Good day, and welcome to Saregama India Q3 FY 2023 Earnings Conference Call hosted by ICICI Securities. As a reminder, all participants' lines will be in a 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 touchtone phone. Please note this conference is being recorded. I now hand the conference over to Mr. Bhupendra Tiwary from ICICI Securities. Thank you, and over to you, sir. Good afternoon, everybody. On behalf of ICICI Securities, we welcome you to Q3 FY 2023 results conference call of Saregama India Limited. From the management, we have Mr. Vikram Mehra, who is Managing Director; Mr. Pankaj Tiwari, who's the CFO; Mr. V.L. Chandak, who's Executive Director; Mr. Saket Shah, who's Head, Investor Relations; and Mr. Pankaj Kedia, who's Vice President, Investor Relations. Without much ado, I'll just hand over the mic to Vikram. Over to you, Vikram. Hi. Good evening, everyone. Quarter three saw operating revenues of INR 185 crore and PAT of INR 52 crore. That is an year-on-year growth of 23% in our revenue and 20% in PAT. It's been a very good quarter, we will once again reiterate and request you people to please look at our business always on an annual basis and never evaluate it on a quarterly basis. People often wonder why should there be a seasonality in music. Actually, there is. Advertising revenue, the part of the music business which is dependent on advertising revenue, like YouTube, that fluctuates. Carvaan sale, which is dependent on festival season, that fluctuates over the year. Our policy of recognizing overflows from agreements which are minimum guarantee based is such that the overflows are recognized only in the quarter when the money is received by us. There is fluctuation that keeps on happening from quarter to quarter. Please look at the number always on annual basis and not on quarter-to-quarter basis. If I look at our numbers on a nine-month basis, both our revenue has grown by 36% and PAT has grown by 34%. This is in continuation to the last year growth numbers of 31% in operating revenues and 35% in PAT. There's a reason I'm stating and quoting the last year numbers just to give you the confidence that the growth that you are seeing is not something which has been happening for only a couple of quarters. We now have been showing growth on revenue and bottom line for over 16 quarters now on a consistent fashion quarter after quarter. During the time of COVID, post-COVID, our growth story is continuing. Remember, we have just touched the tip of the iceberg. The growth in digital consumtion, both in terms of new customers coming in, 750 million people have a smartphone, while only 200 million people are actually using any of the streaming services yet. There are a lot of new customer that's gonna be coming in. Consumption per customer are also expected to go up. Today on average, people listen to 67 songs in a month. We believe in all developed countries, this number is closer to 120 songs per month. You will see that kind of growth happening in India too, which means Saregama growth story in future, when I say future, I'm talking medium to long term, is going to remain stable. Also our diversified business model, which ensures that there's not too much of dependent on any one source of revenue, say subscription or advertising or license fee or physical. We are quite diversified in that sense will ensure that we'll be able to maintain our profitability too. The music business, which is a combination of both licensing and Carvaan, saw its highest quarterly revenue at INR 154 crore. On a nine-month basis, music segment by 25% year-on-year to achieve a INR 433 crore revenue. As mentioned, both licensing and Carvaan contributed to this growth. Let me first start with licensing, which continues its growth numbers of over 20% year-on-year. This will be the fourth or the fifth year that we people have been growing at this rate. We released multiple film songs across Telugu, Tamil, Malayalam, Bengali, Punjabi, and Hindi languages. We also released Jubin Nautiyal's first non-film music album, Sukoon. Punjabi saw two successful non-film songs from Satinder Sartaaj. Bhojpuri language saw four massive hits on the non-film side from the number one artist there, Khesari Lal Yadav, collectively crossing 15 crore views on Saregama's official Bhojpuri YouTube channel one quarter. Over the last nine months, we have taken a new content charge, which is inclusive of marketing, of 50 crore. Just for reference, this same number was 30 crore if you look at a year back, nine-month charge. The strategy of investing in new content is clearly paying off. It's not only allowing us to grow our new content market share, but it's also giving a huge impetus to our catalog. Last year, we raised INR 750 crore. Last financial year, we raised INR 750 crore with an explicit mandate to invest this money in new music content, we are on track. I want to again assure you this money that was raised will be used only and only for music. All the other investments that we people are doing are being from our internal pools. Often asked question is how do we go about picking up new content? I think our biggest edge is our investment that we people have done on data mining and building predictive models to decide what content to invest in. Also our longer term deals which have happened on the marketing side, which is giving enough confidence to our partners that we can market content like nobody else, none of our competitors can. Which is pushing them to work more and more with us. Movie music acquisition deals have been locked across Hindi, Telugu, Tamil and Malayalam languages. You will see some of the movies have been delayed. You will see a lot of them coming hopefully between March to June timeframe this year. This includes the much anticipated movie, the next directorial movie of Karan Johar called Rocky Aur Rani Kii Prem Kahaani. There's another Dharma Productions called Rooha [Bad Newz], starring Vicky Kaushal and Ammy Virk. There's one more Vicky Kaushal, Sara Ali Khan movie called Zara Hatke Zara Bachke. There's a Vijay Deverakonda, Samantha film called Kushi. There are two Suriya films in Tamil. There's a Mammootty film from the Malayalam side. There's another Prithviraj Sukumaran film on Malayalam side. The music of these are some of the big titles that I can think of. The music of this has already been acquired by Saregama. We will continue investing across all Indian languages, both on the film side and the non-film side. We have already achieved leadership position across a few of the languages, and we are number two in some of the other languages. We expect in next 12 - 18 months to be at number one position across all major languages in India. Carvaan numbers maintained their growth trajectory. They touched 768,000 compared to 141,000 last year. Remember this year, the festival sale was divided between quarter two and quarter three because of the timing of Diwali. Unlike last year, where the entire sale boost that one gets on account of festival season came in quarter three. That's why you see the growth numbers between quarter two and quarter three are different this year compared to last year, because already a lot of festival sales had been booked in quarter two. If I combine both the quarters, that is quarter two and quarter three, we have sold 324,000 units of Carvaan. All of this, remember, is coming only out of customer pool. There is no advertising backing Carvaan now for over three years. The latest variant of Carvaan Mobile, has given us a lower price point, which is helping us penetrate smaller markets. The con of this is that the average realization of our sold Carvaan unit has come down, but I think the upside of penetrating smaller markets far outweighs the cons. This means that though the unit sales has grown up substantially compared to last year, the revenue numbers could not have grown, but it is a still a healthy growth compared to last year. There is no marketing push which is planned for Carvaan even in quarter four. Film, series and events vertical touched around INR 100 crore in the first nine months. This is a matter of great pride for us. It literally means that the revenue has doubled compared to the INR 50 crore revenue that we wrote in the first nine months of the last financial year. Most of it is coming on the back of the new vertical that we have created called Live Events. Overall, film, series and events now constitute 15% of the company revenues. This vertical is not, one of the big advantages of this vertical is giving us a huge edge in music acquisition. The fact that we can now give breaks to people on live events also means that artists are more forthcoming and more open to selling their standalone songs also to us. They see a much deeper relationship possible with Saregama compared to any of our competitors. I'll again remind all of you people, remember that live events business is a relatively low margin business. As the mix keeps on changing, it will have its impact on the PBT%, though the music percent remains unaffected. Music PBT percentage. Yoodlee saw action this quarter. Two Malayalam and one Punjabi movie got released during this quarter. Prithviraj Sukumaran's movie Kaapa got released in Malayalam. It opened to great reviews and a good theatrical collection. The movie also got released on Netflix recently, has opened at number one trending position and is currently trending at number two across India on Netflix. Our TV serials that we make and are put up on Sun TV, they continue to do very well in terms of DRPs. We launched a new Tamil serial called Iniya, replacing an existing serial called Roja after 1,300 episodes. Remember, we had launched another serial in quarter two, which had replaced the serial that the quarter two serial replaced had also completed 2,000 episodes, which is Chandrakanta. All the three serials that we people have on Sun TV are actually slot leaders, giving us a strong position. Live events business saw two Diljit Dosanjh shows in this quarter, both in India. We also premiered our own IP show, Disco Dancer, in London. This is our first attempt to go out there and create movie-based musicals, which can attract a large number of people in their forties and fifties, basically people who have a greater spending power, use the equity of those movies and get the customers in and enjoy the songs that are part of these musicals. We also have intent to record these songs and then monetize the videos of these songs on various platforms like YouTube and Facebook. The next season of Iss Pyaar Ko Kya Naam Doon will be happening in financial year 2024. Overall, we are very comfortable right now and happy with the way this quarter has progressed. Our mainstream music has done very, very well. It continues to grow at over 20%. The films, television serials, events business, it will always be seasonal in nature. Depends on which event is coming in which quarter. On an overall basis, at INR 100 crore, I think it's becoming a substantial chunk of our overall revenues. That will be all. Thank you. We'll be happy to take questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 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 questions are assembled. We have our first question from the line of Ankush Agrawal with Surge Capital. Please go ahead. Hi, Vikram. Thank you for taking my question. Vikram, firstly, just a clarification. Our music licensing business has grown at a usual 20% plus growth rate for this quarter as well, right? Yes. It's over 20%. We will be sharing separately the growth numbers both on music and Carvaan at the end of the financial year. Okay. Yes, I'm giving you the comfort right now, it is upwards of 20%. Okay. Got it. Got it. Vikram, what explains, lower EBIT growth of just 11%? Like, have we made some kind of losses in the Carvaan business or, like, what explains that? No. The mix is changing, remember. As the people are going further and further, the live events, films and series is a much lower margin business. Yeah. I'm talking about music segment's EBIT growth, music segment EBIT has grown about 11%. There also, remember, content charge for the newer content is also being considered. Yeah. You know, content charge growth for this quarter has been the lowest for last many quarter. Like last few quarters we were growing at, like, triple digits, right? The content charge was growing. Now the base has got increased, right? This quarter content charge increased about 35% odd. Just trying to understand the equation over here. Are there some other costs that have increased on the music business side or something that you wanna highlight? No. which is any substantial change which has happened, there. Okay. You are looking at right now. Okay. Here, on a three-month basis, like what are the content charge that we've taken in this quarter last year? Just give me a second. I'll just answer your question. Yeah. It's INR 15.9 crores versus INR 11.5 crores last year. The moment I add that much amount of a INR 5 crore kind of number, that itself changes our, the numbers in a substantial. Okay. It's largely on the content growth this. Yes. Okay. Hold on. There is no one-off stuff which is happening here that, which is substantial enough. Okay. See, Carvaan business for us, for the last three years I've been saying this, is a break-even business. Carvaan, the only chances of losses are marketing. We have stopped marketing Carvaan. Okay. That you rest assured I'll never come to you saying that our numbers are getting lost because of Carvaan. Mm-hmm. If we ever want to reinvest in Carvaan, we will inform you first. Sure. Good. Okay. That answers my question. Thank you. Thank you. A reminder to participants, to ask a question, please press star followed by 1 on your touch-tone phone now. We have our next question from the line of Sourasis Chatterjee with Antique Capital. Please go ahead. Hi, may I come in? Yes, please. My question is, we've been saying we have a break-even is five years. Assume we invest or acquire music by INR 100. On average, in the next five years we get INR 100 of profit. It should be accuracy, right? On the 1st year it should be very high, maybe INR 40-50. On the 5th year it will be very low. My question is, what is my... If I acquire music by INR 100, what is my profit in the 6th year or 5th year when the music is not popular anymore? No. I think, I can't get that specific. I just want to clarify you, there is this understanding that music has a life of one year and two years, and it does very well earlier days. While I'm in agreement with you that the first year is the highest number, that's why we also take 38% charge off also in the first year, because first year is the highest number for any song. Year two falls down, which is reality, but after that it starts picking up once again. Our typical trajectory is year one is the highest, year two comes down. For some of the songs, year three is further down, and year four onwards the numbers start going up again, because then they start the digital growth is higher than the rate at which natural numbers are falling down. That's the reason our catalog or even movies that we've acquired 4 and 5 years ago, they're all monthly numbers are higher than the previous month. Okay, okay. Please see, this is a general misconception that music typically has a shorter life, or today's music has got a shorter life, while catalog music used to have a much longer life. We have seen this with our own content, with our competition's content, who had music of late 90s and 2000s. We are now seeing with the brand new music of our own that music which once gets into the playlist or top of mind of any customer, if he or she starts singing that song, then that song stays with them till the day they die. It remains as their favorite song. For my father, for him, Dilip Kumar music is the only music that, which is Mukesh and Mohammed Rafi time. For me, the same thing happened with Bachchan and Kishore Kumar, and in current generation it will be, Arijit Singh singing for Ranbir Kapoor, and that music will stay. Okay. Sir, I have one another question. Suppose in India, 50% of streaming companies become paid subscribers, okay? Then our profitability goes up. Then what happens to our rate even? Do you think even competition will push the acquisition cost also because our profitability has moved up? I stated this, it's a streaming platform which has just one part of our overall revenue mix. The other parts are also equally important. The streaming business, the day it turns paid, will give a huge profit kicker to all of us, not just to me, but to my competition also. Which means the payback periods may become shorter, but if the payback periods become shorter, there may be an increase in the content cost. As long as we are still able to go back and maintain a discipline of not picking up content with a payback period of greater than five years, we are still in the same space. My revenue goes up, maybe my costs also goes up. I still maintain a payback period of five years. That's our guiding principle. We do a combination of film music versus non-film music, Hindi music versus Bhojpuri or Gujarati or Bengali or Telugu or Tamil music. Why do we go on to play in all languages? It gives me a decent puts me in a position to balance my investments in each of these languages and ensure that overall basis, I'm still within five-year payback period. Okay, sir. Thank you. Thank you. Very helpful explanation. Thank you. We have next question from the line of Ravi Naredi with Naredi Investment Private Limited. Please go ahead. Vikram ji, good evening. What is the benefit to shareholder of Saregama and what is the business that company is doing? Sir, that we have got the NCLT approval for the same. We got the shareholder approval. Sorry. Let's I see here for clarity purpose on this, we can say. Basically the picture is, the shareholders of the company have approved the demerger. The result of the shareholders meeting has also been filed in our petition with NCLT in the month of May. The status is that we are monitoring this and the things are on track. The final order should come to us before 31st March. Okay. On benefit side, we can move on to the sixth, the non-core party. That's a part. On the benefit side, it's just about getting our company more sharply focused. Around five, six years ago, we made the first round of changes in Saregama, where all non-core businesses we just got out of there. Things which were not core to the business of IP creation and monetization, Saregama walked out of those businesses. Okay. There were some other investments that were lying out there within Saregama and some parts of the business which were not core to what Saregama does. Okay. To bring more focus within Saregama, we decided to hive it off as a separate business so that both businesses can do justice to their core. Okay. Okay. Sir, second, when we made our QIB, when our fund will be utilized in the company? What other purpose we raised the QIB? Ravi ji, we are constantly looking at opportunities whereby if we can pick up catalogs, but at a price point that are value accretive to all our investors. There's no point picking up large catalogs if they come at a price point which makes no financial sense for us. So we have the monies to close the deal at any time, but we are following a very prudent policy so that we don't end up overpaying just because money is sitting there with us. Right. Right. That is intelligent thing. Yes. Internally, I can give you this comfort that, we are maintaining a very strong audit on these financial investments, because this money has to be utilized only and only for music and nothing else. This money is typically invested in relatively very low risk debt. Yes. The money is protected, and the moment we get opportunities of investing in other businesses which somewhere are going to help our music business, either directly or indirectly, we will move in immediately. We at any time are in dialogue with at least four to five companies, but the deals have to happen at the right valuation. Okay. Okay. Vikram ji, your new initiative like Diljit Dosanjh and Disco Dancer, please tell few words for same, how they are running revenue-wise in our company in third quarter? Sir, you can see the third quarter numbers which the live events is reported along with films and televisions. We did around INR 27 crore. I think live events for Q1 and Q2 were bigger because we held concerts in U.S. and Canada in those quarters. Quarter three were only India, as for Diljit Dosanjh is concerned. Live events business has got two reasons why they're doing it. One, yes, there's margin, but the margins are very small here. What it does is that when an artist comes to know that not only can he sing songs for Saregama, but he can also do live concerts with Saregama, then the artist wants to work with that company that much more than he wants to work with the competition. The competition may be offering only songs and nothing else. That's our main edge. Multiple artists are now reaching out to us and saying, "Listen, we want to give you our songs, maybe at a discount, but please can you also do something on the live business with us? Right. It's just building synergies. For us, it's just a natural extension of our music business. We are very clear on the live event side, we will do only and only music related. We are certainly not going to go out there to start holding exhibitions and conferences. That's not the business that we are in. If there is a live happening, it will be mostly IP related and always connected to music. Okay. Okay. Sir, last my question is, revenue growth is 25% in nine months. Do you think such growth possible in future, and for how much period? Music, I'm still not going to run away from the fact that there are short-term pressures coming here and there in the industry. As OTT services move from advertising to subscription, there will be pressures coming in. We are reasonably confident that the quality of our catalog and the new music acquisition will ensure that we will be writing this 22%-25% growth even in the short run, definitely in the medium to the long run. As far as films, events, and live business is concerned, we have been showing that the growth is actually far higher. In nine months we have literally grown by 100% there. I don't see too much of a trouble right now for that business also to grow at 35%. Okay. Thank you very much. All the best, sir. Thank you, sir. Thank you. We have next question from line of Bhupendra Tiwary with ICICI Securities. Please go ahead. Yeah. Hi, Vikram. My first question was on the new content. You talked about Ranveer Singh movie, I think the Vicky Kaushal movie, and then there was Prithviraj Sukumaran movie, and then couple of regional content. Apart from, I think, the tie-up that we have with Arijit and Sanjay Leela Bhansali, when we release all this kind of... Yeah. Now one, I just wanted to understand how is the pipeline of, you know, content? I think, I believe that the movie pipeline itself was, you know, smaller last year in terms of the Hindi movie vis-a-vis pre-COVID times. I mean, how is the overall pipeline, I mean, new content pipeline that we see apart from the big names? I understand that. Has it changed the economics kind of a thing in terms of the competitiveness? Has it come down in terms of the content acquisition cost? What are you know, observing there? That's, that was my first question. After which I'll ask you. The movie production is back in business, 100% now. The problems of COVID are long forgotten now. Also, increasingly, you are seeing movies getting released in theater rather than going to digital platforms directly, which is good news because any movie that goes to theater, typically the music of that movie does far better than a movie which is going to the digital platform directly. For Yoodlee, the visibility on all the four big languages, Tamil, Hindi, Telugu, Malayalam, and there are multiple releases lined up both with the bigger stars and the smaller stars. Big budget movies, smaller budget films. When we people acquire music in any particular language, we follow a portfolio approach, whereby there are some big, more expensive but high-profile films that you end up taking, and then multiple smaller to medium, budget films that we end up taking. The risk factors are greater in smaller films, if they fire, they fire big time. Larger budget films typically do well because you pay that much amount of money only and only because there's a big star cast, composer, and singers connected to it. That's how typically this entire planning goes about on the film music side. Hindi film acquisition typically happens anything around 8 to 12 to 15 months in advance of the release of the film. That's a stage in which composers are being finalized and singers are being finalized and situations are being finalized, that's the time often we come in, if it's a large budget film. If it's a smaller budget film, we come in only when the songs are fully ready. On the Tamil and the Telugu side, we people end up acquiring music on a typically 6-9 months in advance basis for very big guys, and maybe one month earlier for smaller budget films. Have I answered your question? Yeah, I think most of it. The second part of the question was, I mean, second question was largely on the web series. We had couple of web series, you know, lined up for release. I mean, in the process, under the, you know, process. How are they are lining up, and, do we expect couple of them releasing by FY 2024? I mean, what is the timeline? You know, always remember there always will be a delta between us closing the deal with the platform and handing over the series to them, and getting our money and recognizing it as revenues, while the platform may take its own time to finally schedule the release of the series, depending on whatever suits them. We are, our series model is more safer, if I may say so, because we typically start work on the series only once we have a mandate from a platform. We are trying to pitch series both on the large scale as well as the small to medium scale. At the same time, there's a lot of emphasis going on films in regional languages, which is Malayalam, Punjabi and Marathi, which can first hit the theater and then eventually go to TV and digital platforms. Sure. We had, two or three series, if I'm not wrong, which we were working on, which we had announced, two I could remember, web series, I think. Has it been, I mean, has the shooting and all those been completed or? Priority of part is completed here. We are deals going on. Unfortunately, our contracts with our platforms forbid us to any mention of anything till the time they are not ready to talk about it. Sure. That makes sense. The film business in that sense is simpler because you decide you want to do a film within 6 - 9 months, a film shoot is complete and it hits it. Series business is a longer wait time because scripting itself takes longer, then production happens, and then it's all with the platform to decide when are they ready to announce it. Sure thing. The third question I just wanted, I mean, I had a doubt. I mean, I saw the presentation in the streaming partner thing, I couldn't see Gaana. is what I was just wondering, I just wanted, I mean, are we continuing with RB on Gaana and or it's just that kind of a thing? Just last question. All I can say, the policy we don't talk about individual partner deals, I had a similar question being asked to me at the end of quarter one on our deal with Meta, and that time also I said this, and I'm repeating the same thing here. Often, we will have deals going or deals being put off as part of the negotiation process with various partners of ours. Our role as management team is to ensure that while we are negotiating with the partners and at times having to take a tough stance of pulling off our content from those platforms, the overall revenues cannot fall. If we are pulling off content from one platform, we need to ensure that we get more than the customer of that platform moves to some other platform and listens to my song. If you are fond of listening to our latest Arijit song, or a Badshah ka Paani Paani, and if it's not there in platform A, you will go to platform B and listen to it, and we get compensated that way. In fact, in spite of the fact that we may not be there on some of the platforms this quarter, my music revenue is still grown by over 20%. Sure thing. Okay. Yeah. Thank you. Thanks a lot. Thank you. We have next question. We have next question from the line of Dheeresh Pathak with WhiteOak Capital. Please go ahead. A few questions. First is, what percent of our YouTube views would have an ad load? Hello? Me? Am I audible? You are audible, but I don't know if you can hear us. Yeah, I can hear you now. I don't know if you heard my question. I think what percentage of. Heard your question. See, I cannot comment specific as specific and particular as that. The YouTube revenue depends on actually three factors. Factor number one, how many views has our music been able to generate or have our videos been able to generate? The number of videos on which an ad is put and the rate at which ads are coming in. The part two and part three are more in the hands of YouTube than in our hands, and they keep on fluctuating. Overall, we are seeing a healthy growth coming out of YouTube. Because we have some sense that you know, the views you are anyways sharing with us in aggregate on the YouTube platform. Based on your top line disclosure, we can work out, you know, the monetization per view. It is coming out to be much lower. The only thing that I explain is that you have a very low ad load for content on YouTube. Otherwise, the number is not making sense to me. Please maybe take this offline and more insight. To clarify this, yes, the rates keep on moving. When we people report the YouTube number data, it's reporting data both for YouTube as well as YouTube Shorts, which is a YouTube property only, and it's a collective part of that. YouTube Shorts is a property which is very similar to Instagram. Mm-hmm. It happens. The way, the simplistic way in which you're trying to arrive at the per view money cannot be the right way to do it. I'm happy to clarify more stuff on your offline. Sure, sure. That is useful. In the annual report, there is a breakup of the licensing revenue between domestic and international. What is the basis on which you know, define those two categories between? The revenues which is for our customers outside India, that is completely international, the rest of it is domestic. The client billing might happen outside India, but it is happening for consumption by users of that platform in India. That would actually show up as international, right? See, the revenues that we receive are also in foreign currency typically. We use a consistent benchmark because exactly we will not know what consumption is in India and what is outside or any of Okay. Okay. The international revenue is paid in foreign currency, and that saw a sharp increase as per the annual report last year. The growth, when we saw in licensing, a lot of it was from the international revenue. There was not much growth in domestic. Was there a specific reason for that? It's all different right now. The growth was coming from short of telling you the name of the player. The moment I tell you the name of the player it becomes very obvious why this reasoning is happening. Some of the biggest boys who are there in this game right now are international guys. There are specific deals where there's a huge increase that we people saw, and hence you saw this number. Remember, whether it's the streaming platforms where some of the biggest names are international guys, as well as video streaming business, some of the biggest guys are international guys. Yeah. That's what I'm saying. Hypothetically, let's say it is YouTube. You get YouTube consumption is happening by YouTube users in India, but you have a deal with them at an international level. You classify that as international revenue stream, right? The underlying doubt you have, I can answer your question because otherwise you'll go in circles here. I can't disclose beyond a point on the call. Okay. That's confidential information. If you can tell me what your concern is, I'll try to address that. No, actually, when we saw the increase in the breakup, we saw that a lot of the growth came from international revenues. What I'm trying to understand is it the... Is the bucketing of the revenue based on consumption or streaming by users based out of India or is it just the billing is happening outside India, but users of that seems are still in India? Billing. It's nothing to do with what is happening. It depends where is the party, with whom we have got the commercial deal being signed with. Where are they based? Are they asking the Indian entity to do the deal or international entity to do the deal? Under-understood. It makes sense. There is a seasonality in Q2. Is there a reason that some renewals happen or the overflow based on minimum guarantee gets billed in Q2, that Q2 is typically a higher quarter, a big quarter? Q3 is the best quarter we have because of factors, one, that's a festival season and Carvaan typically does the best in that particular quarter. YouTube revenues typically peak at that particular time because of that much ad spend delivered and the rates are higher. Q3 is the highest, then it's Q2, then it's Q4, then Q1. Okay. Okay. One last question. This content charge comes across various line items, right? Because when you acquire content on the balance sheet and at least my understanding is it is showing up in three line items. One is in intangibles, second is in inventory, and third is in current assets. So, this content charge that you're mentioning is summation of all those, you know, costs which are capitalized and then expense through the PNL, in, you know, operating costs as well as amortization as well as royalty, right? That's correct. Apart from the three items on the balance sheet, you also have a marketing cost which is straightly charged to PNL. That is also part of the content charge as we have defined in our presentation as well. Okay. What you put as intangible, what you shown as current assets, is it just the join up that regionally is put into intangibles and Indian is put into current assets? A lot of money is paid as an advance for our content, and that's in working. Once it gets released, it moves to your fixed asset portion, which is the intangible. It's only the stage of the content which determines where it is going to be placed in the balance sheet. Okay. Everything will initially move to current assets and then will move into intangibles. Is that the way to think about it? Yeah. That is usually the life cycle of rentals. Last annual report, you also put music rights in inventory for the first time. Is there a specific reason for putting it in inventory which was not there earlier? Yeah. There are royalty-based deals. The nature of those content acquisition is different, and we have been accounting those consistently under inventory, and that's the reason you find in all the three buckets. Okay. Okay. Thank you so much. I have some more. I'll either take it offline, yeah? Thank you. Thank you. The next question from the line of Nitin Sharma with MC Pro Research. Please go ahead. Hi. Thank you for taking my question. Can you please talk about the ad revenue environment around the YouTube? Sometimes, has it slowed down or is it at par what it was in past quarter also? Yeah. Unlike the Western part of the world, we are not seeing the advertising scenario as such slowing down on the digital front. I'm not going to just talk only about YouTube because I look at various properties. We have seen that, as always, quarter one was the weak quarter, which is traditionally the weak quarter from advertising perspective. Quarter three, both quarter two end and quarter three saw very decent growth on the advertising front. This is a very different narrative from what you will hear from the television world, where the revenues seem to be falling down on advertising, but not digital. Our experience shows right now that the revenues are still holding steady. Understood. Two, for book casing question. What led to a fall in the other expenses in this quarter? It's actually some of the expenses we had to regroup, reclassify with the revenue. That's basically a PNL neutral item as it's not impacting PNL. Otherwise, yes, there's no other thing to report on that. Okay. Is it some item which was already classified at that base and then it got recovered, something like that? I will not say which specific line is it, but you are right. Some items were appearing as expenses. As per the accounting principle, we had to net it from the revenue. On PNL, no impact as such. Understood. The last question, I see a clothing segment on your website. Can you please talk about it? Could not get you. There's a clothing segment on your website. I think some T-shirts are being sold. Can you talk about it? Is this some promotional activity or a new segment? Clothing segment. You're talking clothing segment. Yeah. There are very, very small experiments that are being done right now at all times about how to further monetize our IP. Many such experiments are run at all times at a very, very small scale. We typically don't talk about it till the time they don't reach at least some substantial chunk. This is one of the multiple experiments being carried out on the merchandising side. When the segment becomes substantial, either in terms of cost or hopefully in terms of revenue, then I'll talk about it. It's just too early. Understood. Thank you. Thank you. We have next question from the line of Savi with 2Point2 Capital. Please go ahead. Hello Hi, Savi. Hi. I just had a question on the films business. If I look at the segmental results for nine months, that has fallen as compared to last year, fallen by a quarter bit, whereas the capital employed has increased substantially. While the profitability has decreased by more than 50%, the capital employed has almost doubled. Both the profitability and the return on capital has declined for this segment. Is there, I mean, How should I read into this? Yeah. The first part you should read it this way, that, unfortunately, since fortunately, we are combining the live events business also. Whatever impact you're seeing is on the live event. Live event is not even a one-year-old business. It's got its own one-off costs that are being put out here. Hence you are seeing some profitability being on the lower side on a nine-month basis. Film business is a healthy enough business. As for you're talking about the money which is locked here, there are multiple large projects that are being kickstarted as we people try to scale up the entire films business. That's what's there. You will see many of these films coming out over quarter four, quarter one and quarter two of next year. Okay. You are obviously monitoring the return on capital in these business because at the end of the day, that is important in the long run. Absolutely. I'm with you right now. Hopefully next year or maybe year after that, we'll start splitting, maybe the events business separately, you can actually see the actual money locked out there on the film side as well as the return that it's giving. We are committed to a 15%-20% margin, that's the only thing I've stated till now, on the films and series business. We are holding ourselves to that commitment. On the content cost side, you know, there, like, there's obviously a QOQ decline. There's a YOY increase, I mean, the amount of investing that you're making does not seem to be significant in context of the amount of cash we have. Is it that the competition has increased significantly and we don't want to partake in that, and that's why we are staying away. This is exactly what's happened here. There were four big films that were supposed to be released in quarter three. We people go out there and plan our calendar of releases, we keep in mind that in any particular month, there's no point having too many big projects being released in the same language. Unfortunately, on the Hindi side, a lot of films have got being pushed. Seeing the debacle of some of the larger budget films in, on the Hindi side, many producers went back to the drawing board to further fine-tune their films, which has pushed the release dates of some of our films. They were supposed to come out in Q3. Some have now got pushed even beyond quarter four to quarter one of next year. Just that aberration that you're seeing in here. We cannot suddenly decide if three films are being planned for a quarter, saying, "Right now all those films are not coming, just put some other replacement in." I think also, what I'll take in all humility as a learning for us, that we should be prepared for this as we people go forward and at any time have multiple other things also lying in a bank. This is a problem that you're seeing only and only because of Hindi films getting pushed. On the dividend side, you know, I don't know if you can comment on this, but the dividend amount seems to be quite substantial. That's board's prerogative. As a management team, I have no say in this. All I can tell you right now, I think the intent is very, very clear for many, many years. Last year also, we ended up giving 300% dividend. I think that the intent is very, very clear right now that we want to maintain a track record of being a good dividend-paying company. I'm not running away from all the other commitments I have made to you as a management team member, that we are holding ourselves to growth rates of between 20%-25%, both on the music licensing as well as. We are holding on to a commitment that the raise from QIP will be used only and only for music and nothing else. I'm agreeing to those revenue numbers also. I'm agreeing to 32%-33% profitability, operating income before interest and depreciation, as well as not touching those funds. We believe we are in a position right now to manage all this. Yes. Thank you. Thank you. We have next question from the line of Anika Mittal with Nvest Research. Please go ahead. Hello. Good evening, sir. Hi. Sir, my question is from, again, continuing with the earlier participant. Like, we are seeing the layoffs and cost-cutting from the organizations, right? Cuttings in the advertisement costs due to the rising inflation. I think OTT is spending by the players like Netflix, due to lower than expected subscription growth likely to impact our revenue also. If that is the case, do we have any alternative revenue stream that can compensate us? OTT and film segment and advertisement from YouTube has a major impact on our revenue stream. We people, one, you'll be happy to know majority of our revenue, which is very, very high double-digits numbers right now, is protected through fixed fee or minimum guarantees. Any quarterly seasonality or even an annual seasonality can be borne by us very, very easily. Second, we get a share of advertising revenue, we get a share of subscription revenue. A lot of cases there's a licensing fee that we end up getting. We are reasonably protected. Nobody is completely protected from if the market really starts tanking. We have been quite prudent over the last two years when our numbers, financial numbers were doing very, very well, and our profitability has been going up. We have not gone overboard just going out there and increasing our manpower expenses. If you see the manpower expense of right now, as a percentage of profitability, we are falling down. We did not go overboard increasing our cost structure just because there was a great time that had come in between, and we maintained that kind of a prudence even here. I'm holding on to our guidance right now of a 22%-25% increase on the revenue side and the profitability in terms of operating income before content interest and depreciation of 32%-33%. That's right. Sir, one more thing. You were talking about this live event business. How much revenue we did in first nine months, sir? Sir, overall between films, series and live events, we have done close to INR 100 crore in the first nine months. sir, the point is this is a low margin business. Don't you think the overall ROC will get impacted as long as this business are increasing its share to the overall mix? It's an essential core of the business right now. One, we are in the larger business of entertainment and not just music. Second, even to protect our music business, we need to be there in these segments. Films is something that every competitor of mine is working upon. You can go and check. Almost every player who's an Indian player who is into music business is also into the films business. It gives us a very secure way to secure music of the films, because we people start getting into the funding of it. Secondly, when we go out there and talk to these digital platforms, almost all of them are now licensing both music and films from us together. It improves my negotiation position to a very great extent. Third, as long as these are positive value accretive, they may not give me the same returns as music, but music, I can't grow at a rate beyond 23%-25% unless I'm ready to take a big hit on my margins. To grow at a rate faster than that, I'll have to acquire music at a very, very high cost, which will have a dent on my bottom line. For us, a good mix is that to manage our overall growth ambitions, we continue growing music at a 23%-25% while maintaining our margins, while get additional growth coming from other areas have a synergy with music and also still are positive margin businesses. That's how we look at it. This is, that was my explanation. One more thing, sir. You were talking about advertisements are not going right for the TV world, right? How do you see this thing on our revenue side? Sir, our dependence on TV advertising is very, very limited. All I can say, all I can tell you at this juncture is that my TV series is the only area. It is a smaller part of our business that we make for Sun TV, where we have some dependence and we have not seen a fall in quarter three. In general, I know in the industry there has been a substantial fall. TV serial business, the good part is I also have the IP owned by us. If there is any fall that we see on television, we are hopefully able to make up for it by putting the same content on YouTube and Facebook. Just a clarification. On the digital side, there is not any issue at all from the advertisement, YouTube advertisement, right? Sir, at Q2 and Q3, we have seen a very decent growth coming out here on the YouTube revenue. Going forward also there, you are not seeing any kind of reduction on digital ad spend? Sir, It's a little difficult for me to give those kind of absolute statements. Based on your conversations with as if people associated in the industry, right. Just giving an idea only. Business, what we need to do is to protect and shield ourselves from if some external industry goes down, it should not affect us too much. If I tell you right now that if something happens to advertising on YouTube, nothing will change at Saregama, then it will be a false statement. All we can do is to protect ourselves contractually. Through minimum guarantees, through fixed fees, and through a diversification of the business that we people are in. Just to give you comfort, you were talking about live events business. While we keep on saying that economy is in a state that it is in, for a Diljit Dosanjh show that happened in Bombay, we sold 10,000 tickets. For a Diljit Dosanjh show that happened in Gurgaon, we sold over 12,000 tickets. These are all tickets which are upwards of INR 2,000. There is a market sitting here. There's a ticketing revenue also coming to us. There are fixed fee, there are advertising, there are licensing, there's physical. There are multiple things that we people are playing in that gives us protection. Sir, what's there on the QIP utilization side? Can we expect something out of it in the near term, say 3-6 months? You will. I think, you will prefer that, we are delayed, but we do prudent buying rather than overpaying and picking up catalogs which, will not be value accretive to us. Just give us a little more time. I know we are testing your patience, but give us a little more time so that we can pick our catalogs at the right pricing. Till that time, I assure you the money is fully protected, not going to be utilized for anything else. You mentioned quarter three is basically your best quarter historically, right? Numbers are also showing that. Right. What is the reason for muted growth of Q on Q? It was festive season and all these things, so. There is the festival season. Carvaan and YouTube quarter three typically ends up doing pretty well. There's also the nature of the contracts that we people have. Usually all the overflows come out there in quarter two or quarter three of the financial year. It so happens. There is that kind of a movement that also happens. I think the best way for you to look at us is look at us always on a trailing twelve-month basis. That should give you far more comfort. Okay. That's the thing. Where do you see our top line by the end of FY 2023? How big do you expect Q4 considering the significant business you did in Q4 of FY 2022, sir? Sir, as I said right now, typically traditionally Q3 is our best quarter. Our attempt obviously will be to maximize the revenues in quarter four. The variations are not going to be wild variations that we are talking about here. Traditionally Q3 is the biggest quarter for us. Let's see which way the quarter goes. On a long-term basis, I'm holding on to our guidance of music licensing growing between 22%-25%, and films, events, and series business on an annual basis growing at 25%. I think that should give you more comfort than just a quarter pass. The quarters move here and there. Understood, sir. That's all from my side. Thank you very much, sir, and the organization. Thank you. We have the next question from the line of Aditya Nahar with Alpna Enterprises. Please go ahead. Aditya Nahar, your line is unmuted. Please go and ask your question. Yes, go on. Hello. Tell me. I can hear you. I'm sorry to interrupt, Mr. Nahar. Your line is not very clear. We could not hear you. We'd request to kindly rejoin from a different line, we can take your questions. We move on to the next question. Our next question is from the line of Shubham Ajmera with SOIC Ventures LLP. Please go ahead. Hello. Yeah. Hi, sir. Thanks for providing me the opportunity. Sir, I was going through all our YouTube channels, there on our main music channel, that is Saregama Music, there is degrowth in the number of views on both Q on Q as well as Y on Y. Can you please highlight on it? Also on the new movies that are lined up for the next year. Sir, there's no degrowth on YouTube views that we people have. I can't comment on a specific channel. We have, I think, over 32 YouTube channels across all languages. Even in Hindi, we have got multiple channels and not just one channel. We have shared our quarter three numbers on YouTube. Overall YouTube numbers, which is channel views, user-generated content connected to us, and YT shorts. In fact, our 44 billion views in Q2 have grown to 53 billion views in quarter three. I'm happy- No, sir, I was referring to Saregama Music channel. It's a little unfair right now to pick up one channel. You think that's a flagship channel. It may not be. There are multiple channels. I'm happy to get into more details here. Overall, YouTube numbers for us have given a very substantial growth in this quarter. Okay, understood. On the new movies lined up, how much movies will be coming up in the next quarter and next Q1 as well, like? Sir, at this juncture, if I go by the release dates which have been announced by the producers, unfortunately they're completely dependent on them. The lineup is on Hindi side, since you follow Hindi, is Karan Johar's directorial movie, Rocky Aur Rani Kii Prem Kahaani is expected to release in April. If that does, the songs will start coming out from the month of March. There is Vicky Kaushal, Sara Ali Khan's movie, Zara Hatke Zara Bachke. The dates have been announced, it's February, March. As of now, we are still awaiting since they wanna change their dates. It's a very common practice in our industry for producers to change dates. There is Vicky Kaushal, Ammy Virk film coming called Rola. There is a Ajay Devgn film coming called Maidaan. There is a movie called Pippa, which is Ronnie Screwvala's film, which in fact was planned for 2022, then became early 2023. Now we're hearing it may go to mid-2023. There is Vijay Deverakonda, Samantha's very big film called Pushpa in Telugu. I'm specifically naming this because both these artists are very well known in the, on the Hindi space too. We have a Prithviraj Sukumaran's films right now coming in the Q1 in Malayalam. We have two Suriya films that we people have locked right now, which will be coming hopefully in Q3 of the next financial year. We have a Mammootty film which is locked. We have a Ajith film which is locked. On the Tamil side, you have Sivakarthikeyan films also getting locked here. You have Dhanush film, which is locked. There's a range of stuff that we people are working on Hindi, Tamil, Telugu and Malayalam, which you will keep on seeing right now over the next few weeks, months, hopefully in the calendar year 2023. We have also learned our lessons, we are going to be prepared right now that if there are large number of movies getting pushed, then there will be more non-film songs that will keep on coming out. Understood. Understood. On the Mango Music, like the acquisition which we have done last year with the Mango Music. Just wanted to check, like, if it started resulting in the financial terms as well. Yes, it has. The numbers, we people have jumped from literally not being a player in Telugu to a clear number 2 position in Telugu, which is a combination of some great new music and the Mango catalog acquisition. Understood. My last question is on the Carvaan business. like, can you share the product mix in the Carvaan? Like, how much percentage is from the newer mobile versions which were launched, and how much is from the older variant with them? Unfortunately, I'll not be able to share that information. I've been stating for the last two quarters that Carvaan Mobile is playing a substantial enough role. The Carvaan, the old Carvaan as a product is a five-year-old product now and has got no marketing support for over three years now. It's the newer products obviously which is helping us that much more, newer variants of Carvaan Mini, Carvaan Mobile, Carvaan Musicbar, which is allowing us to sell these many number of units. Understood. Understood. That's all from my side. Thank you. Yes. Thank you. Ladies and gentlemen, that was the last question. I'd like to hand the conference back over to Mr. Vikram Mehra for closing comments. Over to you, sir. Thank you. I'll just repeat whatever I said earlier. We maintain a bullish stance on music licensing. We expect a 22%-25% annual growth over the next three to five years. The next 12 months, 12-18 months, where we will see the transition of the OTT or the music streaming industry to move from an ad-based model to a subscription-based model, will have its short-term pressures and things will go a topsy-turvy. On a, the moment I start looking at the 18 to 36 or five years, 60 months horizon, I see a very stable growth of revenue coming in. Even during this period, we are confident that this period I mean is next 12-18 months. We are confident we should be able to handle these pressures because of the diversified nature of our revenue and our increasing market share in the space of music. We will continue with our investments, aggressive investments, both on film and the non-film music side across all the major leading languages of the country. We are on constant watch out and conversations with multiple companies which are either music catalogs or are companies which are connected to the world of music, may not be directly holding catalogs, but may help us a lot in promoting new music. We're talking to multiple of them in the scene right now if any acquisition is possible at a valuation that makes financial sense. We continue with a cautious approach on Carvaan, and the focus will continue to be to manage our margins and not the top line. Carvaan will continue at least to do a breakeven. The film series and TV and the events vertical are expected to grow at 20%-25% growth year-on-year, we hope to make anything around 15% margin on this business. The events vertical specifically will have its ups and downs on the quarterly side, depending on how many events in a quarter have we been able to go out there and do. It will take couple of years right now before the stability that comes in, this will be a very low margin business at least for first couple of years. We will continue with this because strategically it helps us a lot on our music acquisition side. Overall, I assure you guys once again that we are well protected from the vagaries of advertising revenues going up and down on a quarterly basis. Yes, there's a long-term impact on the economy, we will get affected, but hopefully, we are well prepped and don't have that high cost structure for us to suffer in case things go dramatically wrong. I'm hopeful right now that we will maintain our profitability and the growth projections we have given you in short to medium basis. That will be all. Thank you guys. Bye-bye. Thank you very much, sir. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines.