D. B. Corp Limited (DBCORP) Earnings Call Transcript & Summary

Good evening to everyone. We welcome you to the Q1 FY '21 Conference Call of DB Corp Limited. We have with us today the senior management team of DB Corp Limited: Mr. Pawan Agarwal, Deputy Managing Director; Mr. Girish Agarwaal, non-Executive Director; Mr. P.G. Mishra, Group CFO; Mr. Mushtaq Ali, Vice President, Finance and Account; Mr. Lalit Jain, CGM, Finance and Account; and Mr. Prasoon Kumar Pandey, Head, Investor and Media Relations, who will represent DB Corp Limited on the call. We will be sharing the key operating and financial highlights for the quarter ended 30th June 2020, followed by a question-and-answer session. Before we begin, we would like to state that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to the company's financial performance have already been e-mailed to you. Now I invite Mr. Pawan Agarwal to share his outlook on DB Corp's performance for the quarter. Thank you, and over to you, sir.

Thank you, Hina, and good evening to everyone. As we are getting used to the new normal, we hope that everyone with their families is safe in the current situation. As we usually do, we will begin the call by highlighting the key financial performance for the quarter ended June 30, 2020, followed by our operational updates during these challenging times. The outbreak of the COVID-19 pandemic followed by a preventive nationwide lockdown has impacted the all over economy. And our business was no different, and the impact of this is reflected in the financial results during the quarter gone by. While continuity of operations to reach to normal level has been the key area of focus, we have continued our cost rationalization drive to safeguard our bottom line. It is said that every adversity also presents an opportunity. The current situation too led us to look at cost optimization in every possible department from a new perspective. The resulting cost saving in many of the identified areas has not only benefited us in the short term but also likely to remain in the long term and bringing bigger advantages in the coming year. Further, the 0 debt balance sheet obviously adds tremendous strength to our financial position. And this is aided by the strong liquidity position that we continue to enjoy. We are hopeful that this will not only enable us to run our operations smoothly but will also be the pivot for future growth. Now coming to our financial performance. The consolidated advertising revenues stood at INR 1,070 million in Q1 FY 2021, the circulation revenues stood at INR 928 million, and the total revenues stood at INR 2,157 million. Company reported a loss of INR 278 million at the operating level and a net loss of INR 480 million. Dainik Bhaskar Group Radio business continues to maintain leadership position in all significant markets. Radio advertising revenue for the past quarter stood at INR 80 million with operating loss of INR 61 million and a net loss of INR 84 million in quarter 1. I would also like to update you that our Digital business has been doing very well. Our app users have gone up by almost 4x with one of the highest time spent by users. During the past couple of months, given the COVID situation, while most of the media company in India post advertising on their digital platforms to optimize revenue on their digital platforms, we remain focused on our strategy of building best-in-class radio experience on our digital app with no ads even during COVID. We continue to invest in Digital business and our focus on our app daily active users. I would now request Mr. Girish Agarwaal to update on how the organization is morphing to take on the challenges thrown by the new environment.

Thank you, Pawan, and good evening to everyone, and I hope that everyone is staying safe and healthy. Further to our last update during our previous interaction on the immediate impact of COVID-19 and various steps taken by us to handle the situation, we are happy to share that our circulation has reached a 67% level in the month of April, 69% in the month of May. And by 30th June, circulation copies increased to 76% of that in the previous year. I would further like to inform you that in the July month, the circulation has further improved to 78%. And currently, as we speak, in the second week of August, we are at 81% level in the overall numbers and with a few key markets like Rajasthan clocking even higher at 84%. The balance 16% or 19% copies which are yet to come back to us are largely from the offices and the markets in the containment zones, which we are confident that as and when the situation can get into control, these containment zones will get relaxed and the offices and the shops will again resume the operations, and the copies will come back. On the advertising revenue, we are seeing continuous recovery. And I would like to break up this entire quarter month-wise for you. So in the month of April because of the lockdown, our sales were around only 19% of the last year, which improved just by 1% to 20% in the month of May and further improved to 32% of last year in the month of June. And in July, this further improved to 53% of last year despite that there was some short-term reimposition of lockdown in Madhya Pradesh, Chhattisgarh and Bihar also in the middle of July. On operating cost front, newsprint rates are continuing to be soft and were lower by around 4% Q-o-Q to INR 3,000 -- INR 35,850 in the Q1 of FY '21. We expect it to further correct by around 2% in the coming quarters. Our other operating cost efficiency measures are effective and helping us in safeguarding our bottom line. And as mentioned earlier by Pawan, COVID-19 give us the opportunity to relook at cost optimization in every possible department. We expect the benefits rising out of the cost-saving measures will continue in the longer term also. Our print business operating loss in April was INR 169 million, which came down to only INR 40 million in the month of May and turned positive in the month of June to operating profit of INR 97 million. And in July, it has further improved to an EBITDA of INR 184 million in the month of July with a margin of around 20%. This company is very much focused to meet the losses of quarter 1 of FY 2021 in quarter 2 itself so that we move on to the net EBITDA positive from the quarter 3. As for the recent report published by EY titled "Will non-metros propel India’s recovery?" the non-metro markets show higher resilience than metro markets. The percentage of respondents, those who are expected to spend more post lockdown on the majority of categories are much higher in the non-metros. So it's a clear divide which is now visible that the metros are largely shut. Or even if they are opened up, people are scared to go out and start much of consumption, while the mini metros and the non-metro markets are already opened up, and we see the consumption happening in those markets. And there's a higher inclination to spend on categories such as consumer durables, FMCGs, auto and lifestyle in these markets. The report also stated that newspaper led the trust index. 35% respondent said that they trust newspaper more compared to any other medium in terms of news from the trustworthiness point of view. As metro markets are still struggling to recover back from their circulation numbers also, these are markets that have recovered almost 80%, 85%. And this is expected to further shift the revenues from the metro print markets to the Indian languages markets, and DB Corp will be the larger beneficiary with circulation leadership in many key markets and also one of the largest offering by any media company in India. Recently, Government of India has announced the new Advertising Print Media Policy (sic) [ Print Media Advertisement Policy ], where they have mandated that 80% of the space or the revenue has to go to the Indian language newspaper. This will also have a positive -- will have a positive impact on us. And we are very confident the state governments will also follow the same policy as it has been made by the DAVP central government, and that advantage will further come to us also. This is all from our side. My colleagues and I will now be happy to respond to your questions. Thank you.

Hello? Is there a connection here? Hello? Hina?

Yes. Can you hear me, sir?

Yes, I can hear you now.

Sorry. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Depesh Kashyap from Equirus Securities.

Sir, your other expenses have seen almost 50% reduction in this quarter as compared to last quarter. Can you please explain what all expenses did you cut and how much is sustainable?

So as you remember, we announced in the last call that we believe that INR 115 crore is the cost what we have cut for this year of 2021 from our overall operating expenses. This 50% reduction what you have seen is on the multiple accounts because the number of copies also went down to almost 70%. So the printing expenses, distribution expenses were less on that. But what we can say, out of that INR 115 crores, what we are planning as annual savings, almost INR 30 crores we have taken in this quarter out of that. And the balance will come in the other quarters.

Okay. So last year, your other expenses were at INR 550 crores. So you are saying this year, it should be around INR 430-odd crores other expense?

Yes, it will go down by INR 115 crores. So last year, if I see the overall numbers, YTD number, yes, around INR 557 crores will come down to INR 430 crores, INR 435 crores. You're right.

Okay. Understood. And sir, your circulation levels are still at 84% of the pre-COVID levels. Can you highlight which all cities the circulation levels are still low? And do you think there can be a permanent reduction in circulation due to changing habits?

See, the market where we are still struggling in terms of copies is Maharashtra because in Maharashtra, the containment zones are much higher. And because of that, the Maharashtra number is below 70%, while every other market has already crossed the level of 73%, 75%. And some markets are even higher than 100%. Coming to your second point of that how much copies will get -- may not come back, frankly speaking, we don't think that any of the copies may get permanently reduced because, as and when the markets are opening up, we are seeing the copies coming back.

Okay. And sir, what is the average pagination that you're having currently? And what was the normal levels that you used to have?

Yes, normal level used to be around 20, 21 pages. But right now, we are doing the average pages of around 14.

14, okay. And sir, lastly, can you please comment about the Radio segment? Like what is the trend here? And do you think July numbers are better? And when do you expect it to improve?

Sure. So in Radio also, I'm happy to announce that -- I'll give you the number recap also. So Radio revenue in the month of April, May was in the range of around 20%. In June, it came up to 25% of last year. And July, they are also at 55% level. In terms of their EBITDA, they suffered a loss of almost 5 -- INR 6 crore in the month of April, May. June, there was 0 loss. And in July, they are positive by INR 1 crore.

[Operator Instructions] The next question is from the line of Abhishek Jain from BP Wealth.

Sir, on the [indiscernible] how are we doing in the digital footprint right now? So do we have any online subscription? Or how exactly we are doing at that level?

So we don't have any online subscription on the Digital right now, but we are doing pretty well, as mentioned by Pawan. We have seen 4x growth on our total users, those who come on to our site. And the time spend has also increased to a very high level. And we continue to invest in the Digital. As we also mentioned that during this 4 months' time, there was an opportunity for the advertising on Digital in a big way. We could have got some revenue over there. But we decided that we wanted to create a world-class, user-friendly environment and the experience, and hence, there is no advertising on our app there. So we want to create that experience for readers and going forward, think of monetizing it.

Sir, one more question. I've seen in one of the newspapers today, it is, I think, 50-page newspaper, which is much higher.

So let me give you that news. I'm happy to inform you that today, Dainik Bhaskar Bhopal celebrated its 63rd anniversary. And team thought that this is an opportunity to motivate advertisers and advertise in print, so they initially thought they will do a 64-pages newspaper. But with the overwhelming response, they were able to do 72-pages newspaper today in Bhopal edition, where all the advertising categories responded, right, from FMCG to electronics, to real estate, to consumer durables, 4-wheelers, 2-wheelers, automobile, all of them. So that's a very encouraging sign there.

[Operator Instructions]

Okay. By the time you take the question queue, I would also like to give some information about the newsprint. As you are aware that in the Q3, our newsprint rate was INR 38,250 per ton, which came down in Q4 to INR 37,223. And in Q1, they're down to INR 35,864. So we've seen a decline of almost 4% in the newsprint price Q-o-Q. And furthermore, we believe that around 2% more savings can come on the newsprint. Also another advantage we have seen in between the Q4 and Q1 is that in Q1, our quantum of newsprint went down to almost half because the copies went down to 70% but more because the number of pages went down. So our per-copy loss, as we speak, is almost 0 in terms of number of copies. So I think that's also helping us to contribute to the EBITDA. Yes. Can you further go to the next question, please.

The next question is from the line of Siddharth Kothari from JM Financial.

Could you just give us an idea as to which segments of customers are coming back in terms of advertisement?

So it's a mixed basket. If I see the quarter 1, education has taken the biggest beating. Actually, I wouldn't say beating, I thought I would say education got shifted because, generally, what happened, April, May, June is the biggest education season for everybody in India. But because of the results got delayed, most of the results are now coming in the month of July, August, and certain board exams have been postponed. So that's the reason this entire category advertising got shifted to the month of July, August and probably in September, October also. Because as of now, government has not allowed the colleges and the coaching classes to open up, so all this advertising is waiting for their physical classes to start so that they can start advertising. That's one. I think one of the categories which has responded very well in the month of July onwards is the automobile, 2-wheelers and 4-wheelers. Every possible advertiser has come back to us in the month of July. FMCG was doing still good in the month of April, May, June also because that was a thing which was allowed by the government from essential point of view. So largely, in the quarter 1, most of the categories were subdued. But in July, most of these categories started coming back. Even real estate has started coming back in the month of July and August.

Mr. Kothari, do you have any further questions?

No. No further questions.

The next question is from the line of Sanjesh Jain from ICICI Securities.

One thing on the advertising side, now the worst is behind and we are approaching the festive season, what's your discussion with the key customers suggest in terms of the revival in the advertisement revenue? Can Q3 be a Y-o-Y growth quarter for us?

I think so. Good thing is that the festive season is starting from 16th of October this year because there is Adhik Maas in between this time. The whole of September is non-festive this year. This is on 14th or 15th of November. So we still have enough time. And the way it looks like that the situation may improve in India and worldwide also. In that case, we are very confident that the Q3 should be on a growth.

Got it. Any update on how the government advertisement are right now? And is it seeing any material uptick?

So government advertising, what we've seen in the Q1, the decline was not very sharp. There was 26% decline in the government revenue in the month of -- quarter 1, actually. And July was slightly better. So fortunately, government has not really pulled off from the advertising.

Look, it's coming on a very low base, right? Last year, we had a steeper decline. So on a low base, it has been declining. Any reversal possible there on the government advertising side?

So when we are talking to the government department, they are also struggling on the same thing that what to advertise. They need to have more projects to come, where they can release their tenders about it. They need to have more things happening, where they can talk about it. So I think they all are waiting for such things to happen so that they can start advertising on that.

Got it. Got it. Just one last bookkeeping question.

Please.

What are the number of copies -- average copies you sold in Q1? And what was the gross and net realization?

Okay. Average copies sold in Q1 is almost 40 lakhs. And the realization in terms of rupees was INR 2.64 per copy.

The next question is from the line of Jay Doshi from Kotak Securities.

I think my question was around circulation, which partially got answered, and I think you've also shared those details in the press release. Just want to know, this 84 -- 81% that you are at right now, what is the balance 19% which is not recovered? Is that -- what percentage of that will be commercial as per your assessment? And what percentage of that is not...

I can tell you roughly around 3% is the railway station copies. Because in all 12 states of us, there are a lot of copies get sold on the railway station. Roughly 2% to 3% would be railway station copies. Another 2% would be cash point copies, where people generally sell in the morning in the markets and all that. Then there are certain copies which we are getting distributed through our railway network. So for example, there are small villages or towns where I would send my copies to my agent, and agent would use his morning network to send those copies to nearby places. So that has been stopped because even -- not only the railway, the local state government transportation also has been stopped. So that is some percentage of copy. But a large percentage is the office area and the market area, the shops and all that. So that's all we are hoping that should come back as and when we -- because right now, what's happening, government has a policy that Monday, a particular lane will open; Tuesday, a particular lane will open. So those 6 days, 7 days full operation is not yet being confirmed to the people. So that's the reason people are yet to get back to normal.

The next question is from the line of Ketan Chawla from JM Financial.

My question is around the Digital business. I understand that our users have increased 4x during this last couple of months. How much of this do you expect to be a sticky user base that post COVID also would maintain? That's one. And second, relating to that, is how do we plan to monetize the Digital business and at what scale. Are we looking more at advertising or at e-subscription model going forward?

So I will answer your second question, and Pawan will answer your first question about the stickiness. On the second question, frankly speaking, we have not yet decided that the monetization will happen in what format and when. So currently, the focus is on to develop a minimum critical mass with us, where we know that X number of people are really committed to us, what we call DAU, daily active users. So that is the focus. And we are very excited that, that number is happening. And we want to get some more time to it, and that's the reason we are not accepting any advertising on our app. I would urge you to have a look at our app. It's a world-class experience on the app. And we are still doing a lot of innovations and additions in that. Pawan, over to you for the first question about the stickiness.

Yes, so as Girish just said, if you download our app, you will experience a world-class user experience. And then fortunately, the app with the new team was ready to go live on the Play Store in the 1st week of April. And because the app was in time and we could remove all the ads from the app and make it much faster, much lighter, it's one of the lightest app with the integration of videos, so the initial 2 months, we also thought that probably is a COVID bump, and it will probably go down. And we experienced that on the Facebook traffic, on the search traffic, that all those traffic which went up, which were never a priority for us, which went up have sort of started to come down. And we see the Comscore data trend also that the numbers in the last 2 months have -- for most of the publishers have started to come down, which bumped up during COVID. Because our entire focus was on delivering a very, very high not just user experience but great content experience, so we made sure that we read those trends of not just COVID news but also news which people wanted to read. Be it international, any other segment, we were right there. And that's the only reason we have been able to not lose any numbers actually, any numbers whatsoever, which we acquired during COVID. It is actually growing now.

The next question is from the line of Ayaz from Nivalis.

Yes, hello?

Yes, sir.

Yes. My name is Ayaz Motiwala from Nivalis Partners. Sir, I have a similar question on the earlier one. Just a little more on the integration side, which is we clearly note that more on the city side but in your markets also, the users will shift in time for which you have clearly got the Digital business going. So the question I have is, the other medium, which are there fighting for the same sort of share of the consumer, whether it's the television, which has now got bandwidth to be able to be watched live, and I'm naming a competitor such as, let's say, an AajTak and your live video feeds that you got on your website along with the credibility of the newspaper. So how would you envision a scenario where, over time, there will be 4 or 5 massive national players who will have an audience which will transition beyond the physical borders of the state along with some sort of local coverage? Can you share some light on how you're thinking internally on being able to tap the larger user base of this country? Because I believe you also have a lot of international audience reaching on the Bhaskar website from countries such as the U.S., et cetera.

Perfect. So let me answer this. So 2 things. One is that in our markets, the 12 states, in the morning, people read our paper, and then we keep them updated throughout the day through our app. Now on the app, if you notice, we are not putting the story which are already going in the newspaper in the morning and just posting it on the app. That's not happening. The app team ensures that they give us further updation during the day. It's not that the morning story is simply posted there. So that's for the -- our markets. Within our markets, there are people, those who don't read our paper or don't read anything or read the competitor's newspaper; or in the other markets like Uttar Pradesh or Delhi or Bombay or United States or U.K. or Australia, where people read the newspaper through our app, whether Hindi or Gujarati. Idea is to understand the requirement of the consumer. Since you mentioned a name of a competitor, so idea is not to compete with somebody. Idea is to understand the requirement of the consumer. So if my consumer wants to come to me from U.K. for a particular segment, particular market and overall India update also, I need to give him that update. Or for example, if a particular -- within India, a consumer set is looking at a particular news, why he would come to me, please understand, I cannot be a journalistic, where I say, okay, I'll supply each and everything to you. No, I have to be specialist plus giving you the flavor of the general news also. So as I told you, we are not trying to compete with any individual, whether it's the number -- what you mentioned a name that or any other name. We are looking at that if there are crores of people, those who want to come on to an app and want to take an update during the day, what they are looking at and how we can engage with them, that's the whole focus about.

Okay. Girish, if I were to reframe this question and to learn more from you because, I mean, we're just trying to understand how this would go, if you want to imagine a scenario on the information you are talking on the app on the COVID situation, in the past, 10 years back, when we were not hyperconnected and news was not easily accessible, the credibility of the newspaper in the morning was sufficient in a town like Kanpur or Pareli or whatever else in other states, where it would be intact in that town or in that big city, whether it's Lucknow, et cetera. Now a lot of the general news is transitioned, and it doesn't matter whether your competitors from another state of Rajasthan or UP carries the same news. So that's the kind of point I'm trying to understand. With cross-media in the form of electronic TV also competing and tomorrow, potentially podcast or telephone companies competing, so your strength is this news gathering ability and writers who are just great sort of ways to tell the story, how are you trying to think of that and as you said, the need of the customer and trying to think the future changing needs of the customer?

So frankly speaking, I can only answer you a limited portion right now because this is almost like letting out my success mantra and the -- my formula to you on a public platform. I would like to restrict from that. But what I'm trying to say, very simply, is that if a consumer is coming to any app, he's going for a particular purpose, either he's going there for a general news or he's clear that I want to go to a particular website to read these kind of news. That we are analyzing. And based on that, we are creating something which we believe that we can really command upon. There's no point saying that I will give you the best Bollywood news. I'm not a Bollywood site. So I will give you Bollywood news which is really required and is something big. But if you want to read a normal Bollywood actor, what they are wearing and what they are shopping and what they're eating, I may not be the right site for that kind of consumer. And I don't want to confuse that also. So that's how we are really operating on.

And related to that, on advertising, quickly, one more quick question, sir. Is this -- we learn about -- from people like yourselves in the media business about power scores and how media planners want to buy those eyeballs or those readers. Are you seeing that the power of newspaper is actually going up or down on the last 3-, 5-year basis when you talk to your advertisers, especially in the light of the new campaign on credibility, et cetera, and fake news in the background?

So one thing is very clear. You must have noticed that there were companies, those who decided to not go on social media platforms, like P&G in between took a call that they don't want to be in any social media platform because there have been a lot of fake news around those platforms. So trust is an element which is really working for print. And I think it is by design because print takes 24 hours to publish any news, and that's enough time for us to do a check and check again and a sub-editor reading a copy, an editor further editing the copy and all that. So I think that's working in favor of print. And we have seen number of copies also of all the newspapers in India going up in last many years. If you noticed, as per ABC, there has been a growth of almost 2%, 3% year-on-year in last 5 years also in circulation. And that's the reason -- I think that's one important aspect. Going forward, last 4 months, because of COVID, there has been a lot of shakeup in terms of people bringing back the confidence of the readers, bringing back the confidence of the advertisers in the market, not about the medium, more in the market because they will -- if I advertise in Madhya Pradesh, Rajasthan, Gujarat, Bihar, will I get the sale or not? So we've been doing all that excite. And we are pretty fairly happy with the kind of response that clients have got by advertising through print medium as such.

Sir, last question, if I can ask -- if you take the -- allow me the liberty, please.

Please.

When we read the statistics on media spending across the country, across different medium, and we read this stat on newspaper as the medium has declined over a 5- and 10-year basis by a substantial number, whereas we are then -- within that, as you said, the 12 states language press and within that sort of Hindi, Marathi and very focused than you are. So when the media planner is created from 0% to 35% on digital spending, they've clearly taken stuff out of your budgets partly and partly from other medium. So in the ongoing forward-going scenario, do you see that, that is tapered off because of, as you said, fake news or credibility issues, et cetera? Or we are still not at that sort of point where press as a medium is very solid and it continues to get its fair share of advertising spending?

Frankly speaking, at this juncture, I believe all the mediums, whether it's the newspaper, digital, radio, OTT, television, we all will have to work very hard with the agencies and the client to ensure that their clients get the response from the market. Right now, it's not about which medium is working perceptually better. It's all about which medium is going to give them the sale. And we've been talking to a lot of advertisers. Like one big 4-wheel advertiser said that I don't think advertising in print will really give me the sale. People are not really going out and buying. They are maybe using their app. And we took the challenge on with him. And just to share a number, pre-COVID, here, from that particular number when you give a call and all that, was 218 calls. And in between COVID, we did a campaign with them. We got 193 calls. So I think that was a big testimony that things are still working in the market. It's all about the market confidence and then how print and anybody else comes in. So I think our focus right now is to see how the sale for all these companies come back to them because once they start selling, they will advertise more with us or with any other medium.

The next question is from the line of [ Pawan Nahar ], individual investor.

You made 2 points. Basically, one, you said there are a few markets where it's more than 100% in terms of circulation and if you can mention that. And the second thing you mentioned there in Maharashtra, is it 70% or lower?

Yes, sir.

Also, if you can just talk about your positioning in Maharashtra because we haven't heard much about this market from you.

Yes. So let me take up that 100% numbers on. So these are the markets, for example, Alwar, Bharatpur, I think Pali, so 1 or 2 markets in Madhya Pradesh, 1 or 2 markets in Haryana. So these are the single city additions in various states, those have already crossed the number of 100% or 95% as such. Coming to Maharashtra, as you know, Maharashtra, large area is still the containment zone so -- and we are -- we have a big presence in Aurangabad, Nashik, Jalgaon, Kolhapur, Solapur and all these markets. And it's not about only us. Most of the publications are suffering in Maharashtra. In fact, Bombay and Pune are the worst...

Sir, leave the circulation. 70%, that's great. I mean I wanted your -- how do you stack up there in this market? I think we heard you're already like #4, you say, in most cities.

Yes.

Right? So if you could just talk about Maharashtra.

In Maharashtra, we operate in a place called Central Maharashtra, Khandesh and all that. In these markets, we are largely at our #2 position in most of these markets. So whether it's Jalgaon, Nashik and Aurangabad, they are 3 key markets for us. We are #2 in these 3 markets.

0 Got it. Got it. So -- and the second question is, look, there has always been this discussion about pledge. Frankly, the absolute amount of underlying loan now is small, as you mentioned, in the television channel today, INR 130 crores.

INR 140 crores.

Sorry, INR 140 crores and in 12 months you should pay back. But I really don't think that is the issue because, time and again, we keep hearing that there are other businesses and no harm, perfectly fine, particularly power, right, which has not been in the best of, whatever, health because of the industry concern. If you can actually just talk a little bit, and I'm sorry if this may not be the platform, but it seems that, that is also impacting the overall sentiment because, operationally, you all have been doing exceptionally well.

Since you have brought up the issue, I must clarify that, and you have all the right to ask about it. So this INR 140 crores pledge is there now, which we believe, as I told you, we are targeting hard to pay back the entire money in next 1 year's time. That's one. Second thing, as you mentioned about the power business, I'm happy to inform you that power business is operation from last 5 years' time, and they've been paying all the bank repayment interest very much on time. That company is A- rated also. So from the rating perspective also, it's pretty good from the power sector perspective. And the company or the promoters have not invested even a penny in last 6 years in power business because that's a self-sustaining business as of now.

So basically, then I read that power is not a concern for this.

No, they have not taken a single penny from us in the last 6 years' time.

Okay. And is there any other business in the group which has been requiring a lot of capital?

These are making money. For example, our textile business, they've been making money, decent money. Our mall business in Bhopal and Gwalior, they've been very much a cash positive business. Yes, that's it. We don't have any other business apart from this.

So this is again very reassuring because this absolute amount of INR 130 crores, INR 140 crores is -- cannot or should not be the concern, right?

Yes.

But time and again, time and again, these things crop up in the market, so happy to hear these comments of yours. So anything else you would like to speak in terms of assuring or talking about the other businesses, that will be dearly helpful.

No, the other businesses, as I mentioned to you, all of them make some money, and they take care of their growth expansion also. And power is also -- as I mentioned to you, is all taken care of and done on that. And somebody asked me about the dividend policy of the company. I would like to reiterate the fact that the company is very clear that whatever excess cash the company will have, that will be given back as dividend to our stakeholders. Because in the current times or even earlier also, company had no reason to keep cash more than required in the balance sheet.

These have been facilitating on those accounts.

Yes.

I mean both DB and Jagran, these have been fascinating. Just that the other things which keep coming up. So okay.

[Operator Instructions] The next question is from the line of Ketan Chawla from JM Financial.

I have 2 questions. One is on the cover price hike. Are we looking at doing any cover price hike in either any of our key markets or a broad-based type? And the second one is regarding -- you mentioned that we are almost back to breakeven and EBITDA positive in this month. Any guidance for the remainder quarters?

On the cover price, frankly speaking, is that a big driver for revenue, are we looking at it? No. Because, yes, maybe some minor correction of INR 0.50 here and there, that will be taken. But are we looking at a major increase in the cover price? No, not now for a simple reason because the number of pages have already gone down. And we are not losing any money on the subscription of it. So we don't want to drive big cover price gain there, to be very honest, in the -- this quarter or maybe early quarter as such. And the second point, sorry, I missed out.

The second point was regarding you all have mentioned that you've returned back to profitability and breakeven in this current month. Any guidance on the remainder quarters?

So the purpose I mentioned about July is to bring confidence in all of you that your company is doing good. July, we have seen a INR 19 crore EBITDA, which is almost 20% EBITDA margin. And our all effort is onto that, that we should be able to take away the losses what we have incurred in the month of April, May and in this quarter itself.

The next question is from the line of [indiscernible] from [indiscernible].

Sir, my questions were broadly at the industry level. Do you see in next couple of years industry getting more and more revenues from subscription as compared to what it was getting before? And it's broadly a 2-player market in most of the states, so is there any possibility of you to hike prices for advertising or for subscription considering -- any sort of agreement because in most of the markets, players were challenging each other, and you were a challenger in many states? Some broader picture of any changes in the post-COVID world or any internal thought process the players may have discussed.

Two things in this. First of all, we are not believer of any cartelization. Number two is that the increase of price should not be suiting company. It should be also comfortable for the customer to pay. I can decide to increase the cover price by 100% tomorrow. Nobody can stop us. But the customer also need to be comfortable with the price hike. Very pleased that, okay, I think you won some INR 0.50, 10%, 20% increase, that's reasonable enough. But if you say, I'm looking at a 40% increase, some customers would say, fine, thank you, go ahead. So I don't want to advocate that kind of situation at all. So we have to -- rather than looking at whether 2 of us join hands and do this, we need to see those millions of people, those who subscribe my paper, are they comfortable with that or not. Thank you.

Do you think people in India don't have the ability to pay INR 0.50 per day more for something as essential as a newspaper and reason?

There are enough studies done by us on the price sensitivity also. You will have to understand that today, our newspaper costs INR 120 a month already in our case. And in some markets, we are at INR 130 also. While in -- some newspapers are at INR 150, INR 170, INR 200 also. So that is the range. But if you see suddenly from INR 130, we make it INR 190, and though it's a INR 0.50 or INR 1 and all that, it was like your cable connection cost you almost the same money. So there is a possibility of cover price increase but not the way some people may visualize that, okay, 2 people join hands together. And since they are the only player in market and make it 50% higher. I don't think that's more advisable.

And on the ability to increase ad prices, does that exist?

There is always a possibility of increasing the ad price by some percentages, 10%, 15%, 20%. But beyond that, if you make it more unviable for the advertiser, he will have to look for more options.

So sir, if I understood you correctly, there's a scope of some reasonable increase, not a very large increase. But that scope, call it, existed. So my -- what I wanted to ask you is, directionally, has things changed in the industry? I'm not talking about cartelization. There's a difference between going for abnormal price increases versus getting something what is reasonable and due, which may not have happened due to highly competitive nature of the industry in the past. So what I'm trying to understand is, is there a scope of a reasonable increase in both ad prices as well as cover prices?

Totally, yes.

Over a couple of years?

There's always a scope for a reasonable increase in cover price and advertising price. And as you rightly mentioned, industry is discussing with each other that how can we look at some reasonable price increase which is still comfortable with the advertiser as well as the readers.

The next question is from the line of Abhishek Jain from BP Wealth.

Sir, 2 questions. How much cash is there on the balance sheet at this point of time? Second, what is -- is there any plan for losing -- sorry, is there any plan for -- what is the market share? It's like you have gained 80% of your subscribers. How the market has moved up, like the market is also 80%, and we have gained some market share or what exactly is the trend there?

So I think the cash, what we have, let me reconfirm with Mr. Lalit. Lalit, it's INR 146 crores, is that right?

That is correct.

Yes, it's INR 146 crore cash. Coming to the second point of yours that if we have reached the market at 80% or 84% in Rajasthan, have we been able to increase the market share? Certainly, yes. We have seen this in Gujarat. We have seen this in Madhya Pradesh. We have seen this in Rajasthan also that our recovery is faster and higher than the competition.

And last question, is there any plan to reduce the pledge?

Yes, sir. We have been mentioning it again, INR 140 crores, which is still to be paid to reduce the pledge. We are all working towards it that, hopefully, in the next 12 months' time, we should be able to bring it to 0.

The next question is from the line of Anshul Saigal from Kotak PMS.

I wanted to understand that in our discussions with companies, it's becoming evident that most companies have deferred or canceled their advertising plans because of COVID. Now does it mean that running into third, fourth quarter of this year, there may be a bunching up of advertising by many of your clients, and hence, you may see some sort of a surge in advertising volumes for fourth quarter and of course, for FY '22?

[Foreign Language] So I would like to say that [Foreign Language]. That's what we are looking forward for, that there should be a surge in advertising in the quarter 3 because that's the festive season, not only because the advertisers would like to advertise just to advertise because they also want to bring the customer back to them. To bring the customer back, they need to advertise, they need to tell people. Because one change what we have seen in the last 4 months' time in the consumer behavior is that the consumer has become slightly less loyal to a brand because of the availability issue, because of the price issue and all that, so I think now all the companies will have to ensure that they're advertised and talk about their product perspective, talk about their product offerings and the benefits to the consumer more and more so that he makes up a mind to pay a premium to a particular brand.

And which segments do you see this recovery? If it happens in the third and fourth quarter, which segments do you think will probably [ will have ] this recovery?

So I think the biggest would be education, automobile and real estate, along with a little bit of lifestyle category also.

Okay. And as of today, our advertising volume, I'm not talking about the pricing but volumes per se, how much lower are they on a comparable basis a year ago?

Sir, they all are down. To be very honest, the last 4 months, we have not looked at the volume, we have looked at the value only.

Value only.

How much we are able to achieve faster because, right now, also what is happening, because of the lockdown, we had to offer a few schemes to the advertiser on some benefit, free runs and all that. So last 4 months, the focus, to be very honest, has been largely only value, that how we are able to get the value back. Yes, I can give you the volume degrowth is almost 63%, and the realization also went down by some percentages.

Okay. And on the Radio business, in this period, one would have assumed that Radio should have held up reasonably well because -- for obvious reasons. But it looks like Radio has also been impacted and not just for you but the industry as a whole. How do we see Radio trends going ahead?

See, what happened in most of the markets, a lot of people listen to radio while they are commuting, when they are in their cars and all that. So I think because of this lockdown, a lot of people were not able to go out of the homes, and hence, their listening of radio was not that great. And advertisers always assume that if you are on the go, then you will listen to my ad. So he was also holding back the advertising. But if you see the number, they have come back to almost 55% revenue of last year. And so I'm sure they are also back on track now, looking at the numbers.

The next question is from the line of Ayaz M. from Nivalis.

My question is, one, on the debt. The debt went up for the period ended March '20. So can you describe what is the debt at the end of June and the particular use why the borrowing was done?

Yes. So working capital was at INR 81 crores in the month of March closing. I'm happy to share that in June, it has already come down to INR 53 crores.

Okay. And sir, the long term -- so the debt position is a long-term debt position, right? It's working capital I'm not understanding.

So working capital. There's no long-term debt on the company, 0-debt company actually speaking.

Okay. So maybe -- so your finance cost, which shows in your 30th June of INR 7 crores or INR 70 million.

Because of working capital, sir.

That's on account of working capital?

Yes, sir.

So that number, time annualized, which was INR 25 crores for the period ended March '20.

It has come down.

Would imply a working capital -- gross working capital level of...

It will come down furthermore.

To level of INR 250 crores, INR 300 crores, sir?

Yes. It will further go down, sir. I don't have exact number in front of me. If you give me a minute, I can look for it.

No, I think it's fine. Working capital clarifies that there is no debt which should build up.

Sorry, Lalit, you are saying something, please?

Yes. Actually, the interest cost which we are seeing in the results, this improves the -- as per accounting standard, Ind AS 16, there is a INR 4 crore entry. You may be aware that rent amount is -- lease rent is removed from the OpEx costs, and it is added in interest and depreciation. So a major part of the interest is not due to the loan, but this is because of the Indian Accounting Standard 16.

Yes. So actually, Lalit, if you can break that INR 25 crores for FY '20 in the form of lease rental which is accounted as finance costs versus actual working capital interest.

Actual working capital interest is INR 3.8 crores.

Sorry, say that again, sir?

It is INR 3.8 crores.

INR 3.8 crores out of the INR 25.1 crores?

Yes.

No, it is for the full year or you're talking about quarters, Lalit?

I'm talking quarter.

Quarter. So can we answer you this off-line with all the details on that quarter-by-quarter?

Sure. Sure. Yes, that's great. And the second question that I had, sir, was on this cost-saving program, about INR 125 crores to INR 130 crores on that base of INR 557 crores, as you read out.

INR 115 crores, sir. INR 115 crores.

Yes, INR 115 crores, sir. So this program, you said some amount of gains have already been made in the first quarter.

Yes, sir.

Can you link it a little bit to copies and distribution of print, saving on account of that apart from newsprint itself associated with copy?

Yes, sir.

When things normalize on the advertising line, which is always what we are hoping and praying for, some of these costs will rebound a bit, sir? Or these are all -- this is what you are going to lower your operational cost structure down by INR 115 crores?

So INR 115 crores is considering the normal situation, not the COVID situation, normal. But if at all we get into a better situation, where the number of pages goes beyond 20 pages also, then we will have some incurring costs happening. But I'll be more than happy to incur that cost because that will be more advertising revenue coming to us.

Okay. And last question, sir, on the new media initiatives, particularly digital, do you share what have you been spending on it for the last few years?

Sir, we took a permission from all of you last year that allow us not to disclose this number for at least a few more quarters so that we are able to invest in that business without disclosing much to the competition and come back to you with the concrete financial numbers.

The next question is from the line of Depesh Kashyap from Equirus Securities.

Sir, in your initial remarks, you talked about the government will give 80% of newspaper ad spend to regional papers. I just wanted to know what was this number before this announcement. And secondly, does the government also mention how much of their ad spend will come to newspapers versus other media?

So they have not given any budget that how much they'll spend on the print. So the thing whatever they spend on the print will be 20-80. Furthermore, what they have done, there was a condition stipulated earlier that if you are a small publication below 45,000 copies, then you don't have to have an ABC certificate, Audit Bureau of Circulations certificate. They have reduced that stipulation now to 25,000, which means there will be a lot of smaller publications, those who will not be able to fulfill the requirement of Audit Bureau of Circulations, they may lose out on the circulation certificate and the revenue from the government. So that will be beneficial for all the medium-size and the big newspapers.

Okay. So 80% will come to regional. And out of that 80%, 50% will come to bigger guys like you, right?

That's what we are hoping so.

And sir, what was the number before this? Was there any proportion that they were decided?

We're getting almost 27%, 27% to 32%, 33%.

The next question is from the line of Yogesh Kirve from B&K Securities.

Sir, 2 questions. The first is more of a clarification. So if we go back to our pre-COVID levels in terms of the revenue on a recurring basis, so will our cost be lower by INR 115 crores on a recurring basis? Or is this for this specific year because of the lower volumes and now we are looking at INR 115 crores?

INR 115 crore loss this year, considering that we'll go back to our circulation original base in this quarter itself. And out of this INR 115 crores, we are also hopeful that large amount will also continue to be saved going forward also. Because we have done some structural changes to cost savings, that will stay.

So right, so there was certain one-off saving in the first quarter at least or the first 4, 5 months, that goes...

That is only for this quarter. That cannot continue. If my circulation has gone up, the production cost will anyway go up. So that we are not accounting in this INR 115 crores.

Okay. Okay. And sir, secondly, regarding the digital metric, so I've not picked up or have you disclosed regarding the absolute numbers in terms of the monthly unit visitors or on daily user -- daily active users, if you could give us that?

So sir, as I mentioned, we took the permission from all of you that allow us not to disclose our financial numbers and the performance number for a couple of quarters so at least we are able to work diligently on this without giving much information to our competition.

The next question is from the line of [ Asim Gorashi ], individual investor.

Girish, you know you are in the front line of seeing how consumer and users are behaving. This is the time of significant change we've seen everywhere. So I would just want to hear your thoughts for some time on what you were seeing the Indian reader and the Indian consumers change in this time.

So sir, Indian reader I can start with first. Good thing is that because in last 4, 5 months' time, people were at home, more time at home even now, and the information hunger went up. So everybody wanted to know what is happening in the morning and during the day also.

[Foreign Language]

Someone has put the call on hold.

So I think this became a quite opportunity for us, our editorial team. Those 3,500 team members, those who work in editorial as reporters and journalists and copywriters and all that, I think they really enjoyed the new phenomena because now every line of the newspaper is being read. And they got a lot of time to innovate, a lot of time to think through because what happened is a unique situation. When I was talking to our journalists, generally speaking, our journalists, they go with the events in the day. There are 3 events happening. You have to go and meet so-and-so politician. There is a murder happening, so you have to go and report that murder. Now in the COVID, there are no events. Even if there's a crime happening, you are not allowed to reach to the state of the crime and all that. So every journalist had to think through that what more I can bring to the table, what is different I can bring to the table, not just the number of the COVID patients happening. So our journalists went to hospitals inside wearing a PPE kit to see the -- how the corona patients have been treated or how a doctor who is in the PPE kit for 6 hours, how does he feel -- he or she feels that how you are managing that 6 hours of COVID PPE kit. Or some of them went to the graveyard also, cremation grounds, to understand because there were fake claims coming in between that. There are many people dying, government are not disclosing the numbers and all that. So they went there and all that. I think last 4 months have been an amazing journey for all the journalists not only for Bhaskar, I would say countrywide. So that's one big thing happened in the -- from the reader's perspective. And reader have got connected more with the newspaper. And this whole truth element came much more in the front because you couldn't take a chance with the fake news now. So I think that was one done with experience. Coming to the normal consumer, as I mentioned earlier, this whole brand loyalty, because of the availability and the price factor also, has come in a bit question mark for any other product. If you are out in the market to buy a tomato ketchup and if your favorite brand was not available, you didn't even think twice to buy another one because you wanted to stock up. And after tasting that other thing, you realize not that bad and the price is from $10 cheaper, so should I think of downgrading, upgrading, whatever. So I think that has thrown a lot of challenge to the marketers. Another big challenge which has come to all the marketers in the country this now, metros are closed. The 6, 8 metros in India are partly closed or not consuming much, so a marketer has to now focus in the rest of India. In a loose language, what people used to call in, say, city like Bombay, [Foreign Language]. Anything outside Bombay is supposed to be a [Foreign Language]. So now they have to focus on that smaller cities -- so-called smaller cities. Like there are people, those who must have not even traveled to Rajasthan beyond Jaipur, or UP beyond Kanpur or Lucknow. So there were these marketers who are forced to now go to each and every place to understand where the consumption can come through. So I think the big change happening in country from that perspective.

Got it, sir. And sir, just on the competition side, you, of course, talked about having gained market share. But fundamentally, what we are seeing across industries is that this is a time when the big become bigger, the strong become stronger, both from the frontline perspective and also like the supply chain and sources perspective. Are you also seeing that [ trend ] in your space?

I would frame it differently. It's not that the big become bigger, it's the best becomes bigger. So if you are a better product, and you are able to continue giving the better product, then more and more people want to get along with you. That's what we're seeing in our states like Gujarat or Rajasthan or Madhya Pradesh and a couple of more markets also, Bihar, where people feel that if your journalism is better, your newspaper is giving better stories, better layout, truthful news, I would like to read your paper.

And so sir, in the places where you were #2 in the market, incrementally, are you seeing signs of gaining over the #1 in this time?

Yes. We are clearly seeing this sign in Gujarat, clearly seeing this sign in Rajasthan also, in various markets in Rajasthan.

And Bihar, sir?

Bihar, to some extent, yes. Unfortunately, from last 1.5 months, Bihar is under flood. So the number of copies which went up in Bihar suddenly, because of flood, almost 40,000, 50,000 copies are stuck because you can't even reach out to certain places in Bihar right now. So I would say Bihar would also start doing this month onward once the situation comes to normal there.

As there are no further questions, I now hand the conference over to the management for closing comments.

Thank you for your participation and time on this earnings call. I hope that we have responded to your queries adequately today, and we will be happy to be of assistance through our Investor Relations Department, headed by Mr. Prasoon Pandey, for any further inquiries. Take care and stay safe. Thank you.