Vaibhav Global ~ Vertically integrated value e-tailer of Jewellery and Lifestyle Products

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Meanwhile till the time this thread was closed MALABAR INDIA FUND took position in Vaibhav Global.

They ave taken 1.46% position on Sept Q…Good sign for company…Now after Nalanda Indian Fund & Mattews India Fund, Malabar is 3rd FUND who took position in Vaibhav global…I hope soon DII will also come after Q3 or year end results :slight_smile:

Shareholders more than 1 percent
Name Category Sep-15 Jun-15 Mar-15 Dec-14 Sep-14
GLOBAL DEPOSITORY RECEIPTS (GDRs) Depository Receipts 12.16 - - - -
NALANDA INDIA FUND LIMITED Public Shareholding 12.66 12.69 - - -
MATTHEWS INDIA FUND Public Shareholding 1.54 1.54 1.54 1.54 1.55
MALABAR INDIA FUND LIMITED Public Shareholding 1.46 - - - -
PANYAEK JAINKIJMANEE Public Shareholding 1.3 1.3 1.3 1.3 1.3
SONYMIKES HOLDINGS LIMITED Promoter Group 18.38 - - - -
SHIVRAM GLOBAL PRIVATE LIMITED Promoter Group 16.36 16.39 - - -
BRETT PLASTICS PRIVATE LIMITED Promoter Group 8.79 8.81 - - -
NIRMAL KUMAR BARDIYA Promoter Group 5.52 5.53 5.53 5.53 5.54
RAHIMULLAH Promoter Group 3.81 4.05 4.05 4.1 4.1
DEEPTI AGRAWAL Promoter Group 1.96 1.97 1.97 1.97 1.97


VGL Q3 FY16 results were announced yesterday. Q3 FY16 revenues are down by 11% on YoY basis and up by 17% on QoQ basis. Results, in my view, are still tepid and I hope that the coming quarter and FY17 will a lot better (in fact Mr. Sunil Agrawal mentioned that H2 FY15 will show a decent growth and he was buying shares from the open market during the corrections - reference Analyst con call Q2 FY15) - where the low hanging fruit of operating leverage can be fully tapped for creating shareholder value. I still believe that its a stock/business worth holding for mid to long-term. Your views are welcome.

:hushed:Its been another quarter of below avg. results. I think they have to do better in the last quarter so that they can show their strength atleast now in the gem export and channels market

Disappointing results I feel, keeping in mind festive season in US and UK in dec. Its taking more time than anticipated for them to adjust with their app interface, refund policy and selling on EMI etc. I was banking on this quarter to see some good nos. but wasn’t happy to see them. Hope they pick up in next quarter and show some strength of their low cost business model.

Yes vikas - I tracked this company - invested and got out last june when they chose not to make public a class action law suit which was all over the web.

When i wrote to the CS, he said " we know when to make public important information" and then the next day, realiziing that it was material, they released it to the SE. I found that at odds with how sunil agarwal behaves during conf calls and AGMs.

I find the cognitive dissonance between what he says vs what hte company delivers huge and persistent and sustaining. The market has given him a lot of opportunities after:

  • his conviction in 2006 on a visa fraud
  • near bankruptcy in 2008
  • class action suit in 2015
  • past governance issues

and as late as in the conference call, he talked about a 15-20% growth yoy in topline and now we have a decline.

This is a business that I am afraid is a remote control car - goes at full speed, crashes against a wall, reverses and repeats it again. This EMI scheme with reorientation of theeir sales model has resulted in a revenue de-growth plus lower cash flows (see the BS- cash is now getting drained) resulting in lower FCF. This is to change assumptions of cash flow and PE.

I am watching from sidelines to see how this shapes up. At 200-250, this could be a good RR.


I listened to the conference call and tried making a mental model of why this is an illusionary moat

  1. the whole game of VGL is to create an artificial sense of higher price, lower it and egg customers on into buying. So the customer who is buying has expectations of a $ 80 product and he thinks he is getting it for $ 20. No wonder, customers are very upset and are demanding returns, proof of this is the class action law suit that is now progressing (not been quashed).

  2. employee reviews on the web seem abysmal. and senior management keeps churning. Not a healthy sign

  3. now that they have realigned the model to EMIs and returns, cash flows and returns no longer seem attractive - WC is also now stretched. It seems now this is the new normal

  4. So, it seems to me that they are still not sure of what they want to do - they are selling home furnishings now which is a deliberate purchase unlike jewellery which is an impulse, emotional decision. For the life of me, I cannot undersstand why a bed, bath and beyond would sell tiffanys or the other way - the psychology and needs are vastly different.

  5. all throough the call, he never used the word understanding “customer needs” - lots of talk was internal and about what they are doing. As porter said, what does not change the life for the customer is not “strategy” - its mere operational improvement. No doubt, they have a robust model but

I would wait for a couple of quarters of stable growth to take a look - the business is operating in a new normal and I am sure that the ROCEs’ that we saw in the past are no longer sustainable - its now a low cost warrior offering lower price points but the same service as a QVC. Sort of like a micromax offering a Rs. 10 k iphone equivalent and the same service but at much lower margins at EBITDA (because higher gross margins is offset by much higher investment in SG & A and customer service).My sense is its caught in the middle as indicated by higher returns and the class action suit.


Results out. Quite poor.

Disclosure: exited

Any valuepickr have concall details as researchbyte is yet to update it?

Vaibhav Global Quarter 4 results, conf call notes:

YoY Revenue’s down by 3%
Q-o-Q Revenue is down 3% with respect to Q3, which typically is the strongest quarter with the holidays season sales.
Retails prices have increased significantly owing to incorporation of budget pay and easy returns in to the pricing of the products…
Gross margin high by 200 bps for the qtr and year due to ASP’s ( average selling price ? )
EBITDA Margin impacted mainly due to lower than expected revenue growth.

introduced new brands and leadership team.

CMD - Sunil Agrawal:

In Q4:
TV revenues flattened out
Gross revenue = 6.6% increased.
Net debt = 16 cr reduced
Customer user experience enhancement is one of the areas we are concentrating on improving.
223,000 new customers have been added.
Repeat purchases = marginally down.
24.5 pieces purchased current year v/s 25.9 pieces purchased last year
Customer retention rate = 45% USA , 53% UK
average revenue per retail customer = INR 31,900 vs 30,700~ which translates to 4% growth.

Forecast for the year ahead:
Gross margins to remain stable and healthy.
Fixed cost might not increase.
lower inventory and Capex visibility for next year = 4 Mil USD.

Volume decreases for last two quarters: Mainly due to return-ability and budget pay. Average Price has increased for the products.
5% returns in last year vs 15% return in this year. 15-16% returns in Q4. No returns are accepted in clearance products.
Web growth - EMI not available. Web sales growth will happen from the second quarter of FY17 ( visibility translates
in Q3 ) onwards due to Hybris platform upgrades( I read it as fixes) which are being worked up on.

Competition in the industry is at $60 price points. our price point on average is at 24 ( web, tv(From $22 to $28) ,etc.). We intend to be on the lower end

Major updates to platform have already been completed.

Negative growth sales is being compensated by positive GROSS sales… this is giving us confidence on volume growth in the coming quarters and year…
-18% to +16% gross sales in the last 45 days has been observed.

We are not launching in India because - the goal is to be profitable with in 3yrs of launch. Inspite of India having phenomenal growth in web purchases, India in Sunil’s opinion is a Maverick market rather than a stable market. Its not the playing field of the company and hence we are away from it for now. Burn rate is high in developing markets. Would prefer to enter a developed market rather than a developing market because of Burn rate. ( this is based on the research already performed by the company.

QVC = $60 , HSN = $18 and VBL = $2 average per household sales wise…

EMI , return-ability and in house brands are the new biz strategy.

Volume de-growth might happen for another quarter or so.

Cost of providing EMI option is about 0.5% of total Net sales

Once net Revenues increases in the next 2-3 quarters, the operating leverage should kick in. For the expenses were a bit higher with the addition of new houses - 10 Million homes.
Please Note: These are my notes from listening to the call. Kindly perform your due diligence before acting on the above.


I held vaibhav and exited a while back. What really got me worried was

  • sunil agarwal comes across as genuine but his actions are completely oppposite. For eg., not disclosing class action suit (I wrote to him and asked him why and then he disclosed)
  • CFOs keep changing - hemant sultania has quit the board too now
  • understimating the seriousness of the impact on cash flows from the EMI pay model
    and most importantly, not being customer focussed. Most of what I gathered from the calls is “inside out” thinking - its unfortunately reflecting in pathetic customer reviews and dissatisfied customers - check FB, google reviews etc.

The business is into a new normal where FCF’s of the past are unlikely to get repeated given the stretch pay - and given the ticket size they sell, EBITDAs cant reach those of competitors -

At a 1500 cr. topline in FY 18 and a 7% EBITDA margin and 3 % PAT margin, its already at 20 x

At a price of 100-120, this can be very interesting.


Dear Ganesh, What are QVC, HSN and VBL in the below statement ? : QVC = $60 , HSN = $18 and VBL = $2 average per household sales wise…

Dear Varadharajan,

I am not able to understand your comment on vaibhav global not being customer focussed and inside out thinking:

All the below statements indicate customer focussed thinking and more than what many listed retailers track and reveal:

Customer user experience enhancement is one of the areas we are concentrating on improving.
223,000 new customers have been added.
Repeat purchases = marginally down.
24.5 pieces purchased current year v/s 25.9 pieces purchased last year
Customer retention rate = 45% USA , 53% UK
average revenue per retail customer = INR 31,900 vs 30,700~ which translates to 4% growth.

They are competitors of Vaibhav Global (VBL).
QVC = $60 average per household sales wise…
Basically means, QVC is selling $60 worth of item on average per household.
HSN is also a competitor ( home shopping network )…

Thanks , Ganesh

Seshu Kumar
Mob: 9966646522

Hi Ganesh,
what does this section mean?


I was not following this company, when the lawsuit was filed for the first time . and he might probably have not disclosed earlier, until the point you had asked him. But the point with these law suits is that they take a very long time to settle.

Per mgmt. from the latest conf call - Latest update - the company has successfully transferred the case from California to Texas. Texas is the place where VBL does business in USA and also, Texas is more business friendly in comparison to California. & such cases will take years to come to closure - it either ends up being withdrawn or settled out of the court generally speaking.
With the initial lawsuit, the company was not really worried and given that it has transferred to Texas, what ever risk they had, all has been reduced considerably per the mgmt.

What they are trying to say is the volume has reduced say from 1000 items to 975 items ( just my example) but the cost price has increased from $10 to $11
Initial Revenue = 1000 X $10 = $10,000
New Revenue ( with price increase ) = 975 * $11 = $10,725
and this number is net of any returns now being accepted by the company…
Say they sold 984 pieces and got 9 items returned & Thus net sold items = 984-9 = 975 items…
This is the new trend they are observing in the last 45 days since the quarter ended ( for which they are reporting…), that is since march 31st to May 15th…

Hope this helps…