Vaibhav Global Limited (NSE: VAIBHAVGBL) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Unidentified Speaker
Sunil Agrawal — Managing Director
Nitin Panwad — Chief Financial Officer
Analysts:
Unidentified Participant
Rupesh Tatya — Analyst
Gaurav Nigam — Analyst
Apurva Kothari — Analyst
Pallavi Deshpande — Analyst
Pradeep Maiti — Analyst
Presentation:
operator
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operator
Ladies and gentlemen, good day and welcome to the WebHub Global Limited Q4 and FY25 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nishita Bhatt from Afactors PR. Thank you and over to you Ma’ am.
Unidentified Speaker
Good evening everyone and thank you for joining us on Weber Global Limited’s earnings conference call for the fourth quarter and full year ended 31st March 2025. Today we have with us Mr. Sunil Agh, Managing Director, Mr. Nitin Pandwad Group CFO and Mr. Prashant Saraswat, Head of Investor Relations. We will begin the call with the opening remarks by Mr. Sunil Agarwal on the business operations, key initiatives and a broad outlook followed by the discussion on the financial performance by Mr. Nitin Pandwan after which the management will open the forum for Q and A session. Before we get started, I would like to point out that some statements made or discussed on today’s call may be forward looking in nature and must be viewed in conjunction with the risk and uncertainties that we face.
A detailed statement and explanation of these risks is included in the earnings presentation which has been shared with you all earlier. The company does not undertake to update these forward looking statements publicly. I would now like to invite Mr. Sunil Agarwar to make his opening remarks. Over to you Sir.
Sunil Agrawal — Managing Director
Good evening everyone. Thank you for joining VGS Q4FY25 earnings conference call. Hope you have reviewed the results and the investor presentation. Before we discuss the financial performance, I would like to briefly touch upon some broader macro developments in recent weeks that has influence upon our operations in US and uk. First, the tariff issue. In anticipation of this we had already shipped advanced inventory to US assuring we are well stocked for next few months. However, policy fluidity causes uncertainty and consumer confidence erosion. We are hopeful for a trade agreement between India and US in near future which would benefit vertically integrated retailer like us.
Among our peers we are uniquely positioned with our in house manufacturing and a global sourcing base which gives us agility and flexibility to respond quickly. Two days back the much awaited India UK FTA got signed which is timely development and could open opportunities for our industry and vgl. In addition, the US China tariff discussion is encouraging especially as our US Group companies process procures lifestyle products from China. These micro developments offer opportunities that we believe leads to improved consumer sentiment and market share gain for vgl. Let me now take you through financial performance. Revenue for the quarter four stood at rupees 850 crores reflecting a 7.7 yoy growth 7.7% yoy growth for the full year.
Revenue reached Rs. 3380 crores up 11.1% from rupees 3041 crores in the previous year. Our gross margin for the quarter remained robust at 62.1% with a cumulative margin of 63.1% for the full year. We continue to see strong gross margins in our target range of 62% plus backed by global Supply chain, this integrated setup allows us to offer competitive prices with quicker turnaround times while enjoying industry leading margins. The digital business is contributing 41% to overall sales 5 year CAGR of 15%. We are on path to achieve 50% sales mix from digital businesses by FY27.
Let me now walk you through the performance across key retail markets. In the US Retail demand was subdued in January due to economic uncertainty and tariff concerns. February and March showed a big sign of improvement, particularly in e Commerce. Our 1% growth in US while modest, reflects market share gain amid a challenging environment. The UK retail industry is continuing to face challenging environment with growth held back by economic uncertainty and cautious consumer spending. While this affected tjc, the Ideal World continued to show strong growth and helped support UK performance. We actively manage airtime and product mix to align with evolving customer preferences.
Germany continued to gain market share maintaining EBITDA breakeven for this current quarter as well. We are confident about achieving ebitda profitability in FY26. Notably, this has been a much faster turnaround than we experienced in US and UK when we launched thanks to our past retail learnings. In local currency terms, Q4 growth in UK and Germany stood at 2% and 18.7% respectively. We expect Ideal World to start contributing meaningfully to the group’s profitability in coming quarters. Mindful Source continued its steady performance delivering 7% PBT margin in Q4. With over 107,000 unique customers. We see tangible benefits from VGL supply chain and ongoing product expansion to get wallet share of these consumers.
We continue to focus on four pillars of our growth that is Widening reach, new Customer registration and Acquisition, customer Retention and Repeat purchase. In Q4 our TV network reached 127 million households as of 31st March 2025, our unique customer base stands at 710,000 which is up 21% YoY and the highest ever for Visual Group. Even excluding acquisitions, unique customers grew 7% YoY. New customer acquisition stands at 410,000 in Q4 while we sustained retention rate at 43% on a trailing 12 month basis, customers purchase an average of 22 pieces from us sustainability continues to be the core of our business and we are strengthening our ESG initiatives to drive long term value.
I am pleased to share that BGL has been assigned a combined ESG rating score of 72 that is strong from ICRA. ESG rating limited reinforces our position as a responsible corporate citizen at VGL. Community give back is integral to our business model where every unit sold results in a meal for a school going child. We are pleased to share that this quarter we served 100 millionth meal to a school child since the inception of our midday meal program called youf Purchase Seeds. Currently we serve 57,000 meals every school day on the Clean Energy fund. We generated 1.1 million kilowatt hours of solar energy this quarter meeting 100% of the power needs of our manufacturing units.
In addition, two US sites and one site each in UK and Germany also operate 100% of renewable energy. These steps bring us closer to our target of achieving carbon neutrality in scope 1 and 2 emissions by 2031. From the governance standpoint, our subsidiaries in India, the US, UK, Germany and China are certified as great places to work. We are grateful to our employees for their honest feedback and are committed to imbibe inclusive collaborative workplace environment across the group. We believe in creating long term value for our stakeholders. The Board has recommended a final dividend of Rs 1.5 per equity share subject to shareholders approval including the three interim dividends already paid.
Our total dividend payout for FY25 stands at 64% of earnings. We remain focused on profitable growth for FY26. We expect to achieve revenue growth of 8 to 12% with operating leverage. While macro risks persist, we are well positioned to navigate them thanks to our low cost, vertically integrated model and high agility for subsequent periods. The project revenue growth in the mid teens range with operating leverage. I will now hand over the call to Nitin to discuss the financial performance. Over to you Nitin.
Nitin Panwad — Chief Financial Officer
Thank you Sunil. Good evening everyone and thank you for joining Q4FY25 earnings call. Let me walk you through the key highlights of our financial performance for the fourth quarter and full year ended March 31, 2025. As Sunil mentioned earlier, we continue to closely monitor market dynamics and proactively manage our operations. In anticipation of tariff disruption in April, we strategically shipped additional inventory ahead of time, giving us a distinct advantage over many competitors. Additionally, positive development like India, UK Free Trade Agreement and US China Trade Deal are promising and can unlock long term opportunities for business growth.
Turning to our financial performance, revenue for Q4FY25 grew by 7.7% year over year reaching 850 crore compared to 789 crore of Q4FY24. For full fiscal year our group recorded revenue of rupees 3380 crore up 11.1% from last year, marking double digit revenue growth. Geographically, the US market demonstrated resilience, though growth momentarily paused due to tariff uncertainties. We remain confident that the digital first retailer like US will benefit significantly in long run. In the UK consumer sentiments remain subdued with weak discretionary spending. However, ideal world robust growth helped offset softness in our TJC core operation. Germany stood out by significantly outpacing the market, achieving EBITDA breakeven once again in this quarter.
In local currency terms, growth in US, UK and Germany was 1%, 2% and 19% respectively. In terms of sales, EV revenue was 456 crore showing a modest growth of 1% year over year while digital revenue reached 350 crore demonstrating strong growth of 15%. Our digital expansion is driven by strategic investment into enhancing our omnichannel capability. Digital now represent 41% of total revenue and we are confidently on track to reach our goal of 50% digital revenue shared by FY27. Lifestyle products now comprise 33% of total sales compared to just 12% in FY18 and we aim to raise this further to 50% in medium term.
Additionally, our budget pay option which allows customers to purchase on EMI, contributing notably to 39% of retail revenue in FY25. Our gross margins remain healthy at 62.1% in Q4, reflecting the strength of our vertically integrated business model. EBITDA margin stood at 8.3%, slightly impacted by ongoing investment in digital growth and challenges in UK profitability, though partially offset by operational efficiencies and lower shipping cost. For full year, EBITDA margin was 9.4%, slightly down from 9.7% of FY24 profit after tax for Q4 was 34 crore up an impressive growth of 62% year over year. Annually our profit after tax reaches 153 crore making a solid growth of 21% year over year.
Both of our acquisitions continue to perform well. Ideal World maintains strong growth momentum while Mindful Souls remain a high gross margin business and is actively expanding its product offering and customer base. The close cross learning opportunities from these acquisitions are delivering tangible benefit across the group. Our business model continue to generate healthy cash flows with free cash flow at 127 crore and operating cash flow at 762 crore. With regular dividend distribution, our net cash position remained robust at 170 crores. Our return ratio ROCE 19% and ROE at 12% continue to strengthen. We remain firmly committed to delivering consistent value to our shareholders.
The board has recommended a final Dividend of Rupees 1.5 per Equity Share subject to shareholder approval. Our total dividend payout for FY25 stands at 65% of our earnings. Looking forward, while we remain optimistic about growth trajectory, ongoing macroeconomic uncertainties prompt a cautious approach for FY26. We expect revenue growth in a range of 8 to 12% with operating leverage over subsequent years. We anticipate revenue growth in the mid teens with operating leverage. Thank you. And I now turn the call to moderator for Q and A.
operator
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touch tone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A reminder to all participants. If you wish to ask any questions, you may press star and 1. We have a first question from the line of Rupesh Tatya from Intelsense Capital.
Please go ahead.
Questions and Answers:
Rupesh Tatya
Hello. Hello sir. Thank you for the opportunity. My first question is for FY26. Can you give some idea about the content broadcasting budget? I think the number was 650 crore for FY25. What kind of spend are we looking for in FY26? Hello.
Rupesh Tatya
Hello? Hello.
operator
Yes.
Rupesh Tatya
Am I audible?
Sunil Agrawal
Yes.
Rupesh Tatya
Yeah. Should I. Should I repeat my question?
operator
Hello, Nathan.
Nitin Panwad
I just. Actually I just connected the call. Sorry, I. Maybe I missed your question. I just connected the call. If you can repeat, that will be helpful.
Rupesh Tatya
So my question sir, is the content broadcasting Budget for FY25 was 650 crore. What would be the budget? What kind of spend are we looking for in FY26?
Nitin Panwad
So the content broadcasting cost right now is roughly around 18, 18.5% of our business. And then we expect that we we expand based on the company’s performance. But respectively we’ll increase this budget if we see the momentum increase in our margins. So we are monitoring both of the cost in line with our gross margin improvements. So if our content broadcasting goes up by 1%, we expecting the additional gross margin will achieve by 1%.
Rupesh Tatya
Okay, okay. Okay. I mean sir, that is. It’s a little bit difficult to make. I don’t know what to make of that answer, sir. So I mean would it remain at 18% even if the gross margin goes up? So gross, let’s say hypothetically gross margin goes up by 3.4percent. The content and broadcasting cost will also go up by 3.4percent as a percentage of revenue.
operator
Yeah.
Nitin Panwad
So let me brief about the bifurcation this content broadcasting cost. So the roughly around 11.5% is our TV broadcasting cost included in this content broadcasting cost number. And remaining 7 to 8% cost is our digital marketing. So major cost increase happen year over year in digital marketing cost. And that we continuously investing year over year to see the momentum and acquiring higher number of customers. As you may have seen our investor presentation also and that we are not shy to invest further to get a more customer acquisition so we can convert those customers in our omnichannel platforms.
So right now it is difficult to guide this number that will remain to 18%. But definitely this number will not be below for the next financial year below 18% either. It will be 18, 18 to 19%. I can give the range for the next year it will be the content broadcasting cost but we will not see the operating leverage in particular this line item as a P and L perspective.
Rupesh Tatya
Okay. Okay. That is clear sir. Thank you. The second question sir is, I mean can you give some idea about how, how would Germany revenue and EB will look like in FY26 and same for ideal world because these two are not contributing to EBITDA. And between I think two of them is roughly I think 400, 400 crore kind of revenue. So if you can give some idea about these two components businesses, that will be very helpful.
Nitin Panwad
Yeah. So last two quarters were Germany and Ideal World. They both performed well. So for second half both of the units has done a EBITDA breakeven. And first half of the year both of the units have done losses. So that will convert it to the profitability the full financial year. We expect that the EBITDA margin from Germany operation will be in positive territory which is right now in around for. Let me just seize around. So around 2, 3 million losses that we have seen in the Germany operation in full financial year that will be resulted in our profitability in Germany per se.
And also from the Ideal World perspectives. Ideal world from the second half has done well and a growth of over 40%. We have seen from from the Ideal World operation and the recent improvement in our airtime cost negotiations and the productivity improvement in different areas of the warehouse. We expect that the ideal world will improve the profitability margin by a percent in total terms.
Rupesh Tatya
So to summarize sir, Germany will grow at let’s say 20, 25% and there will be at least 2, 3% EBITDA margin. Is that a fair assumption for Germany?
Nitin Panwad
Yeah.
Nitin Panwad
So EBITDA margin specifically is hard to guide from the Germany but last year we had a losses. So losses will not be reflect in the Germany operation. So slight profitable, not 2, 3% but slight profitable from Germany.
Rupesh Tatya
Okay. Okay. And then Ideal World you are saying 21 million pound it was and. And it had 40% growth maybe. I don’t know if we can rep that kind of number, but maybe 20% growth. So 25 million pound and 1, 2% EBITDA margin.
Nitin Panwad
Yeah.
Nitin Panwad
So. So growth that I mentioned was the previous quarter that Ideal World had the operation. So we expect that Ideal World will grow to 20% growth rate year over year specifically and it will be the similar kind of EBITDA margin around a percentage from Ideal World operation.
Rupesh Tatya
And when do you see both these components coming to company average for 8, 9% margin in that is possible in FY27.
Nitin Panwad
Yeah.
Nitin Panwad
So both business will continue to grow with the pace of 20% and above. So in next two years we will be similar kind of margins that what we are seeing in us can be achievable.
Rupesh Tatya
Okay. So FY27 they will be significantly closer to company average.
Sunil Agrawal
So let me just clarify this is Sunil ideal words should be there by FY27. Germany is still new. So to give a guidance of 8 to 10% kind of EBITDA FY27 is too premature. So but what I can say is there will be ebitda positive in FY26 which we were negative almost $3 million. So that will help the group profitability by I believe 1 1/2 to 2 percentage point average but will be a bit of positive and in FY27 will be EBIT positive for Germany. To what extent? I cannot state at this time. It’s too early.
Rupesh Tatya
Okay. Yeah, that’s. That’s clear, sir. And sir, I think we. I think we were expecting a better gross margin due to ideal world due to LGB and all of that. But it hasn’t kind of come through in Q3, Q4. So if you can give some color around that.
Sunil Agrawal
Yeah. So this is Sunil. So one thing is the macro environment still is a bit challenging because the consumer sentiment is weak. So to push through price increase at this time is difficult. Second thing is our B2B sales had a bit of increase last quarter and B2B had a lower margin. Therefore you don’t see that flow through into the overall margin.
Rupesh Tatya
So these two factors and it would be like. I mean this. I mean I don’t think the macro scenario has improved. So it would be similar. It’s fair to assume similar gross margin for this year as well.
Sunil Agrawal
Yes. So at the guidance level, we want to give between 62 to 63% gross margin guidance for this current financial year FY26. But there will be operating leverage coming from our HR, SG and A line items because we are seeing a lot of optimization happening in HR area with AI with talent density initiatives that we have across the whole organization.
Rupesh Tatya
Okay. Okay. And then so my final question is for the full year.
operator
Sorry to interrupt. Maybe. Please request you to rejoin the queue. Okay, thank you. We have a next question from the line of Gaurav Nigam from Tunga Investments. Please go ahead.
Gaurav Nigam
Yeah, thank you sir for taking a question. The two questions. One is wanted to understand what is the PBT drag of Germany in Q4 and whole of FY25.
Nitin Panwad
Yeah. Hi Gaurav. So PBT level the Germany is still in losses as the depreciation and the interest of intercompany still there. But EBITDA level it is a breakeven.
Gaurav Nigam
What about Q4 at a PBC level was.
Nitin Panwad
Was it still in level losses because interest cost is high for the intercompany loan though that it is eliminated in a console level because the loan given by US subsidiary company to Germany but on the EBITDA level. But the specifically depreciation which is couple of hundred grants per quarter.
Gaurav Nigam
Understood, Understood. But excluding the interest, will it be fair to say that level there is a break even in Q4 or there.
Nitin Panwad
Is also very close to breakeven. Not a breakeven but very close to break even.
Gaurav Nigam
Understood. And Sunil, sir, just wanted to get a Sense from you on, sir. USA sentiment with the tariff and everything, I think things are still, I mean not very clear. So how’s the consumer sentiment and is there any improvement? Because I think already two months have passed since the quarter has ended. I mean how are you seeing things on the ground?
Sunil Agrawal
Yeah, so consumer sentiment still is a bit challenging. We are faring better than many other. For example, Target just declared yesterday they had negative comps after a very long time and we are reading about negative comps. But our business is currently about middle single digit growth level for the first one and a half months so far. So we are seeing about mid single digit growth for U.S. business this year for us or this quarter for us for the year. It’s too early to make the guidance right now, but our guidance stays true for the whole year, 8 to 12%.
That accounts for uncertainty in the environment. If the sentiments become positive because of say India USGT or US does PD with say 10, 12 different countries before the expiry of 90 days, that may bring a lot of positivity. And if they can settle it with China also, that will also bring a lot of positivity. But if the stalemate continues and the tariff again kicks in, that may bring in negativity. So it’s very early for us to define how the sentiment will shape up. That’s why we have given very wide guidance this time.
Gaurav Nigam
Very interesting sir. And one more point you mentioned about the operating leverage on the HR NSGA line item. It would be great if you can help understand like what are the initiatives that we are taking which will drive this operating business.
Sunil Agrawal
Yeah, so good question from HR point of view. We started driving about eight, 10 months ago. The talent density across the whole organization. This was based on a book by Reed Hastings called no Rules Rules. So that we read all across the whole organization. And we started that initiative and that is creating good results for us across whole organization. Just to give an example, in our US and Germany warehouse we hired talent with higher pay than our average pay. So that led to much higher output per person and reduced our warehouse costs both in Germany and US substantially.
So less number of people with higher output and similar initiatives. We drove across entire business in back office operation, into factories, into call center, into management team, mid management team everywhere. So that is the initiative that is helping us across the group. AI has helped as well. We have eliminated a lot of repetitive functions which we were able to automate. So HR as you might have seen in the number, HR costs are down year over year for us now SGNA includes the shipping cost where we are able to consolidate some and also automate many functions to reduce the SGMA costs across organization.
Gaurav Nigam
Very interesting, sir. And sir, just a final question. To understand the overall dynamics, I was observing that the digital revenue for us is growing faster. And as my understanding is that digital revenue comes at a higher cost and because of the nature of the customer, it is also has a lower repeat rate. And I can see that the gross margin that we are earning right now has not gone up in line with the digital revenue increase. So I mean when you’re thinking about let’s say a year, two years down the line, are you thinking about the profitability? Because I think you expect the digital revenue to go up.
But if the profitability of a digital business is relatively lower, how should we think about the blended profitability going forward?
Sunil Agrawal
Yeah, it’s a good question, Gaurav. Now, digital, when we started investing into digital almost a year ago, we were not profitable in first purchase and we still are not. But over the last one year we have come to the stage that we are profitable between 90 to 180 days in the customer that we have.
operator
Sorry Sunil, sir, sorry to interrupt but your voice is getting bit muffled.
operator
Okay, speakerphone. Is it better now?
operator
Now it’s clear. Yeah, yeah, it’s clear.
Sunil Agrawal
So last since within a year when we started investing in digital, we’ve learned quite a bit to make the customer profitable within months to six months of acquiring that customer. So we are learning that to make it shorter and shorter period. So as we go forward, if you can bring that profitability to say two months instead of currently three to six months. So we have six brands and some brands are profitable within two months and some takes about six to eight months. But if you can bring that forward to two to three months for all the brand, our profitability goes up.
It is not this factor of say understanding meta or understanding Google. We have about 12 or 13 customer acquisition funnels and so we are driving each funnel through talent density of increasing the customer, our employee talent density in each funnel and then reducing the time to profitability for each funnel. It’s pretty complicated. E Comm is much more complicated than television and we’ve learned quite a bit from the mindful source that we acquired and from our own participation on ECOM masterminds and forums where I personally participate and all my senior team participates and our middle level team members also participate has brought in tremendous learning and the investments is getting better and better.
Gaurav Nigam
Got it sir, thank you. Thank you for answering My question.
Nitin Panwad
Thank you.
operator
Thank you. We have our next question from the line of Apurva from Whitestone Financial Advisors. Please go ahead.
operator
Yeah.
Sunil Agrawal
Hi sir.
Apurva Kothari
Thanks for the opportunity. So I have two questions. First is on the receivables. So I’m just thinking that the complete business is on online, right? Online sales. So then why do we have such high receivables of around 300 crores?
Nitin Panwad
Yeah. Hi Apurva. Let me take this question, Steve. Receivable mainly in line with the our financing option to the end consumer EMI option which we call as a budget pay where customer has a customer can pay in two to five different installments if customer opt for this option. So that outstanding is related to the budget pay EMI option which contributes right now 39% of total B2C sales. And this is roughly around 30, 33 days outstanding period in terms of receivable number of days.
Nitin Panwad
And the line which we have not the receivables is because of this EMI only.
Sunil Agrawal
Is it?
Sunil Agrawal
Is it right?
Nitin Panwad
Yes. Yeah, it is. Yeah.
Apurva Kothari
Okay. My next question is on budget only. So the risk or the risk is on us or some other committee. The risk of this emi.
Nitin Panwad
So risk is on us. But we have a robust procedure internally to check the customer payment pattern and the customer buying history before giving finance to the consumer. So effectively our bad debts is within the range of 1 to 1.5% of our budget pay sales. And it is over the period it is similar. We haven’t seen any kind of disruption like anomalies in this trend.
Sunil Agrawal
Okay.
Apurva Kothari
Okay. Thank you. Thank you, sir.
operator
Thank you. We have our next question from the line of Tanvi, an individual investor. Please go ahead.
Unidentified Participant
Hello sir.
Unidentified Participant
So I just had one question. So earlier in the beginning of FY25 you had recommended a growth of 12 to 15%. And we’ve achieved roughly around 11% even after we had two acquisitions of Mindful souls in idle world during the year. Now you even lowered your project guidance revenue guidance for FY26 as compared to 8 to 12%. So why is that so happening?
Sunil Agrawal
Let me ask this. Thanks for the question, Tanvi. It is true that we did guide 12 to 15%. And then we had this uncertainty in the market economic environment impacted. We were expecting when we guided that the economic environment would improve and go to the steady state after the war inflation and the consumer sentiments. But did not happen. It actually was further de. Accelerated actually after the new administration came in policies. The fluidity of the policy and uncertainty cause further deterioration. And that is the reason, as I mentioned earlier we are giving a guidance of 8 to 12% now which is much wider than we have given in the past.
Sentiment. We do not know how they will shape up. And that is why we are giving this guidance. If the consumer sentiments go up then we will be at the higher end. But still it may take time. And this is the guidance for the full year. So it may not be. The settlement may not hold full year. Where the guidance stands.
Unidentified Participant
Okay, I just have a follow up question here. First, out of the 11% growth that you’ve done in last year how much was due to acquisitions of Mindful Souls and ID World? And second, if you could split up. So if you talk about growth, you said that in US growth was flat. So was in Germany. So the entire growth is it coming only due to acquisitions last year?
Nitin Panwad
Yeah. So. Hi Tanvi, let me take this question. So excluding Mindful Souls and Ideal World we have a growth of roughly around 4.5% in rupees terms. And. Sorry, what was your other question?
Unidentified Participant
Okay, I just wanted to know this only. What was the growth excluding these acquisitions? And what. What is the projection of growth excluding these two ideals? World and Mindful Fuel for the next year?
Nitin Panwad
Yeah, projection is combined actually so now in comparable numbers Idle World and Mindful Source both are including. So it is all in combined section 8 to 12.
Nitin Panwad
Okay.
Unidentified Participant
Okay.
Unidentified Participant
Thank you.
operator
Thank you. We have our next question from the line of Pallavi Deshpande from Samiksha Capital. Please go ahead.
Pallavi Deshpande
Yes, thank you for taking my question. It was related to. Initially you mentioned about the content cost. So in terms of the air taking to air, the broadcasting fees were increased by the broadcasting company. So what was the percentage increase they took and what when did that come?
Nitin Panwad
Which quarter?
Nitin Panwad
So that increase that we have done throughout the year. That is why you may have seen the. This cost has been jumped year over year. Earlier it was. Earlier it was 16.5%. Now it is 18.8. So that has been increased because we started doing investment in March 2024 onwards.
Pallavi Deshpande
Right. I’m not talking about the digital part which is 7 to 8%. So I’m talking about not the investment part but what was the increase taken by the broadcasters? The percentage I was looking for which is you’ve given the split eleven and a half percent. So what was the increase percentage by the broadcasters?
Nitin Panwad
Yes, definitely that increase is related to Ideal World that recently that we have launched. So they. Obviously there’s a. Whenever the new channel launched the cost to sales ratio is higher and predominantly airtime is fixed. In nature. So once revenue built up that cost cost goes down. Also that the airtime cost we have done some investment in us some OTA households and the some cable household with the lower channel positioning that we have taken. So that resulted increment in airtime cost.
Pallavi Deshpande
Right sir, Right. And second sir was on this, you know QVC has done a tie up with TikTok. I just wanted to understand, you know how does that impact the competitive dynamics and are we, I mean looking for something similar to do for your digital marketing side?
Sunil Agrawal
I’ll take that. So we believe that the TikTok has been there and we’ve been on the TikTok but at a small level we are doing the organic as well as paid TikTok but to a small extent. So still to be seen how it will shape up for qvc. I hope they are very successful. I hope it’s up well if it does we can replicate that in a way which we are not doing yet to be seen how they will take up. Having said that many D2C brands are doing well on TikTok and some have done exceptionally well.
They are mostly mid to small size brands at QVC level. How much needle it will move difficult to say.
Pallavi Deshpande
Right. So these small brands, any idea of what kind of growth they are seeing? The D2C small brands because of the current environment are they at a better competitive edge?
Sunil Agrawal
It’s differing companies which are China exposed are having difficult time. So for my interaction with a lot of DTC players through the mastermind that I and other team members are member of the China centric brands are having a difficult time. The brands which are not China exposed they seems to be doing okay not as robust as they were last year but they are doing better than exposed to China.
Pallavi Deshpande
And last lastly would be this the dhl you know tie up and some any. Any developments there for the small packages and yarn doing the same thing.
Nitin Panwad
Yes, it is under discussion and going from the Indian Post. So Indian Post is recently launching the single parcel services from SCZ unit that we have expecting that they will start the service from June. We have done a cost benefit analysis based on the shipping what we’ll do we’ll start from the small parcel but yet to be seen in June how fast we will implement and how rapidly we will expand but definitely it will be help not only in terms of the freight and shipping cost but also we can enjoy the benefit of the D minimus which is duty free goods in us.
Pallavi Deshpande
So my last question was on the current assets we’ve Seen a notable increase in the others from 2.7 crores to 43 crores. We just wanted to understand what is that pertaining to?
Nitin Panwad
Yeah, so current assets increase mainly related to the balance lying with the payment gateways. So that has been increased so last couple of days this time compared to previous years that was increased last three days balance was there but earlier it was not. So but that is realized in 1st and 2nd April of the this financial year.
operator
So we have the participant disconnected. We’ll move on to the next participant. From the line of Rupesh Tatya from Intelsense Capital, please go ahead.
Rupesh Tatya
Hello sir, thank you for the follow up. My question is for FY25. Can you give what was our financial provision or impairment because of what percentage of sales was from financing and the corresponding impairment. And it will be great if you can give the Same numbers for FY24 as well.
Nitin Panwad
Impairment, you mean which was stayed in standalone accounts only number 3, 4% provision we do.
Sunil Agrawal
Right sir, when we do financing credit loss.
Nitin Panwad
Yeah, so that was related to our bad debts provisioning that we do for the our budget pay offerings. So for the particularly budget pay sales. As I mentioned to previous caller Also it is 1.5% of our total budget pay sales and it will remain same for the upcoming years.
Rupesh Tatya
So this number was same in FY24 as well?
Nitin Panwad
Yeah, pretty much similar, yeah.
Rupesh Tatya
And. And what is the budget pay proportion? Sir? I. I couldn’t find it in the presentation. 9% of total sales of budget pay.
Nitin Panwad
39% of total B2C sales.
Rupesh Tatya
Okay. Okay. And this number was in FY24, it was similar.
Nitin Panwad
The bad debts rate is for the years is very much similar.
Rupesh Tatya
Okay. Okay, thank you. That was my only question. Thank you.
operator
Thank you ladies and gentlemen. In order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow up question, we request you to rejoin the queue. We have our next question from the line of Ashish Shah from Business Match. Please go ahead.
Unidentified Participant
Hi, good evening sir. Just some thoughts on this whole tariff thing and how is it impacting our business and have we taken. Are there any price hikes to offset or some thoughts there.
Sunil Agrawal
Yeah, I’ll take that call. So we had, we shipped extra inventory to us before the tariff hike because of the announcements that Mr. Trump had made. So we don’t. So we have inventory for at least 3, 4 months during these negotiation that is happening and we are hopeful for the negotiation that happens. India will get a favorable treaty in coming maybe 30, 45 days and we should be fine. Just in case there is no favorable treaty for India. India is still placed at equal to most of the countries and we should be able to compete with anybody else.
If many of the companies depend largely on China, we will be competitively better placed than those companies. So all in all will be equal or better than most of the competitors.
Unidentified Participant
But certainly a scenario assuming a status quo then there could be.
Sunil Agrawal
Well relatively will be better off.
Unidentified Participant
There could be yet a meaningful price hike right in that scenario to offset some base case tariffs as well.
Sunil Agrawal
Right.
Sunil Agrawal
So my worry is not so much for the price hike because our gross margins are pretty high. The price hike doesn’t look as high but it’s more about the consumer sentiments. If the consumer sentiments stay low or subdued that could impact our business. That’s why we gave 8 to 12% of guidance. So if the consumer sentiment stays low then it will be more like 8%. If it is positive then we’ll go towards 12.
Unidentified Participant
Okay sir, thank you very much sir.
operator
Thank you. We have our next question from line of Pradeep Maiti from RBI Pvt. Ltd. Please go ahead.
Pradeep Maiti
Hello, am I audible? Hello, am I audible?
operator
We can hear you.
Nitin Panwad
Yes.
Sunil Agrawal
Yeah.
Pradeep Maiti
My question is pattern to material consume cost. So sir, are you expect the material consume cost will be will increase in FY26 or it will remain in line with the FY25 in full year basis.
Nitin Panwad
Yeah. So margin will remain in improvement trajectory as we are getting a higher digital share and the optimization in terms of pricing. And also the recent India, UK FDA will help us to improve the margin. So cogs will be lower comparatively to previous years. In guidance terms it will be the margin will be 62% so metal consumed will be 38% predominantly that number year over year.
Pradeep Maiti
Oh, that means material cost will not increase in upcoming years.
Sunil Agrawal
Yes.
Nitin Panwad
Yeah. Right. Yeah.
operator
Thank you. We have our next question from the line of Tanvi, an individual investor. Please go ahead.
Unidentified Participant
Two questions on your margin. First sir, in the last con call you had mentioned that if we exclude the loss from Germany in ideal world then our EBITDA would have been greater than by 2.5%. So assuming that as you said for FY26 we would not be there won’t be any losses from Germany in ideal world. So can we assume on a full year basis that our margins will improve by this 2.5% as earlier you said it will improve by 1% overall. But for the nine months data you had said that number 2.5%. So what number shall we take?
Nitin Panwad
Yeah, so definitely there is an improvement in overall margin through Germany operations. Earlier when in FY24 when we were having a full year losses in Germany, the gap between the EBITDA margin excluding an excluding Germany was 2 and a half percent and that is getting better. In this year and next year also that will be better. But the last couple of quarters we have seen the softness in the UK TJC UK profitability that resulted that the margin improvement was not in line with the 2.5% that you mentioned earlier but based on the initiatives that we have in UK so that will improve the margin upcoming period.
As you might have seen the excluding Germany operation was 2.5% and that may be resulted in coming years. However that 2.5% was the if we exclude full Germany operation that means that this operation is in a similar pace as US operation. So that will take another couple of years to in line with the to catch up the US operation pace to achieve the 2 1/2% improvement in EBITDA margin. So you can assume that it will gradually improve up to the level in next couple of years to achieve 2.5% improvement from Germany operation.
Unidentified Speaker
As of now we can assume a percent increase due to these EBITDA losses being wiped off in Germany and Idle World as you’ve mentioned. Okay sir, also just a question regarding margins only. So two things. First you’ve said just wanted to know sir, had there not been any inventory pile up for next three to four months due to weak consumer sentiment in us, how much better would we have been on an inventory level because change in inventory is also accounted for in the P and L. And second sir, what is your stance on Lab grown diamonds? Because in the last quarter we had talked a lot about Lab grown diamonds that they have been showing double digit growth and also improving the overall gross margin and the customer sentiment.
So what are your thoughts about Lab Grown diamonds for this quarter and also about the like these two questions. Yeah, that’s it.
Nitin Panwad
So I’ll take the number Lab Grown numbers but Sunil will talk about the performance side what we anticipating Lab Grown so Lab Grown is continuously improving and Lab Grown category itself has reached a double digit share of overall business sales in all of the three geographies us, UK and Germany. And we are seeing pretty good response from consumer side in terms of Lab Grown products in terms of inventory pile ups inventory pile up mainly we have done in US to that is for the three to three months inventory that we have over there and the respective I would pass on to call to Sunil for the what we anticipating with the lab group performance from coming period.
Sunil Agrawal
Yeah, as Nitin mentioned it is doing well for us double digit sales and we continue to we see see this to continue for next few quarters at least unless the price goes further down. Consumer trust needs to stay with this. So depends a lot of consumer trust on what they’re buying. If they see price continue to go down then they may not buy as much or you know they still may buy. Who knows still to be seen. But we are continuing to look at this business in a positive way while keeping the inventory low because we know the inventory price may go further down.
Unidentified Participant
Okay and sir, about the first question, the earlier question that I had asked had you not maintained any inventory pile up in US how much your EBITDA margins would have been better for this quarter?
Nitin Panwad
There’s a no impact with the EBITDA margin with inventory pile up because it is recorded at the cost of purchase price. So there’s a no impact in EBITDA margin with the amendmentary pile up but that will be benefiting at least for some period to not to pass on the increased price with the tariff increment.
Unidentified Participant
Okay, thank you.
operator
Thank you. We have our next question from the line of Harsh Mehta from Perpetual Capital Advisors. Please go ahead.
Unidentified Participant
Hi sir, can you hear me?
operator
Yes, yes we can hear you.
Unidentified Participant
Yes sir. My first question is around why are the tax rates lower for the quarter? Like if you see as a percentage of pvt, your tax rates have most of the time been above 25% but this time it’s only 17% or something of your pvt.
Nitin Panwad
Yeah. Hi harsh, thanks for the question. So as I think previously also we guided that tax will continue to be lower as the Germany operation become breakeven and profitable as that the losses are not accounted for. So that will be beneficial in terms of reduced tax rate. Also that we have seen the lower profitability in UK this year which is coming up eventually lower tax rate. But we anticipate over the period in coming quarters the ETR will remain at 22% around.
Unidentified Participant
Okay, 22% for the whole year, right?
Nitin Panwad
Yes. Yeah.
Unidentified Participant
Yeah. Okay. And could you share the volumes for the for the whole year for all the three businesses like Germany, US and uk?
Nitin Panwad
I think it was in our investor presentation. Yeah.
Unidentified Participant
Okay. I’ll just go here. Thank you so much. That’s it from my side.
operator
Thank you. We have our next question from the line of Pallavi Deshpande From Samiksha Capital. Please go ahead.
Pallavi Deshpande
Yes, I just wanted to understand on the auctions, did we do more of the online auctions given the slowdown in the UK this year?
Sunil Agrawal
Pallavi, can you repeat the question? You’re talking about the online auctions.
Pallavi Deshpande
I wanted to know what was the percentage this year? Was it higher? As you mentioned, UK was slower. So you had to TGSA online auctions.
Sunil Agrawal
You’re looking for just a UKIP online auction ratio as a total percentage of sale of Indiana.
Pallavi Deshpande
No, total actually.
Sunil Agrawal
Total.
Pallavi Deshpande
Yeah.
Sunil Agrawal
Do you have the data?
Nitin Panwad
So UK TV sales online. I mean say the TV sales is lower than the last year while digital is flattish. But the. The online auction sales is lower than the last year.
Sunil Agrawal
Can you quantify the number?
Nitin Panwad
Quantify? Prashant will share. I don’t have right now. But Prashant will share the number.
Sunil Agrawal
Pallavi is looking for overall option revenue this year versus year before.
Nitin Panwad
I’ll give you that just in my commentary that TV sales grew by 1% year over year for the group. And digital was 15% growth year over year. So online auction is a TV sales. So it’s a 1% growth year over year including us. You can.
Sunil Agrawal
Oh no. She’s looking online or auction I believe. Yeah. Maybe Prashant, you can share that with Pallavi later.
Pallavi Deshpande
Yeah, I just wanted to know like because of the slowdown, et cetera. This. This should have gone up, right.
Sunil Agrawal
Not seeing. So from the. Some intuitive information that I take from the daily report or weekly report, I’m not seeing much change in that. The revenue going up significantly, very meaningfully. So I wouldn’t be surprised. The number is about similar for us UK put together because we don’t have auction in Germany and shop lc. US overall revenue would be about flattish year over year on the auction part revenue. Digital revenue that has gone up has gone up largely with the catalog as well as the web TV and the mobile app. Sales have gone up quite substantially within those auction hasn’t gone up much.
Pallavi Deshpande
Okay. Okay. And one more was on the initial remarks you mentioned about the reach. 127 million. The number and I remember it was 1:30. So there has not been an increase in the reach. Is that a fair assessment.
Sunil Agrawal
Then we have data the household reaches in 525 versus 24.
Nitin Panwad
Is that remain same US 127 million. Sorry, total 127 million.
Sunil Agrawal
Yeah.
Nitin Panwad
US 60 million. 27 million in UK and 40 million in Germany.
Pallavi Deshpande
No sir, that’s. There’s no increase. Right.
Nitin Panwad
That’s yeah, there’s no increase in the household like UK and Germany, they both had pretty much covered in terms of reaching all the household. US has a potential to increase, but UK and Germany, they both are covered.
Pallavi Deshpande
Thank you so much.
operator
Thank you, ladies and gentlemen. That would be the last question for today, and I now hand the conference over to the management for closing comments.
Sunil Agrawal
Thank you everybody. I want to thank you all. Thank all the participants for your time and great questions. If you have any further question, feel free to reach out to Prashanth Saraswat, VGL or Amit SharmadFactorsprindia and we’ll be happy to answer your questions. Thank you once again.
operator
Thank you, sir. On behalf of WebHub Global Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.