Ladies and gentlemen, welcome to the Q4 FY 2024 results conference call of Saregama India Limited, hosted by Emkay Global Financial Services. As a reminder, on the participant line, you 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 telephone phone. Please note that this conference is being recorded. I will now like to hand the conference over to Mr. Pulkit Chawla from Emkay Global Financial Services. Thank you, and over to you, sir. Thank you, Manuja. Good afternoon, everyone, and welcome to the Q4 FY 2024 earnings call for Saregama. From the management, we have Mr. Vikram Mehra, Managing Director, Mr. Pankaj Chaturvedi, CFO, Mr. Saket Shah, Group Head, Investor Relations and ESG Reporting, and Mr. Pankaj Kedia, Vice President, Investor Relations. Without any further delay, I shall now hand over the call to the management for their opening remarks. Over to you, Vikram. Thank you, Pulkit. A very good afternoon to everybody. This quarter, this is Q4, saw operating revenue of INR 262 crore and a PBT of INR 66 crore. This is a year-on-year growth of 29% in revenue and 30% in PBT. So overall, a good quarter that we are happy about. I always start the call by reiterating a rather simplistic business strategy we follow at Saregama. Why do we exist? What is our digital work? Our only agenda is to monetize what we own today and what we had procured yesterday's IP. So monetize our today's and yesterday's IP better and better, and the money we make from it creates IP for tomorrow. So not only today's profitability is secured, but the profitability of the company and the relevance of the company is secured for next 15, 20, 30, 40 years. The IP creation is across audio and video, includes music as well as film series and digital content. We monetize our IP primarily through IP licensing deals done with the third-party platforms. This also includes monetization of artists who are creating this IP. So earlier days, the only thing we used to do was to make music or movies. Now we are saying artists who are involved in making music and movies start monetizing those artists also through brand endorsements and live events. Overall, it's all in the space of entertainment IP only. Let me start with the first vertical, music. This includes both licensing as well as artist management. Our OTT revenue this year and this quarter was adversely affected by the platform's movement, three of the platforms movement, to subscription business, which meant that the minimum guarantees we were getting from them on the free side went away. This growth was more than balanced with the revenue growth we people have seen in YouTube, with newer content and the artist management vertical. In the spirit of more transparency, because it's a newer area, artist management, we have now started reporting artist management vertical separately from this quarter, so that you can get much more granularity on that part of the music business. This quarter saw the music release of Diljit Dosanjh's Chamkila, an album, which has done extremely well for us. Not only the album has done well, but also gave fresh support and boost to the earlier, the old Chamkila songs that were recorded in 1980s and 1990s. Ajay Devgn's Maidaan music got released. Article 370 music was released. Shantanu and Ram Charan's Game Changer first song got released. Mohanlal's Malaikottai Vaaliban in Malayalam got released. We also saw the first song of Saregama's first talent, Mahi, which got released in this quarter. The song called Sorry has become a massive hit in the 14-22 age group of girls. In Bhojpuri, we released superstar Pawan Singh's song called Aara Baliya Chapra, which trended for many, many weeks. And as always, Gujarati, Bengali, our songs have done very, very well. Our lineup for next 12 months is all in place, wherein we have some of the biggest film music of the year. This includes three Dharma Productions films, including one with Alia called Jigra. There are four Jio Studios films, including Stree 2 and Akshay Kumar's Sky Force. We have Suriya's Tamil comedy film, Kanguva; Mammootty's Malayalam film, Bazooka; Kannada superstar Kiccha Sudeep's film, and Gippy's Punjabi film, Shinda Shinda No Papa. And the eighth one I'm happy to add, which we closed the deal just a short time ago, is this very widely anticipated movie called Kalki 2898 AD, which is a Prabhas, Deepika, Amitabh, Kamal Haasan starrer, a Telugu film, primarily it's a multilingual film. We have procured the music rights, too. This quarter, the charge-off on account of our new content has gone up to 37% year-on-year, something we are proud about. I'm very happy to share that for the first time, our annual investments in new music content across Hindi, Telugu, Tamil, Malayalam, Kannada, Bhojpuri, Gujarati, Punjabi, Marathi, and Bengali language, are close to INR 200 crore this year. This is almost 80% jump over the money we spent on new music content in financial year 2023. So we mean when we say that we are investing for tomorrow. We are investing very heavy in newer content. We are using technology, data analytics, predictive modeling extensively to choose what content we people will buy, and it's bearing fruits. I think I've been sharing, and let me share it for one more time. We're in a transitional state currently, where our new content expenses are going to go up in a steep fashion, resulting in incremental revenue just about managing the content charge-off. Over the period of next 18-24 months, this will stabilize. After that, the content investment will go up only linearly, while the additional revenue that will get generated from the content we have procured over these last 36 months will go up steeply, which means end result, the bottom line will grow much faster after another 18-24 months. With all this content investment that we people are doing, we maintain a payback period of 5 years. This is our internal benchmark and VPK to work with, and happy to share we are doing better than that. And remember, after these 5 years are over, we have another fi- anything between 55-75 years in front of us to keep on making money from this music. So we're focusing focus only on new music. We understand our bread and butter also comes from our catalog music. There's a separate dedicated team whose only job is to maximize revenues from the older music that we own, whether it's by creating versions of those songs or finding opportunities to promote those songs on short-form apps like Instagram, YouTube Shorts, or TikTok outside India. Based on our last many years track record, we are pretty confident that the catalog part of our music will continue growing at a minimum of 12% per annum. As over the next maybe 18-24 months, as OTT platforms start turning paywall throughout, that means the entire industry turns pay, the catalog music after that may start going up anything between 16%-18%. Let me jump to the new vertical under music called artist management, wherein artists are made popular through our music IP release, and then we monetize these artists by booking them for live events, beliefs, and brand endorsements. Whatever money the artist makes from these, we get a share of that. We currently have 123 artists under our Pocket Aces clout and nine under Saregama Talent. As the investment in new content goes up, these artists are going to become bigger and bigger. We are finding various opportunities to plug in these artists, even in the film music that we people are procuring. As we all know, the fastest vertical of advertising that's growing in the country is digital advertising. In this world of digital, this influencer and talent has a huge power in terms of reach and share. Thankfully, our vertical of clout under Pocket Aces is a clear market leader. Is the market leader, is perceived as the market leader in this entire influencer business. Not only this quarter saw the release of our first talent, Mahi song. Let me share another good thing that I'm very proud of. We, technically speaking, on first April, actually, released a song called Useless. This song is around one talent, which is from Saregama Talent. The girl comes from Saregama Talent, and the boy we are using right now is one of the influencers from Pocket Aces clout called Arjun Deswal. So this is a good example where Useless is going to make money in its own right because the song is doing well, while both these talents are becoming very, very popular. As they become more popular, we will book them. We have, we have lots of talent. We will book them for films and live events, and we will be getting a share of whatever money these people make. Next, the stated goal of acquiring 25%-30% of all new music, which is going to be released in India over the next few years. The music licensing vertical, which is licensing and artist management, we are very confident that that should be able to double its revenue, that means around, cross INR 1,000 crore numbers in the next 3 years-3.5 years. This number, this vertical today is INR 540 crore, and we are confident it should cross INR 1,000 crore in the next 3 years-3.5 years. All the new budget we are talking about, that we people need to cross the INR 1,000 crore number, we will be able to fund through our internal accruals and the VIP money. Let me now shift to the video vertical, wherein we people make films under the brand name Yoodlee, primarily regional content. Digital series we make under the brand name Life, which is part of Pocket Aces, and we have a lot of D2C channels of ours on Instagram and YouTube called FilterCopy and Nutshell. The explosion in the smartphone ownership and the cheap, relatively cheaper data are the biggest drivers of this vertical. We believe advertising revenue, as I stated earlier, will keep on shifting from the conventional world of television, radio, print, to the digital form. And anybody who controls eyeballs on digital part is going to make money handsomely. We are still in the earlier stages of building this vertical. As we people go forward over the next 4-5 years, we are looking this vertical to grow at a CAGR of 25%. Out of four or so releases of four of our films, while two of our films, which is Malayalam and Bhojpuri, and Punjabi, one or two did very, very well, and we people have made—are in profits. Our biggest film called Malaikottai Vaaliban, which was a Malayalam film with Mohanlal, did not perform that well on the box office. Thankfully, the adverse impact of the film was controlled because of our internal policy, when minimum 70% cost of this film has to be recovered through satellite and digital licensing even before the theatrical release. We have, I always maintain the stand that we are bullish in video, but we have a very, very strong orderly financial policies, which allowed us to handle this less than expected box office performance from Malaikottai Vaaliban. We had three more movies that were planned in quarter, primarily Punjabi. We had to go out there and postpone the launch of these movies because that's a time where farmer agitation was going on in Punjab, and we thought that's a very, very poor timing. And after that, IPL and the political rallies had started. One of those movies has already got released now in this quarter, of Shinda Shinda No Papa, and it's currently running out there in theaters. And if you guys read it on, you'll realize it's a big hit on the theater side. The second movie, which is planned for quarter four, is now going to get released in the month of June, of this quarter one. Quarter four also saw the release of, our digital series, Crushed Season 4 on Amazon MiniTV. Happy to share the FilterCopy, the biggest youth Instagram channel that we people own, actually touched 1.2 billion views in financial year 2024. All this is great news because the advertising base is keeping becoming bigger and bigger. We maintain our stand that video is an integral part of Saregama's IP building strategy. Tomorrow's customer will switch between audio and video in a seamless fashion, and we need strong libraries across both audio and video to give us negotiation powers with the platforms of tomorrow. It also helps that being present in video gives us an edge in the music business. Early days, but I'm happy to share that the ROI that we are managing from the music, which comes from our own movies, is far higher than the ROI we manage from the music we are procuring from third-party film producers. It's obvious because third-party film producers keep their own massive margins on top of it, while when we make the music, we are getting literally on a cost basis, but on ROI base, in the end, as a strategy, it's working for us. And it's for the same reason that every major competitor of ours has got a full-fledged films or video business vertical within their companies. It will be our endeavor constantly to explore various ways of growing the video business in an aggressive fashion, but with strictest financial discipline being in place. We've been building out the video business now for seven years. You people have seen there is no year in which you're going to see us going crazy on our numbers. We are happy to grow in a steady fashion and with utmost financial acceptance. On live event side, we've been back to the drawing board and relooked at the entire strategy this year. You are going to be seeing a completely different approach being taken in the year to come, which is financially at 25. We have a few shows that are due to run time during the year. Also, our Disco Dancer has now got an exhibit in Australia this year. We are also planning shows of some of the Pocket Aces talent. One of them called Viraj. With him, we have done many shows already in Mumbai, and all of them are actually went housefull. As asked earlier, stated earlier to all of you, we need 1 more year to prove the live event model, failing which geometric progression just efficient on this vertical. Last quarter, I spoke to you guys about a music learning app that will teach music fans how to sing or play instruments using artificial intelligence. It also helps promotions of the newer songs that we are releasing. We did the soft launch of it in April, and we'll continue refining this app over the next 2-3 months before we start pushing it. We have rolled out a new retail strategy for Carvaan, wherein we will be retailing it only from e-commerce and modern trade stores. Over these next few months, we will completely get rid of individual shops, which have implications on the entire branch power structure also we have it in the company. The net result of that this year was a flattish revenue on Carvaan with a breakeven. As we people get into financially verified, the revenues of Carvaan are going to see a decline, but we should be able to touch a mid-level single digit, mid-level profitability on Carvaan during the year. If you look at FY 2025, then the good news is that the adverse impact of the three audio OTT platforms that turned gray has more or less got factored in in FY 2024 itself, and the remaining cost of that will fully get factored in the first quarter of financial year 2025. So from Q2 onwards, we will have... Everything will be above the case, and we will be back to the old growth rates that we people have saw in OTT in the upward. On YouTube, quarter one may see some pressure due to April, May. April, May were completely dominated either by advertising happening on IPL or a lot of political advertising going in, where, because of which the other brands took a back seat. So there was some impact, but we are reasoned to believe that starting June, the YouTube revenues are going to be unpacked, and with GDP growth looking as softer as it is, YouTube will also maintain its growth trajectory for the entire year. The new music release calendar is very, very strong, and that gives us the confidence that we will manage our numbers. We also expect artist management vertical to go stronger from what it is today. Overall, at the company level, we expect revenue, company level revenue excluding Carvaan, to grow upwards of 30% in the financial year 2025. I'm repeating my statement. Overall, at the company level, excluding Carvaan, we expect our revenues to go, grow at upwards of 30% during financial year 2025. Over the next three years, we will be investing over INR 1,000 crore in new music content. This will contribute not only to the immediate growth, but also put the company on a long-term growth path. Overall, at the consolidated company level, we expect revenue excluding Carvaan, to grow at a CAGR of 25%-26% and PPG to double over the next 3-4 years. Both music and video verticals are going to contribute to that. We maintain our annual adjusted EBITDA guidance of 22%-23%. If we look at the global data, OTT audio and video streaming grew by 34% in financial year 2023, with India showing the highest volume growth in terms of streams. And this is when less than 200 million people today are streaming in India on OTT, and anything between 350-400 people are on YouTube. There's still a huge headroom left for growth. Now, the next step is to monetize this consumption. It's happening on YouTube. It's bound to happen on the audio OTT platforms also. It has happened in every part of the world, it will happen here also. The price at which it will happen will be different from the price at which happening in U.S. It's gonna happen. With the price increases that some of the streaming platforms have started taking globally, and remember, we also have a play on each of these platforms. We are available on Spotify or Apple or Amazon or JioSaavn at a global level. We see a lot of benefit coming in as we go forward. With our 238,000 internet footprint, cash reserves, professional managerial depth, and investments in technology, Saregama will be able to guarantee earnings, not just for the next 2-3 years, but also for next 20-30 years. Thank you, and we're happy to take questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, press star and one on their touchtone 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 questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swapnil, from JM Financial. Please go ahead. Hi, Vikram, thanks for the opportunity and congratulations on a good set of numbers. So my first question is on the music licensing revenue side. You did mention that there was a significant improvement in the YouTube side of revenues. I just wanted to get a sense if there was any impact of any overflows happening during the quarter that may have benefited as well. And if yes, would it be possible for you to quantify a few numbers? No, actually, overall, the numbers are on steady state. There's no one-off that has happened during the year. Okay. And the second question is, with respect to your Q2 guidance that you mentioned, that YouTube revenues can be replaced because of few one-offs which are there. Is it possible that that can get sort of with some incremental revenues from one of the large music streaming platforms, which was not available for a few quarters earlier? And so those revenues coming back certain, given that I can see the names. I am putting up a near-term projection on Q1. In the spirit of transparency, I just mentioned that YouTube people may have been under some amount of pressure. I'm actually reasonably confident if Q1 is down, June quarter should be very, very strong. There may be a lot more advertising that will start in the moment results get declared, and IPL also gets over, results get declared. So the quarter should start looking better. Anyway, as I always maintain, and we've been doing it for I think over seven years, please look at us on a 12-month basis. Please don't look at us on a quarter basis. On a 12-month basis, we are giving the guidance that Saregama's consolidated revenue, excluding Carvaan, is going to grow upwards of 30%. Understood. Well understood, welcome. And just a last question on your cost side. On if you were to look at how much you want to basis some of your costs like agency spends and other expenses, they have increased meaningfully. Any particular reason that you would like to call out why this cost was on a slightly higher side? Next, do you think buyer advertising increased? Yes. No, sir, if you buy new, new, more content, I told you right now, we have invested more than INR 200, close to INR 200 crore on newer content. That includes marketing monies also. You can read the overall. Every time a new film comes out right now, it needs more marketing. So content investment is not just money that we're giving to the film producer, but also the marketing monies that are going on it. So will it be fair to say that, your run rate of IP was around INR 17 crore-INR 18 crore per quarter for a long period of time, and now it is INR 27 crore? So, will it be fair to say that, it is a new run rate that one should work with? You need to look at that INR 5,000 crore investment over the next three years. This includes some money that we are basically paying to the film producer or the production budget, plus marketing money that will go to back to promote these films. And then the last one on just other expenses, because other expenses, if I recall correctly, there was, there used to be a meaningful impact because of Carvaan. And Carvaan, I think, has not done well this particular quarter. So any particular reason, there is a different factor here? I'm asking Ankur. Yeah, exactly. So something on the other expenses, we had mentioned earlier also. We had one contingent liability which is now settled, and, yeah, that was the charge was taken in Q1. So on an overall year-on-year basis, you will see some increase in other expenses. Otherwise, no major one-offs over there. Okay, thank you. Some of the questions we had shared with all of you earlier in the Q1 of financial year 24. Yeah. I remember. Yeah, sure. Thanks for this and, all the best for it. Thank you. Thank you. The next question is from the line of Kshitij Agarwal from Surge Capital. Please go ahead. Yeah, hi, sir. Thanks for taking my question. So just broadly, I wanted to understand a bit about this artist management side of things. Like, you have qualified what kind of revenue streams you're looking at over there. How big of the business is currently in the overall music licensing side? Is it like, let's say, 10%? If you can guide on that. And three years down the line, when you're saying that music licensing is artist management would be stable, then at that time, would it become a larger proportion than what it is currently, or do you expect the steady state to stay range from? Yeah, so it's what you see in this quarter is not steady state, is going to become bigger than that. Is it going to take over the licensing part of the business? No, it's not. At the end of the day, artist management is a by-product of the business of music licensing. Since we are managing, and let me reiterate our philosophy, if we are releasing six songs in a particular language, we start wondering that why are we building the artist and not getting a benefit out of it? Because if the song becomes a hit, it's not just the company that owns the song that makes more money, but the artist also becomes that much more popular. So hence, this part that if we can take a position on that artist, there's no additional investment I'm making on that artist. I will anyway doing the song with him. Only thing we are now making it pre-conditional to the artist that if you want to do a song with us, you will have to go and get into a long-term agreement with us. And then see if we can make money from this person on the live events and management. Right. Right. But directionally, would it be like 50%, 10% over-overall pie, something like that? Let's give it. Give it in a, Okay. Again, as I repeated to you right now, the good part about this is the by-product. It does not take any major investment from our side. Right. Which only manpower, which is sitting in there to manage these artists, and that's it. Yeah. The reason we're asking more, this was that we know that music licensing is the most profitable part of the business, right? And here, the events and everything that will go with the artist that may not generate the similar kind of long-term revenue or say, just possibly that good. Okay? Just trying to understand. Okay. In the overall company, which is my guidance, please let's stick to that, which is 30%-33% on adjusted EBITDA basis. The only thing which is left after adjusted EBITDA is the charge-off we are taking on new music. There's nothing else left. So everything else is before that. That will give you an idea. So if, if I'm saying 30% growth on the overall basis, that doesn't mean we are reducing our guidance on adjusted EBITDA. So you can't afford to have a situation where an artist management vertical grow as a, grow as a significant fashion, but which no margin for us, because then I can't hold on to 30%-33% adjusted EBITDA guidance. Right. Thank you. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead. Yeah. Hi, good afternoon, Vikram and team. Am I audible? Yes, please. Yeah. Vikram, my first question was more of clarification. So going by the contained charge for the year and your accounting policy that you have explained over the years, just a back of envelope calculation suggests a deal value, new music deal value, coming close to somewhere around INR 150 crore. Would that be right, or you would still stick at, or, or should we take INR 200 crore as mentioned by you for this year? Take it INR 200 crore. A large change in which quarter? What has got released. Okay. Keep that in mind, because even the first charge-off happens right now, uniformly over the full year. Marketing happens instantly. Marketing happens instantly. Phasing change accordingly. So, phasing has a very, very important role here, but-... And that's why we decided that we will share with this time, that how much have we actually invested during the year? So INR 200 crore, so that was, I should say INR 200 crore, because I was under the impression there might be some INR 50 crore non-music addition content, on some other, from some other work, but that's not the case, right? So- Okay, I share INR 200 crore fee for everybody. I'm stating this, this INR 200 crore is music content that we people have invested across multiple languages. Understood. Understood. Because my second question was on Pocket Aces. So this vertical, you are expecting a 25% going forward. This could be after taking in benefit of synergies of Saregama or, you know, prior to the acquisition, they were independently growing at this stage. So the synergies of Saregama are going to be there. I think the bigger driver of synergies of Saregama is the cost management. Pocket Aces, when we acquired, was a loss-making unit, marginal losses only. As we go forward, we have promised you that this year, financially, at 25, we will ensure that it turns breakeven or a very small profit at Pocket Aces level. And that's primarily getting driven right now because of the synergies with Saregama. A lot of cost structures that those guys are having right now, we are removing them because they can just ride on our infrastructure expenses. Okay, so the synergies are on the cost side, not on the top line. Top line, they were growing anyway between 22-25. Yes. Okay. That's it from my side. Thank you so much. Thank you. The next question is from the line of Pulkit Chawla from Emkay Global Financial Services. Please go ahead. Yeah, hi, Vikram. Congratulations on the quarter numbers. So Vikram, you were obviously highlighting that you'll be able to ramp up the content acquisition as such. Now, so would you be looking to ramp up the number of songs, or are you looking to, let's say, ramp up more expensive songs as such? Or would you probably get into more original music, where in the past you've highlighted that ROI is happening better? I might as well go out there and give this information in my competitor's office. This is too much of a granular data. I'll give you one of the holistic answers. Yes, we will do little bit of everything. When you buy music, you obviously take some funds on more expensive premium content coming from artists who are very well established. And you also... At the same time, we keep on investing in the newer artists. The risk reward patterns are very, very different in both these situations. You are investing in the premium guys, the risk is relatively lower because they already have a large fan club going on, outside with them. They become expensive, so the return profile also is that way. When you're working with an absolutely fresh artist, the risks are massive, but if any of them clicks right now, the results can also be massive. Obviously, it's a balance of the two. It's balance of film, music and non-film music. It's a balance of Hindi, Tamil, Telugu, Malayalam on one side, and Gujarati, Bhojpuri, Haryanvi, Oriya, Chhattisgarhi kind of languages on the other side. Right. My second question is, you know, how does the performance of music typically vary compared, if you're comparing between a theatrical release compared to a direct-to-home release? You know, where I'm coming from is just trying to understand if, let's say, Chamkila was a theatrical release, how would have music done differently as compared to when it was released directly on Netflix? Let me put it this way: any film which are going direct to digital, the cost at which we acquire the music is also dramatically lower. In fact, in most of our contracts, we have the stipulation that a movie, if at any end moment, decides not to go to theatrical, and theatrical definition is there, how many minimum theaters in which movie should get released. If they decide not to go to theater and go to OTT, what kind of a reduction are we going to get on the pricing? So we are protecting and covering ourselves through that. At the same time, we are realizing that, it's not that a movie which is going directly to digital, the music will not do well at all. Chamkila is a general example. Now, it's a theoretical thing from its onset issue, that had it gone to theater, had it gone to operator, I suspect it would have, but then the cost at which I would have got the music also wouldn't be that much higher. Okay. That's helpful. Thanks a lot. Thank you. The next question is from the line of Pulkit Aggarwal from Shubham Ventures. Please go ahead. Yeah, good afternoon, sir. Two questions from my side. First is, you guided for a 30% growth of your revenue growth in Saregama. Just wanted to confirm, is it fair to assume a 30%+ growth in your pure music licensing revenue also? Yeah, in that range, yes. Because, because we had guided for doubling your revenue in next three years, right? So which translates to 20%-25% CAGR. So, and in first year, we are doing this 30% or so what? First year, step up, as I said, the content investments are also going up in a step-up function. As we people go forward beyond two years, then we will start growing in a linear fashion. Right now, because we don't have any intent to grow, to acquire more than 25%-30% of all the new content that's coming in, as of now. And hence the nature, on a three-year basis, we are talking of the growth pattern that you're talking about here. Immediate year, there is a 30% growth into Saregama. Okay, that's great. So how much content investment you mentioned you'll be doing in FY 25, including marketing and everything? Next three years, INR 1,000 crore. ... Next three years, INR 1,000 crore. Okay, okay. And sir, what is the breakup? Can you please provide the breakup of your intangible assets of INR 513 crore, which you have mentioned in the balance sheet? Last year, it was just INR 114 crore. So there is an increase of INR 400 crore. I understand, part of it would be because of acquisitions, but, can you just give me the incremental breakup, the breakup of the incremental number, INR 400 crore? Yes, sir. Broadly, I will tell you, goodwill is in excess of INR 300 crore. This has come on account of the acquisition of Pocket Aces. Since it's a committed acquisition, we need to value the entire acquisition and accordingly account for in the balance sheet. There is also a corresponding liability, in financial liability, you would see an increase, which is for the balance 48% stake acquisition. So primarily, that is the reason for the spike. Otherwise, the increase in intangible is only on account of the songs that we acquired. Incremental INR 400 crore, out of that INR 300 crore is goodwill and INR 100 crore is the song. The rest is the music assets, yes. Okay, okay. Thank you so much, sir. Thank you. The next question is from the line of Ashish Upganlawar from InvesQ Investment Advisors. Please go ahead. Yes, so your comments are very helpful in terms of understanding where business is going and it's commendable the way you guys are investing in content. Just clarification, you said that, EBITDA margins, you are comfortable, I mean, looking at 27%-22%. Below that, what remains is the depreciation item, which given the type of investment would also increase by significantly. So is it possible to give some clarity on how much it will increase? I suppose we amortize a lot in the first year out of every spend. So just to get a first indication kind of person. No, so our guidance there is that our profitability at a PBT level is going to double in next three years and a half years. Yeah. So, annualize this, is it possible? I mean, INR 300 crore we are investing, I think 36% we amortize in the first year. You're right. I think we have very open and transparent amount only that we are sharing. So I, I'll hold on to our three-year guidance here. It's INR 1,000 crore music content investment people are doing. Our revenues are at a consolidated level, all verticals combining, excluding Carvaan. We are looking at 25%-26% growth rate as we people go forward on a 3-5-year basis. And on a, and, PBT is going to double over the next 3-3.5 years. That's my long-term guidance, and 30%-33% adjusted EBITDA. On a short term, which is for FY25, we are saying our company's revenue, including Carvaan, should grow upwards of 30%. Okay. Sure. Thank you so much. Thank you. Thank you. The next question is from the line of Pradeep Rawat from UK Capital. Please go ahead. Yeah, thank you for the opportunity. I have one question. Prior to 2020, our EBITDA margins used to be 10%-12%, and then it rose north of 60%. Can you mention any reason for that? It's doing far better than what we used to do earlier. The music industry itself has started shaping up far better. We have started investing in the newer content in a much more aggressive fashion. If you see our investments... And in fact, I'll say pre-2019, we hardly used to make any investments at that time. So, overall, it's doing well and expect to get better on that view. Yeah. So, with respect to debt, we currently don't have any debt. And in 2021, we issued capital, about INR 500-700 crore. So, why aren't we taking debt, and why are we diluting equity? So this year, not at this juncture— We're a debt-free company. We are a debt-free company. There's a very small working capital in here. So the question is, this is a call which we will achieve in 2021, when we raise the QIP part. As we people sit right now, I have mentioned this, that the INR 1,000 crore music investment that we will be making over the next 3 years will be funded completely through internal accruals and QIP money. Okay. Thank you, and all the best. Thank you. Thank you. The next question is from the line of Ravi Naredi from Naredi Investments. Please Please go ahead. Sir, it's me. Sir. How are you? Yeah. No, no, I, I'm fine. How are you? Very good, sir. Thank you. Vikram Ji, first, congratulations and best wishes for next five-year appointment as a MD. I may say in last two years, we saw you are working, and, in last 10 years, Saregama top line rises from INR 200 crore to INR 800 crore, while bottom line from INR 6 crore to INR 200 crore in your acquisition. Yes, sir. So fantastic result you have given, and we wish all the best. Sir, in Gen Z, for songs and movie, movie, new trend started in USA. Just I was reading one news. So are you aware of this trend, and how it will change our business model? Sir, can you... I didn't get your question. Sir, for songs and movie, new trend started in U.S., where people are liking again records that they should play on the HMD like this. And they are buying these cases, buying this record instead of listening music on this our like channel. So, are you aware of this? Sir, I'm not very clear about your question. Are you talking about the music listening, which is happening now in U.S. on vinyls and LPs? Ah, yes, yes. Gen Z. It is called Gen Z. So we already—if you please check it out, and we have already released 9 different LPs, where they are, in fact, doing far better for us in U.S. than in India, because very few Indians have LP players with them. In U.S., they are making a decent amount of money in that space. It's going to market even more than Carvaan for us. Okay, okay, okay. So I was curious to hear how the company will impact our company, but you have already- Sir, as a company, we are constantly checking out what is happening in the various parts of world. From America, which is always ahead of the digital side, from Japan, which is fast in terms of physical side, to artificial intelligence in terms of predictive modeling, and generative modeling. We as a company take a lot of pride in the fact that we are not just a bunch of creative people here, but we are a bunch of tech people who are also in the world of creativity. Right, right, right. Sir, in first few years, whatever movies we made, I am telling about 5 years break or 7 years break, any film we have sold again the right when first right is completed? Yeah. Any money we have received? Yeah, many of those movies which came out of the first, not many have come out, seven years haven't crossed. The couple that have come out right now came out of one platform and already licensed to the second platform. How much money we received? Can you tell the amount? Remember, if you also remember or if I remind you, at that time, the movies that we were making were these INR 1 crore and INR 2 crore movies. Right. They were very small. The strategy of the films has changed completely from how we started in 2017. So how they're making. They are giving up ROI basis, the movies have done very well for us, but whatever money they are making has to be seen in the light of that they are INR 1-2 crore movies. Okay. But they're all making, all have gone out there to the second round. The three movies that have come out, they're all on the next platform. Last, what percentage do you think shift to paid versus free television? This is on audio? Yeah, yeah, yeah. I'll answer this question in a different fashion. Something I am very happy about now is, for Saregama, the amount of money we are making, we made this year from paid subscription of, of in India. Now, we make a lot of money right now from paid subscription of Spotify America or an Apple America. I'm not using that. I'm saying subscription money that the platforms made in India, and they shared a percentage of that cost with, with us. That number has grown by over 40% in financial year 2024 compared to 2023, and it is now touching two digits in crores. Okay, okay. This is in the top three guys are still not paying us. Spotify, Airtel and Saavn not going to pay yet, only the other guys have paid. If I include YouTube revenue also, because YouTube also have a paid service, that is growing in a very significant fashion. So the paid economy is already showing signs of growth. I hold my guidance that over the next 18-24 months, subscription business is really going to take off, which is going to add to overall profitability. Okay. Thank you. Thank you, and all the best, sir. Again, yes, we will check with the, at Saregama. Yes, sir. That's right. Thank you. The next question is from the line of Sweta Jain from Arihant Capital. Please go ahead. Hi, sir. Thank you for giving this opportunity. Am I audible, sir? Yes, please. Okay. So first of all, I just want to understand your content cost pricing policy. I know you mentioned in the previous calls, but I'm kind of still a bit confused. So I understand that we don't charge off in the same quarter, right? We charge it off over three years. Am I correct? I'll just repeat. We've said this earlier. The life of content is 10 years, the new content. However, the charge off is front-loaded. As we have said earlier, the market will charge off immediately, and the content acquisition cost is distributed as 20%, 30%, 15%, and remaining equally over the next 8 years. That's the content charging policy. Okay. Okay, okay. Okay. Okay. And so just, just one more clarification. I think in an answer to a previous participant's question, you were mentioning about content cost of INR 200 crore and then INR 100 crore for music. So just want to understand, this INR 200 crore, that calculation that came up, was it pertaining to FY 2024? So the INR 200 crore part is what we have spent on new music in financial year 2024. It's not going to get charged off in financial year 2024. Our charge-off depends on the timing, on when did that music get released. If there were some marketing that happened behind the song, it gets charged off and fully, and marketing is typically 20% of the cost of a song. So that gets charged off immediately under the marketing side, but the remaining 80% gets charged up in the next session, gets transported. So that even the first year will get charged off over 12 months. Mm-hmm. In financial year 2024, when you see my charge off, it will also have charge off of financial—what we procured in 2021 and 2022 and 2023 also. Mm-hmm. While- Right. A portion of what we people have procured in 2024. Right. Right. Right. Okay. And sir, would you be able to give me the revenue breakup for FY 2024 in terms of, you know, revenue from obviously the music, then, you know, the Yoodlee platform, the artist management of Carvaan? If you see our results, there is a segmental reporting which was sitting there, you can get it. If you want, I'll share with you right now. We people, let me go out and give you the annual numbers. Music, which is licensing and artist management, we did INR 544 crore in financial year 2024. This is licensing and artist management. Carvaan business did INR 130 crore odd. Video business made INR 116 crore, and events were INR 50 crore. Okay. And sir, just one more question. The INR 1,000 crore that you plan to spend over three years, I understand this, that completely is going to be for the music, not on the video business, right? The path is a separate thing, and it's, it's managed right now, through its own accruals. On music, we are spending INR 1,000 crore. Okay, and how much percentage of would it be in FY 25? I know you've said this over three years. I just want to understand, you know, is it going to be more in FY 25, or it's going to be evenly spread across three years? It leaves something out. I can't see. The The minute we share the numbers, it becomes difficult that we are into a negotiation part with somebody from whom we are acquiring content, to whom or people we're licensing content. Right. Traditionally, INR 1,000 crore, and we have spent upwards of INR 200 crore in this year. Understood. Understood. Just last question regarding our strategy for Pocket Aces. You know, you know, do you think it's going to, you know, sync well with our business? I don't know, what are we actually thinking about it, from a three-year or four-year perspective? If you could just throw some light around this acquisition. There's some macro facts right now. If we believe that the GDP will continue growing right at upwards of 6%, which means the advertising business is going to grow in a substantial fashion, because of the substantial of the GDP growth, far more consumption needs to happen. Consumption gives rise to advertising, and the vertical which has showing the maximum growth under advertising is digital advertising. This way we are arriving at, that digital advertising is one of the huge growth structures, and you can refer to any of the predictions made by various consulting companies, they're all arriving at the same conclusion, assuming that the GDP is going to grow. If we look at, digital advertising, digital advertising chases eyeballs. As a consumer yourself, when you are on YouTube or on Instagram, or you do on Facebook, you either go and follow an individual or you follow a channel. So channel means entity, an entity may be a FilterCopy, that entity may be Star or a Sony also, or you follow an individual, which may be RJ Karishma, or it may be Amitabh Bachchan. That's what people do. We through Pocket Aces want to control both these. Our attempt is between Pocket Aces and Saregama to control more and more eyeballs that are going out there on the ad platforms, and ensure then, that the advertising money that will follow these eyeballs, we get the lion's share of that. That's our business idea right now, this entire acquisition of Pocket Aces. Pocket Aces has got two big work areas going in here. They have, they're the biggest influencer management company in India, digital influencer management company in India. Which means more and more advertisers are now reaching out to us and saying: "Can I use your influencer?" The moment they come to us for influencer, we also pitch to them that why not use also a song of Saregama in whatever your influencer is saying about your brand. So both sides are able to go and make some amount of revenue from it. Then we also own channels like FilterCopy, Gobble, Nutshell. They've got the... If you follow it on Instagram, they've got a large amount of follower base on Instagram and YouTube. So we tell the brand, "I will give you the influencer, I will give you the song, and I will put it on my channel, so that you don't need to spend money promoting this message of yours." Because in any ad, you need to make the ad, and then spend- you first spend money on making the ad, and then you spend money right now in disseminating the ad. We can complement everything together as a combination of Saregama and Pocket Aces. This is the direction we people are moving. There are already brands who are now liking this proposition of ours, because we are offering three things together, along with the capability also to make the video for them if needed be. It makes their life simpler, and they're able to do it at a much lower price point, and we get benefits across all parts of Saregama. Digital advertising is growing in a big fashion, and we together at the consolidated level want to have a lion's share of that. Okay. Thank you, sir. Just a clarification, the growth guidance that you gave, you know, a CAGR of 20%-30% over three years. So what I understand, with that, take into account the paid economy, which we have—we feel it's going to really go up today or just, Yeah, when we people are giving you this growth guidance, at this moment, we are saying this is independent of full subscription taking off. If the audio subscription starts taking off, you can add a few more percentages to this. Right. Right. Okay. Thank you, sir. That's really helpful. Thank you so much. Thank you. The next question is from the line of Akhil Dhedia from Pacholi Family Office. Please go ahead. Hi, Mr. Mehra, and first of all, congratulations on the great Q4 results. There was this EY report which suggested in 2023 there are around 70 lakh paying subscribers of music in India, excluding YouTube Premium. What do you think is our estimate of the number of paying subscribers today for competing music, and how do you see this number growing in the next 2-3 years? Are there any trends that you are noticing? Yeah, so I have already seen the only data point I can. First, the numbers that you're talking about right now, they are a combination of subscribers and bundled propositions, because Disney have also partnered with the telecom operators. And two of the OTT platforms are run by telecom operations, whereby they bundle a paid subscription along with the data packs that they are giving. So that's, just for you to get a better flavor of what these numbers are. I've already told you right now that for Saregama, in financial year 2024, the money that we made from paid subscribers, non-YouTube paid subscribers, India operations grew by over 40%. So we are extremely bullish on subscription. We believe in next 18-24 months, the entire economy may be moving towards subscription. Globally, there are around 650 million people who are paying for music subscription today. This is in spite of some of the platforms taking a serious hike over the last 30-60 days. But our music has got that kind of stickiness that people are ready to go there and pay. This is going to be eventually happen in India also. It happened first between cable and DTH, then it started happening on the video OTT side, and it's gonna happen on the audio OTT side. Now, the jury is out, how many people are going to be taking paid subscription? There are not... If I go by affordability factor, some of the numbers I can throw at you is, some 125 million people between digital, cable and DTH, okay? That tells you some indication of what, how many people are ready to pay for some form of entertainment. There are around 80-90-100 million people who are on some form of a video OTT apps, okay? So that's the range of numbers we people are playing on. Whether it will happen at INR 50 bucks per month, INR 70 bucks per month, INR 100 bucks per month, it's still affordable. The number of subscribers that we can manage within 3 years of everybody paying, I believe the number of subscribers can be anything between 50-75 million. Price point can be anything between INR 50-INR 100 rupees. That's the range in which people are paying. The way our deal structures are, whatever the platform makes from a customer, paid customer, on an average, 50% of that money is distributed amongst our content owners. Understood. Thank you. Thank you so much. That's really helpful. So, can you give some idea, I know you can't give the exact numbers, but some rough idea around how much of a music label revenue today is coming from paid subscription versus MGs or free, ad-supported revenue model? All I can go back and say that music, the subscription is still on a pretty low side. It's not a high side. It's just that it's showing one of the highest growth rates. Okay, understood. And, my second question is, around the content cost. So I understand that we're writing off 50% of our content costs in the first two years. So are we recovering the same amount through revenues in the first two years? Because it had been- Right now, my profitability would have begun beating this year. Okay. So because it has been over two years since we did the QIP, so we have some data around, okay, what are the projects we are investing in? How is the ROE? How are we recovering? So you are recovering more than the 50% of the content cost in the first two years, right? Yes. I have stated this, our internal policy is a payback period of five years. If I go for the last four-year performance of us, we are doing better than that. I still consider that to be a beginner's luck, so I'll maintain my guidance of five years, but we are doing better. Okay, that's great to know. Thank you so much and all the best. Thank you. Thank you. Due to time constraints, that will be the last question for the day. I now hand the conference over to Mr. Vikram Mehra for closing comments. Over to you, sir. So once again, thanks a lot for your patience. I've already given my guidance as we people go forward. We believe that Indian economy is on a very, very strong path. Both advertising and subscription-based businesses will keep on getting stronger. And when the customer is paying directly through subscription or indirectly on advertising, we want to get a lion's share of that, and we will get it both from the music as well as from the video side. We will not hesitate in investing and taking heavily and taking bold decisions while being extremely strong on the financial discipline. We repeat our guidance that our financial year 2025 consolidated revenue excluding Carvaan should be growing upwards of 30%. Our adjusted EBITDA guidance remains at 30%-33%. On a 3-5-year horizon, we are looking at revenue excluding Carvaan, growing at 25-26% odd, while our profitability to double in 3-3.5 years. Thank you, and look forward to your support. Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us and you may disconnect your lines. Thank you.