Music Broadcast Limited (RADIOCITY) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Music Broadcast's Q2 FY 2021 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Shailesh Gupta, Director, Music Broadcast Limited. Thank you. And over to you, sir.

Good morning, everyone, and thank you for joining the Q2 '22 Earning Calls of MBL. Joining me on the call is Mr. Ashit Kukian, CEO, MBL; Mr. Prashant Domadia, CFO, MBL; Mr. Jimmy Oza from our IR team; and our investor relation partner, SGA. I hope you and your family are in the best of health and spirit in the festive season while still being cautious and responsible when stepping out. While quarter 1 was characterized by the impact of the second wave which halted our recovery moment achieved during second half of the previous year, this quarter, both the industry and the company have come back stronger, making most of the opportunities coming our way. This is further proven by the rebound in volumes, with the industry garnering 49% growth in volume. During this period, the overall growth in advertisers in the industry stood at 5%, whereas 3,600 clients advertised in Q2 '22, of which approximately 1,900 clients -- advertisers used radio as a medium for the first time, which is very, very heartening. On this, Radio City has garnered the highest market share at 43% of total clients and 35% of advertisers using radio as a medium for the first time. Additionally, with the series of sporting events and product launches lined up, we expect the inventory utilization to improve further. The leadership position continued for yet another quarter, standing at 20% market share in the industry. Coming to sectorial ad spend, we observed a strong growth in some of the major sectors, which always have been real estate, which contributes 15% to the industry, grew by 150% year-on-year, while finance, which contributes 13%, grew by approximately 60% on year-on-year basis. A staggering growth was observed in pharma and education well -- as well, with the 2 core sectors growing by 41% and 51%, respectively, and contributing 9% and 8% volume to the industry. However, the auto sector registered a degrowth of 19% [ owning ] to the semiconductor issues, which we see coming this festive season it should make it up and make it up really well. The digital integration continues to be our growth drivers with an ever-expanding reach and presence on social media and array of digital solutions that provides our customer end-to-end omnichannel solutions for their products and services. Talking about the financial performance for the quarter. The revenue stood at INR 42 crores, witnessing a rise of 105% quarter-on-quarter, whereas on year-on-year basis we registered a growth of 40%. New revenue opportunities contributed roughly about 15.14 crores to the top line, and I expect it to grow steadily going forward. The cost-saving initiatives put in place in the previous years have yielded fruitful results translating into healthier bottom line and enhancing the operational efficiency. This is reflected at the EBITDA level, which reports turnaround during the quarter with a profit of approximately INR 10 crores, translating an EBITDA margin of 22.5%. The similar trend has also -- visible at PAT level on half yearly basis, as well as the company reported an EBITDA breakeven, which is fantastic. On the collection front, the company has managed to collect INR 35 crores during the quarter and total collection for the first half of over 70 crores. The collection from the government for the quarter stood at INR 6.5 crores, whereas we collected around INR 11 crores during H1. The balance sheet continues to be strong with ample reserves, which has always been the rationale of the company through conscious efforts aimed at [ sustaining ] a good liquidity position. Cash reserves stand at approximately INR 250 crores as on 30th September, as compared to INR 236 crores on 31st March 2021. Lastly, with regards to the bonus issues of the nonconvertible noncumulative performance shares, SEBI has [ accord ] its approval. We have filed the scheme with NCLT and are awaiting their approval. We will promptly keep you posted with the development in these regards. With this, I will request the moderator to open up the floor for question-and-answers. Thank you.

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

Yes. Sir, this is the first time in the last 4 to 5 quarters where we have seen our volume growth at 42% in the top 15 markets being lower than the industry growth of 49%-odd, so is there anything worthwhile which is highlighting [ over here ]?

Yes. To answer your question, if you remember, in the last previous 3 quarters, the market was still not saturated from a volume perspective because, if you benchmark ourselves against the pre-COVID situation, 90% utilization level at an all-market level average for us in the top 15 market is what we were operating. So when the markets were not really having that kind of volume, what we had done is we had kind of taken revenues with -- a little late on the ER from [ what – conventionally ]. Because you've been watching your company, we've always been on the premium side of the pricing model, as far as the business is concerned. But the moment the volume started building up, as we know, while the volumes, as we speak right now, is at 90% of pre-COVID levels, but there is an ER or a yield drop, as we all know, in the situations that we are in. So the next corrective action that the organization believes which will take us forward is clearly correcting our ER. So when you do that, you have to take an -- to take certain calls, which means avoiding some businesses which will affect you in the longer run because it's a short-term gain versus long-term gain situation, honestly. So I think that little drop that we are looking at as against the industry is primarily because of this stance that the organization has taken. And historically it has always been that, whenever you're going for a rate hike or a rate change, there is a slight deviation that you see in the volume consumption because the volume players, some of the lower-volume players will drop off.

Fair enough. And sir, how has been our volume performance in the high-yield markets like Mumbai, Delhi and Bangalore? Because if I remember correctly, in the last quarter, there was some shortfall to the extent of 7% to 8% when we compare it with the pre-COVID levels. So are we back to those levels?

Not yet. In fact, there is a correction of 2 percentage points of contribution that has come from the large market levels. And that, to our mind, is the positive sign that we are looking at because, the moment this contribution goes far higher than what you rightly pointed out, the difference between pre-COVID levels and now, and these are high-yields markets, you will see your company's revenues shoring up correspondingly.

Sir, one last question. I just wanted to know, what is our inventory utilization in 2Q and revenue contribution from batch 1 stations?

Inventory utilization in Q2. We are at an overall level of 54% inventory utilization level.

And revenue contribution of batch 1 stations?

Revenue contribution from basically phase 3 station is around 14% on quarter 2. Having said that, we recollect, last call which we had, we said that now we should look all stations put together because they are already 3 to 4 years in the system. They are also getting into mature stage.

[Operator Instructions] Our next question is from the line of Sidhant Mattha from B&K Securities.

Yes. Sir, just wanted to get a couple of things. First of all -- so I have asked this question earlier also, that you used to do 20 crore mark revenue per month. You had an ambition of doing that. That was a normal quarter. You have touched 14 crores, if you see 42 crores [ together ] 3 months. How do you see the festive season? Because there is a festive season that is coming, as you have mentioned. Auto is still you don't know because of this -- the chip shortage, but other sectors, how they are doing. And especially, do you think that we'll reach the 60 crore mark by 4Q FY '22?

By Q?

By the last quarter, like the fourth quarter.

See, I mean, the aim is to be as close to that kind of number by the end of last quarter. We are positive that we'll be near about that, but I -- at this point in time, to give you definite numbers will be difficult, but yes, we are on a positive growth line. And I think we should be -- our aim is to chase that. And we should be close to that number, but yes, Q3 will tell us what the Q4 outlook will be, honestly.

But still, any indications? Like in just 15 days -- but you have -- again, 22 days have past. You have [indiscernible] which has gone by. So any update on how is the third quarter looking like and...

The third quarter will be definitely -- we had a healthy third quarter last year, as compared to the first 2 quarters...

But then, that quarter, you -- so that quarter, revenues, you have already beaten this quarter because that's...

Correct, correct. So I was coming to that [indiscernible]. So that, we have already beaten. So we believe that we should show substantial growth even in this quarter, as compared to the last quarter. And by the fourth quarter, I mean if all thing goes well, hopefully, the wish that you have told should be true of going closer to the last year -- last quarter's full quarter's number.

And one more thing to add on what Ashit has put in. If you look at a quarter 1 to quarter 2, itself, there's a 100%-plus growth in spite of the fact that your normal top 3 markets which are just coming out of the COVID scenario -- your malls in Bombay are still not 100% open for everyone. In spite of that, if you see the numbers going 100% -- I think the things look better off coming in [ quarters ], as Ashit put it.

No, no. I'm -- there's nothing to compare, but you have already reached the fourth quarter FY '21 level where there were some normalcies. Because if you see, January to March is a normal quarter because everything had opened up. So that's a good sign. And secondly, about costs. So you had saved around 52 crores costs in FY '21, if I'm talking about total operating expenses. And currently now if you compare to the first half of FY '20, you have saved around 20 -- 21 crores costs, if I see the first. So how -- is -- that 20 crores, still can we see [ again in the ] second quarter and we'll be able to around -- save around 40 crores? Or this is a higher number? Like what are your costs? Like can you give me some guidance on the costs?

Sure. You recollect we have already told that whatever savings we did last year was around 50 crores or so, of which we said that 25% is the component savings that's going to come in. And 25% will come back based on the revenues coming back. So if -- [ as well, if you have done 20 ], I don't think we will be adding further 20 to the kitty, but definitely there will be addition to the cost savings. But overall the permanent savings would turn around 25 crores or so.

Okay, for FY '22?

Yes.

And for FY '23, that 52 crores, 25%, if you consider that FY '23, everything will bounce back, that's -- 25% or 52 crores savings will be coming, kicking in, yes.

Correct.

Yes, yes, yes. And my last question is regarding how have the print -- no. So print sector is a different thing, but as you have seen, that fourth -- so your revenues or your revenues have reached the fourth quarter of FY '21 level -- because first quarter was a dip due to the second wave. How has it fared compared to print and TV as per your guidance? Do you think that radio is also coming back, that print and radio are coming back? Or you are still hoping for some more revival in radio?

See, revival for radio will be there, as it will be there for print and television, because we all know that we are just coming out of the pandemic. If you look at the last second quarter, television has grown by about 15%. Of course, that will become a larger base as against the 40% growth that we are talking about for radio. So yes, print again is showing growth. So I believe all sectors will see a growth in Q3, for sure. And if all things goes well, I think Q4 we'll also see growth as compared to previous quarters.

[Operator Instructions] Next question is from the line of Gautami Desai from Chanakya Capital.

Yes. My question is that our peak performance was somewhere in 2019, in terms of revenue and, I guess, also in terms of profits. And we had started slowing down in terms of performance even before COVID, right? So for us coming back toward this performance would mean going even behind COVID, means we did -- as a company, we did something wrong even before COVID. So I -- you have been always in all the quarters telling us about cost reduction and number of new clients and the new business. And all that has been there every quarter, but could you tell us that -- internally, when do you feel that Music Broadcast can come to past glories? In how many years? And also what are the actions that we are taking for them? Because when you keep talking about the cost savings in a company which is so kind of creative and people oriented and when there is so much wage inflation around, we are worried whether you -- are you hiring the right kind of people? Are you trying to be creative enough? And yes, so basically my question is that when do you think we would come back to our past glories. And what are the actions that we are taking towards that?

Thanks, Gautami. I would respond to your question with the first question that you -- I mean, first point that you made, which is saying that our company was, much before COVID, not doing well, but I think it should reflect that performance with the industry. Because for the last so many quarters, if you see, our performances -- performance versus the industry has always been better, yes. So that point that we were not doing well when the industry was doing well is actually incorrect, number one. Number two, yes, radio as a medium has -- also in the last so many quarters had to evolve itself because, as you know, as -- with the [ so changing ] mindset of the consumers, there are various aspects that comes from a media consumption perspective's concern. To answer your second question of whether we are investing in attracting the right talent, you should be happy to know that your company has one of the lowest attritions in the media industry largely because of the way we have managed ourselves irrespective of the monetary gains that we are talking about. Because one thing that our company is known for is basically, for the rewards and recognition, the people management, and not simply the great places to work, has come in. So I think that those are positive signs that we look at. And as far as the answer to when will we get to the past glory, we are looking at it 2 ways. One is, of course, when we are talking about cost savings. We are looking at, one, from a perspective of the top line revenues, how are we going to operate, but largely, I mean, as an organization, as the management looks at it, it's that how close can we come -- or how faster will we come to the bottom line of the organization, whether it is PAT or EBITDA. So all the savings that we are talking about, irrespective whether we'll reach the top line faster, we are very clear that we have to reach the bottom line faster, yes. And lastly, to answer your question, as the industry has evolved, we have also evolved ourselves both from a digital player perspective because today, when you look at the whole media game, you find that social media influencers play a large role in marketing. And we have been effectively in the last 2 quarters using our RJ influencers through our digital route, along with radio, to get advertisers come in. And that's where we believe the play is. And as we go forward, we believe, the fourth quarter of this year, hopefully, we should show you some numbers which will give you a realistic understanding of how fast we are from the actual pre-COVID number bottom lines that we are talking about.

Okay, so sir, would you have a wish list that say maybe in 2 years you come back to 2019 levels in terms of profits?

If you ask me, I will say 2 years is a long time. I would want to do it in 1.5 years.

[Operator Instructions] Our next question is from the line of Sarvesh Gupta from Maximal Capital.

Sir, just 2 questions. First of all, on the bonus debentures, I think you mentioned that it is currently in the NCLT. So by when are we expected to finish the process?

Yes. Bonus debenture [ angle and NCLT ] is a long story now, I think. We are also struggling a lot to get these things expedite. The next date for NCLT is on 29th of this month. Hopefully, the bench is -- the problem is the bench itself is not sitting. So the hearing [ is now ] going to take a lot of time because, end of the day, it's only for the minority shareholders. And we don't find any issues which are going to -- picked up by NCLT or any observation [ that you will ] reject the proposal as such. Let's hope that on 28th -- 29th, the board sits and at least a decision is taken. There also I think it takes further 30 to 45 days to put everything -- to put some [ record date ] in place.

Understood. And secondly, while -- the other participant also alluded to this question about wage inflation and all that. So today, in case you will want to hire good-quality talent, then of course, there is a price to pay for it. And how do you see that impacting the kind of savings of 50 crore annually that we are talking about? How do you see that sort of getting impacted by the inflation in your cost structure?

Look. To answer your question that -- hiring the right talent is if you believe that you don't have the right talent right now. Because with the talent that we have got, a lot of our core teams are people who have been in the organization for a long time, so they are not talent which we have attracted recently. And we believe that, over the years, this talent have delivered us. So as and when if there is a requirement for a specific talent, I don't think we are going to cut corners. But to answer your question, I think at the moment we believe we have one of the best talents in the radio industry. And that's the reason why you are seeing our performances over the quarters will go on improving. And honestly, I'm not worried about that adding onto the costs because we are not seeing any level of discontent amongst those set of people who purely are the ones who are contributing to the organization.

Okay. And now that -- because of COVID, we've seen that the market shares that you have held on have been stable, so -- but since industry has gone through a very bad phase -- so do you see any inorganic opportunities or opportunities where your market share can be improved because some other players are folding up in this sort of a tough environment that we have been through? So we, of course, had a much stronger balance sheet, but any comments on the industry competitive structure? Is it going to be favorable for you [indiscernible]? Because when I see the market shares, they seem to be sort of on the same trend. So it looks like your competitive positioning hasn't improved because of COVID as such.

No, we have always been at the highest share. So once you reach the highest share amongst all the players, any improvement from that on is going to be a tough ask. Because, well, everybody [ will have -- share the count of ] business that they would want to have. So any large drop from that will be a concern, but improvement obviously will be 2 costs. One is, of course, looking at it from a play that you want to do. Would you want to show large-volume play? Or you really are playing the value game. So I think at these levels of shares we believe we are in the sweet spot of the right share of volume and the right share of revenues. This is our belief and that's the way we will be operating.

No, that's fine, sir. That's on the operating side, but I mean there are 2 other ways of increasing share. One is inorganic, which we have tried and which we have seen how difficult that process is to get approvals. And also obviously I don't think you will go down that path again. And the other part is where some major player folds up because of the challenges that they have seen. So on the second side, are you seeing anybody folding up or anything of that sort because of which your market share can improve?

See, that, I cannot comment, but the moment if any such instance happens, clearly, as leaders, we believe that we will be getting a large portion of that share or a substantial portion of that share because that market will be then open. So that's speculations, but yes, if there is such a situation, we are up for it. And we are closely keeping an eye on likely players who will be possibly folding up if at all. And we are closely keeping a tab of the customers that we have to ensure that, the moment, as and when that happens, your team will be there to kind of get those businesses over our side of the business.

We'll take our next question from the line of Manjeet Buaria from Solidarity Investments.

Sir, I wanted to understand radio as an industry if one looks from an advertiser perspective pre 2016 and post 2016. And where I'm coming on 2016 is post that the data costs in India really dropped significantly for Internet users. So how has the advertiser perspective changed, when I think about radio as a part of the strategic advertising planning? I'd love to get some thoughts over there from your perspective.

See, specifically when we look at radio, I think the radio [ advantaged advertisers ] sees the local reach that we are giving. So while they will have large-scale carpet bombing through television if there are large advertisers; or even large-scale print, language print editions, if somebody is doing that, they believe that radio has a different kind of a feel from a local perspective. And that gives them the advantage of localizing their brands, content to the consumer that they are reaching out to, number one. Number two, historically the whole multimedia concept is something which is -- largely worked. And global researchers have always proved that, when you use 2 mediums in conjunction, your probability to influence your customers are far more. And [ we know ] that way works happily, whether it is radio and out of home or radio and print and radio and television. Unfortunately, in India there is not much results to show that, but if one goes by the gut feel, there is a clear understanding that advertisers see that. And largely today when you look at all the top category advertisers who are advertising, if we look at television as a big medium, and now digital, you will see that all of them are also simultaneously testing radio. The only challenge is that the investments in radio is not as much as they do in the other mediums, and that's where the radio companies are kind of doing [ their ] efforts. And today, what we are doing is to kind of make that mix more interesting. [ There's all ] digital players that radio companies have. And especially, we have got -- with the RJ influencers playing a large role, we are seeing that having a lot more traction with our advertisers. So a lot of advertisers now are taking our radio along with our digital and RJ influencer [ bit ], which is showing larger successes for us. And as we go forward, we believe this will have a large role to play in our success.

Right. Sir, one follow-up now from a consumer perspective, the talent. Locally what one observes -- one observation over last few years, as data costs have come down, people have a lot more audiovisual options with smartphones becoming cheaper. So just from a listenership perspective, is it fair to assume, let's say, 5, 6, 7 years back, the amount of people who tuned into radio would now be substantially lower? Or even if the number of people you've seen that are switching toward radio would have gone down meaningfully because there are better alternates -- or other alternates, if not better alternates?

So that is the conventional belief, but all research [ files up ]; for example, the AROI data research post COVID. So the 2 interesting facts came out. One is, of course, listeners' listening time has increased in radio. And secondly, number of listeners have increased in radio. And this was the top 6 markets study that they do. I think this all comes from the perspective -- you have to look at this whole evolvement of the consumer in this -- today's media consumption. And that happens on the fact, if you'll have looked at 10 years back, an average media consumption of a consumer will have been about 3 hours. You will be surprised to know that 3 hours has gone as high as 8 to 9 hours now and largely because of the work from home and availability of time, as per the consumers' -- earlier, if you were -- stepped out from your house to go to your office and come back, 8 to 10 hours is lost. Today, I think, with work from home, the entire perspective has changed. So mediums like radio have thrived because, look -- what one people always forget is that radio is always listened at home. 80% of radio listenership -- though traditionally people in metro cities believe that radio is listened in the car, 80% of radio's listenership happens at home. And that is the advantage that the medium has got. And hence, this has increased the kind of consumption both at the consumer listenership level and even the reach level.

Great. Sir, one final question: Today, are there mechanisms or methods by which advertisers can get a sense on the return on investment they do on radio advertising? Or it's still not possible.

See, I think astute marketers obviously have their own ways of finding out how any kind of investment on a medium works because they have their sales team and they have their distributors and so on and so forth. Some of large media spenders like [ HUL ] and all even conduct their own surveys. And I'm sure there is some way for them to find out how the medium works for them. Also, just to note that one point that's come to my mind on the perspective of advertisers and radio, I think one thing which people need to know is that today's consumer is a hybrid consumer. He is not a linear consumer who's only consuming one medium per se. Today, as you'll see, even if you put yourself personally maybe doing a little bit of an OTT or digital OTT, you'll be listening to some radio station or streaming platform. Or you would also be listening to -- or watching televisions with news or any -- so today's consumer is an hybrid consumer; and is not linear, how one would have seen it about 2 decades or 2.5 decades back because the choices were limited. So the multiple choices that people have got have made the consumer hybrid, which means interesting mediums to the interest of the consumer is also consumed as and when he wants. And radio gives you that anytime advantage of listening to radio because of the accessibility that radio has. So that's obviously for the last -- previous point that you raised, but having said that, I think the medium has its own presence. And that's a reason why large investing clients like [ Livas ] and [ Dabur ] and all the -- and I'm taking FMCG because they are large investors, but you have [ across category ] investors who are using radio effectively.

Great. Sir, can I ask one more question, please?

Please, please. Yes, go ahead.

Sir, if I exclude post March '20, when the COVID onset happened, if we take the decade before that for a radio station like a Mumbai or a Delhi which has been there continuously, like how has the pricing evolved in terms of it's -- has it gone up structurally? Or there was a time where it hit a snag with different options like digital, OTT, et cetera coming up, where people had divided attention, as in versus just TV and radio probably up to 2014, '15.

I think prices -- in any pricing model, the prices is a demand-and-supply ratio. So when you are talking about a decade or 2 decades or 1.5 decades back, the number of players in a particular market was limited. Obviously the pricing was demanded -- gone as per that demand and the kind of availability of supply that is there. The moment there is an overhang of supply, some kind of effects of pricing will be done. And that is not just for any radio as a medium, but across categories it will be the same. So I think, from that perspective, of course, one -- none of the companies will be enjoying the kind of yields that they were getting previously, but having said that, I think the yields currently that we are aiming to get to is something which will still make us profitable.

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

Yes. And congrats on good set of results. I had a question on this Slide #10 of our presentation. We -- where we show the leadership in the -- listenership data.

Yes, yes.

[ We definitely ] see the 2 cities Bombay and Delhi. It seems that we have lost some market share in the listenership in last 1.5 years. From Delhi, it is more interesting that, from number second, we are nearly number fifth. And Bombay, also the trend line is we are number fifth now. And it seems very sharp fall has been there. Can you elaborate on that and what is happening in these 2 markets?

Yes. So in the absence of any investments on hardcore research, a lot what we go by is the data that is there in front of us in various formats that we get through our on-air activities and so on and so forth. What you have observed is right. That is primarily because there has been a slight shift in the audience segments when it comes to the 2 driver shows that we are talking about, especially the morning and the night shows that we have. And if you know our night show, which is our -- again a show that we've always been proud of, the Kal Bhi Aaj Bhi, there has been a slight shift in audience. And that shift in audience, perhaps in the absence of data, couldn't be captured, but we have now realized that we need to kind of get closer to the segment which is listening to that show. Because if you looked, earlier, we were playing the [ old '70s ], which is the retro show that we are talking about, but the generation now, even '80 has become retro today as you look at it. So that's the minor change which possibly was lost out in the gamut of so many things that is there. And on that, I will say it's an observation that you have rightly pointed out. But all course corrections that is required in getting the segment, from the leadership perspective's concern, is already in place. And hopefully, we should be able to show you better results in the coming quarters.

Okay. And one small thing. So when the data -- what you have is also being seen by the advertisers at various places, they will be also using some third-party data. So how soon, or when does he start getting worried on the leadership positioning of it? And would it affect the rates in future if this trend does not starts improving or -- on the upside?

See, the challenge with radio listenership, as you know, it is limited to only a few markets, as against the large presence that radio has, one. B, historically, at all resources, including television, there is always a pinch of salt that the advertiser takes, any data. So for us, even in the past whenever there has been a change in our positioning which is on the lower side of what we were, apart from being the leader, that has not substantially changed our market rates because advertisers see the value in totality in terms of the way an integration is done for the brand, the way the execution is done of the brand on air and so on and so forth. And largely they would, like I said, have their own way of having the pulse of what station works for them. I have seen certain advertisers will not even take the #1 station on record because they believe that we're doing a better job in that market even if we are not #1. So I guess it's something which is case to case, but the past has not shown us any indications of drastic rate reductions in line with any change in listenership data because -- for 2 reasons. The listenership data is always 3 to 4 weeks old and they keep changing from time to time, so it's the larger perception that they have and, of course, their own experience of the brand's integration that they have seen in the past with a particular radio station which makes them come over and over again.

Okay. And 2 more things. One is we used to do activations, events even for new product introductions for the customers.

Yes.

And with now economy opening up and events being more happening what we are hearing -- and even new production -- product introduction will start happening over a period of time for even FMCG and many of the products. Do you think that the out-of-home category or "out of the studio" business, what we were doing, will start gathering pace? Are you seeing some pace? And how important a business can that be for the profitability of the -- for -- and brand building of the business for us?

So any opportunity which allows larger involvements with the client and the investment of the client, obviously, will improve the bottom line, a. B, currently in the absence of that, what we are doing is we are using the digital route for unboxing of clients and so on and so forth. So we are already doing some form of unboxing or launching of products and so on and so forth. But you're right there that, as soon as there are on-ground activations, the experiential part starts. And if all COVID [ numbers ] are taken care of and we don't see any other challenges, you will see our team also doing the same simultaneously because we have done that in the past. And I -- like I said, too difficult to predict, but a quarter, 2 quarters from now, you will find that being a part of our play when it comes to doing on-ground events. And yes, on-ground events usually are EBITDA boosters because we only work with a certain level of margins. Otherwise, we don't do on-ground events. So I think you're right there in identifying that, that will be another opportunity which will add onto our bottom line.

But are we seeing any traction on that business now?

We are doing small level of engagement at malls or maybe at a particular-retail-outlet level. But too early for me to give you any indication on those minor things that is happening right now. I think, when it happens large scale, I'll be able to give you a positive answer that, yes, it's happening. Some of them are really bringing it up, but we are doing a lot of those online events as of now. But we are not really, really. Because right now we believe we should go with the protocols that is given of not really engaging largely and on ground, but because we are doing online events in the absence of that, the moment on ground starts, we will translate it to the on-ground part of the activity and get going with it.

One last thing, on the digital initiatives, what you are taking. [ You are ] putting the brands on digital platforms. What is the way you can differentiate yourself versus others? Because this job is being done today by a lot of media companies, okay? And how do you really differentiate in that business? And how scalable is that business for you, [ please ]? Yes.

The biggest difference here is that -- if you look at social media influencers. I think the biggest challenge digital has is about the trust factor. And number of studies have shown that, while you see a lot of things happening -- and we've all heard about fake news and so on and so forth. I think digital influencers getting the trust and credibility is the largest, biggest problem. That is where a radio station like us differentiates because RJs are -- seem to be trusted because the medium itself is trustful. In any amount of [ query ], along with print, radio comes as the top 2 mediums which consumers trust. And that gets translated when an RJ really goes and talks about a product. So that, of course, is an important scheme of things. And for us, using RJs as influencers to kind of do brand communication along with radio is really breaking -- bringing in a new opportunity. And like I say, I'm confident that, as we go forward, you will see more and more of that happening.

We'll take the next question from the line of Manoj Dua from Geometric.

In earlier call also minority investors have applauded management for their -- in this debenture bonus share only to the minority. And we -- yes, as investors call -- there's 2 other company also. I want to applaud this again. So -- and I also want to applaud the management for answering every question very carefully and patiently and with very -- transparency. My question is now a little bit ahead of time. Now after -- this preference debenture, this will be given after this NCLT. And now as we say, we are again going back to pre-COVID level and we have again good cash generation. Are we having a CapEx plan in this? Or we will still -- after giving this generous preference debenture bonus, still we will be giving a good part of money back to the shareholder.

Sir, if you know, we are part of Jagran Group. And Jagran has always known to reward their shareholders to -- in whatever way they can. I think we are going to follow our parent's full steps, and we'll be doing along what our parent [ has at least ] done till now.

We'll take our next question from the line of Anish Jobalia from Banyan Capital.

Yes. So congratulations for this improved revenue performance and keeping our costs under such strict controls and this top line. So I just wanted to take this conversation a bit on the yield recovery. So could you help to understand how [ we've seen the ] recovery in the yields in Q2? And what is the current gap with our earlier pre-COVID [indiscernible]?

[indiscernible] [ how they think about that ].

Yes. So there has been a minor yield [ growth out of ]...

[indiscernible].

Sure, okay -- approximately 4% over the previous quarter. And we will be approximately at 55% to 60% of the yield levels that we are talking about. So one way to look at it is the opportunity is still 40% more than what we are operating at, and that is largely because of the way the industry is poised. So yes, a long way to go from a yield recovery, as per the -- as against the pre-COVID levels, but a marginal improvement has started. And I think Q3 and Q4 should give us more reasons to feel that the recovery will be faster as we go forward.

And how do you expect this gap to close? I mean, do you have any time lines given your understanding of the advertisers' mindset, et cetera? So how do you see the time line, say, how can -- then can we recover the remaining 40% of the yields, I mean, given the gap there which is huge right now? So what's your current assessment [ as it is ]?

It's difficult to predict because a lot of this will also be dependent on the way the competition behaves. Like -- because right now we have certain players who -- it's a question of survival and they would kind of take anything that comes their way. That largely affects a certain set of advertisers who have limited money and who would want to go with them because they believe that -- let me be present on the medium because I can't afford anything else. That's a catch-22 situation for us, but I would want to believe, as we gave a window period of 1.5 to 2 years -- as I said, if the recovery has to happen, from what we said. I think that should be the game plan for us, that if we can -- able to get, within that 1.5 years, to that level of yields and with the cost efficiencies, I think our margins would look much better.

Right. So sir, just in terms of the volumes can it be said that you are higher than the pre-COVID levels today? And then we have a yield gap of 40%. And going forward, the recovery in our revenue will be completely led by the yield improvement over the next 1.5 years.

Largely by yield improvement, but also if you see, the second and third players' markets are still at a 60%, 65% inventory utilization level because they are just getting into the maturity stages. Normally, depending on the way the market is and the potential from an advertiser attractiveness, it takes about 5 to 6, to 7 years to reach 80%, 90% kind of inventory utilization level. And I am talking about the industry. Our positioning has always been better. So there is a room from a volume perspective in those sets of markets. Yes, the large markets that we are talking about, it has to be largely done through the yield route because -- you're right there. It's almost at a 90%, 95% [ into a ] markets of -- inventory utilization already.

And just to -- if you -- my one question was -- in my earlier question was are our volumes today higher than the pre-COVID levels?

In some markets, yes, it is higher than the pre-COVID levels, but the large markets where we believe there is a room is -- it's still lower than the pre-COVID levels.

We'll take our next question from the line of [ Jatin K from Alpha Capital ].

Congrats for a good set of numbers. My first question -- sir, my first question would be on this -- in this quarterly result there is jump in other expenses. So it has gone from INR 16 crore, INR 17 crore over to INR 20 crore. So anything, would you like to comment on this?

Yes. So expenses have increased because, one -- the royalty, which have increased by 1 crore or so. And rest is costs to do business, which have increased.

Sure. So we expect this number to grow in line with revenues?

Correct.

Yes, yes.

Sure, sir. And sir, in terms of total revenues, we're guiding that 3Q and 4Q are expected to be better. So are we seeing a month-on-month improvement if we look at the last quarter as well as this current quarter? So are we seeing any month-on-month improvement which is helping us guiding this improvement?

Yes, it is. And we are seeing that improvement happening.

Sure, sir. And sir, last question would be on the preference debentures. Do we plan to list them on the stock exchanges? Or they will stay unlisted.

Yes, they will be listed in stock exchange, yes.

They will be listed.

Yes.

We'll take our next question from the line of [ Laksh ], an individual investor.

Am I audible?

Yes, yes, you are.

We -- at the current level of revenue, including other income, [indiscernible] INR 46 crore, INR 47 crore -- our total income is INR 46 crores, INR 47 crores. We reached breakeven at net profit level. Being a fixed-cost business, what is the operating leverage we see for the H2 of FY '22?

In fact, sir, to answer -- you have already answered your question. Basically whatever revenue further on from here is going to go and add up to the bottom line.

Yes, yes, okay. And there was an increase in other income. What was that?

[ Well, they are of ] mutual funds deposits which we have and the corporate [indiscernible].

And it's onetime only.

No, it's not onetime. It's been there. So this income is going to continue.

In the H2 of FY '22, are we planning to beat the industry?

[indiscernible] -- sorry. I didn't get you. FY...

H2.

In the H2 of the FY '22, will we be able to beat the industry?

So if you're talking about volumes, I'm not so sure. Value, I'm sure that we will be. I mean we can get to know it from the -- whatever the listed companies would show results, but volumes, like I said, I wouldn't want to play the yield game. So we -- while -- we will not see drastic reduction in our volumes, but I would not really be worried if I am still at a [ 20 ] and not a [ 21 ] percentage of market share because I -- my aim is to increase the yield.

We'll take our next question from the line of Gautami Desai from Chanakya Capital.

Yes. Sir, coming back to the same question that if there is a possibility of soon coming back to 2019 levels. To make it simple, can you tell me that, compared to 2019, at what percentage discount are we both in terms of capacity utilization as well as in terms of yields?

See, like I said, the yield -- or inventory utilization is at a -- 85% to 90% levels already. And in fact, the smaller markets are at a 100% capacity utilization level, as compared to the '19, '20. The yield, I have already said that we are operating at around 55% to 60% of the operating rates. And that's the playroom that we believe is the room that is there for us to grow from a revenue perspective.

I -- sir, I am talking about FY '19, okay? I'm not talking about FY '20.

You are talking about FY '19. So FY '19.

[indiscernible]? Yes.

So between '19 to '20, there has been a correction in yield because of the multiple players, the multiple frequencies, markets getting mature.

Right.

And secondly, the larger impact was, of course, the government revenues which drastically came down in '19, '20. Because we had a large component of political revenues which was there which didn't come out. The central government, which is the largest contributing category, just didn't do any activity in the last 2 years.

Right. Just sir -- yes. So just kind of clarifying, you said that your wish list would be in 1.5 years back, come back to FY '20 or FY '19 levels?

As of now, we are talking about '19, '20 levels because '19 levels is still something which will be once we cross the '20 levels we'll go.

Gautami, just to -- just on the revenue front, when we are talking about reaching a '19 number or a '20 number, let me drive your attention to the bottom line. In spite of we reaching FY '19 number or '20, because of our cost saving and because of our levers, our bottom line will be much, much better off and much quicker to recover, as we have seen from quarter 1 to quarter 2. Quarter 1, we had a 10 crore loss, while quarter 2 wiped off everything. And at H1 level, we are at positive, so...

Yes but we have a very long way to go, that’s why I'm asking this, yes.

I -- but the bottom line recovery will be much, much, much faster as compared to top line recovery.

Correct.

Okay. So yes. So say it will come back to FY '19 profit levels. So the difference between -- I understand if you're going over again so then I'm more clear, but we are at 85% to 90% discount to what was the capacity utilization then. And we are at a 50% to 60% yield of what we were then. Am I right?

So 85% to 90% discount, [ 80 ], we are at a [ 10% of ] discount [indiscernible]. When we say discount, [ I am saying less than the ] utilization level.

Yes, I get it. I get it. So we are at 85% to 90% of what we used to be in our best of days, and we are at 50% to 60% in terms of yields.

Correct, correct, correct.

Okay. And now in this particular -- you said that you came down in terms of volumes, as compared to the industry, because you want to have some price hikes and all that. So what has been your experience in the past few days after indicating a price rise? And how long do you think that it will be -- come back to that 100% of our yield?

See, 100% of the yield will be, like I told you -- I have answered this question for the previous participant also -- will have 2 factors to it. One is the way the competition is going to take their own strategy in terms of yields because ultimately you're playing in a multiple market -- multiple-player scenario. And as an industry, we are trying to see that -- how soon can we get to that level, but like I said, it is going to be in media. I've been in media for so long...

[ Obviously ] your competitor has been telling us that we are spoiling the rates. So let's keep that aside. Maybe let's assume that it will -- they follow us. And if we continue with our rates, then what is your view?

I would -- with all due respects, Gautami, I don't know -- when we say competition is saying we are spoiling the rates, I don't know how to answer that question because those are -- anybody can make any claims, but if you go out in the market -- and you should test the market and ask advertisers or even agencies. You'll have a different story [ to yours ]. So I would urge you and request you that -- if you would be kind enough to have mutual parties talk about what Radio City is operating, perhaps we'll have a better view. Having said that, I will accept what you are saying. And I'm saying that we are working hard towards improving yields; and that, you will see on your -- quarters to come because it's not easy. The point I'm making is not just that I think about it and it will happen. Because each time when I go to kind of push the rates, if I have a competitor coming and saying that, "I am willing to work at the previous rate or even lesser," it's going to be as equally challenging, not all to me. So that's the challenge that I have to live with, and that's the historic challenge that we have seen in media over the years. And that's the biggest challenge. That's why, people who are seasoned professionals, they will say 8% to 10% increase in media takes a lot. It takes a lot for somebody to move that kind of yield or percentage for a media company across mediums. So that is a challenge we will be facing too. And that's the only way I can address this question because I cannot talk about what others are saying because I think -- we always pride ourselves being premium players from a pricing perspective. And we believe that it is, unfortunately, our advertisers and clients also believe that they are willing to pay that premium to us.

Thank you. As there are no further questions from the participants, I would now like to hand the conference over to Mr. Shailesh Gupta for closing comments.

Thank you, everyone, for joining us on this earning call. Having turned a few new -- having turned a new leaf and returning to profitability, we are confident that the company will continue this growth momentum and further solidify its leadership position. The presentation and earning release are already uploaded on the website and stock exchanges. Should you have any further questions, please do feel free to get in touch with any of us or with SGA. I wish you a very best of luck, and more importantly, stay safe and take care. I would also like to extend greetings from Radio City family, for the upcoming festive season, to all of you. Thank you and have a good day.

Thank you very much. Ladies and gentlemen, on behalf of Music Broadcast Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.