Entertainment Network (India) Limited (ENIL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Entertainment Network (India) Limited Q1 FY '21 Earnings Conference Call. Joining us on the call today are Mr. Prashant Panday, Managing Director and CEO; Mr. N. Subramanian, Executive Director and Group CFO; and Mr. Sufal Agrawal , Financial Controller from Entertainment Network (India) Limited. [Operator Instructions] Please note that the conference is being recorded. I now hand the conference over to Mr. Prashant Panday. Thank you, and over to you, sir.

Thank you very much, Ayesha, and welcome to this conference call, dear investors. I, as always, have about 5 or 7 minutes of opening remarks, and then we'll open up the session for question and answer. You must have got the investor presentation already by now, and I hope you've gone through it. However, I will just summarize the highlights for your benefit. In the first quarter of this financial year, the revenues reported by the company have -- were down 72%. And while this is a shocking number, I don't need to dwell upon the reasons for the same. You're well aware about them. If I were to break down the 72% revenue between the 2 businesses that we have, which is radio and solutions, the radio business was impacted more. It was down 84%, while the solutions business was down in its core by 64%. However, because we had a prior period brand licensing revenue inflow, the reported non-FCT revenues or the reported solutions revenues are down only 41%. So 84% down radio and 41% down solutions. If I were to look at the composition of the 84% revenue drop in core radio, a bulk of it has come from volume erosion, which is 72% compared to last year. But there's also been a price erosion of approximately 30%. But the way this 30% price erosion has happened is not in terms of a genuine price erosion but in terms of free value adds that we have chosen to give to certain types of campaigns, essentially campaigns which featured on relief from COVID or hygiene products, which effect -- helped in fighting the COVID pandemic. It was not reduced for all clients. So to that extent, the pricing has been held in check, however, overall reported ER is down 30%. If I were to look at the non-FCT business, like I mentioned to you, the revenues are down 41%. If I were to look at how the months had progressed, then obviously, April and May were the most bad months in terms of revenue degrowth because all the outlets were stopped and advertising was down to a trickle, but June saw a very healthy growth after the first lockdown unlock happened and revenues grew approximately 82% in June compared to May. So there was a big jump, and that indicates that there is a pent-up demand for advertising, which will be realized as soon as the markets open up. We've got an early sign in July also, and I'm letting you in on a bit of a preview over here that in July, also, our revenues have grown almost 50% compared to June numbers. So June grew 82% over May, and now July has grown another 50% over June. So yes, there is an upward trajectory in revenues, and our hope is that the radio business should recover most of its losses by the third quarter and should then either go into a growth mode in the fourth quarter or should at least level off with last year in the fourth quarter. Second point, all the categories with the exception of BFI, banking finance insurance, were in negative growth. The biggest negative growth was surprisingly IP, which includes e-commerce, and the reason was not difficult to understand because e-commerce also was restricted to only essential items for the most period of the lockdown, and therefore, even they were not advertising. Education was down 81%. And for radio, as you know, education relates more at an institute level where institutes advertise for admissions or for results, and since institutes and education colleges and schools were closed, therefore, the whole advertising fell by 81%. Media and entertainment is a big category of advertisers on radio, and since media and entertainment was badly affected, their advertising on radio was down 77%. FMCG was very badly hit as well. It was down 72%, very easy to understand why because there was a supply chain disruption, and therefore, there was no scope to advertise for them. And all other categories put together, which includes important categories like shop fronts, and jewelery and real estate, which are big categories for radio were down collectively 87%. So you can imagine that all the biggest categories of advertisers was down between 72% and 95%. So it was really a colossal hit, which no one could have anticipated. But the surprise is that the BFI sector was actually up 55% compared to last year. And don't forget, last year, BFI was already up another 20% compared to 2 years back. So the BFI sector have started using radio in a much bigger way. Banks are using radio in a big way. Insurance companies are using radio in a big way. NBFCs are using insurance -- radio in a big way. Regulators like RBI, et cetera, are using radio in a big way. So it's been a good spell as far as BFI is concerned. And 2 other categories, health and pharma and government also degrew relatively less by about 50% to 60%, primarily because they were the categories, which did spend certain amount of money on radio. So while there is a lot of gloom as far as revenues is concerned, let me just repeat a story that I had mentioned to you at the -- in the previous quarter call, which is that the listenership has fortunately held up and have actually grown very smartly during the period of the lockdown. Now this was research done by our industry body called AROI , and it showed that in the 6 big cities, radio listenership actually went up by 28% during the lockdown. And this was counterintuitive to many people who were not familiar with the profile of radio listenership because many people thought that if cars are not on the road, then how is radio being consumed at all. But actually, most radio consumption still happens on mobile phones. And when people stayed at home and when television screens were not available because most houses in India have single TV screens, and also because television content was old content, a lot of people started listening to radio in a big way. The time spent on radio went up by nearly 30 minutes from 2 hours and 7 minutes a day to 2 hours and 36 minutes a day. So these are all the positive sides to the story in the first quarter that the radio listenership actually grew by almost 30%. The other very solid story that I would like to tell you about is Mirchi's solutions business, a business that is increasingly more and more important for Mirchi. Incidentally, in this quarter, the solutions business was more than even the radio business, which is an anomaly, of course, because the radio business was badly hit by the lockdowns. But the solution business actually fell a total of about 60%, but the margins have been held very strongly at 49%. So that's a great story. And within the overall solution business, there's a component of our business, which is called media solutions, that fell by only 52%. So in today's times, a drop of 52% is considered to be a great achievement when overall numbers are down by 72% and the overall industry numbers are down by 80% plus, a drop of 52% is considered to be like a positive achievement. The margins on the media solution business are also very high at 47%. So this is a part of the core Mirchi strategy, which is actually doing very, very well, even in this entire month of slowdown. The thing that got affected very badly in the solution business, obviously, was the IP business, which was largely dependent on on-ground activations, concerts, television ideas that we create. Revenues were down 70% in the IP solutions business. But even here, the margins were held very strongly, up at 38%. So overall, the company's margins have been held very strongly up, even though the revenues have come down because of the lockdown. In terms of the solutions business, here is a very interesting development that I think that, that's going to be a feature for a long time to stay. The pandemic has actually had a tremendous impact on the digital products that we offer under our solutions business. And today, from amongst our solution business, as much as 28% of our revenues have come because of our digital products. As you know, the digital products that Mirchi offers are quite a plateful of products, starting with a YouTube. Our YouTube channel, which had more than 10 million subscribers and where we got more than -- or nearly 200 million views during the first quarter. Our original content business, where we make a web series in video and either sell to platforms or we get sponsors to come in and sponsor the content, our videos that we produced on behalf of clients and deploy in our solutions business, our podcast that we have now started making, which are client-sponsored. See, it's easy to make podcast because podcast don't cost much, but podcast do not make money. But the difference between in the Mirchi podcast is that we have started the business of podcast with money. It may be small money, maybe about INR 20 lakh, but INR 20 lakh money on podcast with a 90% margin, we have made our beginning with podcast. We provide audio solutions to our clients, which basically operate on the telephone backbone. So we are able to reach content through media dark markets in the -- using telephone old -- plain old telephone system, as it is called POTS, and we make money off that. And of course, then there is online radio, which we get either advertising from clients or we even get sponsored radio, entirely developed for clients. So all of these are digital products. And this together is composed -- is made up -- is making up 28% of the overall solution business. So this is the next big highlight for you that while solution business is doing well overall, the digital component has gone up, the on-ground component has gone down and with that, the margin profile of the solution business has improved dramatically because the digital business is very highly profitable. Just a matter of detail for you that the capacity utilizations plummeted for the radio business. Even in my top 8 stations, you will be surprised that the capacity utilization was nearly 15% in the quarter. Last year, it was 82%. So you can imagine the drop in the volumes that have affected the radio business, but we can also say that when the recovery happens, these volumes will come back very quickly. One last point before I open up the call for your questions. We have taken a very, very strategic look at our costs, and we have cut costs in a very strategic manner. And when I say strategic, I -- the meaning of that is that these are benefits, which will last for a long period of time and these are not benefits, which will quickly get overturned the moment the business starts. So let look at our DVC business -- our DVC cost, which is related to our solutions business, which are down 68%. But like I explained to you, in the meantime, our solutions business has changed its outlook and is now more digital-dependent rather than on-ground dependent. And therefore, even when the solutions revenues will rise, the DVC will not rise in proportion. Our HR cost is down 25%. However, these are not merely pay cuts, which are there. We have actually taken advantage of the time to clean up the organization structure and to redesign the organization in a way that it is more efficient and less on overheads. We are down 200 people from about a year ago, and we expect to stay at this level. So when the business recovers, the HR costs will not come back. Similarly, rent is down 20%. Electricity is down 27%. Let me just explain electricity to you, how does electricity go down 27%. Well, because we have reduced transmission power in the night time band in many of the smaller markets, we've reduced transmission power in the afternoon as well. And here is what we found that even despite all this, the listenership has grown, as I mentioned to you. So the electricity rate going down is also sustainable in the long run. Admin costs are down 50%. Today, travel, I don't see travel coming back to earlier levels. We spent approximately INR 10 crore last year on travel. This year, we will spend less than INR 1 crore on travel. But if you ask me what happens in a year when COVID goes away, I doubt if it will go beyond INR 4 crore or INR 5 crore. So there's a significant long-term strategic benefit that we will get from the cost-cutting that we have done. So when the revenues recover, you will find that the EBITDA will be strong. And in fact, we expect that from the fourth quarter, like I've mentioned to you of this year, revenue should start growing up and I think the full recovery should happen in FY '22. With that, I'll be happy to take any questions. There is also Subramanian and Sufal available for questions that they may be able to answer. Ayesha?

[Operator Instructions] The first question is from the line of Jinesh Joshi from Prabhudas Lilladher.

Yes. I mean, in the initial remarks, you mentioned quite a bit about cost reduction. Now if I remember correctly, in the last call, we stated that we are targeting about INR 60 crores to INR 70 crores of annual reduction in FY '21. Now given that in 1Q, our operating cost was down by approximately 36%-odd, do we hold on to the earlier figures? Or is there any further scope of reduction given the remarks which you have made?

Subbu, you want to take this?

Yes, yes, yes. Okay, Jinesh. So let me give you a breakdown of the cost that you see on the regulation that creates disclosure, okay? So there are actually 4 components there, right? There is a DVC component, okay, which Prashant said that the cost will not increase in line with the activity because we have added more digital business. The other operating expenses, right, that has actually declined by about INR 18.5 crores during the quarter. But I know in other operating expenses, I'm excluding the depreciation, I'm excluding license fee, royalty and also DVC, right? So that is the core other fixed expenses, right? That has declined about INR 18.5 crores at a gross level, that is INR 20 crores because we have also included an additional provision of INR 1.5 crores during this quarter on top of INR 4.7 crores that we did in the earlier quarter, okay? So the gross movement there is of the order of about INR 20-odd crores, right? In that section, you will see INR 70 crore to INR 75 crore, we maintained our earlier position that we will see INR 70 crore to INR 75 crore movement in that line alone. So that will decline by about INR 70 crores to INR 75 crores during the quarter. The other costs will be a reflection of the level of activity during the year. Does that answer your question, Jinesh?

Yes, yes. Partially. I mean, I was looking out for an explicit number in some sense that whether it will be higher than INR 60 crores to INR 70 crores or...

Yes. It'll be certainly higher than INR 70 crores because if my other operating expenses alone declines by INR 70 crore to INR 75 crore, the other numbers will only add to it, okay? The level of movement in the other expenses is difficult to estimate, because it's a function of the activity. What I have given you is the minimum number. The actual number will be higher than that number.

So Jinesh, just to add on to what Subramanian said, when I say it's INR 70 crore, INR 75 crore is the reduction on other operating expenses. And if you were to look at just the DVC expenses, right, and even if the solution business, like I mentioned to you the IP solutions part was down because permissions, et cetera, are not available on-ground that you know it will not be available till at least December end. So the DVC numbers will also be substantially lower compared to last year, right? So I think put together everything, if I were to hazard a guess, I would say that approximately INR 100 crore reduction compared to last year, you should see.

Okay. And one last question from my side. I mean, FCT yields are typically sticky in nature. And in the opening remarks, you mentioned that the FCT yields were down by about 30%-odd. So how should we look at for the entire fiscal of FY '21? I mean, do you expect the yields to make a comeback? Or I mean, will they prevail at similar levels?

Okay. So the big difference between the drop in pricing this time and the drop which happened in 2008, when the Lehman crisis hit, is that this time, actually, we have not really reduced the rates. Like I mentioned, we have offered special deals to those brands and companies, which are providing some degree of service or some products which are helping in fighting the pandemic. Let's be honest, it's an excuse for us to get that kind of business from typically nonadvertisers or typically small advertisers who would otherwise not use radio. So that is reversible completely because that is a limited period offer. But other advertisers, whether it is banks, whether it is regular FMCG clients, et cetera, whether it is auto clients, those have come at usual rates, and therefore, there has not been much of a decline over there. So to answer your question specifically, I do see a substantial part of this price erosion to come back, even though we'll have to wait for another quarter to see how strong the recovery is, and then we'll have a better picture.

And Jinesh, one more point before sort of we close. What would be more important for you is to look at the EBITDA breakeven -- the reported EBITDA breakeven. So that number so with the new cost structure that we have in place, would mean a revenue of INR 280 crore to INR 310 crore FCT plus non-FCT included, right? And this is the reported EBITDA that I'm talking about. The more non-FCT you have, we will go closer to INR 310 crore. The more FCT you have, we will be closer to INR 280 crore. So that will give you a sort of bang for an EBITDA breakeven for this year.

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

Yes. So Prashant, you referred to the recovery of about 82% in May -- or 82% in June and then 50% in July. So you are referring to the radio business, right, specifically?

I -- yes, I was referring to the radio business over here, but even at an overall business, which includes solutions, it's of the similar order.

Okay. So here -- so could you give us a flavor of how -- what is the scope of this improvement. Is it across all the categories and it is -- whether -- how is it spread across the stations, the top 8 and the other stations?

Yes. It is not unfortunately spread out across all categories. There are certain categories, which have started moving, for instance, auto has started moving in a very good way, there are at least 3 or 4 brands that are advertising. And these are brand campaigns that they are putting out already. FMCG has come back in a significant way, even though remember FMCG, the big brands usually don't come on to radio, but even they have started coming on to ratio this time. What is really -- BFI continues like I had mentioned. What is really missing is shopfront, education, those are the -- jewelery, those are the sectors which are really missing, even at this point in time. But I expect that they will come back in the festive season starting a with next month. So yes, that space specifically. Sir, there was a second question you asked, sir?

No, no. Yes. So this is what I was looking for, too. My follow-up would be so regarding our core advertisers like this category of auto, FMCG, BFSI, so from these advertisers, our realizations have been pretty much stable, right? I understand the discounting was on this.

Yes, the pricing over here has been pretty much stable, even though there would be the normal push and pull that happens in securing deals. So yes, but it's not the kind of special offers that we had made to guys in certain categories of products.

Okay. Another question I had regarding the cost savings, and I was trying to understand how the cost savings will be split between radio and nonradio business. So in case of the solution business, we earlier had this run rate of about roughly INR 78 crores per quarter of fixed cost other than the purely variable.

That's right, Yogesh, yes. Yes.

So how should we look at that cost going ahead?

Yes. So basically, the same level of reduction that you see in the other operating cost, right? If you look in the other operating cost decline in the quarter, that's about 27% -- 28%, right? You assume that costs will come down by about 25% in the non-FCT business as well. The degrowth in fixed expenses in non-FCT will be little lower but not markedly lower. So about 25% from the earlier run rate, which is the gap between gross profit and EBITDA is what you will see. So that last year number, if I recall, was in the region of about INR 34 crores for the full year. So that will decline by about 25%.

Okay. Sir, finally, regarding the cash accumulation which happened on the balance sheet. So any thoughts on how we are planning to utilize or distribute this cash?

See, at the moment, all that call relating to dividend, et cetera, will all be taken only at the end of the year, right? We don't have major investment plans. The idea essentially is conserving cash for the difficult period that is where next 2, 3 quarters is going to be very difficult. So we want to conserve our cash and improve our working capital investment, but we don't plan to do any major investments in the radio business.

Sir, do we anticipate any inorganic opportunities in the solutions business?

I can't say there will not be anything nor can I say there is anything at the moment. As and when there is any development, we will keep you updated.

So conceptually, if I may, to answer that question, Yogesh, we will be on the lookout for strong IPs that we can acquire. IPs, which have their own cash flows and profitability. IPs, which are badly hit because of the pandemic, but which were performing well in the past. Those kind of IPs, which are brand acquisitions, we would certainly look at but in a very, very measured way as Subbu mentioned.

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

Yes. Sir, if you can talk more about this brand licensing agreement. Is it a fixed revenue model or a percentage share type of model? And this INR 7.2 crore, that's the entire amount for the last year that came in this quarter. What was the amount for this particular quarter, please?

Yes. Subbu, you want to take that?

Yes. So the amount for the quarter was INR 2 crores. The total amount was INR 9.3 crores. So last year was about INR 7.2 crores and about INR 2.1 crores for the current quarter. The agreement had both a fixed share and the revenue share but as we have explained in the Regulation 33, the agreement expired on 30th of June. So we are looking at other models in that jurisdiction. As and when we finalize that, we will update you.

Okay, sir. This is expired model. So this INR 2 crore will not continue in the next quarter?

Yes. It will not continue in the next quarter, but we are looking at a few alternate models, which are in a fairly developed stage. But obviously, progress is not as fast as we would like to be because of the COVID-related disruptions and also getting all of these things operational. As and when it reaches a very definitive stage, we will keep you updated.

Understood. And sir, I just want to check that have you reduced or are you thinking of reducing the online radio properties to reduce the royalty payments that you give because that is a very high number, right?

Well, our royalty agreements are not directly with us because we are merely content providers to Gaana at this point in time, but we will also supply similar online content to other platforms. We are in talks with them. So we are content providers. We do not handle royalty-related matters. That's for the platforms to handle it.

Okay. So whatever the music that is being played, the royalty has to be paid by Gaana, and not by you?

Exactly right.

Okay. Understood. And then lastly, sir, you had given the degrowth numbers in the FCT and the non-FCT part. Can you please tell me the absolute number, what was that, for the FCT revenue and the non-FCT revenue, please?

Well, the FCT revenue is now INR 14.8 crores. It was INR 94.6 crore last year in this quarter. So that's a de-growth of INR 79.8 crores. And the rest of it would be the non-FCT, you can do the subtraction.

Yes, correct. Correct. And sir, you've given the capacity utilization of top 8 stations, can you please help in the migration in the batch 1 and batch 2 stations also, please?

Yes. The -- give me just a moment. Yes, the capacity utilization in the 27 legacy stations, apart from the 8 is now 20%. In batch 1, it is 7.4% and in batch 2, it is 6.3%. You want last year's numbers as well?

Yes, if you can give that, that will be good.

Yes. So for 8 stations, it was 82% last year. It is 15% this year. For 27 station, it was 68% last year. It is 20% this year. For batch 1, it was 31% last year. It is 7.5% -- 7.4% this year. And for batch 2, it was about 14% last year, it is 6.3% this year.

[Operator Instructions] The next question is from the line of [ Sneha Kaushal ] from [ SKS Capital ].

I wanted to ask if any of the government spendings on the advertisement have come back from the last quarter?

Sorry, what has come back? Has government advertising come back?

Yes.

Is that your -- okay. So as we have explained in the past, government advertising, which is central government advertising has been the one, which took a big hit in FY '20. That number continues to remain sluggish, even now. However, state government advertising was quite buoyant last year. It had in fact -- if I remember, had grown. But this quarter, the -- while state government advertising is there, it is limited. So that is why the government sector has reported, like I mentioned, to you a 60% volume drop, right? So it's still less compared to last year.

Okay. And sir, secondly, I wanted to ask these other platforms that you're talking about, YouTube, podcast and stuff. So do you think like -- about what percentage of -- would you focus more on that? And what percentage of mix will grow or form a part of your net revenue in the coming future? Are you focusing on that?

Yes. We have been saying this continuously for several years now, that is exactly the Mirchi strategy. We used to call it Mirchi Everywhere earlier, then we called it with Mirchi Unlimited at some point in time. Now if you -- we will soon be unveiling the new Mirchi logo and the new -- if you remember, the old Mirchi logo is Radio Mirchi. The new Mirchi will be just Mirchi. And the radio, when we are doing radio broadcasting will be called Mirchi Radio. When we're doing podcast, will be called Mirchi Podcast. When we're doing original content, will be called Mirchi Original Content. So the brand Mirchi has now become or will become much bigger than core radio. Even though radio will remain a very important part of our revenues. I believe that radio will be about 50% to 60% of our revenues. As much as 40% to 50% of our revenues will come from what we call the solutions business. And within that, digital is a very important part, and we are pressing ahead full speed with digital. While we have reduced head count in the regular businesses, we will increase headcount in the digital businesses and the solutions businesses. So yes, the company will transform. It will become a company, which is much more than just radio even though radio will continue -- we will continue to remain the biggest in the country in radio.

Okay. And sir, this podcast thing, is as in customized? I might have missed that. You were saying this is customized as for customers, specifically?

So see, the podcasts typically work on the basis of fitting brands into the content, right? So the most subtle brand connect is, the more effective it is for the brand itself. So to answer your question, these podcasts are sponsored by clients. However, the integration is done in a very subtle way. So -- because if they do it in a very aggressive way, then the listeners will not listen to the content, right, because nobody likes advertising branded content. So it is done in a very delicate way, but yes, it is sponsored by advertisers.

Sir, do you expect the margins to be better than the normal radio or you -- other things that you would see in this particular podcast thing?

Yes. So see, in the podcast business, I already mentioned that in the deal that we have done and which we had already begun the production of, I mentioned to you that it's a small revenue of INR 20-odd lakh not a big number for a company like us, but it's only a foot in the door right now. But I also mentioned to you that it's a very, very high-margin of 90% almost, right? And the reason is because typically, content production is something that is not very expensive in the podcast business, provided, and this is a big provide though, you have experts who are in the field working for you. Now the good part about Mirchi is that we have 350 people in the programming already working on the radio business. Many of them are very good with podcast. So when we use their services, the production cost becomes very, very less. However, for an outside company, if they wanted to produce podcast, they would have to hire experts and pay them in top dollars and therefore, the margins would be very less for them. This is an inherent strength which the radio company has, and that's what we are counting on.

[Operator Instructions] The next question is from the line of Aasim Bharde from IDFC Securities.

The first question, can you give us the EBITDA breakup between FCT and non-FCT business for Q1?

Is it not there in the handout, Aasim?

No, not for FCT and non-FCT particularly. It's for batch 1, batch 2, that way.

Okay. Okay. Right. So basically, the -- you want the absolute EBITDA numbers or you want the margin information?

The absolute EBITDA number would be useful, sir.

Okay. So the absolute EBITDA for the quarter in the non-FCT business was INR 8.6 crores.

INR 8.6 crores.

The balance is -- sorry, non-FCT. Balance is FCT. Yes.

Sure, sure.

INR 8.6 crores is non-FCT.

Got it. Got it, sir. Sir, secondly, in terms of overall revenue, how much is July down Y-o-Y. You said it is 50% up versus June, but in Y-o-Y terms, how much would that be?

Well, Aasim, I don't think that we should be giving out too many details. I just mentioned that as a trend point to indicate that there is a recovery happening. Trust me it is way lower than last year. So let's not get into too much details, except that it is a step by step improvement happening from last year.

Yes, sure. Actually, I just wanted to get a sense of what kind of a decline we should be expecting in Q2 in percentage terms. Of course, it won't be as bad as Q1 but just wanted to get a sense.

Sure, no problem, sir.

Yes. Again, there was a part of the question I forgot to answer, and I just remembered, somebody had asked me this question about where the decline was more and which sectors and all that. Actually, I'll also tell you is that there are many growth markets or smaller cities, where the -- and some states where the revenue buoyancy is very visible. There are about 6 or 7 cities out of our network right now, where we're actually seeing positive growth cities in Punjab, some cities in Gujarat, for instance, we are seeing positive growth. In fact, overall, the state of Gujarat has seen pretty good numbers cities like Vadodara have reported a 40% growth over last year. So clearly, it depends on the kind of market which is there. To answer your specific question, the growth is the -- we are way below last year numbers. But I think, like I mentioned to you, by the end of the third quarter or if the festival season goes well, then somewhere around the third quarter, we should be somewhere close to last year's levels.

Got that . Got that. Yes. Sir, and finally, these 200 people that you have let go, bulk of them are from which department? Would they be from the content side? Or would there be more like a sales people or back-end people?

No. So these are people that we let go basis effectively our estimation of the next 12 to 24 months of business. A lot of that, as I mentioned to you earlier, is in the IP businesses, which are typically on-ground businesses. So we let go a fair number of people over there. But then the rest of the reduction has happened across the board and it's based more on productivity analysis. We did a zero-based budgeting exercise on people and basis that. But because the biggest teams in Mirchi are revenue and programming, there hasn't been much of an attrition in the programming team. It's largely been on the revenue side and that too within the IP teams.

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

As you might know, Joe Rogan's podcast who was taken over by Spotify recently. So are we looking at any sort of acquisitions, especially in the podcasting space since there are already some players who have quite a lot of listenership that they have gained?

Well, actually, frankly, at this point in time, there are relatively very few people who have got listenership. And we don't want to get into any business where we acquire big names and pay a big hefty price. It doesn't work that way, the podcast business is very, very, very underdeveloped in India. It's at a very nascent stage and it has to be grown organically we believe. It has to be grown organically. There's no way that we want to get into acquiring content of this type. No.

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

Yes. Sir, in your initial remarks, you said the rent is down by 20%. So I just wanted to understand, have you closed any properties? Or there are some special regiments which will continue?

No sir, this is initial days, and these are mostly rent waivers for a few months and all of those kind of things. But the process of identifying properties that we will shutdown is on. Just to give you an example, in big cities like Bangalore, we are looking at surrendering a lot of empty space that we had in our office. And if it all materializes, then like we -- I think we had 25,000 square feet in Bangalore, we should be giving up 6,000 square feet because that's possible to do it over there. In Mumbai, we're looking at reducing space. So in many, many -- in 5 or 6 other cities, we have moved -- and this is not just entirely in this quarter, but I'm saying in the last 12 months, we have moved into newer offices, which are smaller. Don't forget FY '20 was a bad year for all business as well, don't forget that we reported as a country, only 3.5% GDP in the fourth quarter. So many of these initiatives are actually taken a year ago and in the last 12 months, we have vacated 4 or 5 cities. We have gone to smaller offices. We work on a payback period calculation. So when you go into a new office, you have to invest in CapEx. So it takes typically 3 or 4 years to recover that -- the CapEx through reduced rent. So all that process has been going on for more than 12 months, but now it will gather more pace, and like I mentioned to you even in cities like Bangalore and Bombay, we're looking at office size reduction.

Okay. Understood. And secondly, sir, the receivables number stood at around INR 161 crores at the end of March. Can you give the number at the end of June, please?

Yes, we'll give you that number later, please, yes?

[Operator Instructions] The next question is from the line of Pavneet Singh Keer from Skyline Equity Managers.

One silver lining which you had missed out on your commentary is business outside India. So would you like to elaborate as to what kind of margins are you enjoying? And is this because you added newer channels and then finally, economies of scale will be operating very soon? And would it be a part of your like total revenue? Could it be close to maybe, say, 20% in a couple of years' time?

I'm sorry, Pavneet, you'd have to repeat because I couldn't follow most of it. Can you just repeat it, please?

Yes. One silver lining which you missed out in your commentary was about the business, which you conduct outside India, the overseas channels, radio channels and other businesses. And like what kind of growth do you foresee over the next couple of years? Would it be a part of your total business volume to the extent of, say, 20% revenue? And like what kind of growth are we seeing there? And what is our margin in growing in the outside business?

Okay. Our international growth plans were also laid out a couple of years back, and we have spoken about them in various investor conference calls. We launched in the U.S. on Jan 26, 2019, and we kind of completed a year and a few months now. We have got licenses right now in New Jersey and New York. We also had a business in the UAE, which like Subbu explained, has temporarily ended, but we will be entering that geography again shortly. We have recently won the bid in Bahrain and we should be entering Bahrain hopefully before Diwali. We also have a deal in place in Qatar and we should, again, hopefully be entering Qatar before Diwali. Now remember, some of these things are tentative because, one, because of COVID and two, because of very local factors, some -- all of which are not entirely in your control, a deadline do get shifted forward and behind by a quarter. Likewise, we have plans to expand in the U.S., but again, that's a little bit on the back burner at least for FY '21. In FY '22, we do hope to expand beyond the New Jersey. In fact, we are reviewing the U.S. business, and there may even be some geography that we may give up at this point in time because in the radio business, you have to be very, very focused on the bottom line. And if you find that something is not doing well, then you should shed that business and start something else. So you need to be really fleet-footed on that. So in the U.S., we will be launching in some other cities in FY '22. At that point in time, we should also expand into Canada. So yes, these plans are very much intact. But in all honesty, yes, things have got delayed by -- because of this pandemic. It has affected other countries as well. And so I think that it will only come back in FY '22.

So in relevance that's substantial. So like what kind of margins do we have there. Is it all EBITDA negative at this juncture?

Yes. Well, right now, we only had the U.S. operation, which was directly ourselves, but which was negative because that's in the first year, we always -- in every country we enter we invest in the market development. So yes, it was negative in the U.S. But the UAE, as we explained earlier, was a very profitable business for us. And in fact, in this quarter, we've got a lot of revenues, which relates to FY '20 as well as revenues -- with the INR 7.3 crores as well as revenues, which relate to the first quarter of this year, which is INR 2 crores. So that INR 9.3 crores is obviously pure profit from the UAE. And then Qatar and Bahrain, we haven't entered it. So there's nothing on this at this point in time. So overall, the U.S. was slightly negative, but that was in line with our expectation. And we hope to recover that in this financial year.

Okay. And just on my second question is regarding the currency of measurement of the radio listenership. Now, as you had earlier indicated in past, like couple of years that the biggest problem which this sector suffers is there is no currency which the advertiser lies upon to place an advertisement, and that is the first reason that they take a back seat whenever some sort of hiccup comes be it the demonization or GST or now even corona. Now how do you plan to leverage your situation on like when you say the listenership has increased by almost 30 minutes and the travel to the -- and within the local city has started again. So how do you plan to encash this, by telling it to the advertiser that we are a medium which has got a much wider reach. Now earlier, you also significantly you said that FMCG is not a good advertiser for us. It's not a good category -- a big volume category. But now as you said that FMCG has started dipping into the radio segment. What are the green shoots which you see before you normalize by the closing of this financial year? And how do you visualize this?

First and foremost, let me tell you that people who say that listenership numbers are a problem are just finding excuses. We have never believed that, and we don't believe that. We believe that there is adequate numbers in this industry. There is a -- the biggest research in the country called IRS which gives more than enough numbers that any media planner wants. No media planner has ever told us anything about numbers not being there. And that is the reason why more than 90% of all advertisers -- corporate advertisers come back again and again and again and again to radio. So that anybody who tells you anything else is just creating an excuse for their poor results. Now you talked about FMCG, please understand that radio is a fairly expensive medium. It's not something that immediately strikes you because you always think of radio as INR 1,000 [Foreign Language] rate in Bombay or INR 1,500 rate in Delhi. Anything is so much cheaper compared to Sony TV or Colors or whatever, you think like that, right? But if for an FMCG advertiser, he has to use radio effectively across the country. The cost of buying Radio Mirchi could be INR 13,000 for 10 seconds. Now INR 13,000 would place with Mirchi in the top 10 listing of television channels. So it is not cheap at all. So FMCG is typically -- because they're also led by very high -- very big demands of cost per thousand and they negotiate very hard and then they have demonstration -- they like to see visual demonstrations of the product. So that's the reason why they have always used radio as a reminder medium. And today, that has declined because they're finding that cost per thousand to be fairly high for radio. Where FMCG uses radio very effectively is at a local level. So if Hindustan Lever wants to do advertising across the country, they will always use television and nothing else. But if radio -- Hindustan Lever wants to do something specific in Gujarat, they will always use radio, right? Because the medium that provides the most benefits to them in -- at a local level is radio. But increasingly what Hindustan Lever uses a lot more is radio plus other solutions. So we are able to get clients like Hindustan Lever and others on the back of solution, we've got Asian Paints. We've got so many other avert laboratories, we've got so many other advertisers on the back of digital solutions. So the answer to your question is that research is not an issue. Everybody in every industry will complain that research is a problem. Even television guys complain, even digital people complain that research is an issue. But actually, all that is just an excuse. There is enough numbers available. And too, FMCG uses radio wherever it suits them at a local level.

The next question is from the line of [ Manish Gandhi ], an individual investor.

Yes. The first question is we are expanding out of India. So I just want to understand, do you also plan to have a lot of solutions out of India? And if yes, what are the expertise do we have? So Bollywood, I understand that we have a lot of relationship. We can leverage. But overall, say, 5 years down the line, you plan to have a lot of solutions out of India also?

Yes. Okay. So [ Manish ], I'll give you the answer in this way. All our business people have been told that they should not look at themselves as being radio people. They should look at themselves as people who are there to solve the problems of their clients. Now when they take this approach, they will find that in different countries, there are different opportunities which exist, right? For instance, in the UAE, for a very long time, concerts was a very big opportunity. It wasn't so profitable in India, but it was highly profitable in the UAE. So my team there would have used concerts as part of a solution, right? In India, digital is a very big opportunity. So we will use digital in a very big way. In the U.S., online radio is a very big opportunity. So my team may well create an online radio station for a local client over there or create playlists for a local client over there or create podcasts for a local client over there because podcast is very big in America. So the brief to the team is very simple, always think solutions and whatever it takes, right? So the answer to your question is, yes, I see solutions being part of the products that we sell internationally, but the mix of products will depend on the local opportunities.

Okay. My second question is you said that Punjab and few parts of Gujarat has grown maybe in July or something compared to last year. Am I right?

Yes. Yes.

So -- I mean, I'm puzzled so what is driving that?

Yes. Good question. See, remember, these states, both Gujarat and Punjab, specifically, have been -- have actually -- the lockdown lifted in -- on 1st of June. So they have been back to normal business. Now let me also clarify. All of this business has not come from pure radio, right? All of the -- most of this business has come from the solutions that we provide, right? And that's where actually the market is -- has an appetite right now because think of it like this. Tomorrow supposing a shop opens up in Bombay, and they have got good -- I went to a shop yesterday in Palladium Mall yesterday and the shopkeeper told me that these are all new stock. They had only come in March and then we've shut down. We are opening now and therefore, we are giving a big discount. Now this is a classic case we find in many, many markets. And when my team goes and meets a client like this, we start thinking, how do we help this client to liquidate his stocks. Is radio going to provide the solution? Is our jock social media going to provide? Is there a context we can run that will provide a solution? Or what is it that we can do, which will provide a solution? So we think like that and in markets like Gujarat and Punjab, that's the approach, which has actually helped us in generating higher revenues.

Right. So I'm combining these 2 things. Sir, you said in FMCG also, because of our solution, we are getting clients and even in this, you're saying solution is helping. So day by day, we should take the bigger market share. Is that correct?

Of course, of course. And this quarter, we have got the highest market share ever in our history at 33%. Remember, it's a 30-player or it's a -- I think it's probably a 40-player radio market. But Mirchi's market share in this quarter has been 33%. So it's a remarkable thing. And even if you take away the prior period revenue that we got from brand licensing. The revenue market share that Mirchi gets in its markets is at least 30%. Remember, this is in a 40-player market. So yes, our revenue share has risen by 6 percentage points. We mentioned that in the last quarter, it has grown by 6 percentage points in the last 2 years. So you're very, very right over here, [ Manish ].

So it includes the solution, right?

Yes, absolutely. Because we look at ourselves as a company which does radio and solutions both. We don't even look at ourselves as purely radio. When we evaluate our managers, we always evaluate them and say, what is the revenue that you did? And what is the share of solutions that you did? And we want to see that number growing.

Right. And just lastly, so if say, next 6 months to 1 year, people will obviously go for -- not go for the public transport and might use more cars and 2-wheelers, of course. So isn't -- shouldn't we get more share from other media, if the car on the road increases in the next 6 months?

Absolutely. Absolutely, correct, [ Manish ], and I'm really, really hoping that, that happens. Because again, yesterday, I was on the streets in Mumbai and the traffic was more than in pre-COVID days. I can tell you that I went to Phoenix Mall, Palladium, I came back to Bandra, I drove to town, and the traffic was as bad as it was during pre-COVID days. So -- and the jams are starting and without any doubt, this is bound to happen. We'll have to wait for a year or 2 because see even today, the car sales are low. But when car sales pick up and there are more cars on the street and more traffic jams, that's really good news for us. So the other part, of course, is that automobile sales are more in bigger cities. So we'll have more listenership and more revenue share coming in bigger cities, which are where all these advertising businesses out. So certainly, yes, that's a good sign for us.

Right. And just to conclude on that, it means -- suppose if -- as an industry, say next 6 months or a year because of lots of car on the road and as an industry, we cannot increase our share, do we have to a little bit worried about that -- the same thing is not in advertisers' mind that they are not thinking the same way that people are listening more in the car or the big lucrative people for advertisers?

No, no. [ Manish ], let me tell you this that if advertisers looked at radio like that, then why would there be 90% plus repeat advertising on radio, right? So it's the noise...

So I didn't get you. 90%...

Yes, I said, in -- if you look at the corporate business and all the national brands, there is more than 90% repeat business, which means that they come repeatedly because they clearly get returns and they get -- they put more and more money year after year. In solutions business also, we have lots of repeat, very high repeat percentage because solutions also delivers to our clients. So this is not true. See, typically, a lot of investors need agencies and agencies have now become very smart because they like to play this because they know that the investor comes and feeds the information back to the broadcaster also. So they use investors to pass on messaging to the broadcasters. The investor will say, radio conference, nobody listens, like that. All of them actually consume radio because most of them are driving, all of them consume radio. All of them are putting money on radio. The thing that we have to remember is the retail is where we must not lose focus. If the retail continues to advertise, that is what is going to give us the monies. And that's where 50% of our revenue comes from, right? So that's what we are focused on. Thank you, [ Manish ]. And Ayesha, can we just take another one question and then call this meeting to a close.

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

Yes. So our solution business is evolving you referred that it is becoming more digital. So what are the suite of services in the digital that we are currently offering? And where you are seeing the scale-up on top of which we expect that going ahead the queue would be more towards the digital solution?

I did cover this earlier in the call, but think of it like this. When we go to a client, I gave the example, right, let's say this retailer in Mumbai, who has got stocks from March, then there was a lockdown and now he has opened up, and the season has changed and he needs to liquidate all these brand-new stock. This is a problem. Now if I was a radio company, I would go and say, sir, take my radio advertising. It will work for you, right? But he's not going to spend money on pure media because he is going to say, hey, I'm stuck with so much stocks, what do I do with buying media? But if I can convince him that if I'll give you a combination of media, which includes social media, digital, include on-ground, I'll do some contest in your store, I will give freebies from your store on your behalf with no cost to you, I'll get a celebrity to come to your shop to do a small campaign, there are so many things. See the world of solutions is -- it just depends on your imagination, right? All of those things are available to us. But very importantly, it is our digital capabilities in video and audio. It is our digital platforms, which are our social media handles, our YouTube channels, and it is our thinking, the kind of people that we have been hiring over the last 10 years are mostly marketing people. These are the things which are actually in the suite of products that we include in solutions. And this is what clients want today. All right, Ayesha, we have both committed, Subbu and I somewhere else. So can we please call this meeting to a close?

Sure, sir. Would you like to add any closing comments?

Yes, please. I'm sorry, we're closing a little early, but if there are questions that you would like to ask us, please do write on the e-mail address mentioned in the presentation, and we'll be happy to respond to you there. And thank you very much, and do take care, please. Bye-bye.

Thank you. On behalf of Entertainment Network (India) Limited, that concludes today's conference call. Thank you for joining us, and you may now disconnect your lines.