Saregama India Limited has informed the Exchange about Transcript of Analysts/Institutional Investor Meet/Con. Call
“Saregama India Limited Q1 FY2023 Earnings Conference Call”
August 02, 2022
ANALYST:
MR. BHUPENDRA TIWARY – ICICI SECURITIES LIMITED
MANAGEMENT: MR. VIKRAM MEHRA – MANAGING DIRECTOR –
SAREGAMA INDIA LIMITED MR. PANKAJ CHATURVEDI – CHIEF FINANCIAL OFFICER – SAREGAMA INDIA LIMITED MR. PANKAJ KEDIA – VICE PRESIDENT – INVESTOR RELATIONS – SAREGAMA INDIA LIMITED
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Moderator:
Ladies and gentlemen, good day and welcome to the Saregama India Q1 FY2023 Earnings
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 “*” then “0” on your touchtone phone. Please note that this
conference is being recorded. I now hand the conference over to Mr. Bhupendra Tiwary.
Thank you and over to you Sir.
Bhupendra Tiwary:
Thank you Seema. On behalf of ICICI Securities, we welcome you all to Q1 FY2023
results conference call of Saregama India. From the management, we have Mr. Vikram
Mehra, who is Managing Director, Mr. Pankaj Chaturvedi, who is the CFO and Mr. Pankaj
Kedia, who is Vice President, Investor Relations, so without much ado, I will hand over to
Vikram. Over to you Vikram.
Vikram Mehra:
Thank you Bhupendra. Good evening, everyone. Q1 of FY2023 saw operating revenues of
around Rs.169 Crores and a PAT of Rs.41 Crores which results in a 61% year-on-year
increase in our operating income and a 52% increase in our PAT income something that we
are very proud of. This is in continuation with our last year’s numbers, which had seen a
31% increase in operating revenue and a 35% increase in PAT. At the risk of sounding
repetitive I will say that this is not an aberration. Quarter after quarter you are seeing
Saregama’s positive results. This is just another small step in Saregama’s resurgence story
that started a few years ago. We started rebuilding the foundation of the company between
2015 to 2018 and what you see now is the building rising in its full glory. This is a
company which not only thrives on the richest IP catalogue that it owns but is also a
company, which is building the IP for tomorrow. This is being done so that 30 -40 years
down the line Saregama will continue being the number one IP company of India. Our
operating income before content charge interest and depreciation was at Rs.64.7 Crores
which means a 54% growth compared to last year. As you know our business is broadly
divided into three verticals. The most important vertical, which is the music business, grew
by 38% on a year-on-year basis in this quarter. Now this is significant, may be even better
than what most other music labels in India or globally have reported. This growth
comprises of both the licensing as well as the Carvaan business.
Let me start with licensing. We have been growing at over 20% on an annual basis for over
three years now. This is the fourth year, and I am very happy that the growth story
continues. During this quarter, we released all the songs of the super hit movie of Mahesh
Babu called Sarkaru Vaari Paata. I am happy to share that the cumulative audio and video
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views and streams on the Saregama’s official channel for this movie have crossed 550
million and this movie was released in the month of April only. It shows multiple things.
One, we are picking the right content and then we are putting the right marketing muscle to
go out and make this content really big. And it is not just large movies that we are picking
up. We in fact released another small film called Ittu Si Baat and the great thing about that
film was that it had songs from Arijit Singh, Jubin Nautiyal, and Vishal Mishra - the who’s
who of the music industry were part of this film. Our film buying or music buying is not
just based on picking high profile properties. A lot of thinking goes right now on the back
of data modeling to tell us that which of the large, medium and small sized films music we
should pick up and the success is there in front of everyone. We also continued our
investments in Bhojpuri, Gujarati, Telugu, Malayalam, Tamil, Bengali and devotional
music. I think a song that absolutely stands out during this quarter, which I would like to
mention is a Bhojpuri song called Nathuniya by Khesari Lal Yadav. That song in this short
duration of three months has already crossed 150 million YouTube views. Now this is a
massive benchmark for a language, which is not the primary language of this country.
Bhojpuri is spoken by a large belt in North and Eastern India and a song in that language
getting 150 million is a big achievement, which also revalidates the fact that we are the
number one guys now in Bhojpuri and Gujarati.
The strategy of investing in new content is clearly paying off. All the financial numbers I
am sharing with you are a testament to that. It is not only allowing us to grow our share in
the new content category space but in fact it is also helping the growth of the catalog.
Remember people who start following Saregama social media accounts, YouTube accounts,
and Facebook accounts on account of the new content- are also sampling a lot of hits of
Lata Didi or Kishore Da on our channel. We had raised Rs.750 Crores with an explicit
mandate to invest in new music content and we are completely on track. As mentioned, we
are using data mining and predictive modelling to decide on what content to invest in. Many
of the films whose music we have acquired over the last six months will hopefully start
getting released from the Q4 of this year and a large number may be in FY2023-24. Some
of them are Karan Johar’s next directorial film Rocky Aur Rani Ki Prem Kahani and
another Dharma film called Rola. Also, we have picked up music of Maddock film starring
Vicky Kaushal & Sara Ali Khant., Chiranjeevi’s Telugu film Godfather which also has
Salman Khan’s song in it, Malayalam superstar Prithviraj Sukumaran’s next movie Kaapa,
and Punjabi superstar Ammy Virk’s next film Oye Makhna. There is a lot of content that
we have picked up and these are just some of them. The list is very long across film music
in Hindi, Tamil, Telugu, Malayalam and now also Kannada and Punjabi. While the
company started investing in new content from 2017, we initially experimented at a smaller
scal. The real growth that we are looking at becomes serious from this year onwards. It is
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now that we believe, with the funds raised, that our music acquisition is going to see a
significant step jump. With that in mind, over the last many months, we have reassessed our
capability on multiple fronts. On the content acquisition side, we have reinforced the teams
in each of the languages so that people sitting in Mumbai are not taking decisions of what
content to acquire in the Bengali or other regional languages. It is strong teams with
proficiencies in regional languages that are taking the calls on what content to pick up. The
head office gets involved only from the data analytics perspective giving them enough
ammunition about the past track record of the artist whose music we are picking up. So, a
lot of work happening there on building that team, data analytics capability and our
marketing relationships across. This includes partnerships with radio channels, TV
channels, digital platforms, social media influencers etc. If we need to have the largest share
of new content, we should equally be equipped at marketing and monetizing that content in
a very effective fashion. As part of this initiative another thing we did was to re-assess the
useful life of the new music content that we were acquiring. We have been sharing with you
now for many quarters on how the revenue from music that we acquired in 1960s, 1970s
and 1980s is still growing at a significant pace. It is not that the revenues have started to
settle at all and hence we started questioning our current definition of the useful life of
music which until now was six years as per management assessment. The question that was
asked, “is this the right assessment of the useful life of that asset”? We asked E&Y to do a
bench marking of how all the global music labels are defining their useful life of their music
assets. The report has come to us which defines that almost every major label of the world
has useful life definition between 10 to 25 years of the music that they have acquired.
Based on our own data and global benchmarking, the management team is now
recommending that we should change the useful life of our music assets from 6 years to 10
years but unlike the global labels who follow a straight-line method, we are recommending
a more conservative approach whereby there is a higher amortization happening in the first
two years and then it goes on a straight-line method. As an explanation, typically when we
acquire content, Rs.80 go towards content and Rs.20 go towards marketing. Even with the
new useful life of 10 years the marketing cost is going to be charged off immediately, so no
change there. Of the Rs.80, 20% of that will be charged off in year one, 15% in year two
and balance on a straight-line basis from year three to year 10. The total impact of the
change of the useful life of a music asset in this quarter has been Rs.1.7 Crore positive on
PAT. We have made these reassessments of the useful life, more to prepare the company
keeping in mind the large investments we will be making in future and whatever we do has
to be in sync with practical reality, where an asset ends up getting monetized for a much
longer life then older assessment of six years.
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Coming to Carvaan, it saw an upswing in this quarter. We touched sale of 98,000 units
compared to the 45,000 units in Q1 last year and this came entirely out of customer pull.
There is no change or shift in our marketing strategy on Carvaan. We are still playing a
passive role and allowing the market to create and generate its own demand. It is the
opening of the retail network which is helping this growth. In this quarter, we also initiated
test marketing of two new variants of Carvaan in the last 10 days of June. Music bar, which
is the sound bar with a karaoke system, and a mobile phone. It is still very early days. We
will keep on assessing the feedback from the markets. We are in the middle of that and may
make modifications in the product basis customer feedback and then look at a proper formal
launch of these products maybe in Q3. We will keep you updated as we go forward. The
good part is that these products are being manufactured in India so that we are not overly
dependent on supply chains emanating out of China. I want to reiterate there is no
marketing push backing any of these products.
This was a slow quarter for Yoodlee. It typically happens as, films and series come out in
blocks. Last year also everything came out in Q4. This year also you will find most of the
Yoodlee releases happening in Q3 and Q4. The TV serial business continued its steady
performance in terms of TRPs. The only downside we saw this time was a slowdown in the
advertising revenue. A significant amount of our revenues that come from the TV
businesses come on account of advertising both on Sun TV channel and in YouTube. We
expect this to be a short-term trend and everything to come back on track the moment
festival season starts. This quarter we finally saw the launch of the new business line of live
music. We launched it in partnership with the biggest live music star of this country, Diljit
Dosanjh. He is the one music-based artist right now who draws the maximum number of
paid tickets in India and abroad. In fact, we in this quarter completed six successful events,
two in India (Gurgaon and Jalandhar) and four in Canada. Four of the six shows went
completely houseful, so we are very, very happy with the way this business has started.
With time this business will not only contribute more to the topline and bottom line but also
add power to our music acquisition vertical.
So overall ladies and gentlemen, it was a very good quarter for us which saw significant
growth both on the topline and the bottom line along with growth of newer verticals. Music
business was the biggest contributor to this growth in this quarter. Happy to take questions
from you people.
Moderator:
Thank you Sir. We will now begin with the question-and-answer session. Ladies and
gentlemen, we will wait for a moment while the question queue assembles. Thank you. We
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take the first question from the line of Ravi Jain from 2Point2 Capital Advisors LLP. Please
go ahead.
Ravi Jain:
I have just got a couple of questions. One was on the royalty expense that seems to have
fallen both Q-o-Q and Y-o-Y, why is that?
Vikram Mehra:
Sir, royalty expense is more on account of the past catalogue of ours and it typically
depends on the mix. There is some content where there is a royalty expense and there is lot
of content that we people acquire only have one-time payment. So, the mix changes a bit
here and there and royalty expense will keep on changing.
Ravi Jain:
It has got nothing to do with the accounting change, right?
Vikram Mehra:
No, nothing.
Ravi Jain:
Sir on the newer content if you can just again summarize maybe I missed it? What was it
earlier? What did you charge in the first and second year earlier and what is it now?
Vikram Mehra:
There is no change in charging of marketing expense, Earlier, also 100% straight away was
charged off in the month one itself, the same is followed now as well, so there is no change
to that 20%. On the remaining 80% it was 35% in year one and then 13% for the next five
years. Now what we are changing it to 20% in year one, 15% in year two and then it goes to
8.125% for the next eight years. It is a very small change right now. The net impact of that
on our PAT is only Rs.1.7 Crores.
Ravi Jain:
But I think a lot of the contents will be back ended so the benefit will come from the next
few quarters? Is that true?
Vikram Mehra:
Yes. See what we are doing here is to come in sync with the global practice because our
policies were not so earlier.
Ravi Jain:
Got it and on this live concert business can you give a sense of what is the revenue
contribution this quarter?
Vikram Mehra:
I said in my last quarter call that it is an early stage. The first year is going to be more
testing the waters, but in general events business is a 5% to 10% margin business for the
next couple of years. We are running the events business for profitability but more
importantly to reinforce our position on the music creation and acquisition side because it is
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the same bunch of top singers who are also contributing to the biggest songs as well as are
active on the live circuit.
Ravi Jain:
I understand that, but eight events will that like contribute to a few double digits in Crores
in terms of revenues?
Vikram Mehra:
Let the year get over first. Maybe I will be able to give you a better idea then. All I can tell
you that it will not be a loss-making thing. That is all the comfort I can give you.
Obviously, we believe it should contribute significantly to the topline. It is the first quarter’s
first event. Give us four quarters and we will be able to go back and share more specific
details with you.
Ravi Jain:
Okay and the last question as on date YouTube views there is a significant increase every
quarter? Is this to do with user generated content being a larger part of the growth or is it
Saregama channel alone contributing the growth?
Vikram Mehra:
As regards the growth rate, the biggest contributors are the Saregama’s official channels.
But in reality, it doesn’t matter where the view is coming from, as we make similar monies
from a view from our own channel and user generated content. The growth rate it is coming
more from our own channels because of the amount of new content that is being put up.
Ravi Jain:
Lastly if I may just squeeze in on this Instagram deal it was a fixed deal? It did not depend
on the number of streams that we..?
Vikram Mehra:
I cannot talk about specific deals.
Ravi Jain:
No, you had mentioned that it was a fixed deal?
Vikram Mehra:
In general, short format app deals are fixed fee deals.
Ravi Jain:
It has not come up for renewal yet?
Vikram Mehra:
I cannot get into specifics details.
Ravi Jain:
I just wanted to get into basically I think these deals has taken significantly ever since we
signed the deal and because it was fixed deal do we expect like a significant increase when
it comes up for renewal that is all what I wanted to get at but I appreciate if you don’t want
to disclose.
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Vikram Mehra:
I cannot get into specific deals but please understand if we are growing our music licensing
business at over 20% and last year, we grew over 26%. This quarter the growth is even
more. Clearly it is coming out of both. variable deals with minimum guarantees as well as
fixed fee deals. All of them get renegotiated in a very big fashion and the numbers are
becoming significant because we are investing in new content aggressively.
Ravi Jain:
This Gaana thing is that going to be a negative because if it gets acquired by someone, there
is news about it getting acquired so there is consolidation on your customer side, so that
will be a slight negative for you?
Vikram Mehra:
Let me answer this way. I will not answer to the specific brand name that you took but in
general consolidation does not affect us because the customer is going to listen to a song. It
does not matter to us whether the customer is listening to the song on platform A or
platform B. We get paid on an average Rs.0.10 paisa. It does not matter which platform are
you going to.
Ravi Jain:
If you have minimum guarantee on both the platforms?
Vikram Mehra:
You have asked the right question. The days of we people not hitting a minimum guarantee
were six years back. Now the actual revenue frequently touches the MGs, and in many of
the cases there are overflows coming in.
Ravi Jain:
Thank you and congratulations for a good set of numbers.
Vikram Mehra:
Let me add further, if you ask me, if any of the platform’s folds, it is also a signal to the
other platforms that they should move towards paid services. It is high time and I have been
saying this it is time that the streaming platforms, start making a significant push towards
paid subscription. That is going to be great news for their financial viability and also means
lot of money to be made by music IP owners. It will be a positive news if this transition
happens.
Moderator:
Thank you Mr. Jain. We take the next question from the line of Saket Mehrotra from Tusk
Investment. Please go-ahead Sir.
Saket Mehrotra:
The first question I have Vikram, you mentioned this 550 million plus impressions of Sarkaru Vaari Paata from April to August, so this is across YouTube and other apps or was
it just YouTube?
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Vikram Mehra:
This was from Saregama’s own YouTube Channels and audio streaming apps. We do not
include user generated content or any of the other short format video apps. . .
Saket Mehrotra:
Okay, the second question I had Vikram recently we saw this development where Meta
announced that they are starting monetization of music on their videos, so would you like to
comment anything on that? Has that gone live for India or is it just a global announcement
that they are going with?
Vikram Mehra:
I will not comment on a specific company, but in general I will reiterate what I said earlier.
If we talk about short format apps in India from Instagram to YT shorts to Josh, Moj,
Chingari the nature of the deals is a fixed fee deal with a clear understanding that as their
business model evolves and they get into an advertising driven business then the fixed fee
nature will change and will become a variable with a minimum guarantee. We saw how
big that became on a platform like YouTube. We believe the other guys will also go in that
direction which means the platforms will make money as well as the IP owner.
Saket Mehrotra:
Alright so as of now it is still in an evolutionary phase is what I understand?
Vikram Mehra:
That is why we all are protected ourselves with a fixed fee. But our deals are structured in a
fashion that if they move to an advertising driven model stuff and they offer a share of
advertising to any label globally, we also end up getting it immediately.
Saket Mehrotra:
Got it and any timelines on clarity on the demerger? Can we expect it anytime this financial
year?
Vikram Mehra:
Pankaj will answer that.
Pankaj Chaturvedi:
So, we have been resolving all the queries that come from either the stock exchanges or
SEBI. Most of them have been done and during this quarter as well there were some
questions that came in relation to this, and we have responded to that. We now await the
final clearance from SEBI post which we will then obviously file our application with the
NCLT. We cannot put a very specific date, but yes normally these things do take six to
eight months from the time of filing with NCLT. We are pursuing this matter and seeing to
it that any kind of questions or any kind of steps that are required to expedite are being
followed upon.
Saket Mehrotra:
Got it thanks a lot. That is, it from my side.
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Moderator:
Thank you Sir. We take the next question from the line of Shubham Ajmera from SOIC
Investments. Please go-ahead Sir.
Shubham Ajmera:
Sir my first question is regarding the advertisement revenue, so as you mentioned in your
opening remarks that we are seeing some trend in the downward stages for the YouTube
revenue and advertisement so are we seeing same trend in the streaming company Sir?
Vikram Mehra:
We are not seeing that impact hurting us on our music business at all. What is hurting right
now is the fall in the advertising revenue on TV channels because South TV serial business
runs on advertising running on Sun TV itself.
Shubham Ajmera:
Got it so do you have any idea regarding the slowdown in the revenue score in the
streaming company as much?
Vikram Mehra:
Our streaming business is not dependent on advertising at all. Streaming business on the
free side -we have a protection through a per stream rate and on the pay side we get a share
of the subscription amount. So, in fact the audio streaming business for us the way our deals
are structured is not dependent on advertising at all.
Shubham Ajmera:
Got it and my last question is regarding your plans for the Carvaan for like the next three to
four years like if you can give me some broad idea regarding on the margin side which you
are targeting in the next three to four years?
Vikram Mehra:
Sir as I have stated earlier, whenever we decide to start investing in Carvaan, we will share
it with you. First there was a demand issue, with retail network shut. Then, there were
massive supply chain issues because chips were not available. Things are still getting sorted
out because even if we go and manufacture the rest of the parts in India chips are still
coming from one of these Asian countries only. So, we want to first come on top of it. Once
we believe that this product is now ready for expansion then we are going to talk to you
about our investment plans and how the financials are going to work out.
Shubham Ajmera:
Okay sure thank you so much.
Vikram Mehra:
And currently you are not going to find any investment going from our side on Carvaan. It
is just moving at this juncture on its own demand.
Shubham Ajmera:
Understood thanks.
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Moderator:
Thank you Sir. We take the next question from the line of Vimal Gohil from Alchemy
Capital Management Private Limited. Please go-ahead Sir.
Vimal Gohil:
Thank you for the opportunity, Sir. I am not sure if you have answered this so sorry if I
have made you repeat it, if you can just highlight what is the kind of investments that we
are seeing in content over the next one year or maybe if you have any long-term guidance if
at all?
Vikram Mehra:
Our stated aim is that out of all the content that comes out in the market on a Pan India
level, we want to pick up anything between 30% to 35% of it. The cost of the entire content
that is expected to come out this year should be in the range of around Rs.800 Crores. So
that is aspiration we people have. We do not know whether we will be able to acquire the
entire share in a single go. Even if we acquire, it may so happen that the movies may not get
released until the end of the financial year. Though the deal may happen now, the movie
may get released in the next financial year but broadly this is the aim.
Vimal Gohil:
Okay, so this year possibly you are looking at somewhere near Rs.400 Crores of content
investment pool that will be a fair assessment if at all assuming that the entire you are able
to take whatever entire pie that you are looking at?
Vikram Mehra:
See, 30% of 800 is 240 so it is that space right now. Now this is the first year for a company
which has had a single digit share of new content and it wants to move to a 30% to 35%
share. In Bollywood movies the music of the film gets sold 12 to 18 months before the
movie gets released. So, it will take us that much amount of lag right now to go back and
build it up. But the space that I said would be in the range of 200 - 220.
Vimal Gohil:
Understood. Thank you very much Sir. All the best.
Moderator:
Thank you Sir. We take the next question from the line of Bhupendra Tiwary from ICICI
Securities. Please go-ahead Sir.
Bhupendra Tiwary:
So, my question is basically on the web series and movies part, if you could talk about what
is our overall pipeline of things that we are looking to do over the next 12 to 18 months
number of web series lined up, the movies because I think that piece is getting bigger and
second followup to this is what is our kind of margin profile that we are looking to get there
in this segment? Thank you.
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Vikram Mehra:
This is a business right now which will generate15% to 20% margin after writing off the
entire cost of film or series in year one itself.
Bhupendra Tiwary:
Ok.
Vikram Mehra:
And we believe that is the range that we will be in. I am not attributing any profits from the
second round of licensing that happens typically in this business because your license on the
first round may be of three, five, seven or 11 years and then comes the second round of
licensing. The cost is fully written off in year one itself. All that I am keeping separate. I am
saying year-on-year as we people go out for the next three to five years, the Film TV and
web series business will be contributing 15% to 20% margin. In terms of the size of the
business we crossed Rs.100 Crores last year and we believe in couple of years we should be
hitting the range of Rs.150 Crores to Rs.200 Crores.
Bhupendra Tiwary:
If you could talk about the web series or the films which are lined up for the next?
Vikram Mehra:
I can only tell you right now what has been announced. There is a Sunil Shetty web series
that is already licensed out. We will recognize the revenue post making that delivery. The
series should get released sometimes this year. There is a Malayalam film with a big star
called Nivin Pauly expected to release in September. There is a Punjabi film with the big
star in Punjabi, Ammy Virk, called Oye Makhna which is expected to be released in the
month of November. We have also started to shoot with the Malayalam industry’s biggest
star called Prithviraj Sukumaran which may get released this year or next year. These are
things in public domain. But we are working on many more – series concepts and films but
all that information is still not in public domain.
Bhupendra Tiwary:
Sure, thanks a lot.
Moderator:
Thank you Sir. We take the next question from the line of Gaurav Chopra from Union Asset
Management Company Private Limited. Please go ahead with your question Sir.
Gaurav Chopra:
Congratulations on a good set of numbers. I just had a small question. I was going through
your annual report, I could see the revenue from India last grew by just 4% in the music
licensing business, while revenue from exports grew 71%. So, could you highlight like why
would that happen? Like why would India business revenue growth would be just 4%?
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Vikram Mehra:
Sir, typically my understanding is many of the deals that we are doing, are with global guys
- I will not take specific names - but if you think of all the major licensing companies, they
are all global companies.
Pankaj Chaturvedi:
We do have partners who are based out of India, so just from a classification point of view,
the revenue from these partners is classified under “International Revenue”
Vikram Mehra:
As a normal Indian, living in Bareilly and Jodhpur they will say that YouTube is an Indian
company, but the reality is a bit different.
Gaurav Chopra:
Got it. Thanks for the clarification.
Moderator:
Thank you Sir. We take the next question from the line of CA Garvit Goyal from Nvest
Research. Please go-ahead Sir.
CA Garvit Goyal:
Good evening, Sir. Sir my first question is as NFTs are coming into trend so how is to going
to be an opportunity for us and how it can shape our topline going forward any views on
that?
Vikram Mehra:
So, we are very seriously exploring it. We believe NFT is a great way to unlock the value of
what we people own. We just want to get our product proposition right because we believe,
if we are launching an NFT it should not be for gimmick value. There should be a genuine
value we offer to the customer then only the business is going to become significant. You
will see very soon an announcement coming from our side in this space. For us it is a
serious business opportunity and not a gimmick.
CA Garvit Goyal:
Understood Sir and my second question is Q1 financial year FY2023 music segment seems
to be muted if we are comparing it to the previous quarter, so what are the reasons for the
same? Is it due to any downside in the platform revenues like OTT, broadcasting, video
screening or social media and how you are seeing it to be in upcoming quarters?
Vikram Mehra:
So, let us answer the part one first. Please look at our numbers for the four quarters for the
last five years. You will always see Q1 as the lowest quarter. In general, Q4 becomes very
high because a lot of our international publishing revenues hit us only in Q4. A lot of
society revenues hits us in Q4 and our policy with these revenues is that we will recognize
them only when the cash hits our account, so Q4 is always on the higher side. Q3 becomes
higher typically because of the Carvaan sales as it is a festival season. We are very, very
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delighted with the numbers that we are seeing in Q1 because Q1 has never matched our Q4
revenue ever before.
CA Garvit Goyal:
Understood. It means it is better to look year-on-year?
Vikram Mehra:
You have to look on year-on-year basis because there is seasonality in our business.
CA Garvit Goyal:
Understood and what are the developments on the Carvaan platform side basically you were
mentioning your annual report vis-à-vis getting advertisement type of revenue also from
Carvaan platform once it gets commissioned, so what are developments on that side?
Vikram Mehra:
As the new generation Carvaan is going to come in, that is where advertising and
subscription business will be built in. We are still sometimes away. Like I mentioned to
somebody else earlier, whenever we are ready for the product, which may need investment
from our side, we will talk to you, but it is still sometime away. Till that time there is no
marketing or manpower investment going on in Carvaan.
CA Garvit Goyal:
Understood and Sir basically we are looking for the new acquisitions from the music side
and what is our specific target when we are acquiring the new music? Are we looking
towards targeting a particular A group or what is basic approach I am 23, so your focus will
be on our side or on our parents’ side so that is basically my question?
Vikram Mehra:
New music will be all talking to your age group. I am the age of your dad and have no wish
to get into music acquisition. There are younger people under the age of 30 who decide
what to buy and what not to buy. We are very particular about it. Nobody senior is listening
to music and taking a decision. In fact, we sometimes joke that if I like a song at my age,
that means that song will not work. It is better that a 20 plus youngster choose and decide
the songs to acquire.
C A Garvit Goyal:
Right and thank you very much Sir.
Moderator:
Thank you Sir. Ladies and gentlemen that was the last question for the day. I now hand the
conference over to Mr. Vikram Mehra for closing comments. Thank you, Sir.
Vikram Mehra:
Thank you. We maintain a bullish stance on music licensing. We are projecting a 22% to
23% growth year-on-year for the next three to five years. This will happen irrespective of
consolidation on the platform side. In fact, as I said earlier, if there is a consolidation
happening it is good news because that means with less platforms more and more people
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will be looking very seriously at the subscription-based business, which is great news for
both parties - the platforms as well as the IP owner. The advertising downturn may not
impact us significantly because of the way our deals are structured. I think if at all, it will be
a marginal impact. We hold on to a 22% to 23% growth rate in music licensing business
over the next three to five years. We will continue with the investments on content across
the multiple languages, both on the film and the non-film side with the target being people
under the age of 30. We continue with our cautious approach on Carvaan, and the focus is
going to be on the margins and not on revenue. The film series and TV business should
keep on growing at a 25% growth rate year-on-year with a margin which is around 15%.
Events verticals will slowly build up in terms of revenue, but in the initial years we expect it
to contribute only 5% to 10% margin. As a management team, we are very bullish on the
business. We have built the right foundation and year after year after year and quarter after
quarter, we are proving it to you that the foundation that is being built is strong enough to
keep on sustaining the growth rate that we have seen over the last three years. Thanks a lot,
gentlemen, good evening.
Moderator:
Thank you. On behalf of ICICI Securities that concludes this conference. Thank you for
joining us. Ladies and gentlemen, you may now disconnect your lines.
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