technical Difficulty] We have the next question from the line of Vikrant Kashyap.

Good evening, Sunil, and thank you for this kind presentation. I have just a couple of questions. In post-COVID, we have seen rapid growth in the acquisition of our customer base. Do we -- that demonstrate that we have a market where -- it maybe due to COVID situation, but we have a lot of customers. And do we see this kind of growth to sustain? And what are the strategic priorities for you to maintain this kind of growth?

Thank you for the question, Vikrant. So this is true that during COVID starting in April, our new customer acquisition, our business growth has been quite elevated. And we are continuing to see similar growth even now. But we do not know if this growth will sustain in the long run. So that's why we are being conservative and giving still our pre-pandemic guidance of 15% to 17%. This may or may not be, Vikrant. So we can't give guidance right now. We are only giving 15% to 17% overall business guidance and 25% to 30% of digital growth guidance for the mid year, so 2 to 3 -- 3-year time line.

So Sunil, my question is not on the revenue front. My question is on customer acquisition because we have been lagging around 3.5 flat for many times, and suddenly, we jump to about 4.5. So I think the customer behavior has changed. And that presents a lot of opportunity for us. So I am trying to understand your strategic priorities on that front. I understand this is elevated number. But still I see potential for growth. So where do you see this number?

So definitely, Vikrant, there is potential for growth. And we are working really hard, first of all, to convert our essential customer to the main business and also acquire new -- more and more new customer at elevated pace. So we're continuing that even now. But will it continue after pandemic? We don't know. So we're putting some strategies in place in the business that Amit and Srikant shared with you, all the strategies that we're going to put. And will that continue in the long-term growth? Still we don't know. That's why we can't give the guidance at this time because, the pandemic is so new, nobody knows, it's unprecedented. So giving any guidance based on this kind of unprecedented situation would be risky. And we don't want to give any guidance that we can't keep or exceed.

Okay. Got your point. One more question. You are coming up with your loyalty program. Do you think it will help in increasing our retention rate of customers? Do you think any sign of that by implementing loyalty program?

So that is true -- sorry, please continue.

If you can share what is our unit customer number right now?

Yes. So unit customer, let's see if we can look as of last quarter, they can give you number.

4 lakh, 25.

So we can give only last quarter-wise, but I can give guidance that our unit customer is still elevated even the current times. And we suspect that this will continue at the elevated level as long as the pandemic continues. After that, we are not giving specific guidance.

And on the loyalty program?

About the loyalty program, we will continue to watch it, how it goes from the repeat purchase point of view. We expect the purchase to increase because of the loyalty, there's no shipping cost. And we are also planning to give some additional incentive within loyalty program, which should not cost a lot, but will have larger value for customer, like warranty program, other programs, which only we can do and other people can't because of the vertical model, only we can do. So these are unique positions we are trying to create for future, but we'll test them slowly with the small segment of customers. And if this shows a much higher repeat purchase, then we'll roll it out to a larger audience. But there are futuristic thought process we have and that will sustain our continued growth for a long time to come.

We have the next question from the line of Chintan Sheth from Sameeksha Capital.

Great presentation, sir. A couple of questions. One, on the supply chain side. If you can provide a bit more color on that front because most of the presentation was given towards our retail front. You had pointed out 50% of the value, we source it from in-house manufacturing and 50% outside. If you can provide how our sourcing subsidiaries work and source. Do they source from a particular set of vendors? How do we manage vendors in our supply chain? That is one part of the question. And second is on the margins. From your initial remark and our investments in influencers, ambassadors and other stuff, do we see any increased cost per se in our margins? And how do we look at it? And related to margin, if I can squeeze one. Our gross margin in Q1 has been pretty healthy despite a 15% mix in the essential side. So just to -- if you can elaborate how we are able to deliver debt margins?

Yes. Good questions. So supply chain point of view, we have 3 units in Asia, which are outsource based and 1 unit of manufacturing in India. So we look at the product, whenever the supply chain -- whenever you want to go into a new product category, we look at that. It is what we can manufacture profitably and economically. If not, then we give it to outsource. And if the volume of that outsourced product goes to a certain level, that it will make business sense for us to manufacture, then we bring it in-house. For example, we recently did some apparel, curtains and some bedsheets, so all the product. But we look at the product before we start. We don't need to go out and place the orders just like that. But we look at the category. I mean, for example, perfume, we will never -- I don't think we'll ever manufacture at this time. We don't have the visibility of the base product. We'll probably always go outside to source our beauty products. But house product or the kitchen product, we may manufacture down the road once our volumes are supporting that scale. Now if you look at the vendors from their capability, how they service us, we check the references. And then we test them with this experience if the vendor is economical, we hire a manufacturer. We don't buy anything from middlemen. Unless it is a brand representative of a beauty brand, we would not buy from middlemen. So we look at the manufacturer, we look at the infrastructure, we look at the factory, we inspect the factory before we place the order and we take the references. And if everything checks out, we place the order. And for repeated orders, they have to consistently perform from quality point of view, from value point of view, from product performance point of view. Your next question is about margin. So every product, we start with 60% margin. If a product will not give group margin of 60%, we don't go into that at all. So -- some products may give 70% margin too. But most of the product will be 60% and plus. Some products end up below 60% also. For example, if a product didn't work, we sold a lot through clearance or through online auction model, it may go below 50%. But branded, we end up above 60% across the group.

On the influencer costs and our endeavor to further increase our presence in the marketplace, whether it will hit our EBITDA margin going forward? Should we expect any pressure on the EBITDA margin side?

No. Actually, all the influencer or social or marketplace, they're designed in a way not to be value driven. So initial years, when marketplaces was launched about 3 years ago, it was value driven, but to a limited extent. But in second year, it was breakeven. This year, stand-alone marketplace is profitable, and decently profitable. And similar to social. So social is really flat -- in the first 12 months, it may be breakeven or slightly positive, but it's not substantial. So it's all baked into our business plans when we go into give new product segments or new marketed segments.

So regarding commissions and you talked about 5% and 10% commissions to ambassadors and influencers. That are kind of a bit high and plus we are paying them upfront $100, something like that in the initial for registration per se. So I was just calculating the numbers. You're targeting around 2,500 customers from them on an average ASPs and purchase of 30 quantities we have -- that number comes through a sizable number and the commission goes higher. So I'm just weighing in that line actually.

So $100 is per post, not per customer. So if influencer would post that's $100. And from that post, we may get 1 customer, 0 customer or we may get 100 customers depending on who the influencer is, what the post is, what the product is, how the post has been designed. So there are a lot of things that we are learning and also the influencers are learning about our company. So it's still in a learning phase, but our guidance of leverage, EBITDA leverage is still phased through from mid term, 2- to 3-year time frame.

We have the next question from the line of [ Mr. Lakshmi Narayanan ].

Just a couple of things. One is that if I look at your cash and the balance sheet, right, it is actually kept in, I think, U.S. dollar-denominated figure, right? And I just want to understand what is -- what is your treasury policy of keeping cash? Do you want to keep it in the U.S. or you will actually bring it in India? I mean how do you optimally take the decision? That is the first question. Second question is that in terms of your inventory, right, there's definitely inventory pilferage or it could be inventory obsolescence, et cetera. How do you actually manage it? And the third question is that if I look at your manufacturing and direct cost, it has actually been coming down from INR 71 crores to almost INR 65 crores. Whereas your admin and selling cost, which you call out, has actually gone up from INR 529 crores to INR 604 crores in the last 4 years. So how does one take in terms of what is the direct conversion costs? If you actually -- because bulk of it is variable, and you also alluded to the employee processing in the conference calls has not been easy, call centers, et cetera, right? So these are the 3 questions from me.

I'll take this, Sunil. So the first question was about the cash. So we keep the cash and [price computations]. And of course, the subsidiary would declare some dividend for the parent company. We also like to keep some cash in U.S. So that if any meaningful opportunity [indiscernible] which is out there to grab that. Right now, our treasury or the investment policy is we keep safety as the first and paramount thing. So most of that is invested in safe bonds and bank deposit across all locations. So whatever surplus cash we have across different locations, the investment would be only in very safe bonds and the bank deposit kind of a thing.

And between international and India, how much you will keep in INR, how much in non-INR in treasury? What is the policy?

So like I mentioned. So it will depend on the dividend declared, and we would want to maintain some cash right now in U.S., particularly because of any acquisition -- potential acquisition opportunity, if something meaningful comes our way. If you look at the overall quantum, maybe approximately 90% of our like treasury cash would be might be sitting out there at this point of time outside India, I mean, and across all the resources put together. And coming to your second question about inventory. So we have a very robust mechanism of exiting our inventory. So we have clearance, which we keep on doing from time to time like in physical retail shops. So we have our clearance on TV and web. Plus Amit, Jay and Srikant mentioned about the RA rising auction, which is also a very efficient tool of exiting any long-tail inventories, which might have remained after it is put on TV. So even if something remains after all these exit mechanisms, we keep on looking at that and looking at the valuations and keep on providing it downwards from time to time. We do that every quarter. And the number you see in gross models and inventory are after any provisioning requirement, which might be there.

And what has been the -- this kind of provisioning or the loss over the last 4 years, how it has trended?

So this exit mechanism worked beautifully for us. And the provision -- absolute provision, which needs to be drawn, like which we need to draw down our inventory business significantly high, along with disposable like donation kind of a mechanism or inventory kind of valuation operating in the a quarter, it can average for 4 years, maybe on a quarter or maybe $200,000 kind of a dollar, just maybe what we can look at if you see across last few quarters for that matter. But again, it's difficult to put a number to it.

Now, as an organization, you would be tracking it closely, right? Because that is something -- it's a must -- it directly hits your bottom line. So is there a number?

Yes. Yes. So if you look at an average kind of a thing, may be $200,000 kind of a dollar per quarter might be something which might be -- we might be doing across last many quarters. Coming to the last part of the question in terms of manufacturing cost versus selling and admin, again, that's a fairly representation of the kind of the product, which is being sold, which has been [indiscernible] manufactured or procured from outside. So it would be a factor of all these things. Of course, a large fact likely [indiscernible] outsource also have happened during this period. Overall, maybe to summarize, the gross margin level of 60% is something which is sacrosanct and we are [currently, come what may] in terms of product categories or manufacturing scenario. And also operating leverage, taking into account all the cost also is something which we keep mentioning in the last few years, and we expect to see in future as well.

And what percentage of your admin and selling is actually variable? And how much is fixed?

Our admin and selling would also include all this digital promotion expenditure, which would vary from time to time depending on the kind of promotion we want to do and, of course, the kind of pull which we are getting from that. In terms of absolute variables to units being sold or revenue, I don't think so it's directly into that. So most of that would be stable or fixed kind of a number.

So to call it out, you spent around INR 604 crores under admin and selling expenses in the consolidated, right? Is it -- how much would be variable in that? We are definitely packaging, et cetera -- content, broadcasting, et cetera, variable and I don't know any variable amount.

So I take that question. So [ Mr. Lakshmi Narayanan ]. So our fixed cost versus airtime is largely fixed. Our administration and studio staff is largely fixed, but the warehouse, the call centers and the videoconference of the SKU development, that may be variable based on the category that we bring in. So warehouse and call center is number of calls or number of pieces. And the content is -- team is depending on the third category that we introduced. So larger categories need larger number of people. Manufacturing, also number of pieces or sourcing or quality by number of pieces derived. So from manpower point of view, I would say, from a dollar point of view, high-value are largely fixed, but the lower cost, the hourly employees are variable. Airtime is largely fixed, but the marketing cost, for example, money going to marketplaces or social media, there will be variable on the revenue side. So I don't have an exact ratio of that, but this will give you a large segment, what is fixed and what is variable.

Sunil, just to add on that, approximately 40% of such expenditures, which Sunil was mentioning, is kind of a pure variable in terms of shipping, call center and those kind of costs. The rest is largely pure variable kind of a cost.

We have the next question from the line of -- we have Sudha as the displayed name, and you are new, too. And if you can please introduce yourself?

I'm [ Sankar ]. Individual investor. Is it audible? Hello?

Yes.

Yes, actually I'm [ Sankar ], individual investor. I'm having a few questions. The first one is, do we see -- due to current economic situation, do we see any less purchasing power in both U.S. and U.K. from the customers in jewelry segment?

Yes. So I'll answer that. So in the pandemic time during the initial 3, 4 months, we are seeing a lot of essentials and even lesser of jewelry. The last couple of months actually, we've seen jewelry picking up quite robustly, both in U.S. and U.K. So we are not seeing any of those recession impact on our product line.

Okay. And from 1st of August onwards, the jobless claim, that amount stopped. Do we see any impact on that?

No, we are not seeing any impact on our business. So we are continuing -- as I mentioned earlier, we are continuing at the elevated level that we were -- we have been ever since the pandemic started.

Okay. How competitors are doing like HSN, QVC and JCB and all?

So I don't have the numbers, but [ curate ] -- they reported, I think, 7% growth. I can't remember. Vineet, do you have that number?

I think 8.5%, if I remember the number correctly.

So they reported 8.5% growth, whereas we reported on a constant currency basis, I think, 27 -- was it Q1?

So it was -- in constant currency, it was 24%.

Okay. And regarding this eBay, we are getting these products or whatever we sold, are we getting feedback from eBay? Or is it different, sir?

So we get feedback for -- from about 18 different channels that includes eBay, Amazon, our own reevoo site, our forums, our call center, customer service, text, e-mail to the studios, through Better Business Bureaus, through Google Trust score, through our [ normal ] shipping. So we get 18 or 19 channels earlier, we get all the feedback, and then we take the feedback onboard to improve our product and our service to the customer.

My question is normal channel, whatever we are talking, either we are getting very good customer responses. And in Amazon or Wish.com, even I'm talking about in both Shop LC-us eBay as well as you mentioned previously, U.K. eBay also, both we are getting a good response. Whereas in Amazon and Wish.com, we are not getting that much. What is the reason? Is it because of we can promote in eBay and other channels where we could not be able to promote. Is this the reason or some other thing?

I understand your question now. So we are seeing similar robust response from Amazon and Walmart as well, which is based -- it's still very small. Even the new platform, we recently launched in Overstock.com so that also we're seeing very good response. So overall, as a business, last year, we did about $4 million on marketplace between U.S. and U.K. combined. This year, our run rate is about $12 million. So although it's still a small number for our business overall. But just to give you an idea that our product is able to compete against millions of other manufacturers or sellers and gain market share rapidly.

What is the -- sorry to interrupt. What was the average on eBay on an average around 700 to 2,000 feedback, whereas in Amazon, we are getting only 100 to 200. So really, customers are purchasing in Amazon, they are not giving feedback, is it like that? That's what I'm asking.

I do not know about the feedback. That is a very good observation. I highly appreciate your keen observations. I'll have to check more on this one. But from a revenue point of view, Amazon growth has been actually slightly higher than eBay from my memory, I don't have exact number right now. But Amazon growth has been pretty robust. Maybe there's another channel of feedback coming to us, I'll look into that.

Okay. Do you have any plan like HSN is operating 3, 4 YouTube channels whereas we are operating only 1? Is it -- are we doing different feed, we are going to give on YouTube? Or -- and one more observation was in YouTube, if you go to your competitor channel, if you want to scroll backwards to 1 hour, you can see, but are some few days, it has come. But afterwards, it has stopped, now only we can watch live. Do we see any such thing?

So good questions. So one thing is about multiple channels. So that discussion has been held, but we believe that our single channel has a lot of runway in front of us. So once we get to the point that runway slows down, then we will definitely go to the next channel. And also to be able to go to the next channel, our product portfolio has to be very robust in the non-jewelry segment. So as we develop and understand that segment, we may get into that. Second thing is about going backward into our programming. So we are improving our offering of going back into 7 days. And so we'll continue to expand that to 30 days as the time comes. We'll continue to do that.

And last question, sir. Regarding what you were saying that jewelry, the sales have not come down. Do we see -- earlier, we used to do tanzanite program there, these values more than -- maybe we can say the $400, $500, whatever it may be. Those type of products are moving? Or it is less than $100 products are moving? I'm talking about even our average price point is $20 to $30. My question is in the jewelry segment, we are -- are you selling more on high-end products or low-end products because you told that now there is no problem in jewelry segment.

So our average price point in jewelry compared to last year is pretty constant so in current quarter. Last quarter was an anomaly. Current quarter ASP of jewelry is similar to last year's ASP, same in Q2.

And that was the last question for the day. I will now hand over the forum to Sunil for his closing comments.

Thank you very much to all the participants. It was amazing participation by everybody. Thank you for your time and patience while we have gone through our presentation, a rather long presentation, but you stood with us, and thank you for that. And thanks for your continued confidence in Vaibhav Global. If you have any further questions, feel free to reach Dipti [ Yadava ] or CDR for any question, and we'll be happy to answer. Thank you, and goodbye.

Thank you. And with that, we close the session for today.