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Entrepreneurship An enriching Experience !!!
SUNIL!AGRAWAL!C&MD,!VAIBHAV!GLOBAL!GROUP!!
VGL Group How It all started
! !
Started!as!a!Gemstone!dealer!
Ventured!into!Gemstone!manufacturing!!
VGL!went!Public,!raising!Rs.709.50!lacs!@!premium!of!Rs.20!per!share!!
Setup!Jewellery!Manufacturing!as!a!B2B!vendor!
Moved!to!USA!
First!Attempt!at!ETcomm!place!!2Umbrellas!
Went!to!college!again!in!NY,!USA!
Warburg,!one!of!leading!PE!firm,!acquired!27%+!equity!in!VGL!
Retail!stores!at!intl!tourist!destinations,!like!Alaska!&!!Caribbean!
Legal!Issues!(Indictment)!by!US!Govt!
1980
1996
1997
1982
1998
2001
2006 EntrepreneurshipA Journey
2002
2005
2005-07
TV/Web!Retailer!
Nalanda!India!Funds!Ltd!invested!$!25!mn!in!the!company!
Restructuring!due!to!the!financial!meltdown;!CDR!
Discovered!Discounted!Electronic!Retail!Format;!transformation!from!!B2B!into!B2C!Format!
Outsourced!CallTcentre!for!TJC,!UK!
Ventured!into!Lifestyles!Products!segment!
Outsourced!CallTcentre!for!LC,!USA!
2006-07
2009 2010
2014
The Journeycontinues
2008
2013
2007
VGL Identity
Mission!
Core!Values!
Vision!
!! To!be!the!Value!Leader!in!Electronic!Retailing!of!Jewellery!and!Life!Style!Products!
!! 1.!!Team!Work!!!2.!!Honesty!
3.!!Commitment!
4.!!Passion!
5.!!Positive!Attitude!
!! 1.!!Build!a!Learning!Organisation!with!High!Performing!People!
2.!!Offer!Low!Priced!High!Quality!Products!
3.!!Delight!Our!Customers!Every!Day!
VGL Business Model
1.!!Own!manufacturing!to!the!extent!of!50%!of!COGS!
2.!!Sourcing!from!base!component!Cost!perspective!
3.!!Tight!control!on!operating!costs.!
!!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerce!Business!
Introduction!of!New!Products!
VGL Business Model
1.!!Inventory!of!over!One!year!COGS!in!2010!to!100!days!in!2014!
2.!!Strong!Tail!Exit!mechanism!using!Reverse!Auction!
3.!!Test!trend!spotted!products,!go!deeper!with!proven!products!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
VGL Business Model
1.!!3Rs!!Reach,!Retention,!Repeat!Purchase!
2.!!Fascinating!Story!Telling!mechanism!about!the!product!
3.!!Highly!interactive!&!fun!shopping!experience!for!the!customers!
!!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
VGL Business Model
1.!!Fast!paced!process;!creating!frenzy!among!customers!by!inducing!a!sense!of!loss!
2.!!Peer!Pressure!to!stay!in!fashion!with!updated!trends!
3.!!Impulse!Purchase!due!to!low!prices!and!money!saved!aspect!
!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
VGL Business Model
1.!!Start!price!is!usually!competitors!price!for!similar!product!5U8!times!!!!!!!!!!!our!final!price!2.!!Average!price!point!of!$20!against!$60!of!competitors.!!
3.!!No!returns!below!$200!price!points!!
4.!!Excellent!value!for!the!price;!much!based!on!exceptional!sourcing!abilities!
!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
VGL Business Model
1.!!TVs!Push!and!Webs!pull!works!simultaneously!for!differing!needs.!LTV!of!multi!channel!customer!in!US!is!over!3x!of!TV!or!Web!alone!
2.!!Over!50%!of!VGLs!web!sales!is!actually!exit!of!TVs!tail!products!
3.!!Very!high!social!media!presence!(!345k!likes)!funnelling!customers!to!web!and!TV.!!
!!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
VGL Business Model
1.!!100!New!products!EVERY!DAY!helps!high!repeat!purchase!(Q22014U15!UnitsUsoldUtoUuniqueUcustomers!!ratio!!=!17.4)!
2.!!Over!200!strong!product!development!and!merchandising!team!across!VGL!Group!
3.!!We!are!trend!spotters!and!not!trend!setters.!
!!
Vertical!Low!Cost!Model!
Tight!Inventory!Mgmt!
Customer!Engagement!
CallUtoUaction!
Deep!Value!Perception!
Integrated!TV!&!EU
commerceBusiness!
Introduction!of!New!Products!
AWARDS & RECOGNITIONS
2015 1) Fastest Growing company by Gems & Jewellery Export promotion Council
2013 Indian Gems & Jewellery Award; category Silver Gems & Jewellery Export Promotion Council
2010 Highest Export Award in Gems & Jewellery - Gems & Jewellery Export Promotion Council
2007-08 Highest Export Award in Gems & Jewellery - Gems & Jewellery Export Promotion Council
2005-06 CNBC Emerging India Award, Gems & Jewellery Category by CNBC TV18 & ICICI
1985-2005 .Multiple awards
1985 1st award as a company by P. Chidambaram
Financial Performance
! !
Revenues Trends
FY11! FY12! FY13! FY14! 6M!15!
115! 134!164!
215!
104!
Revenues!($!Million)!
FY11! FY12! FY13! FY14! 6M!15!
10! 15! 22!37!
19!
Web!Sales!
FY11! FY12! FY13! FY14! 6M!15!
87! 100!126! 151!
74!
TV!Sales!
FY11! FY12! FY13! FY14! 6M!15!
19! 19! 16!27!
10!
B2B!Sales!
Jewelry!&!Lifestyle!Products!
23%!CAGR!
20%!CAGR!55%!CAGR! 13%!CAGR!
Retail Trends
16!
6M!15!FY14!FY13!FY12!FY11!
!3,156!!
!6,420!!!5,239!!
!3,268!!!2,039!!
Sales!Volumes!('000s)!
6M!15!FY14!FY13!FY12!FY11!
!23!!!24!!!23!!!30!!
!41!!
Average!selling!price!US$!
TV!Sales!
Web!Sales!
6M!15!FY14!FY13!FY12!FY11!
1,401!
!2,955!!
!1,700!!!762!!
!357!!
Sales!Volumes!('000s)!
6M!15!FY14!FY13!FY12!FY11!
!14!!!13!!!12!!!19!!
!27!!
Average!selling!price!US$!
47%!CAGR!
102%!CAGR!
Margin Trends
55%!
59%! 60%!61%!
63%!
50%!
55%!
60%!
65%!
!T!!!!
!50.00!!
!100.00!!
!150.00!!
FY11! FY12! FY13! FY14! 6M!15!
Gross!Profit! Gross!margin!$!Million!
Note:&&EBIDTA&excludes&exchange&gain/loss;&&
15.6!17.9! 14.8! 26.1! 10.7!
13%!
13%!
9%!12%!
10%!
0%!
5%!
10%!
15%!
!T!!!!
!10.00!!
!20.00!!
!30.00!!
FY11! FY12! FY13! FY14! 6M!15!
EBITDA! EBITDA!margin!$!Million!
Profit Trends
0.29!0.48! 0.44!
0.80!
0.13!
!T!!!!
!0.50!!
!1.00!!
FY11! FY12! FY13! FY14! 6M!15!
EPS!!$!per!share!$.!Million!
9! 16! 14! 25! 8!
8%!
12%!
8%!
12%!8%!
0%!
5%!
10%!
15%!
!T!!!!
!10.00!!
!20.00!!
!30.00!!
FY11! FY12! FY13! FY14! 6M!15!
PAT! PAT!margin!
Balance sheet Trends
FY11! FY12! FY13! FY14! 6M!15!
45! 51!29! 39!
45!
Shareholders!Equity!
FY11! FY12! FY13! FY14! 6M!15!
45!39!
11! 11! 12!
Fixed!Assets!
FY11! FY12! FY13! FY14! 6M!15!
36!
40! 40!
37!
39!
Net!Current!Assets!
*"During"FY13"fixed"assets"were"adjusted"lower"by"$."27.8"Mn"due"to"goodwill""written"off""*" During" FY13," Shareholders" Equity" was" adjusted" lower" by" $" 30.1" Mn" due" to"goodwill"written"off"($"27.8"Mn),"provision"for"CDR"recompense"interest"($2.1"Mn)"and"write"off"on"liquidation""of"subsidiary"($"0.2"Mn)"
$!Million! $!Million!
$!Million!
$!Million!
FY11! FY12! FY13! FY14! 6M!15!
36!28!
21!
9!6!
Net!Debt!
Cash flow Trends
11.9! 10.0!14.2!
29.8!
6.8!
FY11! FY12! FY13! FY14! 6M!15!
Operating!Cash!flow!
10.6! 8.5!11.6!
26.8!
4.7!
FY11! FY12! FY13! FY14! 6M!15!
Free!Cash!Flow!!$!Million!
$!Million!
Key ratio Trends
15%!23%!
34%!
60%!45%!
FY11! FY12! FY13! FY14! 6M!15!
ROCE!
37%! 36%!
68%! 65%!
41%!
FY11! FY12! FY13! FY14! 6M!15!
ROE!
Competitor Analysis
! !
Potential for Operating leverage
!FY2013! Inditex!(Zara)&Interactive!Group!
(QVC)&HSNi!!(HSN)&
VGL!Group!(FY!2013U14)!
!Turnover!(Million!US!$)!& !18,909.4!& 10307& 3403! 215!
!Average!Selling!Price!(US$)!! TTT! 55! 62.4! 24!
!Gross!Profit!Margin!%!! 59.3%! 35.9%! 36.1%! 61%!
!Operating!costs!as!%!of!Sales**! 76.5%! 78.6%! 90.4%! 89%!
EBITDA/OIBTDA!as!%!of!Sales! 21.4%! 18.4%! 9.5%! 12.1%!
*Current!EPS! **Operating!Cost!=!COGS+!SG&A!!
Direct Competitors
FY2013! QVC! HSN! SHOP!HQ! LC*! TJC!UK*!
NUMBER!OF!PIECES!SOLD!(mn)! 134.0! 44.7! 7.2! 7.7! 2.0!
AVERAGE!PRICE!POINT! $62! $62.92! $81! $19! $26!
TV!HOUSEHOLD!REACH! 98!million! 95!million! 87million! 73!million! 25!million!
REVENUE!PER!HOUSEHOLD!REACHED! $60! $24! $7! $1.5! $1.8!
CUSTOMERS!SHOPPED!IN!2013!(000s)! 3,100! 3,000! 1,357! 267! 130!
CUSTOMER!RETENTION!RATE! 89%! 51%! 52%! 48%! 47.6%!
CUSTOMER!LIFETIME!VALUE!(USD)! $1247! $826! $339! $442! $378!
REPEAT!PURCHASE!(purchases/Total!Customer)!
24! TTT! 4.96! 19.11! 14.12!
*!TTM!Jan14TDec14!!
Environment!Care!
Training!&!Development!
Employee!Engagement! CSR!Activities!
Other Welfare Activities
Famous Quotes by world renowned Entrepreneurs/Leaders
! !
!!
Entrepreneurs!must!be!willing!to!be!misunderstood!for!LONG!periods!of!TIME.!
I!knew!that!I!failed!I!wouldnt!regret!that,!but!I!knew!the!one!thing!I!might!regret!is!not!trying!
!Jeff!Bezos!!Amazon.com!
!!
The!biggest!risk!is!not!taking!any!risk.!In!a!world!that!is!changing!really!quickly,!the!only!strategy!that!is!guaranteed!to!fail!is!not!taking!risks.!
Mark!Zuckerberg!Facebook!
!!Steve!Jobs!
Apple!Inc!
I!think!the!things!you!most!regret!in!life!are!things!you!didnt!do.!
!
The!only!way!to!do!great!work!is!to!love!what!you!do.!If!you!havent!found!one!yet,!keep!looking.!Dont!settle.!As!with!all!matters!of!the!heart,!you!will!know!when!you!find!it.!
My Message to Budding Entrepreneurs
!!
Hard!Work!
Perseverance!
Follow!your!Passion!
Thank You
!!