HT Media Limited (HTMEDIA.NS) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. I'm Amit Madaan from Investor Relations team, HT Media Group. I would like to welcome you all to the Quarter 1 FY '21/'22 Earnings Webinar. [Operator Instructions] I now hand over the call to Ms. Anna Abraham, Head, Investor Relations. Thank you, and over to you, Anna.

Thank you, Amit. Good afternoon, everyone, and welcome to the conference call of HT Media Group. We will be covering this evening the results for the quarter ended 30th June 2021. The panelists for the call are Mr. Piyush Gupta, Group CFO; Mr. Sandeep Gulati, CFO of Hindustan Media Ventures Limited; Mr. Pervez Bajan, Group Controller; and members of my Investor Relations team. We hope all of you are staying safe and healthy, and I trust you had an opportunity to go through the financial results of HMVL and HT Media Limited. Kindly note that our remarks will track with the presentations on this Zoom webinar, which is also available on stock exchanges and Investor Relations section of our website. Before we get started on the presentation, I would like to focus your attention on the cautionary statement, which has been given. Kindly keep this in mind for all discussions going forward during the course of this presentation. Moving on to next slide. It gives the message from our Chairperson, and I quote, "Economic activity gathered momentum in the third and fourth quarters of 2021, but the second wave of COVID-19 and the surge of infections brought with it affected the beginning of the new fiscal year. All Indian states imposed lockdowns and restricted movement and activities to combat the surge. The economy took a hit, and advertisers turned cautious. Our learnings from 2020 and the first wave stood us in good stead in this challenging environment, and our operations remained resilient even as we recovered smartly from the lows of the second wave. Advertising revenue in our Print and Radio businesses was better compared to the same quarter last year. Our Shine business also showed good growth led by Shine Learning. Circulation revenue to continue to improve sequentially as well as over last year. With infection ebbing, consumer sentiment improving and business activities almost at pre-pandemic levels, we expect pent-up demand to drive consumer and advertiser spending in the near term, followed by sustained demand as the economy looks up. Our constant focus and endeavor is to offer our audience reliable and engaging news and information and high-quality entertainment." Moving on to the next slide. This gives the agenda, which will be covered for the course of the presentation today. I now hand over the call to Mr. Piyush Gupta.

Thank you, Anna, and good afternoon, everyone. I hope everyone is safe in these trying times. Thank you all so much for joining our quarterly investors call. We would be covering this content. So Amit, can you just move on to the next slide, please? So I'll be covering the consolidated performance. So if you look at our consolidated performance for the first quarter, we -- our total revenue tracked at INR 281 crores, which was an 18% improvement over the same period last year. Of course, as all of you understand, the last year was the peak of the first lockdown, and of course, there is a softening of the base. So hence, we have seen growth coming in the first quarter. Of course, if you look at it sequentially vis-a-vis the fourth quarter of last year, there will be a decline because the second wave really hit us very hard like the entire industry, of course. If you track the EBITDA, it came in to negative INR 43 crores, which is a decline of 84%, margins at negative 15%. That tracked minus INR 76 crores with a PAT margin of minus 27%. Primarily, the impact on the margins can be attributed to both our raw material cost, where the pricing of paper cost has gone up about 10% to 15% versus the first quarter, as also the copy shrinkage, which you saw last year in the first quarter, did not happen with that enormity in the first quarter of this year, and our copies still remain very resilient. If I may just move to the next slide. Let me cover now the business unit performance and straightaway dive into the Print business. Our Print revenues came in at INR 132 crores, which is a growth of 55%, as I highlighted on the consolidated chart. Base effect has a big role to play. Circulation revenue, which are much more sticky, came in at INR 50 crores, which is a growth of 43%. As a consequence, the operating revenue tracked INR 203 crores, which is a 41% growth. Operating EBITDA primarily attributed to a higher-than-usual raw material cost and the [ copy sticking ] came in to a negative INR 54 crores and margins, therefore, at minus 27%. Let's move on. If I may just break it down into English and Hindi. Our English ad revenue growth was 91%, which is nearly doubling itself at INR 69 crores in the first quarter vis-a-vis INR 36 crores in the same period last year, and the circulation revenue went up to INR 7 crores from a low of INR 2 crores. So growth in ad revenue came from both local and national advertiser, and we saw that the volumes sharply increased. And I don't have the volume chart, but in -- we saw the volume sharply increase. The big problem that we see right now is that the pricing still has to stabilize for the industry, but the volumes indeed came back before the second wave. Growth. We saw growth in most of the categories. High-growth categories such as classified, real estate, e-commerce and durables and governments continue to perform better. And circulation revenue growth was led by improvement in both realizations and copies in circulation. So a lot of pricing action also happened on the circulation copy. As a matter of fact, our RPCs are better than the same period last year across the major publications and units. Moving ahead. Our Hindi business, our revenues tracked to INR 63 crores as against INR 49 crores last year, which is a growth of 49%, and circulation revenues came at INR 43 crores, which is a growth of 12%. These increases in ad revenues were seen across most categories, and we saw higher growths in FMCG, health and fitness and auto categories and growth in circulation revenue on Y-o-Y and on sequential basis. As I said, our RPCs are tracking very smartly in the first quarter FY '22. Moving further down on our Digital business. So on our Digital business, our operating revenues tracked to INR 29 crores as against INR 14 crores in the same period last year, which is slightly more than doubling itself, and our operating EBITDA came in at a breakeven as against a loss of INR 3 crores, which we had last year. Operating revenues, as I've said, doubled itself, was primarily attributed to our Shine Learning business and our digital entertainment and Mosaic business, which we incorporated and operationalized last year. And EBITDA breakeven is a significant step towards profitability, and we believe that this trend will continue and gather momentum as we move forward on our Digital businesses. Our Radio business, as everyone is aware, had suffered the most even in the first wave and also had a huge impact in the second wave, though our revenues were slightly better than what they were in the first quarter last year at INR 12 crores, which is a growth of 44%. But of course, the basis has shrunk down, and it's taken some while to build back the revenues in the Radio business. Operating EBITDA still continues to be negative, though it has improved significantly versus last year, but there are still some distance to cover. Most of the impact, if I break it down into categories on the revenue side, is coming from the MSME part of the business, whereby the COVID has really disrupted a lot of businesses, and those guys are currently having a very cautious stand. And our revenues, therefore, continue to be soft as far as the Radio business is concerned. Okay. So with that, I come to the end of the presentation. We would be happy to take any questions that the participants might have. Thank you so much.

Thank you, Piyush. We will now begin the Q&A session. [Operator Instructions] The first question is from [ Rahul Ng ]. Since there is no response, we'll move to the next participant. The next question is from [ Chetania Mortani ].

I'm an individual investor. I just wanted to ask [indiscernible] I saw that -- I'm actually a new customer of yours also, and I have been using your app for downloading [indiscernible] for my family. So I just saw that in that section, we operate in 4 states and Delhi. So why don't you operate in Hindi-speaking states of Madhya Pradesh and Chhattisgarh?

Well, great question, [ Chetania ], and thank you for joining the call, and thanks for being a customer. We need good customers like yourself. Look, [ Chetania ], I think there's a long answer, and there's a short answer, but let me just try to give you a little perspective. We had consciously chosen the states where we will participate in, and I believe you're talking about the English paper. You're talking about the Hindi or you're talking about both the papers, [ Chetania ]?

I'm talking about the Hindi paper.

Right. So [ Chetania ], in Hindi paper, this publication, Hindustan, started 97 years ago in Bihar, then what was the unified Bihar, and right now, of course, that's 2 states, Bihar and Jharkhand. Post that, we also had a presence in Delhi. But over the last 8, 9 years that we have increased our footprint for the Hindi newspaper, we went to UP, Uttarakhand also with that gusto because that's the single-biggest ad market for language papers in the country. Now going with the physical papers to various other markets is a very costly proposition from the initial losses that one has to sustain because their interest there in most of the markets, Hindi-speaking markets of Rajasthan, Madhya Pradesh, Punjab, Haryana and so on and so forth. So we have cautiously picked up the state where we believe that there are more ad revenues to garner. The other markets we are catering, too, our online app, and our online app, as we move forward, we will be increasing the local content for various state-related issues, local municipality-related issues across the country, but that's a journey on which we are. But the physical paper, we chose our markets, given the richness of the market. And currently, we don't plan to expand the footprint of the physical paper beyond the market that we currently are in. I hope that answers your question, [ Chetania ].

Yes. And a second question also.

Okay.

So like I was reading a number of newspaper reports and opinion piece. And I read that a number of newspapers and publications, small ones specifically, are closing down because of the pandemic, and a number of big publications also were operating in our core markets of Bihar and Jharkhand, also closing down their noncore activity. So can you specify upon that?

Well, [ Chetania ], if your answer is whether we are looking at those opportunities closely, we are always looking at all the opportunities which present themselves to us, but we only make those investments if the business case and the ROI case makes ample legal sense. So we are always looking at evaluating the opportunity, which can lead us for our sustainable value creation over the long term. So yes, we are aware of that, but as and when something will come, we will be announcing that. But at this point in time, there is nothing that we wish to make a comment on.

Thank you. The next question is from Anish Jobalia.

Yes. So one is I just want to understand on the Hindi side. So we have seen good growth over the last year, of course, with a lower base. But just to understand your thought process about going forward in the next 9 months. We started recovering gradually in the last 3 quarters of the last year. So how do you see this year versus the next 9 months going forward?

Okay. No, great question, Anish. Anish, let me just reflect back on the last year. If you remember, last year's result for the last 2 quarters, and I'm specifically talking about Hindi, Hindi had already turned the corner and was posting a very smart recovery. As a matter of fact, not just Hindi, it was -- we were seeing the same trend over our entire publication business. On Hindi, specifically, I believe that -- and I'm keeping the outlier case of our -- over Phase 3 or third wave or what you would call it, I believe because the impact has not been as sharp, the downward impact of the second wave on health and wellness, we know it has been much sharper than the first phase, but on the business sentiment, because the impact has not been that sharp, I believe that recovery will be very smart. And I believe in the second quarter, we will be recovering most of the losses that we have sustained as the impact of COVID Phase 2. However, phase -- in the third quarter and the fourth quarter, depending on how the festive season pans out, I am very hopeful that we will have very handsome growth coming for revenue. As far as bottom line is concerned, the big difference between last year and this year is in raw material costs because the newsprint, which is a substantial part of the build of material for publishing a newspaper, is substantially higher than what it was last year. That, of course, will have an impact on margins, but I believe it will stabilize at a certain level. Right now, it's an upward trend. But given the good, smart recovery on ad sales, I believe we will have a good third quarter and a very good fourth quarter. I really -- but that's crystal gazing, but that's what I believe.

So I mean -- so just a follow-up, is that -- let's say, versus the last 9 months, do you think we can see a similar growth to what we saw in Q1, say, around 30%, which is not difficult to visualize because we had a sharp degrowth in the last year? So do you think that kind of a growth is possible? Or it could be much gradual and a more gradual growth within this year?

Look, I think these are all conjectures, Anish. I mean, look, I think it depends on the business sentiment. If the business sentiment comes back, I believe the growth will be smart. Now the intensity of the growth, the pricing, et cetera, there are a lot of nuances to it. We really won't be able to comment on that. But I believe that the businesses have shown much more maturity this year in terms of sentiment, in terms of the consumer demand So. I believe, come Q3, we will have a robust top line and a bottom line, which will be growing.

And in terms of the circulation. So we are seeing that versus Q4, we are at similar revenue levels. So if you compare this to the pre-COVID, I think the recovery is still around 80-odd percent, right? Please correct me if I'm wrong, but that's the way I understand it.

No. No. I think mathematically, you might be in the ballpark. As I said, look...

My question, actually, sir, was that how important it is for that 80% to go back to 100% of the pre-COVID? Even our ad revenues should go back to 100% of...

Not -- I think, look, it will be welcome, but it's not like it's very necessary because what -- one of the other trends will be a lot of readers probably might not come back to a newspaper and might go into a digital form. So 10%, 15% readers would probably have vacated the space. But given Hindi and the market that it plays in, there are a lot of first-time literates who are coming into the stream, so they become the new set of readers. So -- but for the ad revenue, I think 80% gives you a sufficient critical mass to garner the same kind of revenues. Of course, the wildcard that we'll have to see is that the pricing in the industry has to stabilize, which right now is not stable.

Okay. And last question, if I may squeeze in. I'm just trying to understand how are the sentiments of our advertisers. I mean if you could comment around that. I mean is it still not looking that good or...

I think it's the same question that you are asking in a different form. I think the advertiser -- again, I'm homogeneously classifying them into one bucket because even within advertisers, there are all kind of advertisers. I think as and when the businesses, which are advertising, B2C businesses, government, on their social messaging, the classifieds and various other properties that a newspaper has, has to bring out the IP advertising, the brand establishment advertising, as and when those businesses are stabilizing, we are seeing them clearly come back to advertising, and this is much sharper than what it was in the same period last year. So we are very hopeful that those businesses are coming back and hence, the advertising is coming back.

Okay. And the pricing...

Anish, could I please ask you to come back to the queue?

Sure.

The next question is from [ Yash R ].

So my first question is with regards to the staff cost that we're seeing as compared to Q4. There, again, is a hike of around 35%. Now if I remember correctly, in the previous call that we had for Q4, we were told that it was on a kind of provisions that were reversing on a kind of non -- business holding up the [ margins ]. So [ variable studies ] are not paid and that's why there were quite a few measures that were taking place. So staff cost was actually less. Now again, we are seeing that there is a hike. So what is the reason behind this? This is my first question. Is it because...

Can we answer the first question, please, first?

Yes. Sure.

Anna, would you like to take this question?

Yes. So Q4, we spoke about the fact that there is a reversal, so it is not giving you a run rate number. Secondly, we -- in the last year, given the high level of uncertainty, et cetera, there were sharper actions done on the salaries, including salary corrections, which also we had said we will reinstate this year. So it's a combination of both, which vis-a-vis quarter 4 is making it look a substantial increase.

Yes. So that 69 -- yes, yes. Let me just clarify that point. That 69 that you see is not the correct number because there are things sitting in there. And the salary collection or the variable part, which we had taken away last year, that has got reinstated. So those are the 2 things happening there.

So it's just a reinstatement, basically, most of the quarter.

Yes. That's right.

Okay. And it's not like these [indiscernible] component has been restated. That is a part of variable, and we are just providing on the books. No, that is not the case. We are paying.

We have reinstated the salary corrections that we have taken last.

Okay. So it's not just a provision in the books on the part of variable, but we are actually paying out the employees. [indiscernible]

Look, I think...

See, there are different components.

Okay. Okay. Okay. I got it.

Yes. Yes. So I do not like to put the cart in front of the horse. I need the payment, et cetera. The variable part happens on the attainment of certain financial objectives, the fixed salaries, something which has to go out on a fixed paycheck. But this is a mixture of both. And we have taken this away. We have reinstated that. That's all there is.

Okay. Now one thing that we are seeing is there is -- there's an increment of other expenses as well. But the problem is that operating revenue has dropped at 33%. I'm talking about stand-alone HT. But my other operating expenses have fallen only by 14%. So anything -- any...

Yes. So to some extent, we will not be able to -- it's not something which we can kind of drastically correct for fluctuations that happen from quarter-on-quarter. So there will be a minimum level of expenses that we have to -- which we have to run as a sustainable company. Having said that, in the quarter, in the last year, quarter 1, there was a much lower content procurement fees that we had paid, given the very sharp decline in the revenues of the company. But yes, we will -- if there are quarter-on-quarter fluctuations, it is not that other operating expenses can get corrected. Raw material, of course, to some extent, thus, to the extent it's led by pagination, but it's not like all the expenses we can automatically correct.

Yes. So what is the run rate that we're seeing for the rest of the year, quarterly?

Look, [ Yash ], if I might conjecture. Most of our operating expenses, which were in first expenses in terms of office spaces, travel, discretionary expenses, those have been corrected very substantially. Now I don't think they will be further corrected in this year. Now if there one-offs like those provisions or reversals, et cetera, et cetera, they will obviously change the comparability of the numbers. But I believe that we will remain at a frugal level that we are, adjusted for all these one-offs, which happen on a quarter-to-quarter basis.

Okay. So any numbers you can quote on a ballpark basis?

You can broadly go with the current quarter numbers because as you said that -- as we have said, most of the cost actions have happened. However, it will change depending on -- if the business recovery is faster, we may spend more on those B2B-, B2C-related cost, which may be coming back. Do you want a specific number?

So I think just one example. If I have to just give you one example, [ Yash ]. Now if we start on the copy booking thing, and if we think -- one of the earlier participant was asking a question whether 80% is the new normal, is the right thing to do or not the right thing to do. If we see a good opportunity in a certain market and we go for a copy buildup there, you might see a temporary rise in expenses on account of various sales promotions, et cetera, which might happen, which might be temporary in nature, but that will change the comparability. As far as those structural changes that we had to do by letting go of office spaces and other discretionary, all those are now baked into the base.

Okay. So [ 1 60 ] is something -- excluding the additional amount that we're going to spend on improving our markets, [ 1 60 ] is a number that we can stick to approximately? That's the Q1 number I'm talking about on a consolidated basis where we see...

On a consolidated basis, [ 1 57 ]. Okay, that number. Look, I mean you take that as a best case number. Honestly, yes, I think you can take that as the number.

Okay. Just last question. I can see that the other income has fallen considerably as compared to Q1 last year and also as compared to Q4. So it was at 49. You are currently at 37.7. So any reason?

Yes. Go ahead, Anna, please.

It's largely dragged by the interest income. We had a substantial gain last year because last year, given all the disruptions in the market, there was successive rate actions, which kind of led to an unusual extent of income in the last year.

The next question is from Vinit Manek.

Yes. Just 2 questions from my side that -- like first one, what is the rationale behind raising INR 100 crores of fund raises through NCDs despite of we having cash on the books of our subsidiary? And the second question from my side is can you help us understand that -- like how has been the news price -- newsprint prices moved up on? And how do you see that going forward that can hurt our profitability more in terms of coming quarters or because we are not able to take the price increases on the per-copy basis, but the raw material prices have significantly went up? So like how are we taking measures? Or how should we look at that going forward?

Yes. So Vinit, the first question on the NCD. It is nothing but a routine refinancing of the earlier debt that we are doing, though we have a surplus cash, but if we get an opportunity to finance working capital at a cheaper rate from the market, we always resort to that. So there is a certain long-term debt, which is coming up for retirement, and we are just taking that enabling resolution to be able to explore the various opportunities in the marketplace. So I hope that answered. That's not an incremental debt. that be refinancing of the debt, which will come up for repayment at some point in time, and we do more for our working capital purposes. Now your second question, what was it? Sorry. What is your second question?

Regarding the newsprint.

On the newsprint. On the newsprint. Look, on the newsprint, Vinit, I think that's a great question. Let me take 30 seconds on that. Look, newsprint, we -- as -- and now I'm speaking both as English and Hindi because that's where we consume newsprint. As a company, though we had not anticipated such a sharp increase in the newsprint prices, really, the spot prices versus 6 months ago are up by 50%. But -- though we had not anticipated, but we knew a bit of a disruption will come there, so we had taken a decision to up stock or increase our coverage. That has helped keeping us in very good stead as far as the imported newsprint is concerned. So the spot replacement price on imported newsprint is north of $600 a metric ton, and we are still managing the oil prices, and we, I think, have a sufficient cover to tide over it. The bigger problem, however, that we are seeing is coming on the domestic newsprint, whereby because of shortage of old newsprint, because India only makes recycled newsprint, right, because of the environment loss, because of whatever reason the old newsprint is priced so higher, that the domestic newsprint is now at a very high, elevated level north of INR 40,000 a metric ton. I believe what the prices earlier were, were artificially low. What I believe that right now, the sharp increase, which has happened, is also very high. Maybe it will take a quarter or 2 to stabilize, but I believe we might feel a little bit more escalation in the prices before it stabilize or comes down. But I think we've already got an impact of about 15% -- 12% to 15%, depending upon domestic or imported and a mix of that. We believe another 5% to 7% will happen before they start stabilizing or coming down. So that -- I hope I've answered your question, Vinit.

Yes. So going forward for 1 or 2 quarters, our margins will be still affected due with the newsprint, and then we might see the...

Well, newsprint will have a damper on the margin, but as I was explaining to one of the earlier participant, I believe in the next 2 quarters, the revenue numbers, depending on the sentiment in the market, should basically be able to more than offset that. But that obviously depends on the macroeconomic scenario, and we'll see how that plays out.

Okay. Okay. And just one last question from my side. So on the Radio side, how has the traction been building? So like when do you expect that to come to a breakeven on an annual basis? Or like what are the other plans that should we continue with the losses being incurred on the Radio side? Or anything else that we are thinking of?

Look, we are thinking a lot of things, Vinit. I think Radio has been one of a very tough journeys that we've been on since the onset of the pandemic. Just to refresh you, before pandemic, we were hitting revenues north of INR 200 crores, as a matter of fact, INR 225 crores, INR 230 crores. And there, radio actually took the biggest of the brunt because most of the advertisers on radio were small and medium businesses who have been impacted by the pandemic. So we have been turning in a loss position. But what gives me comfort here is just before the second wave, if you look at the Radio numbers for the fourth quarter, Radio had come back to about 60% of the pre-pandemic level, 60%, 65% of the pre-pandemic level, and of course, the second wave again brought it down. So I believe if the third wave does not come, we might, in 2 quarters, see Radio turning in a profit, but it will definitely not happen this quarter, maybe the quarter after that. And after that, it will go from stem to stem because one thing that has happened is because of these forces, we had no other option but to work the cost structure in a very, very innovative way. Now Radio's cost, apart from the regulatory and the statutory cost, which is [indiscernible] and the Ministry of Information and Broadcasting and so on and so forth, have been restructured to minimum [ sustaining ] cost, and we are now adopting a lot of technology to work with that cost so that the product does not suffer. So if the revenues come back, I think Radio can be profitable in the next 2 quarters.

Thank you. The next question is from [ Pavan Thirulla ].

So my question is regarding HMVL. So you have very less operating profit for last many quarters, and profit numbers were mainly due to interest income, like, I think, for the last at least 5 to 6 quarters. So with interest rate decreasing, what is your -- what are the steps you are taking for this operational profit improvement?

Can I request my colleague, Sandeep, to -- Sandeep, HMVL CFO, to answer that, please?

Yes. So you are right. In the last few quarters, the operating profits have been low. But -- and that, too, because of the overall tough economic environment we are going through. I think somebody else also earlier asked that same question, how are we going to see it. So the good news is that we are seeing an improvement quarter-on-quarter. Even this quarter, if you look at revenues, they have come back. Of course, we have got impacted by higher newsprint costs, which, over long term, may not be reaching to -- should be stabilizing to a better place, number one. Number two, even we talked about -- and I think some of the gentlemen also asked about this, what are the actions we are taking to kind of mitigate them. Over time, of course, we are bringing back our copies as much as we can, but we have also taken pricing actions, and that has also kind of reflected itself in a good way from our overall realization per copy. And if you see that, you will see it quarter-on-quarter improvement, and that's why, sequentially, it's going up. So structurally, we are moving in the right direction. So the moment we are back from this tough environment, I think we should see a much more sustainable profitability going forward.

Okay. And also the -- like my second question is about any consideration for dividend in coming quarters? Like if the situation improves, at least for HMVL? Because we have a good number of funds in HMVL. And also, I think it will also help HT Media with funds as HT will also get the funds from HMVL as part of dividend.

Sure, [ Pavan ]. I totally resonate with the sentiment, and the simple answer to your question is absolutely yes. It's just because these were so prime times that we stayed away from dividend. But your question is absolutely valid, and the answer is, yes, there is definitely -- we would be looking at dividend very closely, provided the business situation does not deteriorate given the macro situation.

The next question is from [ Janvi Tucker ].

Yes. This is [ Mehul Panjwani ] actually. Sorry, I logged in, in the pandemic time, so I'm using -- anyway, Piyush, I have...

[ Mehul ], by the way, I do that all the time. So that's okay, absolutely.

Yes. So I have 2 questions, Piyush. One is how are we positioned to pay off the long-term debt, which is coming up, which you mentioned, which you touched upon?

Yes. So [ Mehul ], as I said, at a group level, we have surplus cash on the balance sheet, but what I was basically alluding towards is our cash is working much better when we're investing and getting return on a long-term basis. Hence, our working capital, we tend to finance for market borrowings, and hence, we've taken the enabling resolution on the NCD. So we will look at the best and the cheapest form of refinancing the debt, and hence, we have taken that resolution. There are multiple options available on that. That's never a concern, [ Mehul ].

Okay. Great. One follow-up question on this. Pardon my ignorance. I've been a shareholder, but I don't know the group structure of Hindustan Media Ventures. I mean I know HT Media is a parent company, and Media Ventures is a subsidiary. Is my understanding correct?

Yes. Yes. It is a subsidiary. We hold 75% -- nearly 75% stake in that company. I think this is something we can take offline also. You could just write to us, and we can kind of take you through the details of the group structure.

So which e-mail ID should I write to?

The one which is also on the presentation [email protected].

Okay, fine. And second question which I had was that I have -- in the financial press, I came across some overall article with this -- with the listing of Zomato and other companies. There was some mention that Hindustan Media also holds a lot of stake in -- I mean stake in a lot many unlisted companies, but there was not much detail. So is it something which is -- which you can share the details of?

[ Mehul ], we don't share that detail because of competitive pressure. That is some information that we do not put in the public domain. But your understanding is absolutely right. We, through our AFE platform, do make such investments, and we believe that these investments will give us rich dividends for all our shareholders as these investments mature. Now of course, Zomato is a very headline company. We just made IPO some time back. But that's a journey that your company is also wishing to endeavor, and they're willing to partake in by going the investments now.

Right. Right. Piyush, pardon me, I missed out something when you said something that based on the ERP. I mean was it -- we do invest through ERP or something? I [indiscernible].

No, no, no. There's a business segment, which we call AFE. It's just a name of the business division which undertakes that investment, and that's what I said. Just think of it as an investment outfit within the company.

Okay. Okay. Investment outfit of Hindustan Media Ventures.

It's at a group level. Hindustan Media Ventures also participate, and HT Media also participate. It's a group corporate initiative.

The next question is from [ Rahul Ng ]. There's no response. We'll move to the next participant. Next question is from [ Hersh Patel ].

Am I audible?

Yes, [ Hersh ], you are. Please go ahead.

Yes. So my -- I'm [ Hersh Patel ] from [indiscernible]. My question was related to the Radio business. So I wanted to understand what is the CapEx utilization in the Q1 and for FY '21. And what is the pricing and the volume degrowth you are seeing in the Radio business compared to pre-pandemic levels?

Okay. Let me -- hold on. Let me just look at my numbers. Well, the capacity utilization, typically, we look at capacity utilization in prime and nonprime hours. Now in the Q1, it is much below 50%, both in prime and nonprime hours. And pricing, as I was alluding to some gentleman prior to you, pricing is under pressure on all media platforms, including radio, so pricing is much, much softer than pre-pandemic level. But the capacity utilization is also less than 50% at this point in time.

Okay. So as per the previous participant who asked you about the Radio business, you are expecting Radio to come back by Q3, Q4 of FY '22, am I right?

Yes. By Q3, Q4, you're absolutely right.

So sir, do you see any write-offs? Because one of your competitors has seen a -- has taken a write-off in the second frequency of the Radio business. Will you -- [ meaning, a write-off ] in the, let's say, -- at least in the second frequency or in the...

I don't think so. Yes. Look, [ Hersh ], I don't think -- we have taken some impairments ahead of the competitor, and this was because long-term value was becoming tough to establish because of the pandemic. But I don't see any big write-offs coming our way. Even if there will be some, they'll be very, very minuscule. I don't think so.

Thank you. The next question is from [Rangab Prasad ].

Yes. In the last con call, you had said that the company was in the process of taking certain measures to enhance shareholder value, and that you could expect to hear something on that in the next few months. Is there any update on that?

Well, I think the single biggest update on that is, as you are aware, in the public domain, we filed a scheme of reorganization of some of our legal entities. We believe that will unlock a reasonable value for the shareholders, but the process is currently in the stock exchange. We will keep you posted. At this point in time, it is in the stock exchange, and once that happens, we believe that a lot of value unlock will happen for all shareholders as per the scheme.

The second question is on -- do you have any update on Google new showcase? Because we are hearing a lot in the press saying that they are tying up with a lot of news publishers. And next...

You know the -- yes, you're absolutely right. Great question. Look, Google is in conversation with most publishers, and bilateral discussions and negotiations are happening. The way I look at this thing is it's better late than never or everything was precipitated by the Australian judgment, which happened, but this will definitely bring at least some value back to the publishers. But I can't go into the detail because these are bilateral negotiations that Google is doing. But those values will definitely -- you will see it going through the P&L as time -- every quarter from here on.

So we can expect something this year itself?

Yes.

Thank you. The next question is from [ Prakash Advani ].

Am I audible?

Yes, please.

So sir, the reason I unmuted myself and to ask the question was I'd like to have some kind of an appreciation about the AFE investments. Look, there's a lot in the public domain around VCCircle, oil, MobiKwik, Beldara, Hubhopper. And I believe a gentleman by the name [ Anshu Gupta ] has also put out a statement. Now capital allocation is an important element for any shareholder, and I understand you kind of alluded to not answering that question by mentioning that there are competitive tensions. But what is the capital deployed in this segment? What is the fair value? I believe we owe some level of appreciation in the scope of how the company's capital allocation policy is working, especially given this alongside any print or media business. So that's my first question. I have a second one, sir, and I request you to be as transparent as you get so we can only appreciate what you guys are doing because it's fantastic to see what's being done there. And the second one is could you give us a sense of -- you alluded to the Facebook role and how that's helping the publishers. And you said, yes, negotiations are on, I can't be more open. But could you give us a sense of how big could that opportunity turn down, let's say, a decade from now or 5 years from now? How would you think about that from a long-term perspective rather than the short term?

So let me start the other way around, and let me talk about Google because that's a general conversation. And also, you spoke about 10 years. So I don't proclaim myself to be Nostradamus, but let me try to, from my understanding, at least try to answer that question. Now Google, Facebook or these big, global media platforms have been going through a certain regulatory scope the world over. Now what comes out of various countries, et cetera, et cetera, we can all conjecture, but we don't know. But we as publishers, as legacy businesses, as publishers in various countries, have always maintained that the news which is gathered, which is curated, which is analyzed and put up in a credible format to our readers should not be picked up and freely distributed because there's a cost of putting all of that together. Now how this will pan out, if you ask me, and this is my personal opinion, will depend upon the regulatory environment the world over, starting with the United States of America. Of course, right now, Australia has taken a lead, but we'll see how U.S. and the western democracies kind of take a lead into this thing. I think that will -- will this be a big opportunity? I personally think it will be a reasonably big opportunity, but it's all conjecture at this point in time because going forward, as I've always maintained, the heart and soul of any media organization is in the media that it is putting together. In our case, it is more news than entertainment, but the news, credible news, gathering the news, et cetera, et cetera, is where our heart and soul lies. Now if there is a value to be attributed, irrespective of the platform, it is up to the customer. The value has to be captured back with the person who's doing that So that's the second part of your question. On the first part of the question, look, I think these are all coming in media, and [ Anshu Gupta ] has put down some statement. I'm not aware of that. [ Anshu Gupta ] is no longer an employee. I mean he was a great employee. But the reality is these capital allocations, and I have explained that earlier, happens through our AFE platform, which from a capital-agnostic -- is capital agnostic because what happens is, think of it as a barter trade. We give that media -- we take a stake in a company in lieu of the media that we are serving. Of course, there are ways of doing it. It goes through a classical investment process, whereby we buy that thing, but it is capital agnostic because that same cash that is going for investment also comes back to company in the form of advertising. But what this helps the company to do is take long-term bets on these new-age businesses, which can be multibagger, and the value can then therefore come back to the shareholders. So don't worry about the capital allocation. I just hope, like any other classical investment business, whereby 2, 3 bets out of 10, 20 will basically go out of the roof, and the balance might not fortify, but they'll be good enough to kind of go over this whole stuff. We are seeing that early signs. And hopefully, in the next couple of years, there'll be a disproportionate amount of value, which will be generated for shareholders there. I hope I've been able to answer your question, [ Prakash ].

So yes, that's helpful. Just one clarification on that. I appreciate that you can give qualitatively an appreciation of the scope. But could you just kind of give us a size? Are we talking INR 100 crore investment at book value to date? And any appreciation of where the fair value is sitting of this portfolio? And if not the fair value, the consolidated value...

I can't. the numbers are higher than that. Okay, let me ask my colleague, Anna, to answer that question.

We cannot give you individual investment-wise details, but it is our -- the accounts itself requires it to be fair valued at every balance sheet date, so the information is available in our balance sheet. We have, in our calls, also shared the overall number. Individual investment-wise, we will not be able to share with you, but the details are very much there in the public financials, and it is at market value itself because that is what the accounting standards also require us to do.

Okay. And the market value would be what number? I'm sorry, I've not seen it in the public domain. Is that number, which you said in the public domain, kind of something you can quantify on a group basis?

On a group basis -- yes, on a group basis, it will be north of INR 400 crores, INR 500 crores.

Thank you. The next question is from [ Pawan Nahar ].

Piyush, just a clarification. In the last call, you mentioned AFE business portfolio for the group was about INR 1, 250 crores, which is equity and property. Right now, you mentioned INR 450 crores, I think, something, or did I hear it wrong?

No. No. INR 1,250 crores, I don't think I mentioned INR 1,250 crores, [ Pawan ].

Last call, you did.

I -- are you -- [ Pawan ] -- no, no. Hold on, Anna. [ Pawan ], I think you might have -- because INR 1,250 crores, and I'm just racking my brain last call, I think you were mixing the number of cash to AFE -- AFE is in the ballpark of INR 450 crores, INR 500 crores. That's what I said right now, which is the correct number. It might not be...

[indiscernible] or with property?

Everything put together.

INR 450 crores to INR 500 crores for the group. Okay.

Yes. INR 1,250 crores, if my memory serves me right, was the number which looks like a cash number in March. So maybe you've kind of mistaken the cash number.

What is that now? What is the cash number now?

In the ballpark. In the ballpark. The number hasn't changed much.

It hasn't dropped despite EBITDA loss?

Must have dropped by around INR 40 crores, INR 50 crores, but not much, [ Pawan ]. I can absolutely tell you that.

Piyush, the other question I have is we have had a number of new initiatives, and it's okay. Some may work, not work. We had HT -- so recently, we have HT Labs from which we have the OTT play. Prior to that, we have seen HT Smartcast. Prior to that, we saw us entering into an LLP with a film producer. So can you -- and today, in the digital side, I'm seeing there is some Mosaic Venture, and there is Shine Learning. So can you please just give us like some thoughts? Number one, what is HT Labs? Number two, how much money are we burning in these new initiatives? Number three, Shine or Shine, what, Learning, what, as you call it, what -- can you talk about these?

Yes. No. No, that's a great question. Look, [ Pawan ], I know it can be very confusing, but let me try to demystify it by giving you a structure around this whole stuff. HT Labs is a initiative that we embarked upon, is about 1.5 years old. Just think of it like an incubator, whereby we are thinking, as a media company, we've got a right to succeed in certain platforms. Can we create those platforms or incubate those platforms by having an in-house team and bringing those products to the market? We talked about OTT play and various other things like that. Those are the things that are coming out of HT Labs, and just think of it as an incubator, as a team of 20, 30 professionals who are trying to make it work. Now when you talk about Shine Learning, this is not a new business. Shine Learning is a business that we've been now, if my memory serves me right, at least for 8 to 10 years. It is classically in the space of education and online selling various educational courses. Now globally, think of a Coursera, and that's what we are trying to do here. Now of course, we are not thinking that we will be -- we'll create a market brand like Coursera, but that is a journey that we have been on to. Various other products that you said are -- you mentioned another the one whereby we have created a joint venture with a producer, and the whole idea will be while we will have our OTT play kind of a platform, can we participate in a very limited, risk-averse way in this whole value chain of motion pictures and not like really becoming a producer or a production house? But can we have a play and synergize that business with our existing business? Because all of these guys also do a lot of advertising on newspapers and radio channels, which we already have. Can we also step into their shoe in the first 20% of that value chain and create value? So as confusing as it might sound, just keep...

No, it's not confusing.

And just to add, sorry. Mosaic Media is just the legal entity name for VCCircle.

VCCircle, yes. Sorry, yes. Thank you, Anna.

We had announced an acquisition last year. Mosaic is just the legal entity name of that business. Otherwise, it's VCCircle.

So that's VCCircle. So that's VCCircle, [ Pawan ]. So basically, just...

So your movie venture has not taken off. I haven't seen anything [indiscernible].

Yes. Because what happened is this last 1.5 years, production has gone down to 0. There is no movie getting produced because of COVID environment. We signed up a couple of script writers and a couple of directors and production houses and so on and so forth. Very initial on, we had to kind of stay where we were because of the pandemic, but we have not made any major allocations in that. So all these businesses, no major capital allocation has been made at all.

So how will you do business if you don't allocate capital? And there's no...

Unless, unless, unless the movie production business start, what's the point of allocating capital because no movies are getting produced at this point in time. As far as the incubator business is concerned, I told you it's a small outfit. We are not starving that of capital. All the capital that is required to work, but that will never eat out hundreds and hundreds of crores. It will basically start with a INR 10 crore, INR 20 crore capital allocation and churn out products, which sit well with the HT portfolio.

But then like, Piyush, HT Smartcast, I thought it was picking up, but now I can see that things are going the reverse way because I just see it once in a while to see how often things are getting updated. Now the only thing which I see getting regular content is the OTT play.

No. No. HT Smartcast is doing very well in the entire podcast space. We have a very high level of audience. A lot of these products, [ Pawan ], it's about first capturing the audience and then monetizing it. And HT Smartcast in the entire podcast ecosystem, we are doing extremely well in terms of our traffic.

Look, these products look good as a -- I mean -- or should I say, a biased hope that they do good. But again, without spending money, how would you do it? You have to burn money.

No. No. [ Pawan ], I think this whole point that I made about spending money was on that content production, and you generalize the point across. So on that particular thing, we stopped the allocation of money because the production of movies stopped. Other things, we are allocating whatever is the capital to be allocated as per the business plan. The point I was making is these things will never take hundreds of crores because the incubator never takes hundred of crores. We have to create a product. We have to bring a team who will put together that product, and then we have to take the product to the market. These things never take hundreds of crores. But the capital, whatever is required, is being allocated to all these products.

And lastly, is there like when -- is there some regulation which allows you not to -- I wonder because I don't know of another Indian company where I cannot see where they have invested when I look at the annual report. There's not another company which I know of. How do you manage to do that?

Well, we are not doing anything illegal. I mean you make it sound like we are doing anything illegal.

No. It's regulation, right? I'm sure -- there is no other Indian company I know which does not disclose where they have invested their money in the annual report other than...

Our investments, it's -- [ Pawan ], there is -- we are regulatory [ MBF ]. We are a listed company. We have to follow the accounting standards. Of course, we are regulatorily compliant in all of which ways, and there's our...

No. I'm sorry, but I don't know -- maybe you are doing it...

There are enough -- more companies, including our competitors, who do not give the details. The requirement under law is to disclose the details of subsidiaries, joint ventures, which we do. Any other investment also, it's not that we don't have to disclose. We disclose. But all adequate disclosures, including of market value, we are not required to give the names of those companies when it is below a certain threshold. So it is under regulations, and I'm sure there are enough people in the market also who can advise you of that.

So the cash remains INR 1,000 crores, right? Or INR 1,100 crores?

Yes. Absolutely. Sankalp, are we done?

Sorry, Piyush. I was on mute. Piyush, we have a few follow-ups. Do you want to take? But we are nearing the end of time.

Let's take the last question, Sankalp, because I have a subsequent meeting. Let's take the last question, and then we'll move on.

Sure. The next question is from [ Chetania Mortani ].

Second question. Just a follow-up. It's more of a suggestion and the question. So as I said that me and my family live in Bihar, and we are multigenerational customers of yours. And during the pandemic, we used the app to download the [indiscernible] reader. I read the English one, and my family reads the Hindi one. So the thing is that like [indiscernible] like [indiscernible] families using via phones [ and so using all ] the websites. So the Hindustan Times, the English app is -- the app and the website, both are pretty good. But the Hindi app, it's pretty dull. It looks like some third-class world app, and it doesn't look like an app which belongs to Hindustan Media. So are we doing something to develop it? Because if you see the website of Hindustan, HMVL and the website of HT Media, there's a very big difference between them. So are we doing something to change the graphics...

So [ Chetania ], well, I'm not aware of it, but [ Chetania ], now that you have pointed out, Sandeep, can I request you to take to our marketing and our content production people? I think this is a very fair feedback coming from [ Chetania ], and I think we should give the feedback. So [ Chetania ], thank you for the feedback. We are taking it on board, and we will take it to the right people. If it is looking that bad, obviously, coming from a customer, we absolutely value input, and we will do whatever is required. Thank you so much.

Final question. I actually have more question.

Please go ahead.

So this is follow-up to one of the -- a couple of previous questions that someone asked. So you said that you're refinancing your [indiscernible] using NCDs, your working capital. And you want -- and someone asked you why are you even thinking of -- taking it when you have over INR 1,000 crores plus cash. So what is the yield that you get on the cash?

Well, last year, as we had disclosed on our results, we -- on a debt investment that we made, we made a very handsome yield, which was in double digits, and this is without accounting for the tax benefit of it. So more than 12%.

Can you tell me the percentage? Can you tell me percentage how much...

12%.

12%.

Okay. 12%.

And what is the cost of the debt that we released?

Look, I think it is not even half of that, [ Chetania ]. But obviously, I don't want to go into these details because the transcripts will be available to my competition, and that is the reason we do that. If it gives a positive value to the shareholders through a positive accretion to the bottom line, that's the reason we do it.

Thank you. With this, we come to the end of Q&A session. If you have any further questions, please reach out to Investor Relations team. Our contact details are given in the investor presentation and are also mentioned on our website. I now hand over to Piyush for closing remarks.

Thank you, Sankalp. And thank you, everyone, for making this a very interactive session. Reflecting on the quarter, I am, as a person, very optimistic that the macroeconomic situation will improve in the second quarter, and you will see the early signs by the end of second quarter. And third quarter hopefully will be a profitable quarter. And beyond that, I see the business coming back with a vengeance and the pent-up demand really unfolding. With the new initiatives across on which we had a hearty discussion with [ Pawan ], I am very hopeful all these initiatives, which are also sitting in the right space as far as the market is concerned, will also give a disproportionate benefit to the business. The investment portfolio, as it matures, will definitely bring out bumper profits and returns for all shareholders. And with the support of all the shareholders, I believe that the scheme, which is with the stock exchanges, will go through and unlock more value. With that, I wish you all the best of health and wellness. And thank you so much for all your support, and I look forward to seeing you in the next quarter's earning call. Thank you so much.