Ladies and gentlemen, good day, and welcome to Saregama India Limited conference call hosted by ICICI Securities. 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 touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Banerjee. Thank you, and over to you, sir. Hello, everyone. A warm welcome to you to the Q1 FY24 results conference call of Saregama India Limited. On behalf of ICICI Securities, I would like to thank the management for giving us this opportunity. Today, representing the management, we have Mr. Vikram Mehra, Managing Director, Mr. Pankaj Chaturvedi, CFO, Mr. Saket Shah, Head of Investor Relations, and Mr. Pankaj Kedia, Vice President - Investor Relations. I will now hand over the call to Mr. Vikram Mehra for his opening comments. Over to you, sir. Thank you, and good afternoon to everyone. The biggest event of the last quarter was the approval finally coming from NCLT for the demerger of Digidrive Limited. This new company now has a digital distribution mandate on a non-exclusive basis of Carvaan range of products, opens publication business, and Saregama's other non-core assets. We are in the process of getting this new company listed on the stock exchanges. Shareholders of Saregama will get one share of Digidrive for every five shares of Saregama held by them, and the record date for the same was July 27th, 2023. We expect the listing to be done somewhere in the last week of August 2023. The quarter, our operating revenues are INR 163 crores and an EBT of INR 59 crores. In our presentation, we this time again have shared the performance of the company over last 13 quarters, just to show you the, the cyclical trend that we people have seen in Saregama all throughout, where Q1 is the lowest quarter and Q3 is the highest quarter, and the same trend is continuing year after year after year. We hope that we will further build up on the Q1 numbers in the Q2 and Q3. If we look at the quarter numbers on a year-on-year basis, the revenues look on the flattest side, but it hides more than it tells. It's the events business, which is extremely cyclical and event dependent, where last year we had a large number of Diljit Dosanjh concerts that were scheduled in U.S. and Canada in the first quarter of the year, which was not the case this year. We had in fact year of Australia concerts coming in, which is at the later part of the year. The Q1 number of events which were there in the last financial year were not there in this year. Otherwise, if you look at the music business, there was a pretty healthy growth of 17% in Q1, too. The other part I want to tell you, share with you guys upfront, is the company is in dialogue to settle a very old contingent liability, which is presently under litigation. Discussions with the party are in pretty advanced stage, based on the conservative policy that we people follow, we have provided for an estimated settlement amount in our books during Q1. This is the only reason why there has been an increase in the other expenses in the P&L, and this has absolutely nothing to do with the ongoing business operations of the company. This is a very, very old legal case that's going on. The big story in the music business were off in this quarter. Eventually, we people achieved a leadership position in the Hindi music segment also. While last year, we were able to get into leadership position on Telugu, Malayalam, Bhojpuri, and Gujarati, Hindi was still sometime far away because most of our releases had got postponed to financial year 2024. Two of them, finally got released in, or are getting released now. Q1, the biggest hit of the country at an All India level, have been the two songs of Zara Hatke Zara Bachke, which is Vicky Kaushal, Sara Ali Khan, and the music was given by Sachin-Jigar. The songs were there at the number one position on every possible chart in India, whether it's Spotify or it's Airtel Wynk. In fact, in YouTube, area was, it was a global number one music video for a very, very long time. The songs are also rating at number one on various radio stations, whether it's in the terms of number of times the songs are played or the local countdowns, which is presented by companies like Mirchi. Even on Shazam, it was emerging as the top songs. The, the, the music has done very, very well for us. It was immediately followed by Rocky Aur Rani Kii Prem Kahaani, the one song that got released at the end of the last quarter, and did very, very well. It's an Arijit Singh song. In Telugu, we had another postponed movie, finally releasing its first song called Kushi. Again, a super hit music, and the good part about Kushi's music is it's not just Telugu, but the Tamil and the Hindi versions have also done very well for us. For, for a company which wants to go back and establish a leadership position at an all-India level, this was a very, very important and a crucial step for us, that in Hindi also, on an overall basis, we will be able to prove that we are number one in terms of listenership share. I'm happy and glad to share with you that if you look at, at an all-India level for the full quarter, new content released during the quarter and the listenership of that content, that means all the songs that were released in April to June and their viewership/listenership, we have got a clear market leadership as [Zirchanjaya] at an all-India level. Even in Malayalam, we got a massive hit, a movie called Romancham. Songs fared very, very well, which allowed us to continue with the leadership position in Malayalam. If I look at the next quarter, which is the Q2, the going looks pretty good. Rocky Rani Kimi next level of songs has come out, all doing very, very well. Case in point is a song called What Jhumka?. Again, dominating most of the charts in the country and abroad. With the movie getting released today, we believe that the traction for the songs are going to become even bigger as we go ahead. We also have Kushi Ki, other songs coming out. We have big original songs in Hindi coming out, sung by Arijit and Badshah. We have a pretty decent lineup in front of us for Q2. If I look at Q3, Q4, the second half of the year, which is always bigger from the entertainment industry perspective, we have big movies like in Tamil, we have Captain Miller and Kanguva. These two both are, one is Dhanush, the other is Suriya. Both of them, top stars of Tamil, their movies, music is gonna get released. Kiccha Sudeep, who is the number one star of Kannada, his movie is getting released in the later part of the year, and the music will come out. In Hindi, you have again, Vicky Kaushal, Ammy Virk movie, Mere Mehboob Mere Sanam. We have A. R. Rahman music, Imtiaz Ali, and Diljit Dosanjh acted Amar Singh Chamkila, and we have Ajay Devgn's Maidaan. In Malayalam, we have Bazooka, which is a Mammootty movie. We have a very big film coming, one in two. The music of all these films is sitting out there with us. We see as we people go forward, this leadership position, now that we people have got onto this number one position, we see ourselves fully holding on to this position. Also, strategically, I need to state this: it's easy for us to take a conservative position on newer content and just pick up a few movies here and there, from the new content perspective. As a company, we, we don't believe in that policy. Saregama, as we erstwhile HMV, has always had bought the biggest music, and this is what kept this company relevant for so many years. Now, also, we are very clear, we will pick up all the major, big, popular titles that are gonna come out, which is not only going to make money for the company for the next three, four years, but will ensure that the company keeps on making large amounts of money, even 20, 30, 40 years down the line. That you or I may not be there, but you, as a shareholder on whichever management team is sitting here in 2060 also, can take a lot of pride in the content that we people secured in the 2020s. The way people take pride in the content that was picked up in the 1950s, 1960s, and 1970s, we still make money off it. On the monetization side, I have been saying this for some time, that the big changes that are happening is more and more streaming platforms are now realizing that they need to move towards a subscription model. You already have three big guys all announcing over the last 200 days that the model is now fully moving behind the paywall. There are only three guys left who are still pursuing a free model. All three of them have also sent messages, which is number one, number two, and number three in the market. All three of them have sent a clear message that they want to move towards a subscription model. Am I saying India will never have a free market? It will be silly on my part to go and state that. It will be a mix. Like in television business, India will have a mix of subscription and advertising. Just like in the television business, the subscription, at one time, subscription was just a nominal number. All the, all the revenues that TV channels used to come from advertising, which has now completely changed and a larger chunk now starts coming from subscription, something very similar is going to be happening in India, too. Where on the music side, a greater and greater chunk of revenue is going to move towards the subscription side. When it moves towards subscription, our, our yield, per song heard, is going to go up. I've shared the match with multiple times in various calls, so I won't bore you by repeating how that will work. As we move towards subscription, there will be short-term pain. As, as platforms move from a free model to going behind completely a paid model, their revenues are also going to fall for a quarter or two quarters, and so will there be an impact coming on our revenues, too. The good part is when you are a very well-diversified company like Saregama, which has a very which has a dependence, but very limited dependence on revenues coming from streaming, we are able to go back and we will be able to manage this, this, ups and downs that will keep on happening on the subscription revenue in the short term, very, very easily. We are not we though we are sharing with you, there will be pressure coming in on the subscription side, we're still holding to our guidance that overall, music licensing revenue should be growing at a rate of anything around 20%-23% this year. We don't see us changing that. The YouTube revenues have gone up substantially, and for us, it's a disproportionately higher numbers that are coming in. Remember, traditionally, the music that we people own, we had only the audio rights. We are the only label who had only audio rights and not the video rights. Now, with the aggression that we people are showing and picking up newer content, all this content is coming along with the video rights here. If you check out All India Trending on YouTube at any particular time, out of the 20 or 30 songs that they show in All India Trending list, we typically, as a label, have anything between seven to 10 songs sitting on that particular list. Because there's a lot on the popularity of the music that we are picking up and also the direct implication on the revenues that we are making right now from the on the video side. We have also further beefed up our publishing side of the business. We are getting more aggressive in terms of giving licenses for our music to various films, as well as brands, creating songs specific to particular brands. Up till now, what used to happen, brands used to have their advertising, and they used, and they used to use a song in their advertising. Now we are proactively going to the brand and saying, "Why not we develop a song which is completely suited to their brand, which helps them in their marketing, while we can also go out there and monetize that song?" In fact, we also get a license fee from the brand. That part of the business is also getting shaped up. More and more brands are realizing that to talk to huge music is the strongest art, and with our leadership, position, and perception in the market, brands are very comfortable coming out there and working with us. Our work on growing revenue from our catalog continues. More and more, lo-fi versions or traffic versions, which are, or acoustic versions, or this is the kind of music right now with the newer generation and the younger people like to listen a lot. While they maintain the, the lyrical quality or the composition of the original song, it's a completely new instrumentation, which is created at literally at times, at a zero cost or very nominal cost, making the song relevant to the younger generation, and more importantly, giving a fresh lease of life from the copyright perspective to the new rendition of the song that people will release. We also continue with the campaign to keep on inviting more and more entries from the budding talent, whether it's a bathroom singer or it's a talented guy who have won some contest in a smaller town like Bareilly. All of them to keep on sending their cover songs across to us, in return of which we people share 10% royalties with these people. This is allowing once again, us to grow revenue without spending money and also improve the popularity of our catalog music. On the last call, we had shared with you that the royalty expenses that have gone up in Q2 was a one-off event because we had adjusted the entire royalty payout that we had to make the singers for the entire year in a single quarter. We have lived up to our commitment. If you see the royalty expenses this year as a percentage of revenue, they have come down. This is a steady state in which we are going to be operating, because now we are paying them on every quarter basis and will not come on a cumulative annual basis across. Royalties are back to where they are supposed to be. On the overall basis, I still maintain we have just touched the tip of the iceberg. We are not going to get swayed by doing some short-term things to improve profitability for a quarter or two. We will continue on taking steps to build foundation for this company to be the most relevant entertainment company in India for the next 50 years. All these necessary steps, whether in terms of spends that we people are doing on data analytics, predictive AI, generative AI, building tools for us on the marketing side, we will continue taking those steps because we believe that's going to make this company far more resilient and powerful in the decades to come on not just the music front, but the overall entertainment front. The other edge overall, that we end up getting is a diversified business model. We are not dependent on any one player, any one business stream, and within that, also, any one partner too much. There was a time that some of our global partners were having a problem in terms of their advertising revenues. We were not that affected because our dependence on any one partner is on the high. Now that all of them are seeing an upswing, it will be great news for us, but the good part is there isn't too much dependence on any one partner. They're not riding the fortunes of any global MNC. Carvaan. Carvaan, I've been stating this, Carvaan just running on its own momentum, and its, the journey continued during this quarter also. If I look at a quarter-on-quarter basis, it's been a crazy growth that we people have seen. It's a 50% growth. We have touched close to 1.49 lakh units have been sold, this compared to 98,000 units that we have sold of Carvaan in the Q1 last year. Repeat sales drivers continue to be Carvaan Mini and Carvaan Mobile, which is also explaining that the revenue growth is lower than the unit growth. Remember, Carvaan is profitable, Carvaan is not making losses, and more importantly, Carvaan helps us a lot on the catalog marketing side. It, it really keeps our music relevant, as we people go forward. Films and series verticals did not have any release happening during the quarter. We just had our TV series on Sun TV. Q1 is traditionally our bigger quarter from advertising perspective, because most advertising goes into IPL. Q1, every year we go through the same pressure. This quarter was no different. We have one movie which is getting released of us in Q2. Q3, Q4, the lineup is very, very strong. There are lots of big titles that are coming, both on the Malayalam and Punjabi side. I want to reiterate that we are holding our guidance on the Films and movie side of a 25% growth in revenue and a 15% margin. Looking at the Q1 numbers, some of you may have doubts how we are going to go and achieve it. We are very confident with the lineup, which is sitting in Q3 and Q4, that on an annual basis, we will achieve this 25% revenue growth number with a 15% margin. Let me not talk about the Live Events business. This is the feedback we see from multiple investors. We have decided to present events business out of, out of the films and television and present separate vertical so that you can see the revenue and profits. Please remember, it's an absolutely new vertical for us. It will require larger amount of investments to build this up. We saw in this quarter, Disco Dancer being released for the first time in India. Some of you may have heard about it. The fees were widely covered in every major newspaper and online publication. It got very positive review, both from the critic side as well as the customer side. We people, I have to, to be honest with you, we people had to market it a lot because this is the first time a concept like a musical show where a story is being told with a combination of dialogues and music, being presented in India. It's a relatively newer concept for Indian audience. We're either used to seeing a story in form of a film and theater, or we go to a musical theater only to listen to people singing songs. This is a combination. This is a very common thing in, in, in, in U.S. or U.K., is a newer concept in India, and we spent a good amount of money to go and promote it. We believe. Hence, there are losses which are people have written during the quarter. The entire cost has, a part of it has been charged off. We are confident in a period of 12 to 18 months horizon, this segment will also turn profitable. If it's not, we are very open to completely having a relook at this new business that we have got ourselves into. Overall, the Films business, if you take both these segments together, Films and Series segment and the Live Events segment, the total capital allocation, as we have committed to you at any particular time, of the total capital that is deployed, the total capital allocation to these two segments will never exceed 18%. That's the internal guideline that we people work with. At this juncture, the number is closer to 12%. We still have a large elbow room left in front of us. We are clear, we are not going to, because we have an 18%, 18% upper ceiling. We don't want to go and plan to touch it at any particular time. Overall, we are happy with the way quarter has shaped up. Music segment is solid. Overall, if the growth looks flat, it's only because live and films, live had a big quarter last year on Q1. By the time we end the year, right now, we are confident each of these segments are going to grow at a rate that we people have gone out there and shared with you in the past. Thank you, and we're open to questions now. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, please press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, you will wait for a moment while the question queue assembles. The first question comes from the line of Swapnil Potdukhe from JM Financial. Please go ahead. Hey, hi, Vikram. Thanks for the opportunity. Hi. I just have a couple of questions. One is with respect to your growth rate in the music licensing business. Your music business has grown 17%, your volumes in the Carvaan business have grown more than 50%. Does that imply that our music licensing business has grown significantly lower than 17% by one? If that is so, the fact that some of our accounts are doing quite well, topping some of the charts, why is that not getting reflected in, in terms of our top line growth in this licensing business? Let me answer your second question first so that you understand how commercial work in a music licensing business. This is not that there are CDs and cassettes that are album because right now I can sell more cassettes and CDs. All our deals are covered under minimum guarantees. As long as the person and the overflows are booked only when the deal gets over. Unless the deal was getting over on the 29th or 30th of June, and the overflows are at eight hours, there's no way that the impact of Q1 factors can be seen in Q1 alone. You will see it only when the overflows in the end of the deal are going to come in, or if it's a fixed fee deal, that basis is higher performance, we will be able to negotiate a much higher fixed fee deal. There is no immediate same-day correlation or a causal effect relationship, which is there between success, the success of the song today and the revenues going up also today, principally. Coming to the first part, no, our music licensing revenue has shown a pretty decent growth. We show these segments separately only at the end of the year. However, tempted I may be right now to share the numbers with you and tell you the growth is pretty decent, I will resist it. We are holding on to our projection of 23% growth overall on the music licensing side. We have said this over the last four to five years. We have a track record that we have maintained these numbers. I'm pretty confident we'll maintain the numbers this year also. Right. And, and the second question that I wanted to ask is the, is the, losses or, or the cash burn that we expect in the events business. Have we, internally, taken a, you know... Do we have any number in mind that you would burn a certain amount? You did mention that you can take around 15 or 12 to 18 months to, you know, make it profitable, but any quantification in terms of the actual burn that you expect in this period, would be-? Yeah. We've Yeah. We've got an internal numbers that we people are saying that at any particular time should not go beyond that. Yes, it is. We adjust them as per the plan. For you, what the comfort I can give you is, this cost people see when we share the Adjusted EBITDA margin, because we're not capitalizing it, we are charging it out completely. Adjusted EBITDA margin of the company level is not going to be falling below 30%-33% that we have always maintained. Right. Right. Even the business unit, untouched, technically, is also critical for us, that if we people want to control artists and, and, and for artists, life is a very important part. As a company, we are clear we are not relying only on, firstly, the laurels of our past by doing only recreations of our older music. We want to create music for tomorrow. Tomorrow's music is going to come both from film side and the newer generation is getting more and more comfortable with original music, the way it happens in America or anywhere else. We need to be prepared for the situation that if suddenly original, non-film music starts becoming big, in that case, artist relationship is going to be the biggest differentiator between labels. Artist relationship is not just about who is going to go back and take my phone because I've been there, and artists will look at everybody's phone. Who, which label can offer what for the, in the path of artist growth? All these are great areas that we can offer to the artist, saying that: "If you work with us, it's not just songs that we can release for you. I can do artist management for you, and we can also manage your entire live business." That does not mean Live is going to become a loss leader. We believe once we have been able to establish ourselves in the initial days, what does Saregama Live stand for? This builds on professionalism. The real, at the operating level, actually, there's typically no problem, and this a problem becomes marketing, and that's what we need to do in the initial days to establish what this concept is. Right. Got it. Just one final question, if I can squeeze in. Can you give a sense of what percent of the QIP funds are still being, are still on the balance sheet given that you have now started deploying some of those funds towards the newer content that you mentioned? As of now, we are not using. The internal accruals of ours are enough right now to fund all our content acquisitions. We have INR 7 crores and INR 10 crores, which is still sitting out there on our balance sheet from QIB. Got it, Vikram. Thanks a lot for taking the question. Yes, all the best. Thank you. The next question comes from the line of Udhaya Prakash from Value Research India Private Limited. Please go ahead. Hi, sir. Congrats on the great numbers on the music segment. May I request you to be a little louder so I hear you? Yes, sir. Can you hear me now? Yeah, better. Thank you. I have three questions. My first question is that you have said that you are going to pick up bigger content going forward, more so in projects. One of the reasons why you, along with many other production companies, both was that is because they probably guarantee a certain number of streams automatically, due to the staff or that it automatically exists. Yeah. Do you think that because more and more music production companies will come towards these kinds of movies, the content, the cost that you which you acquire this content would be inflated? Let me answer your question number one first. I don't want to name, take the names of my competitors, if you please go language by language, the big film music areas are Hindi, Telugu, Tamil, Malayalam, and Kannada. In each of the languages, there are two or max three music labels that are playing it out. The entry barriers in music label business is very, very high. That's why globally, there are only three music labels. From all the global labels are not there in India. India is an only exception. In India also, in any market, there are only two or three labels. I'm not saying there's no competition, but it's not that there are 10 people fighting it out. The production house also understands the deals are very, very clear, that if I am going and acquiring a large budget movie, it's not just some money because of which, a Rocky Rani came to us or a Zara Hatke Zara Bachke came to us. You can check this out with the respective production houses also in, in a one-on-one dialogue. It's the marketing ability of a company which goes a very long way to convince a film producer whether they want to work with the company or not. A very good example is the recent movie, Zara Hatke Zara Bachke, which is a Vicky Kaushal, Sara Ali Khan movie. The movie got a massive opening, and the production house has accepted publicly because of the very huge success of the songs. We had played a very important role in promoting the songs a lot. Unlike the Western world, where it's the failure of the movie which convinces people to watch a film, in India, it's primarily the success of the songs before the release of the film, because of which movie gets a big opening. We believe that strength of ours will always put us in a very good position with each of these production houses. Second, also remember, with most production houses, we have a relationship going on for 30, 40, 50, 60, and 70 years old. The royalties are still being paid to them. They also have this comfort level that at Saregama, the deal is not only for a day. If you do work with them, Saregama is one of the very few upfront and honest companies that will keep on paying you royalties eventually. Okay, sir. Understood. My next question is, as a music production company, do you have control over any aspect of the album, be it the number of songs or the length of a song or any, you know, anything related to the album, or all of it is decision of the creator only? No, we have-- Most of the times right now, most production houses work with us, very, very close. Some of the factors that you raised, like the number of songs and all that, this too is part of the commercial deal itself. When we people go and acquire, all this is very clearly stated, that how many songs will be there, what will be the kind of situations of the song. In 99 out of 100x or 100 out of 100x, music composer is also finalized. What we don't have a control, and I'll be very honest, is that in that song, when it's a picturisation is happening, what is the actor wearing and what is the actress wearing? That is completely in the hands then of the film director. Unlike an original song, if I'm releasing non-film, then I'll have control over that. In film, you don't get that in control. On the audio part, the production houses work with us very closely. Okay, so by that, while you're finalizing the deal itself, you pretty much know everything that you have to know about the album, music-wise? Yeah, yeah, you do. In fact, you know it at every stage. See, See, most production houses also need to sound out and bounce ideas. They, they work closely because it becomes more of a partnership model as the song starts getting developed. Okay. My final question is that, the contribution of Films and Series segment to our revenue has improved, in last five years. In FY23, it was around 20, it was around 20%-22% of our revenue. Due to this factor, you think the lack of releases in many one or two quarters, which you may, which you may have done deliberately, will affect the revenues going forward since they form a huge part of our revenue? Is, is this something that we should expect going forward? Yeah, it is. The only part of my films and, you know, series I don't like is the lumpy behavior. Often the film release date is may not even be in my hand. It also depends a lot right now, which is the right window, where we can go and release our film so that there is no competing film that is of a bigger star coming on the same day. A lot of variables start playing. You will have some amount of lumpiness. Often as the, the size of the films and TV business becomes bigger, there should not be any quarter where there's no release coming in. We are, we are, we are hoping and trying that it builds up that way. The very nature of it is lumpy. Okay, sir. Thank you. If I could squeeze in one last question. Sure. In last, in last con call, you had stated that, we are remaining conservative, about, spending the QIP money because anytime you go on for acquisition, the valuations are so inflated. Is this still continuing? Are you, trying to finalize any deal during this financial year? In constant, we are very clear. We will do deals either in terms of content buying or buying positions in companies that help us in the marketing of music, because this money is going to be used only for music. It's not going to be used for films business or Carvaan business. We will do it only when we believe right now it's value accretive to our investors. If it's not value accretive to our investors, then we, if need, we sit on the fund or use these funds for new content acquisition rather than going out there on the catalog side. Are we in dialogue? We are in dialogue with people, we'll share with you whenever the timing is right. Okay, thank you. That's it from my side. Thank you. The next question comes from the line of Bala Murali Krishna from Oman Investment Advisors. Please go ahead. Yeah, good evening, Mr. Vikram. Rajan Sha, member. I would like to know about this film segment. Here we have planned only three. What will be the plan for the number of films per year and down the line to 40 years, sir? Sir, I'll not go on the number of films. I will go back on the revenue that we are writing on film production. We previously are saying, right now, we should be growing at 25% that segment, and in fact, I'm holding on to that guidance on a short to medium-term basis. Every year, we see our Films and Series segment growing at 25%, while the total capital allocation keeps on remaining at the upper limit of 18%. Good. That's great. Regarding this library, we have around 58 months. All these films are satellite rights are already sold or any film satellite rights is still sitting with any model? There's a combination. There are rights that are from. The newer films, most of the rights are gone. Some of the older films, rights come back to us because these can only time, duration with rights. We don't, we are, we are licensing and not selling. Often, if satellite rights go away after 10 years, they come back. This keeps on happening. The bigger revenue clearly gets connected to the newer films, and most of the newer films are still going through the first tranche of licensing. when, when we can expect this, the newer films will come back to us on again, right? each year we can expect. Some of the YouTube films that the absolutely 1st round that we people have launched in 2017, came back from the 1st platform, already gone on to the 2nd platform. This keeps on happening. Remember the earlier set of films that Pradyumna was making under the Yoodlee brand name were relatively smaller films made for the digital platforms. We are now making bigger films in Malayalam and Punjabi primarily, which are going to hit the theatrical world also. One more thing, and lastly, on this, we are focusing on these two languages only. Is there any specific reason or we can expand to another language also in future? At this juncture, when we look at the two parameters, are very crucial for us. One, we want to have a guarantee that 70%-80% of the cost of the film is revenue connected to that is guaranteed before the film is released. That's an important criteria with which we people approach the film business. We, we rely on theatrical only between 20%-30% of the cost of the film is to consider. That we know that if everything goes wrong also, at least anything between 70%-80% of the cost is recovered. Second, we are looking at a 15% margin in this business minimum. If I look at these two parameters, then the language like Malayalam, Punjabi, and some Tamil and Telugu also fit the bill better. There is a, there is a higher probability that the films get over on time, within budgets, and we are able to get a good value for those films. Are we open to other projects also? Yes, we are, provided the other project also guarantee us that 70%-80% of the cost of the film will get, the revenue connected to that is guaranteed even before we first spend the money. That's the basic principle with which we approach our films business. We are not relying too much on theater. Yeah, that's very helpful. All the best to all your future. Thank you. Thank you, sir. Thank you. The next question comes from the line of Christian Nahar from Altna Enterprises. Please go ahead. Hi, Vikram. How are you? Hi. Great to hear you again. Vikram, just wanted to check with you this provision that we have made against a settlement. If you could, if you could share what the amount of this is? See, the matter is at this juncture being subdued, and it's still pending a formal closure. We cannot give you more details at this juncture. I'm, I'm, I'm quite hopeful right now that in Q2, everything should get closed, and as that time we'll share with you. Okay. Thanks so much, Vikram. Best of luck. Thank you. The next question comes from the line of Ravi Kumar Naredi from Naredi Investments Private Limited. Please go ahead. Thank you very much, Vikram. Ravi. Yes, yes. Thank you. Thank you, thank you. Now the result is subdued comparatively last quarter, my question is, Song of Zara Hatke Zara Bachke, made blockbuster. Congratulations to you. Can we have write off the cost of music, in this June quarter, or what is the policy? I think we shared the policy multiple times now. The marketing cost is fully written off, in the June quarter itself. The cost of the content is going to be, written off right now in a, in a 10-year horizon, where the largest chunk is going to be written off in year one itself. Okay. Sir, I actually, if you look at the overall business for us, firstly, we don't think that the quarter performance is up. Please think about that events business vertical, which is really the actual shared information or event. Secondly, look at the music part, which you are comparing with. Very few people have gone back and delivered a previously hit performance while we have taken the cost of Kushi also, Zara Hatke Zara Bachke also, and Rocky Rani also. Please understand, we are building the company for thirty years down the line. We are not building the company- Definitely, definitely. That we agree. That we agree. Of the, if the company will be high in the next 50 years, I am so promising on this feature. Because the music has no alternate so far. If you quickly check it, I think it's really a part. Every year for the last five years, you will see my Q4 performance of the previous year to Q1 of the current year. Typically, they go right now at 2%-3%. The numbers go right to Q1, goes at a number, increases that. Q3 becomes even bigger, Q4 comes down, but still bigger than Q2. The next year, Q1 starts where the Q4 ended the last year. We, we have a clear pattern in which our performance keeps on moving. My overflows are at a particular time when they come in. We don't. We try to do more and more minimum guarantee deals and minimum overflows. Rather than a deal, you can recognize revenue whenever. We do various deals where revenue is recognized only when it's getting accrued across the bar, and there's a large overflow that typically ends up coming in specific quarters. Yes, sir. Still we need to deploy extra funds? Yes, this is my question. We are, we are, and, and that's a very stated position of Saregama as a company, that we will go out there and, one, invest in multiple languages, take leadership position in each of the languages, because then when you get into a number one position across multiple languages and the power of catalog that we have, I think at that time, we will be able to drive efficiencies in terms of better yield, far better than anybody was able to do today in the market. Okay. Okay, okay. Thank you very much, and wishing you all the best. Thank you. The next question comes from the line of CA Garvit Goyal from Nwest Analytics. Please go ahead. Hello. Can I audible? Yes, please. Vikram sir, you mentioned if no value accredited deal happens, we will use the funds for acquisition of new music. At the same time, we are saying that we do have suffice internal, internal approval for the acquisition of new music. I'm not getting what exactly we are thinking. Are we put in a situation like we can't flow the funds at high valuations, but the valuations are not getting favorable? Can you kindly put some color on this statement, sir? First, for QIP funds are going to be used for both things. QIP funds are going to be used for inorganic acquisitions, acquisitions that are either on music catalogs, either they help us on the content side or they help us with acquiring companies that can help us on the marketing of music side. There are two big pillars on which the music business is built. The current requirement of a new content acquisition that we people are doing is getting met, as I talk to you right now, through our internal approvals. Our stated position is that we want to acquire 30% of all new content that is coming in. Nothing stops us from acquiring 35% or 40% of new content also. The management is constantly evaluating whether the QIP funds, as we go forward, are better deployed, picking up older catalogs, picking up companies which are specializing in marketing of music or picking up larger share of newer content. What I'm assuring you that this money is invested right now, keeping in mind principal being secure and will not be used for anything apart from music. That thing I understand. If I remember correctly, 1.5 years ago, our strategy was that most of the fund, most of the percentage of this fund will be like for inorganic acquisition. That thing I think we are something differentiating now. That was what I was asking for. If we believe right now that any acquisition is going to be value accretive, we will go ahead. We have done a smaller acquisition right in the beginning. After that, we are still evaluating multiple players, both on the content side and marketing side. The moment we believe that something is hitting mark and it's value accretive to the investor, we will reach out. That's also you were saying next year, we will announce something regarding the share. We will, if we are not getting 100%, we will get to the percentage of the company putting in returns. Is it likely to happen in this year? Let me, let me do something, then I'll share with you. Okay, sir. That's also nice. Thank you. The next question comes from the line of Namit Bhaiya from an individual investor. Hi, Vikram. Hi, Namit. I have three questions. The first is, the INR 0.10 that you get, you know, per song that is heard on a YouTube channel or whichever channel, does that ever come for renegotiation, you know, with inflation or maybe cost of content also going up, or that remains fixed forever? It's on an average INR 0.10. The, if your question is, do I see the rate going up in the short run? Doubtful on the free side. The, the yield will go up because more and more people are going to go behind the paywall, and if they go behind a paywall, this yield can become 2.5x-5x higher on a per song heard basis for the guys who are listening to the song behind a paywall. On the free side, I don't see this sales going up. The real kicker is coming because of the deeper penetration of each of these services and more number of songs being heard on a daily basis. Okay. Again, on the free side, any specific reason why it would work, inflation per annum? At least that should be, you know, there in the free, the free- Namit, I have shared this in the past also. Remember, on the free side, the streaming platforms don't have a viable business model today. The only way they can make money is through advertising. There is limited amount of advertising money that chases audio. The streaming companies, if they are promoting free, they also need to find a way to make money. We understand those pressures. That's why world over, in every country of the world here, streaming platforms can move towards a paid side. There are 600 million paid subscribers for audio streaming world over. In India, we are seeing video streaming has done a decent job on the paid side. It's just a matter of time all these streaming companies in India are also going to have a very effective paid business, which means they, they make money and we make money. Understand. Okay. My second question is, how big is the international, you know, song segment, English song segment in India? If you have any percentage in terms, how big is that? How big is the international? Content, you know, heard in India. That's a retro phenomenon. It's there, the beach. Just to be clear, in the Bombay and Delhi of the world, the youngsters also listen to a lot of Western music, or Korean music, for that matter. It's still, even with those people right here, every time they're with their friends and there's a party happening, it, it finally is going to come back to Arijit Singh and Badshah, or a, or a Ranbir Kapoor or a Ranveer Singh movie song. The moment you go to smaller towns, it's all Indian music. Okay. As of now, for us as a company, even in the medium term, there would be no plans of acquiring content in the English segment, right? We have a very publicly stated position there that, we believe with 1.4 billion Indians here and a large amount of, billion Indians, the entire population of Sri Lanka, Bangladesh, Pakistan, there's a large enough captive market, and parts of Malaysia on the Tamil side, and parts of Singapore. There is a large enough population right now for our music, and we want to focus there and get a clear, distinct number one position. Understood. My third question, which is more of an understanding. There are a lot of newer creative mashup songs, which is like three-minute songs with, you know, 10, 10 different songs in it, of which maybe there are three from Saregama and the remaining from some other labels. How does the revenue sharing work with you there? Tell me there, it's all different platform to platform. Give me an example. Are you talking about YouTube? Yeah, YouTube, yeah. In YouTube, if somebody is going and running a video where five songs are being used, the revenue which is getting generated that YouTube is going to share with us will be split across those five songs. Okay, understood. You would have, you know, analytics to figure out as an advanced song is used for 60% of the time, and, yeah. Absolutely. That is there. We have got advanced analytics. YouTube model is very, very strong. Their fingerprinting is really right there. I haven't seen instances where the division that they do of the revenue based on each of these songs goes wrong. Understood. Okay. fair enough. That's all my questions. Thank you so much. Thank you. The next question comes from the line of Saket Mehrotra from Jess Investments. Please go ahead. Hi, Vikram. In the earnings, in the earnings disclosure, there was a mention of an INR 12 crore revision on contractual terms for the revenue. Does this have to do with our existing contracts, or were these any fresh contracts that we've undertaken? Saket, we'll just check this out. Yeah, hi, Saket. This is part of all existing contracts. It just happens that, you know, we follow a very conservative accounting policy of revenue recognition based on the virtual certainty. At times, there are contracts which are under negotiation. There are, you know, formal contracts without these, is the renewalism process. We book the revenue based on the estimates. Now, when the renegotiation takes place, there may be a difference that would arise, and we will recognize the next quarter. Like you are asking, at times, people do ask about how the renegotiations take place and the nuances of revenue recognition. We thought we'll make an upfront disclosure, so the position is very clear to our, all our investors. Okay. Will it be fair to assume that, like, this is like an increase in pricing that we've managed to get from whatever negotiations we've done, right? Like, that's what we are working with. Yeah. What you're saying is right. Okay, this renegotiation has been done. We've affected the revenue in this quarter. It also means that, you know, from quarter to quarter, this could differ based on the position and the negotiations. Okay. Which is fully recognized, accrued, and recognized as future revenue. Yeah. Okay, also on this events business, right? I mean, what's the way forward? Because, you know, we've just emerged a loss-making business, and, you know, how much drag do we see with this going forward? I understand it's a part of your overall strategy, but if you could just give us some guidance on what the expectation is from here forward. I have answered this. Somebody else also asked me this question. See, we, on the overall basis, we are not allowing people... We will never allow events to drag down our Adjusted EBITDA below 30%-33%. Events is a business that we will align, because we believe strategically it's going to help us a lot as we go forward in our artist relationship side. Also in India, there have been various studies that have been, that have come out, that for people, as disposable income goes up, go up, people will be seeking out for entertainment options outside their homes, too. There is a limit to which digital consumption will happen. People will seek out other things, too, and live may play a very, very important role there. Keeping both these things in mind, we have gone ahead with this. We are going to reevaluate this entire thing over, what, everything between 12 to 18 months and see whether things are moving as per the plan or not. If it's not, we take it off call. Okay. Thank you. Thank you. Thank you. The next question comes from the line of Swapnil Potdukhe from JM Financial. Please go ahead. Hi, thanks for the opportunity again. Just one clarification, Vikram. Since most, some of the music ability platforms are moving to behind the pay, paywall, now, is it possible that our minimum guarantees will the contractors we have, they will not get renewed at a, let's say, incremental levels or, and the business model will slightly change, as in, like, you will the visibility of the revenues will be lower? Whereas- Yes, there will be a pressure when we move from free to pay. If there were minimum guarantees, then there would have been no pressure. For us, music labels, and feeding platforms to build a sustainable model where the revenues for music labels are guaranteed not just for next 12 months, but for the next decades, it's important that these streaming platforms also have a sustainable model. The only way they can have a sustainable model is to move to a subscription. All of us are helping the streaming platforms to move from free to pay by moving away from this concept of minimum guarantees. All of us are going to get paid right now on the basis of our actuals. That yield is going to be far higher on a per song basis, but the first two, three quarters, when you look at the picking up the numbers, there will be pressures coming in. It's not just one label that's doing it. That's a global practice that happens. The guys who continue with free have to still go back and give them minimum guarantees. Guys are going fully behind the paid world. We are there to support them in these quarters. Because we know this was coming and we have been planning for this and urging the streaming platforms to go behind the paywall, at Saregama, we have built multiple sources of revenue now, which will ensure that we still hold on to our growth numbers. Right. Just an extension to that, since you are holding your guidance for the full year, are you suggesting that your YouTube revenues will be significantly higher and that would offset the get from the year-end volatility? I can't share anything on this. Uh-huh. See, also the member on the streaming side, also three of the biggest guys, were biggest, who control the industry, are still free. Not that they have gone to the paywall. The top three are still behind the free part. The remaining guys are all behind the paywall. The journey has started. A journey which we believe right now is going to make large, a much better yield and profitability both for us and the streaming platform. The journey towards paid. Right. Right. Thanks a lot, Vikram, for that overview. Thank you. Thank you. The next question comes from the line of Anirudh Shetty from Solidarity Investment Managers. Please go ahead. Yeah. Hi. Thanks for taking my question. I have three questions. My first question was, you know, we are amortizing our content charges over 10 years. What you've done to more accurately match our content costs with what over what time period we will get our revenues? Also, if you can give a breakup of, you know, how much goes on year one and then, you know, two, three, just to get an indicative sense of how upfront are the, you know, how staggered are the content cost charges in some sense. The answer to the first question is, it's syncs with the global standards. Any company which is in the genuinely large enough content creation mode, look at the three global companies which are doing this in India. It's actually only two of the companies which are genuinely into big new content creation. The number one player, and from revenue perspective, we are the number two player today. Both of us only are not spending large amounts of money. We looked at our, our global benchmarks, the companies we look up to, and all of them follow similar policy. On an overall basis, when you think, what gives you an idea that for a song, which is getting released, in numbers, assuming marketing to be 20% of the cost, the numbers will be something around 38% of the total. 36, 36% of the total money, get written off in year one itself. Okay, the balance, would it be fair to say that it's spread equally? No, second year is- It's going to it, 50, then 10. Yeah, then 8.1. 50 to 80, 50. 36, 12, and then eight point something over the next years. Got it. You know, in the past, we have mentioned that, you know, we look to make a payback of five years. How should one interpret that? Is it that, you know, the cash that we'll deploy in any particular given song or a particular year, that, you know, we intend to recover that on a post-tax basis over five years? How does one read this payback period? Let's just say that without including the cost of capital, this is the amount of money that if you, if you, acquire content and marketing at INR 100, we are charging it off, with 36% and 12%, 48% out in the first two years. We internally work on a benchmark that this INR 100 will get recovered in the first 60 months. Got it. If, say, over time, you know, in the streaming world, you move more premium to paid subscription, does the payback period reflect that new reality? Or you think, you know, the payback period would become even shorter if that were to happen? It, it's more towards the paid play. All my growth projections, 23%, on the music growth, with that 32%-33% Adjusted EBITDA at the company level, all of them are, shared with you without considering the upside that will come from paid subscription. Got it.