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

Ladies and gentlemen, good day, and welcome to the Q3 FY '21 Earnings Conference Call of D.B. Corp Limited. [Operator Instructions] I now hand the conference over to Ms. Hina Agarwal. Thank you, and over to you, ma'am.

Thank you, and good evening to everyone. We welcome you to the DB Corp Limited Q3 and 9 Months FY '21 Conference Call. 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 and 9 months ended 31 December 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 and are available on the website of stock exchanges. We trust you have been able to go through the same. 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. We will begin the call by highlighting the key financial performance for the quarter ended December 31, 2020, followed by operational updates during the quarter. We are happy to share that our advertising revenues have almost reclaimed to the pre-COVID levels during this period. Our calculation too is inching towards the pre-COVID levels. Further, the festive season has provided a strong impetus to the advertising revenues, and our mega editions released during this quarter have garnered strong responses from advertisers and readers alike. Dainik Bhaskar has taken editorial journalism to a different level when a national editor, Mr. Lakshmi Pant and his reporters volunteered to take first shot of COVID vaccine and this was done to guide and remove any possible public concerns that may have come for vaccines. Our consolidated advertising revenue stood at INR 3,667 million in Q3 FY 2021. The circulation revenue stood at INR 1,082 million. And the total revenue stood at INR 4,966 million. The company reported a profit of INR 1,679 million at the operating level, a growth of 16% Y-o-Y; and a net profit of INR 990 million, a growth of 21% Y-o-Y. And let me add while on the print, PAT grew by about 30% Y-o-Y in quarter 3. While the overall revenue is at 85% of quarter 3 of last year in the backdrop of COVID-19, we are pleased to inform you that our cost optimization measures along with improved economic conditions and continued soft prices for news print has aided in improving our profitability with EBITDA margins at 34% in Q3 FY 2021 as against 24% in the same quarter of last fiscal. Our print business EBITDA was INR 1,699 million as against INR 1,380 million last year. Print business EBITDA margin has registered 1,200 basis points growth from 25% to 37%. Dainik Bhaskar Group Radio business continues to maintain leadership position in all significant markets. Radio advertising revenue for the quarter stood at INR 291 million with operating profit of INR 108 million, and a net profit of INR 44 million in quarter 3 FY 2021. I would now request Mr. Girish Agarwaal to update on the operational front.

Thank you, Pawan. And good evening to everyone, and I hope that everyone continues to stay safe and healthy. Over the years, in India, the print media sector has been experiencing structural shift towards Tier 2 and 3 cities, with Indian languages newspaper showing significant improvement in both circulation as well as the advertising revenue. And this is primarily due to the faster recovery of economy in the Tier 2 and 3 cities, what we all fondly call Bharat. As the market leader in this segment, the benefit of this shift is reflecting in our performance. On the circulation front, we are happy to share that our circulation team's continued effort and focused strategies have enabled the group to reach almost 85%, 90% of our pre-COVID circulation level. Though we are still down, if I have to compare from the Q3 of '20, we are at almost 80%, but if I compare in the month of March and February base, then we are at almost 85% to 90%. And in some markets, we have even achieved the number of 100% also. With further recovery of economy, reduction in active cases and rollout of vaccine spreading optimism amongst people -- among people, we intensified our efforts towards gaining back the remaining copies and expect to gain back most of the copies post normalization of the market operations, including -- actually most important including railways and the state government bus operations. On the advertising front, after being hit by the COVID-19-related restrictions, we have witnessed continued month-on-month improvement in the ad revenue and with the opening of the economic activity. While we have registered print advertising at 87% of the last year in this quarter, the festival months of October and November together saw advertising revenue achieving almost 95% of last year as advertisers increased their marketing spends to capitalize the demand and also to announce their return to the businesses. The strong economic recoveries in the Tier 2 and 3 cities have helped local businesses and also this is reflected in the growth figures of the GST collection of our markets that have exceeded the national growth rate. Our cost optimization efforts have resulted into a saving of INR 178 crores in other operating expenses in the last 9 months. If you remember, we had done the initial planning and we had announced that we will do a saving of almost INR 125 crores in the full year. I'm happy to say that we have already achieved INR 178 crores savings in 9 months. And in the balance, the 3 months, which is Q4, we hope that the total saving for this year will touch the number of around INR 200 crores. Another important area that we have been focusing on is the delivery of our content through the digital medium, and we have made significant stride in this area. The company continues to invest in digital business with a focus on our app, especially on the daily active users and the monthly active users, which have already resulted in the 4x growth in last 9 months' time as per the latest Comscore report. This is all from our side. And my colleague and I will now be very happy to respond to your questions.

[Operator Instructions] The first question is from the line of Himanshu Upadhyay from PGI Mutual Fund.

Good set of numbers. Really appreciate on the costing side. But I have some questions on the revenue side, okay? The advertisement revenue in newspaper is down by 13%. Can you give an idea of segments which are still below last-year levels in terms of volumes? And secondly, this 13% lower volume is because of -- how much is because of volume and value, if you can give some breakup? And how do you see the things move ahead, some idea if you can give?

So largely, volumes are down by 8%, 10%, and the value was down by 13% because, in some cases, we had to offer certain schemes to motivate the advertisers to come and advertise. As for the segments are concerned, I think most of the segments are down except a little bit from the education category, which is showing some growth. Real estate is down by only 6%; government and political, they are actually up by almost 4%, 5%; but rest of the category like automobile, health care, lifestyle, jewelry, they all are down actually. The sector which has taken the biggest hit is actually the lifestyle, the apparels, which is almost down by 53%.

Okay. Okay. And 1 more thing. We have been hearing all across the Tier 2, Tier 3 and rural are doing pretty well, okay? But still, for us, the revenue is down in our advertising in both radio and print. Why is that, sir? And how do you see the scenario from here on? And what you have stated about the apparel business -- because the festival season, whatever we read from auto companies and everyone, it seems it's reviving, okay? Even in real estate, the things are seeming to revive. So why such a big dichotomy? Can you give some more...

So let me answer your apparels question first. During the festival season also, there was a restriction in the markets for a number of events to be organized, weddings to be organized and people to move out freely. That's the reason when you are not going out to meet somebody, you don't want to buy anything new. You already have enough in your wardroom. That's our typical consumer mindset. But going forward, since the market have opened up, people have started going out, government has lifted the restrictions of the number of people to be attending a wedding and all that, so I think this sale will come back in next quarter or so. Apart from the -- sorry, the next question of yours, what you mentioned about that how you heard Tier 2, 3 Bharat cities are really growing well and why we are still down? Actually, we are at 87% because of that sentiment itself, because Bharat is doing go, Tier 2, 3 cities are doing very well. And hence, the advertising came up to this number. Also, you have to appreciate in the month of October, November, December, the number of launches of automobile were not very well planned, because people were not too sure how the market responds. So not many launches happened. That's the reason the advertising of automobile was still down compared to last year. And similarly, the other categories also like real estate. The market suddenly opened up in the month of October, November. Most of the builders never expected this kind of response coming to them. And that's the reason the advertising has not grown to that number. But we are very confident that since the things are becoming clear, vaccine is already out, and the fear factor of this whole COVID is going down drastically, so I'm very confident that going forward, in next 3 to 9 months' time, things should be on the positive note, actually.

One last question, and I'll join back in the queue. The question is, see, generally, historically, we have stated that if you reduce the prices, taking up the prices becomes very challenging or tough, okay? And to get the advertisements, we have seen some amount of price reductions or what we have seen across the players, okay? How tough will it be to get back those prices? And what is the situation currently in Jan, Feb, March? So even now also, you have to reduce the pricing to get the volumes or the situation has stabilized or improved? I mean these 2 questions, and I will join back in the queue.

So you are right, it's tough to regain the price. But at the same time, it is our endeavor to make sure that it comes back. And that's what we are doing. And that's the reason, if you see, the difference between the volume and the value is not drastic. And we are very confident that going forward, once the demand picks up, this whatever percentage discount 3%, 4%, 5% given out should also be taken back from the market.

Okay. Okay. And the situation in Jan-Feb...

May I request you, sir, to come back in the queue?

[Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities.

Best wishes, and also congrats on good set of numbers. A couple of questions on the circulation side, particularly on the cost side. So what has been -- so what has helped us in terms of cost? It's only because of the dip in the newsprint prices or we have also seen lower pagination helping us?

All 3. So let me start one by one. First of all, the number of pages. In this quarter, we were at almost 21% average, while last year this quarter, we were at 24 pages average. So from 24, it came down to 21 this year. So there's a pagination saving. Also, the newsprint prices, we have seen a reduction of almost 9%, 9.5% last year quarter to this year quarter. So that's another advantage. And the third thing is the circulation also. From last year quarter to this year, circulation is also down by almost 20%. So all 3 factors put together has given us the benefit on the newsprint cost of almost 40%.

Got it. Got it. The second question is on the circulation side. Though we have seen quarter-on-quarter some big revivals in the advertisement, but on the circulation side, it still looks much slower. So the quarter-on-quarter growth is just 3%-odd. So what's impacting the recovery in the circulation? Because in the earlier stage, we saw circulation recovery much faster than the advertisement, but in this quarter the trend has just reversed.

You're right. So let me just give you the number. If you remember, in the last year quarter, December '20, we were at 56 lakh copies. In the month of February, we were at almost 55 lakh copies. In the month of March, the number came down because last 10 days of March was almost because of the lockdown, so the number came down to 49 lakhs, almost 50 lakhs, average. But that average also because January, February was full, but the -- March 20 days was full, but balance 8 days was almost 20%, 30% down for those lockdown period. As of today, when we speak, we are at 44 lakh copies. We are increasing copies every month, but not that drastic for 2 reasons. Still, the railway network has not yet started, which is now good news that's starting this week itself. So if the railway network starts, all the copies which are in the surrounding areas will start -- will get started. Also, the railway stations performance, they've used to sell almost 3% copies on the railway stations itself. Copies should come back when the traffic comes back on to the railway station. So that's another important aspect. Same time, the state roadways network, the bus network has also not yet fully started. So that will also help us. So we are hoping that some more things will happen, and we will gain the numbers from there. Having said that, there's an important aspect from the ground, is that when we look at the ground, I think our circulation team has done a fantastic job. And our market share and the lead over competition has increased in most of the markets. I can talk about Rajasthan, where our lead has increased over competition. I can talk about Gujarat, where our lead has actually -- in Ahmedabad we were the leader anyway, but in rest of Gujarat also now our difference between the competition and us is just 10% on overall Gujarat. Further in Punjab market, the gap between us and the competition -- see, we both are down, but the gap has narrowed down, which means the competitor lost much more copies and they were not able to gain back as fast as we could. So I think -- so if I look both ways, we still have to cover a lot of ground. From 44 lakh, we need to go back to our 44 -- 54, 55 lakh copies base. At the same time, the market share has improved, so -- if you look from both aspects.

Just on the circulation one follow-up. In terms of the regular copies sold, who buys on a monthly basis, I understand this all what you're talking is a spot sale loss. So in terms of the repeat or a recurring sale, that is back to the normal?

Okay. So let me explain you in newspaper at our business, almost 99% copies were the regular supply. The spot sale was only 1%, 1.5%. That's it. Now the copies which have not yet come back are the regular copies only. For example, if a net -- railway network is not operating in the Bastar division or in the Korba region of Chhattisgarh, I'm not able to supply the copy there. So that copy has stopped. So once the railway network start, I'll start again because it's not viable for me to deploy a special taxi to send 150 copies to a distance of 300 kilometers. So that's the reason we all are waiting for this railway and the bus network to start.

So basically you're telling it's a logistical issue and not actually the demand side issue?

Exactly. Exactly. Now after the logistic issue is over, then we'll have to see, do we face any problem from the demand side because it has been almost 9 months.

Got it. Got it. That's helpful. One question on the advertisement side...

Let me further add on to that because the same problem is being more acutely faced by the newspapers in the metro market because the metro market was shut for almost 6 to 9 months' time. It never allowed the vendor to come inside and deliver the paper. So metro newspapers are facing big, big problem from that side -- perspective even now.

Got it. Got it. One last question on the advertisement side, you said that during festive, we reached almost 95% of the pre-COVID level. So...

Last year, last year, Q3.

Yes. So post festive, as the things are being not so good as during the festive season? As in what I'm trying to understand is have advertisers spend a lot during the advertisement and all -- sorry, during festive and all and then again, they have become cautious. Is that the sense? Or continue to remain the same optimism?

Yes. The optimism is the same with some percentages here and there. So I won't say suddenly, they have gone back home. No, it's not like that. They all are active in the market with some percentages here and there.

The next question is from the line of Himanshu Shah from Dolat Capital.

Congratulations for a good set of numbers. Sir, can you provide an outlook on newsprint prices? We have been hearing that other set of papers like for packaging material, et cetera, the prices have been going up. So how is the trend looking like or outlook looking like on newsprint price over the next 1 or 2 quarters?

So what has happened, the Indian newsprint mills as well as the foreign newsprint mills are experiencing acute shortage of waste paper because of the low recycled waste generation in last 9, 10 months' time. So that is 1 problem being faced by everybody. So because of that, we are seeing that Indian newsprint manufacturers are planning to revise some price. So maybe if I see the Q4, if I see Q4 year-on-year, there'll be a saving of some 3%, 4%. But if I see Q4 as a Q-on-Q, like Q3 to Q4, there could be a revision of almost 3%, 4% in terms of pricing, of course.

Okay, sir. And do we foresee the newsprint prices stabilizing over there? Or we are anticipating even further rise as copies start increasing and demand starts coming back?

Yes. I would actually wait for 1 more quarter to see how this recycled pulp and the recycled waste paper gets available for the newsprint mills. We'll see how the prices move.

Okay. And second, sir, can you just provide, like it seems like December was slightly weaker month after very healthy October and November months. So how are the advertising trends panning out in January month?

It's normal, not very exciting, but not too bad also.

So fair to assume that Q3 average? Or...

Should be around there.

That was very helpful. If I can just squeeze in 1 more question, sir?

Go ahead, please.

Sir, in terms of cost savings, you've highlighted we saved almost INR 178 crore, which is on employee and SG&A costs. So -- and almost INR 200 crores savings. So on a structural basis, like once we are fully operational, once advertising revives, once circulation comes back to normal level of say at around 95% level or something, how much of these savings do we foresee to continue on a...

Around 40%.

Around 40%. So around INR 120-odd crores should come back in cost?

Yes, yes. Because, for example, the newsprint costs will come back, the pagination will come back, the copies will come back, all that.

I'm not talking about raw material costs. I'm talking about employee and SG&A cost where we have saved almost INR 173-plus crore in 3 quarters. So I'm just talking on other than the direct cost or raw material cost.

Okay. The number which we have given you is including everything. This number includes everything. So for example, there is a 14% saving in the personnel cost. There is a 23% saving in the operational cost. Now out of this 14%, we are hopeful that around 10%, 8% will continue as it is. The operational expenses, which is down by 23%, maybe with the news -- more number of pages, more copies printed, instead of 23%, this may come down to say 15%, 16%. So if you see an overall number of INR 178 crore, what we are talking about is including the newsprint also -- sorry, including the printing processes of the newsprint, manufacturing and all that and all that. So I guess, out of this INR 200 crores, we're able to continue saving INR 80 crore to INR 100 crore.

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

Sir, this is Depesh from Equirus securities. Sir, the first question is on the inventory days. Your inventory days are increased to 54 days, I think. So can you please tell your inventory price? What is the price that you are storing the inventory -- newsprint at?

See, because the consumption has gone down, so whatever inventory we had kept that time, that is the reason number of days increased. So with the consumption increasing, we will go back to the normal inventory stocking.

That is mainly newsprint, right? That is what you show as inventory?

Yes.

And what is the price of the inventory, sir?

I can give you the price of the newsprint in the Q3, is in the range of around 34,500, 34,600.

Okay. And you're saying that Q4 it should be 3% to 4% higher, right?

Yes. Looks like depending on the manufacturers -- Indian manufacturers.

Understood. And sir, on the radio, your 22% decline in radio revenues was better than the other players. So can you tell us how much was the volume decline and how much was the yield pressure?

So on the volume, we are almost 95% -- closer to 100% this quarter, you can say. There is a yield drop of about 25% to 30%, varying from market to market, which we are bringing back.

Okay. Got it. And sir, lastly, on the -- according to the new IPAB order, the music companies will charge royalty on a [indiscernible] basis, right, instead of revenue sharing. Now this order looks adverse for players like you who have more presence in the smaller, nonmetro cities. So it would be helpful if you can share the margin impact of this new order, please?

Okay. We still need some more clarity, but we'll be getting some saving on music royalties.

You're getting saving on the music royalties?

We will be saving some money. On our base, we'll be saving some money. Not a substantial lot of money, but some money.

Okay. Got it. And lastly, sir, the receivable days have also increased to 167. The government revenues are down so why are the receivables increasing so much?

It's because of the festival billing coming in. So I don't think there should be a major problem in that.

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

Congrats on the good earnings show during the quarter. So regarding the raw material costs, I mean, clearly, they are down about 40%, some of the reasons that we talked about earlier. So is -- are there some portion of these savings which could also be sustained going ahead as well? Can we sustain, let's say, a slightly lower circulation compared to pre-COVID levels for the lower pages in the interest of profitability going ahead? There was kind of P&L that we see right now, it looked quite different from 3 or 4 years back in a positive way in terms of the relative amounts of circulation revenue, raw material costs and the advertisement. So trying to understand to what extent some of these efficiencies can be sustained?

To be very honest, sir, I would not like to save a penny on the circulation front. I would like my circulation to come back to the pre-COVID number, even higher than that. Because it's very simple, higher the circulation, higher the market share, and I have a more capability to ask for the rate I want and have the advertising revenue. So I would not be greedy for the short term in terms of circulation. I would like that circulation number to come back. Having said that, our focus should be on the advertising revenue, that how do we reach 100% and plus more on the advertising revenue. At the same time, the cost, what we have discussed with you, the personnel costs, other operating costs, our focus is there, so that, that cost stays under control. And whatever we have taken as a long-term savings should stay with us.

Just a little more thoughts on the linkages between the circulations and the ad revenues. Now clearly, in this quarter also, our circulation seems to be down by like 18-odd percent, while our ad revenues are down by less -- much less at or about 13-odd percent. So obviously, this has played out on the negative side. But on the positive side, would the linkages be that linear? Like, I mean, would that increase in circulation will result in the ad revenue increase, considering that it has not declined as much when the circulation was down?

Sir, in the mid and long term, that does play a role.

Okay. And sir, I may have missed what you have said. So in terms of the near-term outlook, I mean do we expect to return to, say, positive or the flattish ad revenue trend in the fourth quarter or in the coming months?

We are at 87% achievement over last year as of now for the Q3. And our endeavor would be that, that how fast we can reach to 100%, whether it's Q4 and going forward.

Okay. And regarding the -- on the digital side, I would see that we are doing -- seems to be doing a very good job in terms of our app, just looking at the ratings on the various -- the app stores. So what sort of plan that we may look at going ahead? I mean are there any thoughts on any subscription pay models or any paywalls or maybe more focus on the advertisements, considering that we have made a lot of progress over the last 9 months?

Sir, we took some liberty from all of you to not allow us to disclose the digital number for some quarters, and we would request for the same again. And -- but one thing we can assure you that things are in the right direction. Our DAU, which is a daily active user, and our monthly active user has increased 4x. And if you look at the competitive data of other Hindi and Gujarati players, we are far, far ahead on our app. So I think we are in the right direction. We need some more time to come to that critical mass, where we believe that, yes, we have a large chunk of audience with us, and then we think of monetization.

The next question is from the line of Puneet Jain from Fair Value Capital.

Hello?

Yes, sir.

Congratulations on a good set of numbers.

Sorry to interrupt. Puneet, I would request you to speak a little louder, please. We are not able to hear you.

Am I audible now?

Yes.

So basically, what was our volume and yield drop in Q3 in print business?

We have achieved 87%. And I can tell you that volumes are almost at 90%-plus. So yield is certainly down from the regular level by 4%, 5%.

4%, 5%. And what was our average copy realization in Q3?

When I said yield was down 4%, 5%, which means 13% plus 4%, 5% because the number is 87%.

Yes. And average realization?

In terms of what?

Per copy.

Per copy realization is at -- INR 4.38 is the cover price. Realization is INR 2.79. And last year, it was INR 2.69. So we have increased the realization by 10%.

So are we contemplating more price hike in our major market things...

No, nothing is planned so far.

Okay. And also 1 more thing. So in Q3, our overall ad revenue for print business was 87%, whereas in October and November, we clocked 95%. So was there a sharp growth in December month? Or is this a regular thing that after the festive season, there is lull and advertiser scale back?

Yes. See, what happened, we take the festival days as 32 days. From 32 days of festival, which falls -- which were in October, November, mix put together. So in those days, we saw 95% growth. Overall, it was 87%.

Okay. And this 95% is on corresponding period or -- I mean calendar period or on corresponding festive period?

Festive period. So we pick up, for example, Navratri's first day till Diwali. So 30, 32 days of this. And last year same period, it may jump from month-to-month, but we take the same time to understand what is the apple-to-apple comparison.

[Operator Instructions] The next question is from the line of Anish Jobalia from Banyan Capital.

Good to see the numbers. Just wanted to check our market share movement. So if you could comment around the major markets and also your emerging markets like Bihar. So competition has been talking about gaining market share in Bihar. So where are we -- I mean we have also been in Bihar for quite some time, but we still publish that as an emerging market. So if you could speak about Bihar update and other major markets in terms of your market share?

Yes. So we call Bihar as an emerging market because that is a market where we are not yet EBITDA positive. So our internal definition is that the market where we have launched and not yet become EBITDA positive, we call that as an emerging market. That's one. Second thing, as you mentioned about Bihar, so our advertising growth in Bihar is good enough, decent enough, but I won't really say that in Bihar, we have gained market share in terms of overall advertising. [Technical Difficulty] competition still enjoys higher government ad revenue as well as ad volume there, so we really won't be able to say that in Bihar, we have gained much overall perspective. But at the same time, if I look at the markets of Punjab or Gujarat and Madhya Pradesh, even Haryana, some extent in Rajasthan few markets, yes, we have gained the market share.

Okay. And 1 question about going forward in terms of our coming back to levels of before COVID. So in Q3, I mean there was some advantage we had because of the festive season and there was some shift also in the days between last year and this year. So just going forward, I mean -- like do you think, like, let's say, in the next year and the recovery is like, say, 80% of what we were in FY '19 and '20, and still, it will take quite some -- I mean it will take some quarters to come back to 100%? Or do you think that we can reach back those levels in next year itself? What's your best guess in terms of the recovery?

I would avoid giving any guesstimation to you. But what I can tell you that certainly, the number targeting for next year is based on '19-'20 only because 2021 is a washout year in terms of number. So we are not at all comparing any growth from 2021 number. So our base is going to be '19-'20, and the entire planning for the year '21-'22 is based on that only.

The next question is from the line of [ Anita Singh from Avendus Capital ].

Congrats for such good numbers. My question is regarding the other expenses in the third quarter. We're seeing a good bounce back from previous quarter of around 37%. So what would be the line of these expenses? And will they further rise as we recover in the coming quarters?

You're saying bouncing back, what -- other expenses have increased? Talking about Q-o-Q or Y-o-Y?

Q -- quarter-over-quarter.

Okay, q-o-Q. Yes, that has increased because of 2 reasons: the number of copies, number of pages, the printing expenses, the transportation expenses and other costs. So as I mentioned to you that we are more happy to bring that expenses back because they are resulting in a number of more copies and resulting in more ad revenue.

Okay. Sir, my other question is on newsprint front, you said that there is a waste paper shortage, so there's a likelihood of prices going up and -- in the Indian mills. So what would be your mix of Indian and imported?

We are at 45% imported and 55% Indian in this quarter, Q3.

Okay. So would you be shifting that mix to reduce your costs in the coming quarters [indiscernible] likelihood of time line?

I would actually prefer to buy more of Indian, Make in India. But depending on the cost viability, we'll take a call when it comes to that.

[Operator Instructions] The next question is from the line of Sanjesh Jain from ICICI Securities.

These are 2 from my side. One, just wanted to understand the revenue contribution from the Tier 1, Tier 2, Tier 3 city. How does it stack up directionally is also helpful. Number two, how has been the sales or advertisement from the local and national? How has they moved? Has national more revived and local is more subdued? What's trend on that side? These are the 2.

So national and local, I can answer you first. The local revival is faster than national, for sure. So out of this 13% shortfall of the Q3, national actually did a better job than -- sorry, local did a better job than national, for sure. And in terms of the Tier 1, Tier 2, Tier 3, I don't have exact breakup here, but large revenue actually comes from Tier 2 and Tier 3 itself.

So when you say large revenue...

All the bigger market, for example, if I, say, talk about a particular state, who contribute, say, INR 500 crores from advertising, in that INR 500 crore, the biggest money would come from the top 4 cities itself. They all will be in Tier 2, 20 lakh, 15 lakh population base.

Okay. So you're telling, for us, a significant contribution comes from Tier 2 and Tier 3 and Tier 1 is not so big for us?

In our market, except Ahmedabad, there is no Tier 1. Because Tier 1 definition is 50 lakh plus population. So only Ahmedabad is a 55 lakh population. Rest of the cities are below 50 lakhs.

Got it. Got it. And what's the contribution now, local and national? We used to be 66%, 34%. Where are we now?

Is same, almost the same, 65%, 35%.

Okay. And then it's same, then there is no difference actually in the national advertiser and the local advertiser, right?

Yes. But in terms of growth, if I have to see the quarter-wise, so let me give you the exact number. In '19-'20 Q3, it was 61%, 39%, while in this time, it has become 64%, 36%.

Okay. Okay. So the contribution of local [ hasn't changed ].

The next question is from the line of Anuj Sharma from M3 Investment.

Mr. Sharma, we are not able to hear you.

Yes. Sorry, am I audible now?

Yes, sir.

My question is when you look down year or 2 and when you talk to media planers, which are the segments you feel would actually have a strong positive momentum? And which categories do you think that the contribution [ and possibly ] the traction will be slower than what it has been in the past?

So for sure, the one which will respond faster are automobile, education, FMCG, real estate, jewelry. The one which will be slower would be lifestyle, entertainment, cinema. Yes, these are the ones those will be slow -- those are slow actually, currently.

But that would be due to the economic momentum, but do you see any trend line change in the way these categories would behave over the next maybe 2, 3 years once the entertainment segment opens up and travel and tourism, which are gradually opening. Do you see a trend line of them shifting to different medium? And hence, are you saying this? Or it's just...

I would actually -- I'm looking at a scenario where the Tier 2, 3 has bounced much faster and in a better way than the metros. So for example, if I'm a media planner and I was planning say INR 100. Out of INR 100, INR 40 was focused on metro and INR 60 was focused on the Tier 2, 3 Bharat cities. Now since metros are not performing, so that -- and even the media in metro is also not that performing well, so that 40% actually is going down. So there is a possibility and which we are seeing could be shifted some money from the metros to the Tier 2, 3, where the response is coming faster. So we have that opportunity ahead of us.

Okay. Okay. But do you think any category which will significantly reduce in the next maybe 3, 5 years, which was dominant on print but would have shifted or evolved to some other categories?

I'm currently not able to visualize any such category. Yes, as of now, no.

Okay. Okay. My second question is on the mega editions. Now that seemed to be a new feature. Would that be a continued strategy going forward? And just on the ad-to-edit on these mega editions, is there some thought on that?

So see, mega editions is very clear. It gives an opportunity for our teams to regenerate the whole market and garner some extra revenues. They look for some opportunities. It could be anniversary, it could be a particular day, it could be feature on the city or whatever. So I think that's a new window has opened up and that's going to continue. Number one. Number 2, advertising, as we mentioned, by ad-to-edit ratio, is very simple. We have to see their direct variable cost and anything more than direct variable cost is a profit there. So I'm more than happy to do that.

[Operator Instructions] The next question is from the line of Aditya Khetan from East India Securities.

Congrats on a good set of numbers. Sir, my question is -- so sir, for the last so many years, we have witnessed that the media companies generally ask for doubling down on the ad rates, and they're asking for tax holidays in the budget. So how are -- so being an industry participant, how are you seeing these things? And whether the demands from these media companies are feasible enough that the government should consider? And how -- so I just need your view how will the things pan out in the near future?

I must say Government of India has been very considerate. If you remember, last year, 2 years back, they had increased the advertising rates of DAVP by 25%. And I'm very confident that the government will understand the issues faced by the newspaper industry currently. And they would certainly extend olive branch to us.

Okay. And sir, just on the tax holiday part, so how are you witnessing this demand like...

So that would be a part of the package, what industry is asking from the government, and I'm sure they would consider this in some manner. So let's hope that next week we should get some good news.

Okay. And second question, sir. So recently, there was a news that the government is imposing an anti-dumping duty on newsprint. So how this will impact the EBITDA margins? If I can get any guidance for the next 2 to 3 years?

See, Indian government was very clear that they never wanted to hit anybody. But at the same time, they wanted to make sure that the Indian newsprint manufacturer should also get the benefit and not get penalized because of somebody dumping the quantity in India. So they invited us and we went and presented our case, the manufacturer has presented their case and it was decided that anything up to 42 GSM of a newsprint will not be imposed anti-dumping duty on that because that's the quantity and the quality which most of the Indian manufacturing mills are not able to produce in the desired quantity. And so this is a kind of a win-win situation that below 42 -- 42 and below, there'll be no anti-dumping duty. And anything which is beyond 42, there will be anti-dumping duty. As far as the newsprint -- newspaper industry is concerned in India, most of our consumption, I would say, almost 100% of our consumption, which is imported, is below 42, 42 and below. So there is no impact going to be on the anti-dumping -- of the anti-dumping duty. However, we have further made a request to the government that the Glazed newsprint and the Hi Brite newsprint, which is higher, which is 56 GSM, 72 GSM, that should also be exempted from this anti-dumping.

Okay. Okay. So how are you witnessing that the government would consider the demand or they would not consider at the movement?

I'm very positive because government is really looking at each and every sector. There are issues. And they've understood the issues of our sector, and they would be -- certainly be considerate about the problems that we are facing.

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

Just 1 clarification. Sir, did you guide Q4 newsprint price to be 3%, 4% higher Y-o-Y or Q-on-Q?

Q-o-Q, sir. Y-o-Y will be a saving of almost 3.5%, 4%.

Okay, that means you think in next quarter, it will be around INR 35, INR 36 per kg. That is right, sir?

This quarter, we are at 34,500. So from 34,500, it will go up by 3%, yes.

But sir, current prices, I think, domestic prices are around INR 39, INR 40. Is that correct, sir?

I've given you the total mix for the news -- imported and Indian put together.

Sir, I'm saying just right now if you go to buy, domestic price will be around INR 38, INR 39. Is that correct, sir?

No, no, sir. Our team is very efficient. We are buying much lower.

The next question is from the line of Anuj Sharma from M3 Investment.

Yes. Just a follow-up. You see this pandemic has been harsh on media companies, specifically print companies. Did you see -- or are you seeing some of the competition actually withering away and the market remaining strong for the existing period. Do you see a reduction in number of players which are competing to you or with you, say, year ago versus now? Or do you see that scenario changing?

As of now, no. But I'm sure if you have some market information based on that you are asking this, we would see something going forward.

No, I wouldn't have any market -- I'm just saying it was a harsh scenario. So it was quite a challenge. You don't -- there could be many number of smaller players, right, not the national players. No issues amongst them? No reduction in competition?

Possibly, the smaller players certainly would not be in position to sustain this going forward.

[Operator Instructions] The next question is from the line of [ Vijay from TrustLine PMS ].

We are reading the news that Australia has imposed some tax on Google to share revenue with the print companies for copyright violation. And even France and Belgium are following this. And what stage we are in India? And what is the -- your -- the lobby is pushing government? And when we can expect that revenue share to happen?

So Indian Newspaper Society and also the digital newspaper publications group, I think they are representing this case at the appropriate platform. And I firmly believe that the Indian government and the Competition Commission and all that will certainly ensure that a fair play is done in India. Everybody is taken care of.

Can we expect in 6 months, 1 year time frame? Or if this may take much, much longer...

No, I think the way things are happening worldwide and the way departments are functioning, I think this should be much faster.

The next question is from the line of Himanshu Upadhyay from PGIM Mutual Fund.

I have a question on any debt on the balance sheet currently? Or the cash what we show is the net cash...

Zero debt, sir. Zero debt. Even the working capital limit what we took, we have not utilized that.

Okay. And -- but reply to you, Anuj, you were giving was that you might look for inorganic opportunities, was it what you are trying to elucidate?

No, sir. We are not looking at any inorganic opportunity as of now because there's nothing on the table actually.

Okay. And what the capital allocation strategy remains the same that we like to distribute more dividends than...

Totally, totally. We are -- see this -- as of now, also, company has decent cash in the balance sheet. And we are very clear that there is no acquisition opportunity on the table. We have no further expansion -- capital expansion plan. So apart from the regular CapEx next year also, there won't be any major money required by the company. Though we would be slightly cautious, we would keep some cash in the balance sheet because you don't know, future is slightly uncertain. This COVID is not yet totally out of the system. So we would like to place slight caution there, but the policy is simple, whatever excess cash in the balance sheet should be announced as a dividend pay back to the stakeholders.

And the circulation copies which are down by 10%, how much would be from matured markets and emerging businesses?

It's a mix actually. Certain markets are back, certain markets are not yet back, depending on the logistics also. So really won't be able to quantify market-wise also.

And lastly, this INR 200 crore cost reduction, how much would be nonrecurring? And how much employee base would have reduced in this whole...

Around 10%.

So how much was previously and how much is currently?

I don't have an exact count here, but the total cost saving is around 14% on the Q3 of last year and this year.

On the employee count basis, you are saying?

It's a total cost. So count may not be that same. Count will differ.

[Operator Instructions] The next question is from the line of [ Himanshu Patel ], an individual investor.

Congratulations on a good set of numbers. So sir, I only had 1 question and that is, how is the trend of the digital revenues right now? So has it been like flattish over quarter-on-quarter or has it been increasing over the quarter? So...

Mr. Patel, you would be aware that as a company we took a call almost last year that we will not accept any advertising on our app. So if you see our app, I would request you, urge you to please download our app and go through that. So you'll find that we are probably the only app in the country where -- news app where there is no advertising. No advertising means no advertising. No narrative, nothing. Because we want to give a world-class uninterrupted experience to our readers. And that's the reason. So hence, in the digital business, we aren't focusing much on the advertising for now.

The last question is from the line of [ Dharmesh Sangoi from DS Associates ].

Sir, 1 follow-up on the newsprint side. When you say INR 34,300, is it the buying price or is it the final consumption [indiscernible] price?

This is consumption price, sir.

As that was the last question, I now hand the conference over to the management for closing comments.

Thank you. I thank everyone for their participation and time on this earnings call. I hope that we've responded to your queries adequately today. And if you have any more queries, please reach out to our Investor Relations department, headed by Mr. Prasoon Pandey, for any further queries. Take care and stay safe, everyone. Thank you. Have a nice day.

Thank you. On behalf of DB Corp Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.