Ladies and gentlemen, good day and welcome to the Vaibhav Global Limited Q4 and FY 2026 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Nishita Bhatt from Adfactors PR. Thank you, and over to you, ma'am.
Good afternoon, everyone, and thank you for joining us on Vaibhav Global Limited earnings conference call for the fourth quarter and full year ended 31st March 2026. Today, we have with us Mr. Sunil Agrawal, Managing Director, Mr. Nitin Panwad, Group CFO, and Mr. Vivek Jain, Head of Investor Relations. We will begin the call with the opening remarks by Mr. Sunil Agrawal on the business operations, key initiatives, and broad outlook, followed by discussion on the financial performance by Mr. Nitin Panwad. After which, the management will open the forum for the Q&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 risks and uncertainties that we face.
A detailed statement and explanation of these risks is included in the earnings presentation, which has been uploaded and 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 Agrawal to make his opening remarks. Over to you, sir.
Thank you, Nishita. Good afternoon, everyone, and thank you for joining VGL's Q4 and FY 2026 earnings call. I trust you have reviewed the results and the investor presentation. FY 2026 has been a year where the investments over the last few years have started reflecting in our numbers. Profit before tax grew 41% year-on-year. EBITDA margin improved to 10.8%. Our in-house brand contribution has crossed 50% of B2C sales, nearly a year ahead of our earlier target. Germany has turned EBITDA positive for the full year. We generated our highest-ever free cash flow of INR 272 crore in FY 2026. These are meaningful outcomes, and they validate the direction we are moving in. Let me briefly cover the macro backdrop. The year had its share of noise. Precious metal prices spiked, the U.S. went through tariff-related uncertainty, and discretionary spending was cautious across our core markets.
Despite all of this, we navigated the year well. We also see the recent macro developments as supportive for VGL. The India-U.K. and India-E.U. free trade agreements, the ongoing India-U.S. trade discussions, and the easing of U.S.-China tariff tensions all create a favorable environment for vertically integrated retailers like us. Coming to the numbers. For Q4 FY 2026, consolidated revenue stood at INR 935 crores, a growth of 10% year-on-year. EBITDA was INR 96 crores with an EBITDA margin of 10.3%. One of the most encouraging structural shifts during the year was a rising share of our in-house brands, which crossed 50% of B2C sales. This was achieved almost a year ahead of the plan. Higher in-house brand contribution strengthens customer engagement, improves sourcing efficiencies, supports pricing discipline, and lifts gross margins. We expect this to remain a key driver of margin improvement going forward.
Our digital business also continued to scale steadily. Digital contribution stood at around 44% of B2C sales for the year, supported by better quality customer acquisition, improving retention, and stronger AI-led targeting and personalization. Our OTT, livestream, and social commerce initiatives are also gaining traction. We remain on track to reach 50% digital mix towards the end of FY 2027. Lab-grown diamonds are another important new lever. LGD now contributes 11% of retail revenue at an average selling price of around $250. This is lifting realizations, supporting gross margins, and meeting a clear shift in consumer preferences. Moving to our geographies. In Q4 FY 2026, U.S. and Germany grew by 1% and 7%, respectively, and U.K. did grew by 1% in local currency terms, resulting in total growth of 3% year-over-year in U.S. dollar terms.
The most important milestone in our international footprint this year has been Germany achieving EBITDA breakeven. This is a meaningful, faster turnaround than we experienced in the U.S. and U.K. earlier when we launched originally. Germany is now well-placed to contribute to group profitability from FY 2027 onwards. Our growth continues to be guided by our 4R priorities. That is, reach, new customer registration, retention, and repeat purchases. During Q4, our TV networks reached around 127 million households globally. Our unique customer base stood at 6.8 lakh customers. Retention remained stable at around 38%, and customers purchased an average of 23 pieces from us on a trailing 12-month basis. Technology and AI adoption remains central to our long-term strategy. During the year, we expanded the use of AI across customer engagement, marketing optimization, analytics, content creation, merchandising, and operational workflows.
These initiatives are already helping improve productivity, scalability, customer experience, and operating leverage across the organization. Sustainability and community remains at the core of our business. Our ICRA ESG rating was upgraded to 74 during the year, reflecting continued progress on environmental, social, and governance practices. Under our flagship Your Purchase Feeds program, we have now served over 112 million meals to school-going children, currently providing around 56,000 meals every school day. We remain committed to our long-term goal of 1 million meals per school day by FY 2040. On clean energy, we continue to meet 100% of our manufacturing power needs through solar. Two of our U.S. sites and one site each in U.K. and Germany also operate fully on renewable energy. We have also committed to the Science Based Targets initiative, aligning our carbon reduction pathways to 1.5 degrees centigrade goal under the Paris Agreement.
I'm pleased to share that all our group entities across India, U.S., U.K., Germany, and China are now Great Place to Work certified, reflecting our human resources engagement. On capital allocation, the Board has recommended a final dividend of INR 1.5 per equity share, including the interim dividends paid earlier. That leads to total INR 6 payout for the year. We remain committed to a balanced approach, rewarding shareholders consistently while keeping flexibility to invest in growth. Looking ahead to FY 2027, we remain confident in our growth trajectory and currently expect revenue growth of 9%- 11%, along with an improvement in EBITDA margin of 50 - 100 basis points. Backed by continued investments in digital capabilities, technology adoption, customer engagement, and operational efficiencies, we are confident to drive long-term value creation.
With this, I would like to hand over the call to Nitin to discuss the financial performance in greater details. Over to you, Nitin.
Thank you, Sunil. Good afternoon, everyone. Let me now walk you through the key financial highlights for the fourth quarter and full year ended 31st March 2026. For Q4 FY 2026, consolidated revenue stood at INR 935 crores, a growth of 10% year-over-year. EBITDA for the quarter was INR 96.3 crores, translating into EBITDA margin of 10%. Profit before tax came in at INR 64 crores, a strong 41% year-over-year growth. One of the sharpest quarterly profit improvement we have delivered in recent years. For the full year FY 2026, consolidated revenue was INR 3,691 crores, with EBITDA margin expanding by 140 basis points to 10.8%. Gross margin remained healthy through the year, supported by our vertical integrated sourcing model, higher in-house brand contribution, traction in lab-grown diamonds, and disciplined inventory management. Despite elevated precious metal pricing and geopolitical tariff tension, we maintained pricing discipline and protected profitability.
Our product mix, lifestyle products now contribute around 35% of total sales, and we continue to target a medium-term share of 50%. Lab-grown diamonds contribute close to 11% of retail revenue. As Sunil mentioned, our in-house brands have crossed 50% of our B2C sales, a year ahead of our earlier target. The business continued to be strongly cash generative. We delivered operating cash flow of INR 305 crores and free cash flow of INR 272 crores, which is our highest-ever free cash flow generation in a year. Net cash position stood at INR 296 crores as of 31st March 2026. ROCE improved to 24% and ROE to 15%, reflecting much better profitability and disciplined capital allocation. We also saw operating leverage during the year. Employee cost efficiencies improved further through process optimization, automation, and increased use of AI tools across functions.
Airtime cost productivity also improved with the sharpest product portfolio and better negotiation outcome. Our digital marketing spend continued to stay focused on higher quality of customers with stronger lifetime value, which is helping strengthen our long-term customer economics. Now let me cover geography-wise performance. In local currency terms, Q4 revenue growth was 1% in the U.S., U.K. did grow by 1%, and 7% growth in Germany, resulting in total growth of 3% year-over-year in U.S. dollar terms. In the U.S., the retail landscape continued to shift rapidly towards digital-first customer discovery, with paid social media emerging as one of the most important channels for customer acquisition and engagement. Customers are increasingly discovering, evaluating, and purchasing through platforms like Meta, Apple, and TikTok, and Google. We have been steadily scaling our presence and investment across these platforms.
Our paid social strategy is driven by performance marketing, AI-led targeting, creator and influencer partnership, and platform-specific content, all aimed at improving customer acquisition efficiencies and lifetime value. This aligns very well with VGL's omni-channel model, which blends live TV, digital, and social commerce. Despite higher precious metal prices and softer discretionary spending sentiment during the quarter, we delivered growth in the U.S., supported by improving digital contribution, healthy traction in our proprietary brands, stronger customer engagement, and better marketing ROI driven by AI-led optimization. Importantly, the in-house jewelry casting line we operationalized in the U.S. during the year continued to help us to mitigate tariff impact on our shipments and protect gross margins. In the U.K., headline revenue was flat during the quarter, and on the back of weaker consumer sentiments, the impact of elevated metal prices on discretionary purchases.
However, underlying performance improved meaningfully, especially Ideal World continued to its strong momentum with a healthy double-digit growth of 15%, while TJC declined by 7%. Overall, U.K. EBITDA improved substantially by 220 basis points year-over-year, supported by strong gross margin, disciplined cost management, and an improving product mix. In Germany, we delivered growth of 7% year-over-year, supported by continued strength in our live TV commerce and improving digital adoption. The Germany business achieved EBITDA breakeven for FY 2026, which is a notable milestone for us. It is expected to contribute positively to group profitability from FY 2027 onwards. Mindful Souls, our digital-first acquisition, also continued to its steady performance with strong gross margin and delivered tangible cross-learning benefit across the group. On dividend, the Board has recommended a final dividend of INR 1.5 per share, subject to shareholders' approval.
Including the interim dividend already paid, our total FY 2026 payout works out to around 37% of our free cash flow, reflecting our continued focus on consistent shareholder returns. Thank you. We can now open the floor for Q&A.
Thank you. 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 remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Aditya Jhawar with AK Investments. Please go ahead.
Yeah. Thanks for the opportunity. I have a question.
We need to interrupt. Hello?
Yeah. Hello.
Yeah. Aditya, please be a little louder. You're not quite audible. Thank you.
Yeah. Sure. I have a question. Regarding the margins, in FY 2022, we did roughly about on a INR 3,000 crore revenue base, a 15% or 13%-15% margin. Currently, going forward for FY 2027, we are doing roughly about INR 4,000 crores of revenue, and still we are inching up at 11% EBITDA margin. I just wanted to understand what it takes to inch up the margins higher. That is my first question.
Thanks, Aditya, for your question. Margin, in FY 2022, we have launched Germany operation, which initially led the lower margins for the initial period. Now past financial year, we made the Germany business breakeven, and that now will start contributing in our similar kind of margin ratio over the years, what we have seen in U.S. and U.K. will improve our margin lines. Apart from that, our initial investments as we are expanding in our digital footprints in platforms like Meta or TikTok or all paid media channels, which require investment in these kind of platforms, resulting lower margin compared to FY 2021. All of these results, if you see the last three years, our margin is steadily improving from 7% to 11%, from FY 2023 to FY 2026 now.
We're confident that our margin is continuously improving in upcoming years, as we have guided 50-100 basis point year-over-year improvement. Next year, we have given a guidance.
Okay. These investments we have to continue for the growth. The operating leverage is kind of, it will happen slowly, even though our base is becoming larger, but it won't be that big. Is it right?
Yeah. We expect that margin will continue to improve. Operating leverage will continue to come in the business with especially the technology development and the AI initiatives, what we have, we see the operating efficiency across all the platforms. We expect that the leverage predominantly will come from HR and SG&A and shipping kind of cost platforms. But it will continue to improve and for the foreseeable future, we don't see that we should not achieve the peak margin of 15% we have achieved. But in terms of precise guidance, it is not right time to say, but our margin will continue to improve, and it can be achievable to our peak level we have seen 15% in earlier years.
In coming one or two years, basically.
Possible.
Yeah. It's a gradual improvement as we have seen in the past three years' improvement, you are seeing it will be a gradual improvement.
Okay. Next, my question is little medium-term. Since we have the presence in Germany and it is being stabilizing, I know you earlier talked about Japan or any other geographies, but I wanted to specifically ask why management is reluctant to start the business in India when there is a hunger in India who is ready to contribute or ready to pay up. Still why aren't we focusing on India? When will be the time that we'll be focusing on India and create an optionality for the company?
Yeah, let me take that. This is Sunil. Thanks, Aditya, for the question. India, the television shopping never took off in India. For us to get into India, it will be only digital entry. Now, for our own business in Western world, all three countries, the digital is nearing maturity. Once we feel comfortable with our full maturity in digital, we will look at India as a potential market for us.
Okay, that makes sense. Also, I have one other suggestion for the management. I know we are paying a good amount of dividend, but our stock price is down really from the peak from 1,000 to 230 odd. We would request the management to go for a buyback so that it helps in the EPS boosting. That will create more shareholder value rather than dividends. Please have that check.
Thank you, Aditya. Thanks for the suggestion. We'll keep that in mind.
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Pradeep Maiti with RGI. Please go ahead.
Hello.
Please go ahead.
Am I audible?
Yes, Pradeep.
Just a moment ago, you have already told that our in-house brand already achieved 50% of total revenue. In the investor presentation, it is already written that our in-house brand mostly contributing to gems and jewelry products of 80%-85%. You also already said that in mid terms, we will achieve the lifestyle product 50% of total revenue. How you can say that? Both two statements are contradictory. Can you explain?
Yeah. Thanks, Pradeep. Yeah. Let me explain that. Our total in-house brands is 50% of our total B2C business. If we do a sales bifurcation of in-house brands, that is 85% of in-house brands is through jewelry and 15% of in-house brands through our lifestyle products. The other ratio that we are suggesting guiding for the business is whole together, that our total sales of business, 35% of total sales of business coming through lifestyle product. Both are the different things.
I am telling, you told that 50% in midterm lifestyle product will increase to 50%. Already you said that the jewelry product in in-house brand, jewelry product is 80%-85%. How can you say that? In in-house brand, jewelry product is a majority product, but you are saying that lifestyle product will increase in percentage term.
Lifestyle product will increase in percentage terms. Our midterm target is to 50%. It is combining in-house and external brand and our umbrella brand both. The number we have reported in in-house brands is only the 85%-15% ratio of our 50% of total branded ratio. If we have more confusion, then we can have a separately email chat, and then we will explain you better.
Okay. I will definitely mail you. Another question is, can you comment on the tax for next year, means FY 2027?
What do you mean? Tax?
Tax. Yeah, tax question. You have already told in the FY 2026 that it will remain in the line of 20%-22%. In case of FY 2027?
Yeah, got it.
Can you comment on that?
Got it. Our tax rate, ETR will be steady around 22% for the upcoming years.
Okay. The next question is that in TV broadcasting expense, can you comment on that? It will increase in percentage term or remain in percentage term, or it will increase in absolute term but decrease in percentage term in terms of revenue?
Yeah. The line we continuously investing to expand our digital share. We expect that this will continue to be around in 20 odd percentage, that line.
Okay. Thank you. Nothing else.
Thank you.
Thank you, Pradeep.
The next question comes from the line of Sahil Sharma with Dalmus Capital Management. Please go ahead.
Yeah. Hi. Thank you for the opportunity. Sir, I just wanted to understand, since we see volumes have declined across the board, in both TV and digital by about 9%- 10% YoY, which seems quite significant. How should we see this? Is this reflective of a broader macro and demand trend, or are we seeing increased competition?
Sure. Our portfolio is pretty wide, and we offer every day a new product of 50 - 100 every time based on customer need or market trend how is going on. As a recent period, lab grown demand is pretty high. Lab grown is around $200 price point. To fulfill that demand, our average ticket size has increased, so volume is impacted. Also increased metal prices also driving higher price point customers. We actually look into it more in terms of our number of quality of customer acquisition and total sale of each platform is a true performance of our overall business. Declining volume doesn't mean that the customer is less buying. As the product portfolio is shifting, where we see more quality of customers and more lifetime value.
Okay, understood. You're not seeing any sort of slowdown in demand at this point, especially given the inflationary environment that we are living in right now?
Yeah. Sunil, would you like to comment on this?
Yeah. Sahil, we are very agile in assessing the customer environment, the macro environment and customer demand. Whatever the current environment, whether recessionary or positive, we will adapt and bring the products suitable for that particular time. Volume may not be the right barometer for you to look at it. Number of customers, repeat purchase, the retention rate and the reach, therefore are the best way to look at our business and the overall revenue and profitability.
Understood. Sir, on the own brand, as a percentage of revenue has reached about 49%, and 85% of that would be jewelry. I think it would be around 64%-65% of the jewelry revenue is now coming from own brands. Do you see the share of jewelry revenue from own brands increasing further? How do you see it in the next three to five years? You mentioned that it would be margin accretive. Would it be margin accretive on an EBITDA level, given there could be higher advertising spends in the own brand segment?
Having higher own brand ratio is margin accretive. As we increase the ratio across jewelry and LSP product, the EBITDA margin will increase. We don't have precise calculation for that because that is still very dynamic, but it helps in margin accretion because our customer with our own brand has better repeat purchase and better retention. We can give better value through our own brand than the third-party brands.
On the share increasing further, do you see it increasing further?
Yes. It will continue to increase. I do not have exact guidance on that because we constantly push it, but we are also cognizant of customer pull. We'll continue to increase it. At what ratio we will increase.
In the coming years. I don't have guidance on that yet, but it will definitely continue to increase in foreseeable future.
Okay, sir. Can you just give a little more color on the sharp increase in the ROUs? Like what has led to this increase?
Yes, let me take this. ROEs is primarily driven in our growth in our PAT. Our company's PAT grew sharply during the quarter and year-over-year both. That is leading in our ROE number. If we normalize the [audio distortion] credit that we have got in this year, we're still having an improvement in our ROE to 15%.
Sorry. I was asking about the ROUs, the Right of Use assets.
Oh, yeah. Okay, now I got it. I understand that. We have taken one lease, signed a lease in U.K. around in February. That resulting a higher ROU. The existing building that we have, we will vacate and move in the new buildings by the end of during this financial year. ROU increase is mainly related to the new lease we have signed for the U.K. premises.
Would that result in a significantly higher depreciation cost going ahead?
Depreciation will be similar in line that for this financial year compared to the next financial year. We have a resulted savings in terms of our, as we are consolidating our four buildings operation in one building. Operational efficiencies, faster execution deliveries, all around we will get the benefit in our operational cost side.
I understand. Great. Thank you so much.
Thank you, Sahil.
Thank you, Sahil.
Participants, you may press star and one to ask a question. The next question comes from the line of Shreyans Jain with Svan Investment Managers. Please go ahead.
Hello, can you hear me?
Yes, Shreyans.
Hi. Congratulations on a good set. Sir, my first question is, over the last three years, our mix has consistently improved from, say, TV to digital. I'm just looking at that percentage is from 38% to 41 odd percent right now digital. Right. The other thing that you also mentioned is that we're having a lot of sales from lab-grown diamonds, which is about 11% of your sales right now. Also gold has, to an extent, played a big role in this growth, right? When I look at your gross margins, over the last three years, it hasn't improved that much. We were also made to understand that as your business mix moves more towards the digital side, your gross margins tend to be better on that side. Why aren't we seeing a commensurate improvement on the gross margins?
Is it that the TV business that we're ending up doing is at a far lower gross margin that we used to do historically? Can you just help us understand this piece, sir?
Hello.
Shreyans, hi. Gross margin side, what I see, actually it is improving trend. The main reason I see is only the gross margin as we have a B2B sales share increased. Though the B2B sale EBITDA margin is very close to our channel's EBITDA margin. B2B gross margin is much lower as the B2B doesn't have like a fixed cost of digital content broadcasting that much. That is why you are seeing in the overall consumer result that it is a flattish over the years. Like in the current quarter, we have seen around 180 basis point improvement in gross margin. In the full financial year, also 40 basis point improvement in gross margin.
As digital share is expanding now further and which might be in next year a significant half of the business size from the digital, then gross margin will further expand in future.
Sir, B2B is hardly, I think, INR 200 odd crores out of INR 3,700 crores. The volumes have dropped off from what we used to do historically. That is why the question that we're not able to see the kind of gross margin improvement that we were earlier looking at.
Yeah. I see as the gross margin 1% improvement from FY 2021 to FY 2026.
I'm saying the last three years. From 64.6% we are at 65.5%. At last three years, your digital has improved by 3%. Lab-grown has become 11% of your sales where ideally your gross margin would have been higher. Volumes have sort of dropped off, so your ASPs have gone up. Just these three, four things when I look at these things and then try to sort of come to the gross margin number, I feel are we doing the traditional TV business at a lower gross margin at what we used to do historically?
Yeah. Margins-wise, it is flat, but time to time we do inventory clearance. Overall, broadly, we look into it that year-over-year are we getting an improvement in our overall margin or not. That we are seeing in past three years. Though it is not maybe a significant amount of percentage higher, but still 100 basis points higher in past two, three years.
Now we are seeing more traction on the higher gross margin side in our paid media sales channel. That share is increasing in a recent period. That will drive more higher margin in coming years.
Okay.
Let me add to that, Shreyans. In the last financial year has been the tariff addition to the business, the cost of tariff was there. Although in June we were able to start casting in U.S. and bringing to India and then making it, we saved tariff on some portion of the jewelry. Overall, the tariff intensity was substantial, and the metal price spike was there. In spite of that, we were able to expand the margin during the year. Digital has helped to some extent, but it was more of an internal discipline of improving margin that has seen the growth in margin and therefore the profitability and ROC and ROI. Given the circumstances, I believe that we have done pretty well with our margin profile.
Got it. My second question is, obviously employee costs as a percentage of sales have improved by about 200 odd basis points in the last three years. Now when we're seeing 50-100 basis points of margin improvement going forward, Mr. Panwad also mentioned that some of it would come through from employee costs. Just trying to understand, going forward for the next two years, which significant line item should we see improvement coming from? That's one piece. Second is, what is the kind of top-line growth we should ideally look at? Because I'm just looking at the constant currency full-year numbers for U.S. and U.K. Obviously, we understand the macro. But U.K. is flat and U.S. is 3%.
Could you help us understand what you're looking at for the next two years in terms of constant currency growth in two, three geographies?
Yeah. For constant currencies, there's still a lot of noise of the currency fluctuation and the tariff uncertainty. We are just giving one guidance in INR for midterm of around 10%-12%. For next year, we're giving guidance of 9%-11% of overall revenue growth. Business, as we grow more towards digital, where we have more conviction of growth, then we can give local currency guidance going forward. At this time, because of the macro and business transition, we are not giving that constant currency guidance.
Got it. The margin improvements, where will that come from, 50- 100 basis points?
Yeah.
We've already improved employee cost by 200 odd basis points.
Yeah. First it will come from gross margin improvement, then the employee cost improvement. Shipping may have some leverage, but in current on the Asian crisis, the war, whatever growth we had last year or the margin leverage we had last year in shipping, that won't be available for this financial year. If the business goes steady state, then there may be a room in shipping as well. Generally, I don't see leverage because we will continue to invest into whatever the saving we do on TV, we'll continue to invest into digital. The content and broadcasting will stay at around 20%, what Nitin mentioned earlier. Leverage, to sum it up, leverage will come from margin improvement and HR costs.
Okay. All right. Just last question. Sir, when I look at your other expenses, ex of C&B, that has increased by about 16 odd percent in this quarter, right? What has led to this 16% growth? The second thing is that we've taken a write-off of about INR 25 odd crore in the Mindful Souls piece, right? Just trying to understand what has happened in that piece, because I think it's just one, one and a half-year-old business, and aren't we too early to take that write-off, or you think fundamentally something has changed in that business?
Yeah. I see. I'd like to take this question. The other line which is increased is mainly related to the traveling and the different office expenses that we have incurred for initially to set up the warehouse in U.K. Also some of the technology expenses that we have driven in AI side that we have done, resulting other expenses are slightly higher compared to last year. That we see that it is temporary in nature. The other point about the Mindful Souls. Mindful Souls current business, initially we structured based on the higher growth and we forecasted based on the double-digit growth basis, the initial impairment testing that we have done it. Though conservatively, we have taken this year that however, that number of growth percentage is not coming, but the business is still good profitable business for us.
There's a cross-learning is pretty high that we are having the U.S., U.K., and Germany, all three business are learning from Mindful Souls. Considering that, we perceive that business it's very fruitful for us. Now the recent investments that we are seeing in changing our digital strategy in Mindful Souls, focusing more on the one of single items. We are seeing that this quarter started seeing the positive numbers from Mindful Souls, but the write-off is mainly related to the conservative impairment testing that we have done it. Initially, we forecasted that the business will be recovered, all the invested money within five years. Now it has increased to seven years. The potential, it may be reversed in upcoming years if the business performs well. For now, because of the initial year, we haven't converted well from Mindful Souls.
That is why the write-off is coming of INR 25 crores.
Okay, sir. Thanks and all the best. I will get back in the queue.
Thank you, sir.
The next question comes from the line of Sheel Kumar Shah with Sameeksha Capital. Please go ahead.
Yeah. Hello, am I audible?
Yes, sir.
Yeah, thank you for the opportunity. Considering the current macro environment in U.S. and U.K., particularly elevated gas prices and inflationary pressure, could you give us some qualitative color on the current trends that you are observing in April and May so far?
Sure. I'll take that. We are seeing better digital traction in both the geographies, but the television audience is still a bit stressed owing to the inflation. The gas price is high, and interest rates are getting higher. We are comfortable with our guidance that we gave of 9%-11% growth year-over-year in overall for the group. Let me add the Germany also. The Germany is seeing better traction this current quarter than it did last quarter. All in all for the group, we are comfortable to see the growth in revenue as well as profitability in current quarter and for this financial year.
Okay. Thank you.
The next question comes from the line of Pulkit Singhal with Dalmus Capital Management. Please go ahead.
Thank you for the opportunity. Sunilji, I think one of the concerns is that U.S. market particularly has been growing at low single digit constantly for now three consecutive years. We have been making a lot of investments on the digital side. We've been trying a lot of things. How do we get comfort that this will grow higher going ahead? What is it that you're seeing? Is there something that you're doing that gives you comfort on this going ahead, that it'll grow higher?
Yeah. Pulkit, good observation. Over the course of last 31 years we are public, we have transformed our business multiple times, from B2B to B2C, brick-and-mortar to TV, to jewelry, to lifestyle, and to now digital. Last three years has been our transformation journey from purely TV-dependent to TV/e-com and more and more towards e-com, while giving improved EBITDA, improved margin, and amidst the German initial build-up negative margins. To your question of U.S., given our investment into digital and my conviction of us being on the right track gives me confidence that in mid to long run, U.S. and U.K., both geographies will get to double-digit growth for us, because we put those investments in place and the teams in place.
You're talking about double-digit consecutive growth you're expecting for both the markets eventually?
Yes, in mid to long run. Yes.
Any initiatives you want to touch upon, AI or otherwise, that gives confidence that you are doing something new, which is kind of giving you that confidence or visibility?
Number one is AI is now completely integrated into our digital efforts. From scanning the competitor environment, all Meta ad library or other data. What is working? What angles are working? We scan that, and then we create the creatives for Meta or for AppLovin based on that intelligence through AI. We create landing pages for those customers clicking on that ad with the help of AI. We analyze with AI where the customer is bouncing from through. There is Microsoft service and that integrated with AI. We are able to watch real-time where the conversion is slowing down, where the customer is bouncing, and that is helping us getting to improve the conversion and spend ROAS. That gives me a lot of confidence.
From product identification to creative angles to making the creative AI and the landing pages and the analytics completely. This is on the marketing side. We are also using AI in our operations for the supply chain, demand forecasting into the back-end supply chain analysis and optimization. It's quite across the board we are using AI, and it's only going to accelerate. We are not doing centralized AI. We are encouraging all our team members to use AI with certain security guidelines to utilize AI to improve their results. There are contests across the company going on for best AI use, and people are getting handsomely rewarded for the good AI use that they demonstrate.
Right. These initiatives on AI demand generation or marketing, when have they started, and when do you think it can reflect in terms of some real impact, as in terms of significant impact in terms of demand generation? How old are these initiatives and how do we understand?
It started a few months ago. You just don't switch on one switch and go on. It started almost a year ago, and then in recent weeks and months, it started accelerating. I cannot predict how much it'll result in substantial increase. I cannot say that, but I'm comfortable with the guidance that we've given you, and we hope to meet or exceed those guidances.
Understood. Thank you, and all the best.
Thank you, Pulkit.
The next question comes from the line of Mehul Panjwani with [Forty Cents]. Please go ahead.
Hello, sir. Thank you so much for the opportunity. Sir, last two quarters, there was some uncertainty due to tariffs. Can we say that the tariff-related uncertainty is out of the way right now, or we have to wait for one more quarter or so?
With the current administration, Mehul, we can never be certain.
Sure.
I can only say that is, whatever the circumstances, we are very agile and pretty multi-country operations and logistics that we'll be better than competitors.
Right. Sir, another question related to this is that, since we have reported a very good set of numbers, if the tariff-related uncertainty wouldn't have been there, we would've been significantly better?
That is very hypothetical question, difficult to answer. It is a fact that uncertainty can cause disruption. I look at uncertainty sometimes, too, as an opportunity to make a difference or do something better than competitors are not doing. It's difficult to say. Hypothetical and very difficult to say.
All right. Another question is related to certification. Are our products certified by an external agency or there's no requirement as such for our customers?
Nitin, do you want to take on that?
Yes. Our products like lab diamonds or lab-grown, those are certified products, and customer also looking for certification to get a trust and authenticity. Regulatory requirement also is in U.K. to assay the silver and gold jewelry item, so that also is certified. Most of the product in branded product side, we certify. The certification varies based on product price range and product brand related. I would say that with the trust we have created and value generation that we have created across the years, the customer believes and customer trust is there, and we do a certification also there for our customer if needed.
Okay. Sir, my last question is about lab-grown diamonds. Since when have been selling these products?
Sorry, I didn't get that last part.
Yeah, since when are we into the business of lab-grown diamonds?
Okay.
Is it started in the last couple of years or?
Yeah. lab-grown category picked almost around 18 months back, and that category was pretty much nil for us, lab-grown diamond. Now that category within 18 months, it is picked to almost 11% now.
Okay. Sir, thank you so much for all the answers, wish you the very best.
Thank you.
Thank you. The next question comes from the line of Parth Dalal, an individual investor. Please go ahead.
Can you hear me?
Yes.
The first question is about the unique customer which has gone down. How do you see that panning out, maybe next two years, three years?
Sure. Hi, Parth. The customer number, we are constantly looking and refining our customer persona and portfolio, and where we see a more value or quality of customers that we have targeted. In the past year that we have targeted very low price point customers, and we have seen the lifetime value for those customers were not high, we deliberately moved to the more quality of customers, where the customer we get more repeat, like beauty items and the lab-grown and the other gemstone items. That we have expanded, and they are naturally slightly high price point items. The quality of customers cost is also high, longer term, it gives value. Overall unique customer, we monitor based on how many quality of customers we acquiring.
The number has gone down because of mainly those one-off customers which were earlier not giving value, inflating the last year number. Now their focus is more on the quality of customers.
Do we see that increasing, maybe not immediately, but at least two years down the line? Because we have this Germany doing very well. We have two acquisitions. If I recall from the past calls, we have been investing in customer acquisitions and all. Do you see that happening?
Yeah. We are seeing that the recent improvement led through AI and the digital marketing, the whole platform that we have created of content generation. That is resulting the acquisition of higher number of customers with lower cost, and we see that that number will continue to improve.
Okay, sure. Thank you.
Thank you.
Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Sunil Agrawal for the closing remarks.
Thank you everybody for your participation and great set of questions. If you have any further questions, please feel free to reach Vivek Jain at Vaibhav Global or Disha or Amit Jain at Adfactors, and they'll take care of your questions. Thank you so much.
Thank you, sir. Ladies and gentlemen, on behalf of Vaibhav Global Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.