We perceive that the current headwinds are transient in nature, and with all growth levers in place, we will continue to achieve market leading growth. We made sustained efforts towards cost optimisation, operational efficiency, constant new products introduction and customer acquisition. We are confident that the steps taken during the year will go a long way in developing a more agile and resilient business model.
I am delighted to present the 2nd Integrated and 34th Annual Report of Vaibhav Global Limited. In my earlier communication, we extensively discussed our strategy of maintaining a diversified product portfolio and investing in future capabilities. This is even more relevant in the current times, considering the global macro-challenges like geopolitical tensions, cost inflation and a fragile growth environment.
In the preceding two years, during COVID-19 and its disruption phase, customers worked from the comfort of their homes. The pandemic changed online shopping behaviour, as they increasingly used online platforms to order, leading to a boom in teleshopping and online businesses.
However, in FY2023, as things opened-up, people stepped out more to shop, which had an impact on online and TV shopping to some extent. Additionally, larger economies suffered during the year due to the geopolitical tensions. Inflationary and pricing pressures affected consumers’ purchasing power, thereby impacting e-commerce and digital companies, including teleshopping companies.
The headwinds in the global environment impacted two of the key regions that we operate in: United States and United Kingdom. Despite facing moderating consumer demand, we demonstrated resilience. We judiciously invested in key strategic initiatives, such as expanding our households reach by adding more cable TV and OTA households. We also increased marketing spend in OTT or connected TV homes where the customer lifetime value is very high.
At VGL, we believe in seeding investments for long-term growth. For instance, our Salesforce marketing and Salesforce service clouds have recently gone live in the US and the UK. Despite the challenging macro environment, we continue to gain market share across regions. We perceive that the current headwinds are transient in nature, and with all growth levers in place, we will continue to achieve market leading growth.
Our balance sheet remains robust having a healthy cash and bank balance of Rs. 167 crores (net of debt). We made sustained efforts towards cost optimisation, operational efficiency, constant new products introduction and customer acquisition. We are confident that the steps taken during the year will go a long way in developing a more agile and resilient business model.
We take pride in our omni-channel sales distribution model, enabling global electronic retailing of fashion jewellery, apparel, lifestyle products and accessories. Today, we are serving approximately 141 million households as against 124 million households in FY22. New registrations during the 12-month period were 3 lakhs, a significant increase of 69% over the last pre-COVID year. Nearly 57% of the new customers were acquired digitally, thus reaffirming our decision to increase investments in digital segment.
A vertically and fully integrated supply chain spanning 30 countries is our backbone and a key differentiator for us. An asset-light and vertically integrated business model enable us to offer differentiated products at competitive prices. This has enabled us to maintain ASP (Average Selling Price) of our products ranging between US$ 25 to US$ 45 and sustain market-leading gross margins at 60%+.
What truly makes Vaibhav Global unique is our ethos that encourages innovation. We continue to foster a culture of innovation across products and processes. With several ‘innovation’ programs like Innov8, Spark, Catapult and Hackademic, we strive to understand the demands of our customers and deliver relevant products.
The importance of ESG has increased globally and businesses have begun to integrate it into their operations and business strategies. We continue to make progress towards our target of becoming net carbon zero entity by FY31 in terms of scope 1 and 2 GHG (Green House Gases) emissions. Today, our SEZ unit in Jaipur is Net Zero Energy Building certified, making it 16th project in India to be certified so out of 3,600 nation-wide green certified projects. Today, 2 of our manufacturing units in India, 2 premises in the United States and 1 premise each in UK and Germany are utilising 100% renewable energy sources in their operations.
Expanding on our key achievements, we successfully conducted and passed SMETA-4 pillar audit for 2 of our units in India. Globally all our business units except Germany, are Great Place to Work® certified. Through our flagship mid-day meals program - ‘Your Purchase Feeds…’, we have served approximately 75 million meals to underprivileged children in India, US, UK, and Germany to date. Currently, we are serving ~50,000 meals every school day and aim to serve 1 million meals per day by FY31.
I would like to conclude this year’s letter with a famous quote from Zig Ziglar. He said, “When obstacles arise, you change your direction to reach your goal. You do not change your decision to get there”. This embodies the philosophy of your Company as well. Our long-term growth story remains intact and we remain confident of our business model, despite the short-term challenges.
As I conclude, I want to take this opportunity to express my sincere gratitude to Board of Directors, employees, customers and vendors. The trust and confidence displayed by you, our valued stakeholders, has always been a source of great strength for everyone in the Company. We look forward to your continued support in the future as well.
We continue to closely monitor the macro environment and business trends. I believe that we have a capable team with the experience to effectively manage growth in this environment. We are well positioned to leverage our competitive advantages. We look forward to maintaining a balance between growth, investment, and pay-outs to generate sustainable value for our stakeholders.
The Group’s performance during FY23 was against the backdrop of moderating consumer demand owing to two macro environments. First the opening of economies after almost two years of travel restrictions led people to go out for revenge outings and in-person shopping, impacting the overall digital retailing industry. Secondly, the high inflation in western economies resulted in high level of uncertainty in consumers, leading to subdued spend on discretionary items.
Even though the business environment for digitally native retailers was tough, we continued to gain market share against our competitors.
Shop LC’s (US) performance reflects impact of uncertainties due to high inflation, rising interest rates, increasing rents and food prices. Cyber-attacks also temporarily disrupted the operations in crucial holiday period. We took proactive measures to mitigate the impact of inflation on consumer sentiments. We expanded our portfolio of Gold and diamond products that people tend to buy in inflationary environment. We focused on content improvement and accelerating household expansion through OTA, digital and the OTT medium. While many retailers struggled mightily due to snarled supply chains, our vertical business model allowed us to rapidly change our offerings, suitable for the time, allowing us to maintain our 60%+ gross margins.
In the earlier year, TJC (UK) upgraded its channel position to 22nd position, from its erstwhile 50th position. In TJC (UK), the ‘Freeview’ channel upgrade continued to yield positive outcomes for new TV customer addition. Customer acquisition growth was a bit lower compared to COVID high but was 82% higher than FY20, the last pre-covid year. In UK, during the year, several major delivery partners faced strikes which led to an industry-wide impact on deliveries. Cyber-attack temporarily disrupted UK operations as well.
We believe that these headwinds are transient, and we are well placed to leverage the true potential of US and UK markets.
In a key milestone, our German subsidiary Shop LC GmbH partnered with Vodafone Germany on the nationwide cable network. Our strategic partnership with Vodafone Cable Network has enabled us to extend our reach to additional 13 million households, thus expanding our presence to approx. 90% of total households. Germany continues its growth momentum and is today clocking a monthly revenue of 1.4 million Euro.
Marking our foray into Over-The-Air platforms through Freenet TV was a major achievement in Germany in FY23. Today, we are despatching 3,500+ pieces per day, with a CSAT score of 96%. We continue discussions with other affiliates to gain more households in the country.
Innovation is continuous process of identifying problems and solving them at an operational and delivery level. Through a ‘systematic innovative thinking approach’, multiple problem-solving products were introduced, and we came up with ideas to further expand our existing successful products. Some of the innovative product ideas that were implemented and sold on our channels in good volumes included: a Smart Walking Cane, many innovative cut gemstone, an Arthritis ring, Bolo bracelet with a magnetic clasp, etc.,
We are optimistic about the future and confident in our ability to navigate challenges and achieve our goals. Our 4R framework of Widening Reach, New Customer Registration, Customer Retention and Repeat Purchases forms the basis of driving our operating performance and continue to be the future levers for growth.
We believe in seeding investments for long-term growth. Recently, Salesforce marketing and Salesforce service clouds have gone live in US and UK. Our continued investments in digital areas of our business will give us growth in coming periods. We are also expanding the customer base by leveraging our diverse product portfolio and a growing omni-channel presence across linear TV, digital TV, Live streaming, OTT, Market places, web and mobile Apps.
We have been working towards creating an organisation that is more transparent, technologically evolved and one that has the best of corporate governance practices. We believe the robustness of our business model will continue to drive our growth ambitions forward.
In FY24, our key focus area will be to strengthen our digital presence enabling cross-selling potential resulting in improved customer lifetime value. We will work on further improving the customers’ shopping experience by augmenting various customer touchpoints. We intend to grow our TV reach by increasing the number of households we broadcast to.
We continue to closely monitor the macro environment and business trends. I believe that we have a capable team with the experience to effectively manage growth in this environment. Despite near-term uncertainties, we believe that the medium and long term demand remains strong. We are well positioned to leverage our competitive advantages. We look forward to maintaining a balance between growth, investment, and pay-outs to generate sustainable value for our stakeholders.