ENILNSEQ4FY2022May 11, 2022

Entertainment Network (India) Limited

6,632words

54turns

6analyst exchanges

2executives

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Management on call

Prashant Panday

MD & CEO, ENTERTAINMENT NETWORK INDIA LIMITED

Sanjay Ballabh

HEAD OF FINANCE, ENTERTAINMENT NETWORK INDIA LIMITED

Key numbers — 40 extracted

rs,

hank you Lizann. Welcome to this very unique conference call on a Saturday. In my last so many years, I don't remember doing this conference call on Saturday, but such are the times that we adjust to

Rs. 99.4 crore

variant had on our quarterly numbers. Now, first our overall quarterly number; revenue number was Rs. 99.4 crores. This reflects a 0.3% growth over the same quarter last year. Now remember last year was a perfe

0.3%

s. Now, first our overall quarterly number; revenue number was Rs. 99.4 crores. This reflects a 0.3% growth over the same quarter last year. Now remember last year was a perfectly fine quarter becau

28%

Let me give you the split of the 0.3% by month; now at an overall revenue level January was down 28%. Please note that we began the quarter with (-28%) in revenues. February was down 2.5%. As I ment

2.5%

ry was down 28%. Please note that we began the quarter with (-28%) in revenues. February was down 2.5%. As I mentioned the impact of Omicron continued through the middle of February. But look at how s

20.4%

etail establishments opened up and business became normal. In March, our overall revenues were up 20.4% compared to last year. This should tell you that the quarterly numbers have to be seen as the fir

7.6%

what we generally call it non-STP or solutions business. The radio business number have grown by 7.6% in this quarter which is absolutely fantastic because radio is the main breadwinner for the compa

2.2%

happen. Again, let me give you the split of the 7.6% by month; in January, the revenues were down 2.2% compared to last year, in February the revenues were up 15% and in March the radio revenues were

15%

; in January, the revenues were down 2.2% compared to last year, in February the revenues were up 15% and in March the radio revenues were up 11%. Now please note that radio is just a button. You can

11%

mpared to last year, in February the revenues were up 15% and in March the radio revenues were up 11%. Now please note that radio is just a button. You can turn on the advertising and turn

11.4%

how you the non-FCT split. Non-FCT for the quarter or solutions business for the quarter was down 11.4%. This 11.4% you will understand from the quarterly split how significantly hit it is by Omicron b

61%

n to you by month. While overall solutions were down 11.4% in the quarter, in January it was down 61%, in February it was down 50%. Remember in February after Omicron the restrictions were lifted, cl

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Guidance — 20 items

Prashant Panday

opening

“It is the most profitable parts of the company and therefore when radio grows it actually suggest in the future also one can expect profitable growth to happen.”

Prashant Panday

opening

“I mentioned in the past that we hope that almost 50% of this will be sustainable cost savings.”

Prashant Panday

opening

“Like I mention in ‘23 and ’24, I expect at least 50% of the savings to be retained.”

Prashant Panday

opening

“We will be launching in India and remember 800 hours is not a big number.”

Prashant Panday

opening

“We will be mounting a marketing exercise starting approximately from June.”

Prashant Panday

opening

“He's our Head of Finance and both of us will be happy to take your questions.”

Deepan Shankar

“Can you provide us more light on what has exactly happened and how do we plan to scale this up?”

Prashant Panday

“As it picks up in Q1 and Q2 going forward in this year, you will find that the digital component of the business will be back on the trajectory to 25% that we have been maintaining, we will achieve in the next couple of years.”

Prashant Panday

“Like I mentioned, this is on route to 25% which we should hit by about FY24 or I think FY25.”

Deepan Shankar

“Finally on this app spending per se, so the 6 crores kind of run rate will be maintained for the whole year or we will see further increase in the marketing spent?”

Risks & concerns — 6 flagged

As you will recall the impact of that virus lasted till about the 10th or the 12th or the 15th of February.

— Prashant Panday

Now remember last year was a perfectly fine quarter because there was absolutely no impact of COVID.

— Prashant Panday

As I mentioned the impact of Omicron continued through the middle of February.

— Prashant Panday

But look at how strongly we rebounded in the month of March when the impact of Omicron was over, retail establishments opened up and business became normal.

— Prashant Panday

This 11.4% you will understand from the quarterly split how significantly hit it is by Omicron because when government stops giving permissions for on-ground events, when retail establishments are stopped, when celebrities or performers refuse to perform because of the scare of the COVID, then you will see the impact of that on our results when I explain to you by month.

— Prashant Panday

Clearly, the results of the radio segment, the non-FCT i.e., the solution segment as well as the total revenues showed to you the impact of Omicron variant on January, February, and March performance.

— Prashant Panday

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Q&A — 6 exchanges

Firstly, wanted to check about this digital revenue contribution. So, we were expecting something closer to 20 crores kind of run rate, but we have been delivering only 6 crores kind of run rate quarterly. Can you provide us more light on what has exactly happened and how do we plan to scale this up?

Prashant Panday

So, Deepan, in my introductory remarks I mentioned why the digital is a component of the business. It is only 6% of our revenues in this quarter. The reason I mention is that our digital business derives from our solutions business. To give you an example when we do an event called Mirchi Cover Star, a lot of the push on Mirchi Cover Star is done on using digital platform, external digital platform and also our assets on those external digital platforms. When the solution business itself falls then obviously the sub-component digital business also falls. It is just a result of that. I also men

I understand that this quarter was impacted by Omicron and hence the on-ground activities were limited. But despite that at a production expense of 25 crores is higher than 10 crores that we reported in 3Q. Can you explain the reason behind this?

Sanjay Ballabh

Sanjay here Jinesh, I am taking this question. See in this quarter when we are reporting the numbers we have seen as Prashant has already mentioned, we have got two TV properties done. One is Mirchi Music Award Hindi, one is Mirchi Music Award Punjabi. Actually, it is three and third is Mirchi Music Award South. Now these three TV properties put together when we produce them has got a bigger expenditure portion than the normal other, I would say other than the TV property solution products. Therefore, you are seeing a bigger or more action expenses in the Q4. Secondly can you help me with the

I just wanted to check this run rate of Rs. 6.3 crores on digital or our strategic initiative expenses towards digital platform? Can we expect the similar kind of a quarterly run rate for the next few quarters?

Prashant Panday

Well, a similar question was just asked sometime back and I mentioned that we will be keeping a tight lid on the marketing expenses on the app but yes you can expect something similar like this number to happen on a quarterly basis in the year coming ahead. A little less, a little more, that kind of thing. Which should even out on a yearly basis like quarterly they can be here and there, up and down? Approximately, yes. Can you give us a breakup of core solutions and the radio revenue which we achieved in this quarter? I understand the growth rate in the radio was around 7%-8% which was impres

I had one question on the digital side, on the app side of the business. What would be the content cost which would be incurred by us as a budget on the app side?

Prashant Panday

So, Vishal, content is made in two ways. One when we hire a content team. We have a lot of people who are now hired by us and they make content. There it is reported as HR cost rather than content cost. And then there is content that we produce externally like when we launch our app in India there will be a few marquee shows that we will be putting on the app. These are externally produced by celebrities and by other production houses. Those are reported as content cost. In general, our philosophy is that we will be using both of these models but our focus will be on trying to create most cont

My question firstly was pertaining to the monetization of your digital app in India and globally? So, of course you have got this advertising which you will be playing on your app but what about the pay-base mechanism? Are you exploring some monetization obviously there as well?

Prashant Panday

Thanks Karan for your question and it's good to have you on every investor call. So, really appreciate that. Now answering your question, the app will have several modes of monetization. One of course is the advertising that comes on the content that we put out and remember that pure advertising on the audio apps business; in fact, even on the music apps is very limited. Therefore, I don't expect too much revenues to come from pure audio advertising on the app. But like I mentioned, the bigger the way to get more advertising on the app is to provide it as a part of a solution, a larger solutio

Okay good then we can call this meeting to an end. If I may just summarize and say that if there are any more questions that you would like to have then our contact information is there in the presentation deck and we would be happy to put out the answers to your questions. Thank you very much and have a great weekend.

Management

Speaking time

Prashant Panday

Moderator

Karan Taurani

Jinesh Joshi

Deepan Shankar

Sanjay Ballabh

Sumit Rathi

Vishal Bagadia

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Opening remarks

Prashant Panday

Thank you Lizann. Welcome to this very unique conference call on a Saturday. In my last so many years, I don't remember doing this conference call on Saturday, but such are the times that we adjust to it. Thank you very much for attending this on a Saturday. We truly appreciate that. Now, I will just take 5-7 minutes to explain the larger narrative on the quarter's performance. The most important point that I would like to make, a request to you note is that the Quarter 4 was very badly affected by the Omicron virus at the beginning of the quarter. As you will recall the impact of that virus lasted till about the 10th or the 12th or the 15th of February. So, approximately half the quarter was pretty badly hit by the Omicron variant. I'm going to give you a split of our revenue segments by the first 45 days of the quarter and the second 45 days of the quarter to show to you what impact the variant had on our quarterly numbers. Now, first our overall quarterly number; revenue number was

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