Saregama India Limited (532163) Earnings Call Transcript & Summary

[Audio Gap] licensing Carvaan films and TV series. Internally, it's very, very clear, every business has to fend for itself. We are not ready to subsidize one business at the cost of the other business. Short-term, things, up and down, keep on happening. Long term, every business has to provide for itself, and that's the way we people are moving. And all the 4 verticals at the juncture right now, leave aside the quarter -- 1 quarter, something happens or other, which is more of a timing issue, a phasing issue. All 4 businesses are in pretty decent state. While we people all celebrate this good quarter for us, please keep in mind 2 exceptions that have happened in this quarter. One is on the revenue side. We had a one-off income from operations in the music vertical. It's in single-digit of crores that happened in this particular quarter. We're seeing it as a one-off item. Also, on the cost side, we have not been taking any content cost for the last 2 quarters. No new movies are getting released. Since we are not not releasing any movie, we are not booking any cost for those movies. So there's neither revenue nor costs coming in. This is going to change as markets start opening up, new movies start getting released. We are investing heavily right now in newer content because that gives us a huge edge in the market and I'll explain that. We will keep on investing. As we keep on investing, you will see both content and marketing costs start going up, which over the last 6 months have been very, very low. As we mentioned last time, we have been -- especially in light of the fact that no Bollywood was coming in, we have taken a call to invest heavily in nonfilming content in the regional space, Tamil, Bhojpuri, Gujrati and Punjabi. Our Bhojpuri channel, which has launched in Feb 20 and within a month of launching the YouTube channel of ours right now COVID happened. In spite of that, we have been able to put close to 50 songs on that channel, and we are already clocking closer to 225 million views cumulatively over this period. So we have seen that there is a huge growth which is coming on the regional stride and plays to the strength of Saregama. We are the only music label in India, which have a large enough catalog in every major regional language of the country. It's not just limited to Hindi or a Tamil. We are very big in Bhojpuri or Malayalam or Telugu or Punjabi or Haryanvi, Gujarati. We have a large catalog sitting right on the 20th century. We are now ensuring that we play to that strength of our. Our competitor, our biggest competitor has got to play only primarily Indian Punjabi language. We'll fight the Hindi and Punjabi. We will also try to consolidate our position on the regional side. The biggest driver for us during last few quarters have been a music licensing business. As digitization is increasing, we are seeing this part of the business going up even further up for us. Last quarter, we had declared the licensing deal with Spotify and Facebook. This quarter, we ended up doing deals with ShareChat and Moj. So the kicker of not those 2 apps came in, Spotify and Facebook, but 2 new apps have come in here. These are all video-sharing apps, and you will now see the advantage of this coming quarter-after-quarter for us. We are now licensing overall to 45 distinct music streaming applications, 357 TV channels in India and a host of video-sharing apps like Instagram Reels or a ShareChat or a Moj, YouTube, Facebook, all these are video-sharing apps, and we are going out there and licensing our content to these people. All these people have become very, very prominent ever since Tik Tok gone away. The other great thing which is happening is there's a large amount of usage of our content in all the latest -- these digital series that are coming up. So if you -- anybody has watched A Suitable Boy, it's a BBC Series, which have just been released based Vikram Seth's book, has just been released on Netflix, it is full of Saregama songs in it. There are Hostages 2 on Disney Hotstar, again full of a song. Scam. Scam is the series, which is doing very well on SonyLIV, full of our songs. So these days, it's becoming absolutely involved for any digital series to start using more and more of regional content as part of their series. And every time they use regional content, they need to use our content. They need to take a license from our side, which means increased revenue coming across to us. So when I say digitization is helping us, remember, there are various ways in which digitization helps. Once our customer has got a smartphone in his or her hand, either they listen to songs on a Gana or a Saavn or a Spotify, Saregama gets paid, or they go and check out various series on a Netflix or a Hotstar or an Amazon. And if that series is using Saregama songs, we get paid. Or they create a video of their own, attach a song and upload it on a YouTube or a Facebook or a TikTok or Instagram or a ShareChat or a Moj, Saregama gets paid. So digitization is helping us get a massive ticker right now on our monetization ability. Now to just put the things in context, if our licensing revenue had been growing right now in the past between 22% to 25% year-on-year, where is it coming from? It's a twin factor. The market itself, the music industry in India is also growing. And if you see the data released by IMI and some of the other people like KPMG and [indiscernible], the number is projected to be something between 11% to 12% that the industry is growing. But we are growing our numbers between 22% to 25%. How is that happening? I'm part of the industry only. The only way it can happen right now that our market share is going up. And that's a fact. Saregama's market share is steadily going up. And there are 2 factors which are contributing to this market share growth. One is our investment in new content, and we have just started. We have not done large investments yet, but they're already bearing fruit and helping us increase our market share. But the second part, which according to me is even more prominent these days is that retro music share is going up in the market. It's suddenly the very, very -- and it's not just reinterpreted music. It is genuine retro old song are getting used more and more. And the biggest credit for that is just one thing, Carvaan. All our work that we people have done with Carvaan over the last 3 years has not only helped the Carvaan business and sell us more Carvaan but then equally big benefit has been right now to make these older songs that much more popular. Once we advertise about Carvaan, we don't just advertise Carvaan, the hardware, we are also promoting the songs which are running on Carvaan. People, when they consume that much more Carvaan right now at their homes, they get exposed to that music that much more, and they want to listen to that music in other forms also. Hence, more and more digital series TV programs that are coming in right now are now using retro music. A lot of music-streaming apps, which earlier used to promote only newer content seeing the popularity of Carvaan have also started promoting retro content in a big fashion, which means the share of retro music is going up on music-streaming apps. We are literally the sole custodian of retro music in India, the biggest beneficiary becomes Saregama once again. Since we are on Carvaan, let me just talk about that a bit. As the retail network opens up, Carvaan sale is steadily started going up once again. We sold 81,000 Carvaans during this quarter, nothing compared to what we sold last year the same quarter, which is 250,000. But still, it's a steady increase compared to 15,000 number in Q1 or a 74,000 number in January to March quarter. So there is a steady increase we people have seen. Our digital sales are helping us a lot out at here at this time. As we had committed in January-March quarter call itself, that our focus going forward till the time COVID-19 issue is not completely linked up, we will keep on focusing on reducing our costs because we don't -- at this juncture, doing any investments on Carvaan, whether in terms of manpower or marketing will be a wrong move. Because there's a lot of uncertainty in terms of when will the retail market open up. So we have put a lot of focus in pruning our cost structure. What we have done, we have retained the muscle. We have just gone out there and pruned the fact that could have been there. We have -- if we were getting into the tier 3 cities, we are out of it right now, selling only in tier 1 and tier 2 cities. It's more of a consolidation time. So that at the end of the year, right now, we can ensure that Carvaan is managing a breakeven, and we are on track to achieve that. At the same time, I will say this, something that many of you guys may experience in your home, with COVID-19 happening, the people who are impacted the most are people who are elderly, especially the 60-plus segment. They're all stuck at home. They are very high-risk category, and they are not stepping out. Many of us are out in offices, people who are 60-plus are not out in office. And even for the next year, I don't see too many people who are above the age of 60 to be completely -- even when the vaccine comes in, you're going to be finding the spread of vaccine is going to take time. More and more people who are in the older age group, which is Carvaan's age group, are going to be staying at all. We believe as retail market opens up, people start spending once again right now. There will be a positive impact on the sale of Carvaan, but we don't want to rely on that. Our part is very clear, we will not do any major marketing push or start getting deeper into the markets at the juncture. We will wait and watch whatever sale happens right now happens from the innate demand, which is there in the market, and we will see how it progresses. This entire lull that we people have seen over the last 6 months have also given us time on Carvaan to change the direction of Carvaan. One of the biggest objection that almost all of you guys had, and we also had our own concern that Carvaan was becoming a onetime margin product. There was no long-term play coming out there from it. If I sell a Carvaan to somebody, how do I make money from him or her an ongoing basis? People buy these songs, they've got 5,000 songs. They're very happy for next 3 to 4 years. That customer is not going to generate revenue for us. Hence, we have taken a call to completely transition that direction of Carvaan from being a onetime-purchase product to an ongoing revenue-generator platform. Everything remains the same, except Carvaan now also has a capability to connect to your home Wi-Fi through which we are able to stream more and more content. So every Carvaan normally comes with 5,000 preloaded songs. And there are, again, another 20,000, 25,000 songs that we are streaming to it, along with giving them the Bhagavad Gita on-demand or art-of-living content on-demand or [ Bachon ki Ranch ] on-demand for the grandkids. We are also taking right now the audio feeds of the new app called Editorji. So there are lots of -- there's a risky application ports right now, which is also given on demand. So there are lots of things that we people are providing through the forecasting route on the same Carvaan. Customer just needs to go back and turn the nob, and they'll be able to go back and access it, the content which is coming. It's no longer limited only to music. We believe the next 18 to 24 months is the large number of Carvaans in the market that will be supporting this. And once that happens, we will be able to generate enough advertising and subscription revenue through these Carvaan. So -- and I want to give you guys this comfort here, the content which is running on these Carvaans is either Saregama-owned content or people are coming out there and giving us this content under the clear understanding from our side that whenever we generate revenue, then we will do revenue-sharing with them. We are not incurring any cost on this additional content which is coming using the Carvaan 2.0 or Carvaan, the platform. Once the other part of the business, if I may jump right on, which is films and television, the moment the locked down eased out somewhere in the month of July, I'm very, very proud to say right now, Saregama was the first company, which is off the block in terms of restarting shoot. It's not that the lockdown situation or coronavirus situation was any different in my company from any other company. But this is where, we believe, right now, we are different. In July, people on the -- both the teams on their own, they restarted shoot. We people put up a series on Sun TV in the month of July itself. And I'm again very proud to say our serial Roja, which were #1 before lockdown, again immediately went back to the #1 positions in terms TRPs. So you have a Saregama-owned IP, which has been faring as a #1 program on Tamil channels right now. Now from the quarter 3 of last financial year constantly doing very, very well, which also helps us because since we owned the IPs, we're also monetizing these programs on YouTube. So a Roja episode on an average now does 4 million views for us on YouTube, which means additional source of revenue coming in. Not just that right now, the films team, we all are talking about right now what's happening to Bollywood theaters opening and not opening. Very few producers have started shoot. Saregama started the shoot of its movie Comedy Couple in July. In October, the movie has already been released on ZEE5. So this is a case right now where the order was formed up during long-term. Script got finalized during lockdown. We started shot in the month of July, and in October, the movie was put up. No other production house today has got this kind of wherewithal to go back and turn things around. And these things, I'll be honest with you, don't happen because of an individual. If I say right now, as Managing Director or a Head of Yoodlee, any of us have any role to play out there? No. Our system is that strong. That we can start to take a movie right now at any particular time, and the system will ensure that the movie gets over in time, in budget, and Comedy Couple has been able to go out and prove this out. Every other movie that you're seeing right now getting released, they all were ready, were short before COVID-19. We are the only guys who started the shoot after COVID-19 started and been able to release ourselves. Also another film of our which we had sold to Hotstar in March of this year, finally got release called Bahut Hua Samman. It has opened up -- both these movies have opened up to great ratings and critic reviews. There have been -- if you see our numbers right now on the segmental side, you will see a marginal loss going in. It's just a timing issue because month of July for more than 3.5 weeks of July right now, there was no programming that was up on Sun TV. We all restarted only at the end of July. It's just a timing issue right now. You will see us, there's a clear direction moving in where we will go back to our TV and films being profitable but before the end of the year. My last point out here and I think it's important to understand, the big element, which is driving the commercial success of the company. We have been doing well in a steady fashion now on quarter-on-quarter. But you need to understand that this is -- cannot be attributed any longer to any one business doing very, very well or one even going out there and helping us out or any one man in this company right now who is contributing to the success is the overall change in the way the Saregama company's DNA is where there are all -- every business and every individual working out here right now feels that they can bring about a change, and they feel like a winner. We are -- the performance of my company that you are seeing right now is not coming out of retrenching people. In fact, we are not the rare media company that gave over 10% increment across the board to the employees and, in spite of that, have been able to go back and deliver results. Because this is a bunch of people right now where if individuals, any of us go also, I don't think the track of Saregama is going to change right now from the path it's on. So we believe, as we go ahead for rest of the year, I maintain my licensing guidance of -- music licensing business will keep on hovering between 18% to 20% growth this financial year, while Carvaan will show a breakeven. Films and television, depending on -- but right now, they may be showing in loss. But before we end the year right now, they will also be into -- they will be able to recover the losses that we people have incurred right on the first 2 quarters. Digitization is there to happen and there to stay in the country, and we believe Saregama with the strength of its IP. We'll be able to ride this digitization wave more successfully than any other company which is in the space of media in India. Thank you, ladies and gentlemen, we'll be happy to take questions.

[Operator Instructions] We have a first question from the line of Biplab from Antique Stockbroking.

Sir, I just wanted to understand one thing. How does this licensing work? Like do you pick back to like whether your content, your IP has educed by some OTT or you -- how does it work? Is it a onetime payment that the -- say Spotify that give you a onetime payment for us using your music or it is some variable? Like someone listens to that music, you get paid. How does...

Sure. So you are talking about how does music licensing work?

Yes, sir.

Music licensing, our first big revenue earner is the music-streaming applications. Like Spotify, Gaana, Saavn, Apple, Amazon, Wynk, Hungama, there are 9 of them in India. This works on a variable basis. More the number of times our songs are heard, we get paid higher. So we get paid every time a Saregama song is heard. We also get paid a share of the advertising that, that platform is generating on our songs, and if they have a paid subscriber base, we get a share of the subscription also that the customer is paying. It means there are 3 sources that I'm getting the money from. And because of the quality of content we people own, we also insist on getting a minimum guarantee from these guys. So with time, what we have seen as digitization is increasing more and more, people are listening to songs through these apps. Our share is going up. We believe eventually, Spotify has got close to 125 million paid subscribers globally. We believe in India also more and more, with time, these apps are going to turn pay. As they turn pay, and we also get a share of the paid part, the revenue that we are making from these apps will start going up even more substantially.

Okay. Sir, same thing, how does it work in other platform like social network platforms Youtube or Amazon. Is it based on variables?

So YouTube is again variable. Every time a video which has got my song in it, if an add is served on that, we get 55% of the money generated and 45% goes for Youtube. So more number of times, people are watching videos, which have got Saregama songs in it, and if an ad is served, a higher amount of money we end up making. With the television channels, typically, these are fixed fee deals that we do. Whereby they pay us a fixed amount of money for a year, but every year, we track how many times our songs are getting used. And if there's a big variation, we go out there and renegotiate the deal within a year or 2.

So that means, sir, you have to keep track whether there is no -- or there is any leakage or not, right?

Leakage?

I mean, something has been played. And they may have not paid and they may not have counted that this song has been played. Or...

Can I vouch for right now that nobody in the world is able to get away with it. I can't vouch for it yet. We have a 28-member team of kids earning around INR 12,000 to INR 15,000 per month, who's only job is to track on YouTube and some of the apps that whether any app which has not taken a license from our side is using our music. If they are, we move legal immediately. So as I said, I'm pretty proud to go back and mention this that we people have over 45 streaming applications in the world. Who all -- these are not Indian apps. There's a Chinese app also right now sitting. There a French app, which is sitting, all of them have officially taken license for our music. Over 350 TV channels in India have taken a license for our music. So over majority of the time, people are taking a license and our infringement tracking team is that strong that if anybody ends up choosing our content right now without taking a license, we are able to find out within 24 hours and we move legal. And most of the time, people end up taking the license.

Sir, one final question on this only. Amongst this -- like you have OTT streaming, such as Spotify, and you have TV channels, you have Netflix, Amazon, you have social media. Amongst this, is there any -- could you give us some breakdown, which is more important? Or what percentage of revenue they are contributing?

I'm not able to give you a percentage of revenue, but the biggest revenue generator for us is the music-streaming applications. Spotify and Saavn, Airtel Wynk, Hungama types, they are the biggest revenue generator for us.

We have a next question from the line of Rahul Jain from Credence Wealth.

Of course, in tough times, we are doing exceptionally well. But just to understand, going ahead, so you've already mentioned that last 2 quarters, we have not had a new music content acquisition. And earlier, you had stated about spending about INR 200 crores on new music acquisition over a period of 3 years considering you have a 20% market share of about a INR 400 crores market in a year. Now just to understand, Vikram, given in last 6 months, you did not have a single release of movies happening. And as the market opens, say, next 3 months, assuming things get normal in 3 to 4 months, suppose that. So do we look at, say, next year, somewhere a bunch of movies coming, pent up -- we speak about pent-up demand from consumer side. So similarly from the movie business, do you say -- or do you get feel that you will have a larger slate of movies coming in, say, FY '22, whereby in that year, probably, the music industry could be much higher than that INR 400 crores, and thereby, you guys will be spending much more amount into FY '22?

So you are asking me to be a suit share and tell you which way COVID-19 -- it all depends on which way COVID-19 vaccine is going to come in. If that come in March, if we have a vaccine by March out here and start spreading in country, you'll have majority of the movies getting -- big movie getting released in '21, '22 itself. In fact, some of the movies that we already announced, we have got the music rights of Akshay Kumar, a movie called Bell Bottom. We have bought the rights of Ajay Devgn movie called Maidaan. We have 2 other big star movies right now, whose rights we have picked up. There are 8 Tamil films. All these movies are not released. We have in most of the cases, not paid anything. It's just a legal agreement or paid a very small token. It's difficult for me to go back and give you that will they get released in '21, '22. At this juncture, looks like they will get released in theater in '21, '22. Now maybe in March quarter, I may be in a better position to tell you right now whether all those will get released or not. But by and large, please understand the numbers that you are seeing today, financially, our numbers at which Saregama can go back and keep on generating, if there is no new content investment that's happening. But we know right now that will be an extremely short-term move from our side because 10 years on the line what will happen to this company. So we will carve out the cash that are -- being thrown out by music licensing business. From that, only we will keep on investing the kind of numbers that you are talking about.

Sure. And you also mentioned in your opening remarks with regards to advertisement expense is also Carvaan-focused. Now for sometime, you're only tier 1 and tier 2 cities. Because I remember some 2, 3 quarters back, a year back when we had tried to position our products into Tier 3, Tier 4 towns, and we have gone for a large advertisement budget. So you mentioned that for now, you are not going to go ahead with large advertisement budget. But typically, that now would mean until the situation becomes normal, how do we look at it?

Rahul, I think the more fundamental part out here is that we will invest in Carvaan only if you believe Carvaan is going to make revenue. If you think Carvaan is not going to make revenue, there's no gun on our head to keep on investing in Carvaan. At this juncture, nobody -- at this juncture if you've taken a call not to invest in Carvaan for the simple reason that retail network is shut, there's no point spending money going to Tier 3 towns. There, the job losses are even more than in the Tier 1 and Tier 2 towns. Going forward, we believe there may be a decent enough play for Carvaan, the platform. We will keep on testing the hypothesis out here. If it works, we will keep -- we will invest in Carvaan. Remember, the first 2 years of Carvaan right now, Carvaan was making profits. The entire issue of Carvaan started happening right now on the last financial year. That also would have done a breakeven had quarter 4 gone normal. Carvaan wouldn't have incurred a loss if quarter 4 had gone normal. And we are back to the same breakeven level. So all I can rest assure you right now that we will invest in Carvaan in sync with the money that Carvaan throws back in the system.

Sure. So do I assume now with the previous expense of last year going ahead, you would try and as you mentioned, again, in your opening remarks, each of the business has to take care of itself. So do I assume that, hence, going forward, Carvaan [Foreign Language ], which will dent some other businesses.

So Carvaan has to breakeven. Is that's the question you're asking me, yes. Carvaan was able to do a breakeven right now in the first 2 financial years, Carvaan was not able to do a breakeven in the fourth because of the fourth quarter, where our numbers got wiped out. Had we managed that additional 180,000 to 200,000 numbers, which are the numbers that Q4 typically ends up. Q4, in a normal case, it would have ended up giving us 250,000. We scored what, 80,000 -- 70,000 number in that quarter. Had those numbers come in, you would have seen Carvaan breakeven last year also. First 2 years was profit. But Carvaan has to pay for itself. There is no cross-subsidization happening out here of Carvaan. There's no vanity project going on here if that's what you want to know.

Sure. Last question on Yoodlee Films. We are almost -- 3 years are done in this business, and we have had some fantastic good content, including the recent one for Comedy Couple, and it was really a nice movie. And you've also tasted success with some of the -- there's OTTs in Netflix and Hotstar in these of type of days in terms of licensing content. So Vikram, what is your feel for this business over the next 2 to 3 years? Do you feel now somewhere we are at an inflection point where it can accelerate, and probably, we can see larger revenues and profit coming from this business in the next 2 years.

All I can project right now that Yoodlee business is going to be a profitable business. First year, I maintained Yoodlee business for the loss-making business. We got into it. Second year was breakeven. Last year was profitable, and we will maintain that profitability track record of it. The business per se, the very nature of the business is that you make films which are smaller budget films, put it on digital platforms. You are not making films which are costing INR 50 crore and end up generating INR 300 crores revenue. We are not in that business. We're in the business of making content only for digital part. So will there be a growth right now, which is that kind of massive? No. You will see double-digit growth right now easily going in. It's a -- we are falling very intentionally relatively lower risk, relatively lower returns right now compared to big Bollywood films.

Sure. That I understand and that I know because I've been tracking this company for a long time. So -- but just to get a sense in 3 years where do we see this business?

All I will be able to go back and say, right now, you will see a double-digit growth coming in, low double-digit growth coming in into the Yoodlee business year-on-year with profitability.

[Operator Instructions] We have a next question from the line of [ Sonal Desai ] from [ Total Capital ].

So 2 questions. The first question is on the content side. So we have talked about the content consumption side of it. But in terms of content acquisition, we know that, the world over, the content is being chased by a lot of large players, including platform, and that has happened in the video content side. Do you see that happening in the music content side? Also, players like Amazon, Spotify, they kind of competing with you on content side. And the reason I'm asking you is that there the cost of money or the cost of capital is much lesser and the profit may not be the only motivation -- it can not be the only source of profit that they may be aiming at. So does it mean that the content will be costlier for us, and hence, the IRR that we are targeting can go down? How do you look at the entire ecosystem evolving around that?

Sure. The biggest OTT app right now in the music space is Spotify as it's at over 125 million paid subscribers. Active license that Universal Music, which is world's biggest music label is becoming bigger and bigger. INR 3 billion in revenue, INR 33 billion-odd valuation going in for them. Spotify had not gone out there and started competing with Universal or Sony Music or Warner. All these guys are also in India now. All of them are very clearly concentrating on the platform business and not getting into content business. Remember, content is not commodity. Lata Didi whatever song she has sung or whatever song Abhijeet already sung or Kishore Da has sung, that song is not going to come back. So platforms understand that they as they get into the content space, content companies will stop giving them content. And that's the reason none of the music-streaming business come -- none of the big guys have come into the content business. Not with India, I'm talking about global outlet, the bigger guy. Spotify, Apple Music, these are -- they are big, massive guys, even Tencent-backed company, nobody has gone into content business. And we don't expect any of these guys to get into content business. Universal and Sony globally made it very, very clear, telling these guys, you -- if the moment they get into content business, these companies will stop giving them content. So that's one part. Now let's talk about -- since you raised this issue, let's talk about video side. Netflix, in spite are talking all that part, why is it they are the biggest boy in this game. All the content -- we have given 10 movies to Netflix in last 3 years. The IP of all those 10 movies is maintained by us. They are not interested in taking over the IP. They are very, very happy right now that you go and create the content. They will take over licensing -- all rights of licensing of that for, say, 10 years, juice it out, give you a flat fee and then a content comes back to you. So in a nutshell, do we believe platforms will get into content space? I have my doubts. For that matter, right now, what will stop content? Companies will get into platform space in that sense. All I need to do is to go and join hand for T-Series, and we can start launching a platform of our own. So don't think that will happen.

Okay. Got it. That was very helpful. The second question is on Yoodlee, Vikram. So I think, if I remember correctly, our escalation was to, in 4, 5 years, create a library of around 50 movies, 40, 50 movies, roundabout that number. So currently, you're sitting at around 13 movies and maybe a few more in production. So do you have the same aspiration or after having tested the model, do you think that we want to be a much larger guy in that space, and we want to do a lot more different things. I mean, how are you seeing Yoodlee Films as a separate venture? Not -- let's not talk about only part of Saregama, but what are your aspiration for Yoodlee Films? And how do you look at that business 5, 10 years now?

So I think Rahul was asking a similar question. Our -- the only guidance I can give you is double-digit growth going year-on-year and profitability as far as Yoodlee is concerned. But in qualitative aspect, we will do more of what we are currently doing. We have no ambitions to get into large-budgeted Bollywood films. Oyour films are always going to remain extremely tight budgeted, script-lead cinema. That's what we stand for. The obvious evolution of Yoodlee will be that we will not just make films, we will also make web series. We are in dialogues right now on multiple ideas with multiple platforms. If anything happens right now, series are that much more profitable. We have built our reputation as a great producer using films, but we will evolve into series, too.

[Operator Instructions] We have a next question from the line of [ Ankit Gupta ] from [ Bamboo Capital ].

Congratulations for a good set of number.

Thanks, [ Ankit ].

Yes. Vikram, if we see the evolution of how we have acquired content over the past 2, 3 years, we started with small movies then went on to Panga, and now we are acquiring music rights for large stars as well. We have acquired music for Bell bottom, Maidaan. There was also new articles that will be acquiring music for one of the Khans. So if you can talk about how -- what are the process for choosing content when we make bids for acquiring music rights? Because in Yoodlee, we have seen that our focus has always been on script and not on any big stars. So any thought process while we are acquiring music for new movies, especially when the stakes are going up for us.

Yes, [ Ankit ]. In fact, I'll specify that in our corporate presentation, too. We follow both the left brain as well as right brain part. What we have been able to build right now is every song, which -- I'll take the case of Bollywood, Hindi movies for the time being. So every song, which has got released over the last 36 months, irrespective of who bought that strong, we have a database of that. That song is further mapped into who was the lyricist, singer, music composer, film director, actors on whom the song was picturized and the kind of from it was, romantic song, melancholy song, motivational song, whatever. Now using the -- and now -- so this is the data you have for the song. And for each of thes song, we know how many times the song has been heard on JioSaavn. JioSaavn openly publishes that data. For every song, you can check out right now, how many times it has been heard. So I know this song's performance in JioSaavn. I also know the song's performance on YouTube. We know internally from our own right now, JioSaavn and YouTube are what percentage of the overall revenues typically for any music label. Based on that, we are able to go back and start doing a guess of how have each of these songs performed using that, we have built predictive models, whereby if a new song is coming in, I can say what is the track record of this music composer with this lyricist and this actor working together. It gives us a -- it's a -- in the end, right now, is it a precise science? No. But it gives us a decent understanding that going by the last 3 years track record, who is performing how here. That gives us a number in terms of how much should we be going out there and maximum bidding for that album. We have an internal benchmark that anything that these people pick up right now, the payback period should not exceed 5 years. But keeping that in mind, we know what kind of money can we go back and bid for. Then there comes the right brain of the company. There are bunch of kids all under the age of 30. It's their job to go to the film producer and listen to those songs. As a policy, the music licensing -- music business head and I don't get involved in it. We -- it's the younger people who listen to it. They give their qualitative feel. We get the bench numbers right now from our modules based on which we decide whether we should go ahead with the songs or not. Is it a precise science? No, it isn't. It involves the creativity. Only thing we are trying to take away right now, individualistic calls out of this so that becomes a little more thought out and a larger number of people involved in the decision-making process.

Sure. That's really helpful. Yes. And the second question also is on new content acquisition. We have charted out plans that we'll be spending INR 200 crores for new music acquisition over the next 3 years that was before -- pre-COVID. So any changes in that plan as of now? And if everything goes -- if you're back to -- if the vaccine gets released in March and things come back to normal, let's say, by June, July of next year, thankfully. And do we see that this INR 200 crores will be spent now in FY '22 and '23?

So again, right now, I can't give you specific timing because I don't know whether the movies will start releasing here. Our current plan is INR 200 crores over a period of 2 to 3 years, all funded by the music-licensing business itself. No debt is going to be taken by the company. Other business streams are not going to go back and subsidize or fund licensing business acquisition spree. And if we believe that the model is working better, and we need to increase the amount of investment, we'll come back and inform you guys.

[Operator Instructions] We have a next question from the line of Yash from ICICI.

Congratulations on an excellent set of numbers.

Thank you.

Just wanted to check on this radio thing, which was supposed to expire on 30th of September, the licensing bid, which the entire industry used to get for 2%.

Yes.

And so what is the status on that? Has that been renewed and we are getting 7%, 8% as we have desired?

No. So right now, the issue is sitting at the Copyright Board level. They will start the hearing from 2nd of November, where both the radio side and all the music labels are presenting their case. We hope by the end of this quarter, we will have an official rate from the Copyright Board.

Sure. And my second question is on the YouTube channel, you've been doing excellent work. We've seen that the subscribers are just multiplying from the time I started following it. I just wanted to check, like we pay a royalty to, say, the film banner, say, serial, your song plays, and we get some revenue in YouTube out of it, you have to pay [indiscernible]. Does it go the other way around as well? So because I'm asking this question because specifically in YouTube, we see these videos, wherein like -- most of our songs are like lyrical solve because of some probably licensing issues. And most of these film banners have their video songs which have like got like crazy amount of viewership. So do we get reverse loyalties as well?

Yash, the way it works is, you are talking of the videos. Still, if I remember my vintage correctly, 2001 or 2003, the way music rights used to be sold that only audio rights used to go to the music label. The right of the music video used to be sitting right now with the film producer or the negative rights owner. So the person who owned the film had the rights of the original music video. The song rights used to go to music label. Last 15 years odd, music label gets both the music video rights as well as songs rights. You clear there, Yash?

Yes, yes.

Now let's go back to the older music of ours. So if that song was picturized on Dev Anand, the original music video, we don't have any rights on it. The money is still being made right now by the person who owned a movie, which maybe [indiscernible] whomsoever. But the song is mine, and if you want to create a video of yours in which Yash is appearing singing a song, the money comes to me. So for us, for Saregama compared to so suppose, a song of mine, Mere Sapno Ki Rani Kab Aayegi Tu, if I am making x number of views from my official channel on Mere Sapno Ki Rani, I make close to 3.5 to 4x of the same thing from user-generated content where user has uploaded some random thing apart from original Rajesh Khanna video. Rajesh Khanna video money will not come to me. But everything is under the earth, if it uses the words Mere Sapno Ki Rani, if it uses the music composition or anybody else thinking in any fashion or if this original song is put on your video, all the money flows back to us.

Got it. That's very helpful. And sir, just last question, something on the Open Magazine bit because nothing seems to be happening on that. Every quarter, we see it as a loss-making venture. Anything on that Open Magazine front now that the group has also acquired -- RPSG Group has acquired Editorji. So is there any plans of hiring of Open today or something on that part?

At this juncture just assume that Open Magazine is a status quo. The losses should not go up. It should be at -- it's a very, very difficult market. So long run, I'll leave it to the promoter. It's Mr. Goenka's call. But at this juncture, assume that Open remains at the same state for some more time.

[Operator Instructions] We have a next question from the line of Dipan Mehta from Elixir Equities Private Limited.

Congratulations on a good set of numbers. Beginning of the presentation, sir, there was some onetime, but I did not get exact number, which was of a onetime income in the current quarter. What is the amount for that income, sir?

Sir, it's in single digit of crores.

Okay. And second question I have, is there any data point to have in terms of the market share of the new music you provided in the last 12 months?

Sir, I can't get into those kind of details. It's is very, very competitive, sensitive information. But for us, both things are helping us out. Remember, what has changed in Saregama, suddenly, why are the numbers looking that great? Which is the same music right now of Lata Didi and Kishore Kumar. So both these factors are helping us out. The newer content that we people have acquired across Bollywood, Tamil cinema and now Gujarati and Bhojpuri, that's helping us out a lot and retro music is becoming increasingly more popular, Carvaan.

I understand. But my point of you're asking is how do you keep the freshness of library alive? So if you have some data point that maybe 20%, 30% of the all songs acquired by you, just give us [indiscernible] a reference of only a single incidence during the company that has been used?

Fair enough. If you see my corporate presentation, we have stated out there, the number of songs we have by decades and these give contribution to revenue. The songs, which have been acquired in the 21st century, if I remember, they are -- the total number of songs, which belong to 21st century is 30% of our overall catalog of 130,000 songs, and they contribute 31% of the overall revenue.

I can ].

You can see by decades, we have given the data right now that what is the share of the music of a particular decade to a total catalog, both in terms of count and revenue.

So it's an interesting slide. Another question is the investment on INR 111 crore. What is our investment, or in your consolidated balance sheet, which you have published for September 30?

Sir, you have to repeat. Your voice is breaking a bit. Can you repeat the question?

Sorry. Yes, the investments you [ did ] of INR 111 crore, what is the investment into, sir, on a consolidated basis?

The investment, what?

Investment in balance sheet is -- it is investment in subsidiaries.

So on consolidated basis, it is...

No, so this is the investment in the group company.

Which group company is this, sir?

CSC and Tips, Carvaan, et cetera.

So this is listed entities.

These are all listed entity, all listed entity.

Okay. And the liability debt, value of the liability invested on which line item? Is it on property, plant and equipment or rights that you have to acquire the music, which asset -- where does it fit on the balance sheet, sir?

So unfortunately, my entire music is charge-off to P&L, and it doesn't feature anywhere in the balance sheet.

We have the next question from the line of Kush from Care PMS.

My first question is on advertisement revenue. So considering we did not have any major new movie -- new music acquisition or movies in this quarter, what was the spend related to -- was it related mainly to Carvaan?

So advertising happens right now in 3 counts, new music, Carvaan and new films. Whenever -- and all 3, so new music, we have not done any major film acquisition, but the Gujarati and the Bhojpuri music that we people have released right now, all of them end up getting their own marketing. Carvaan had a minimal support which is needed at any particular time, which is more below the line. So that's why the numbers are that low.

Okay. And so you mentioned 2 movies. So would they be releasing in Q3?

When you say releasing in Q3, meaning?

So in October, I think we had 2 movie releases Comedy Couple and one more. So the revenue would be coming in Q3, right?

So Bahut Hua Samman revenue got factored in our books on last year's Q4 itself. But what happens when Bahut Hua Samman was getting released, there were no revenue coming to us. We already licensed a deal to Hotstar. It is in our interest and the interest of Yoodlee to build the equity for brands Yoodlee that we also promote the fact that Yoodlee went out there and did this particular movie. It's for brand building or Yoodlee, the studio. So the revenue has already been factored in the last year. So you can ask me if we have not advertised, would it make any difference? No, revenue was fixed. But the problem with studio brands is, they are B2B brands. And people -- end customer does not come to know very, very easily right now who have made the film. And it is important right now, whenever we're releasing a film we do some amount of publicity behind it.

Sure, sure, sure. And if you can share the percentage of online sales for Carvaan?

I will not going to give you a percentage, but since the retail numbers have come down dramatically, online share has gone up over the last 2 quarters. But as retail...

Is that significant?

Sorry come again?

Is that significant? Meaning about 10% or...

It was above 10%, even pre-COVID. Post-COVID, the numbers have gone up substantially. But remember, percentage is a very numerator-denominator game. The percentages of digital have gone up not because digital sale has gone through the roof. It's because retail has fallen dramatically. The digital has gone up in an actual number for us, but the bigger issue is the retail -- physical sale is not happening at this moment. So as that sale starts coming back, retail shops start opening up, and customers start walking in. Digital numbers, again, as a percentage will start falling down.

Sure, sure, sure. And how was the response so far in the festival season for Carvaan, [indiscernible], et cetera?

All I can tell you, right now the numbers are there for you. We did a 15,000 number in Q1, which has crossed up to 81,000, you will not see any TV advertising, nothing happening out there. There's all the stuff which is coming out of the innate power of the brand Carvaan.

Okay, okay. And you mentioned about web series also. So considering we get license for any web series, would that mean web series would have 8, 10, 12 episodes? So would that mean equivalent revenue of 4, 5 film? Is that understanding correct?

No, there are web series which go out there, you're right, on which per episode, you may end up generating INR 2 crores, INR 3 crores also. There is web series going up to INR 4 crore and INR 5 crore per episode also, and there are web series happening at INR 50 lacs, too. I'll not be able to give a generic number -- throw a generic number at you. But please do understand we have no reputation in the world of web series. The web series are typically done by all large studios, which have been there right now existing for 20, 30, 50 years. We are slowly getting into that space. We have a reputation of doing great quality, concept-led films. So we will get into series. Chances are that the initial sites may be smaller budget series. And as we deliver 1 or 2 series right now, we get into larger budget. But the good part in series is that it's always guaranteed profit-based business.

We have a next question from the line of Mayur Gathani from Ohm Portfolio.

Sir, a short-term question. But will you be able to maintain our margin to 35%? You were usually in the 11%, 12% range last year.

No, 13% range. Let's not -- we don't get a 12% range. We have been touching 15% the year before that, only last year because of quarter 4, retail network, COVID-19, that the numbers fell down. So yes -- so we may not have touched 35% level before. I think 35% is an unsustainable number. You are talking of a situation where you're not investing in feature at all right. Yes, if one decides right now that we have to milk the catalog and no investments need to happen in the future, this number tells you how much can we go back and manage. If you further strip off the work on films and television, which also suffered because of COVID-19, especially the TV part, then the numbers look even more -- even better. But I think the way you should read that, right now, look at the numbers and say, this is what this company can do just on the basis of the catalog this company owns. If we keep on investing in future right now, hopefully, the overall revenues are going to become that much more. As a percentage, the number's going to fall down, but the absolute profitability may go up.

Okay. But let's say, with lesser sales of Caravans and less business from the TV side, we can do better margins, right? Of course, at the same time, expand -- putting money on content.

So but TV -- all these businesses are fending for themselves. So a television business is important for us right now because it's generating IP for me through which I'm making money on YouTubes and the Facebooks of the world also today. So -- and TV business on its own -- the last year also ended up making money, we'll again make money this year. It's just a question of -- if TV was shut, April, May, June and most of July, hence, you are seeing this part. COVID-19 is, hopefully, kind of situation that's not going to happen every time.

We have a next question from the line of Biplab Debbarma from Antique Stockbroking.

Sir, just wanted to understand the competition in the new music launches. So could you give us some idea like in last 5 years or 1 year? What would be the Saregama shares in new music launches mainly...

We have not been investing in new music in that -- our investments have been very, very low as I think somebody else earlier mentioned that our strategy was very, very clear that we will invest in very, very smaller films in the beginning, which started in 2017, '18. We were spending -- taking movies which had 1 song or 2 songs and a smaller star cast. To ensure right now that we have our own engine running properly, because the new movies is very important right now that the majority of the money has to be made in the year 1 itself. And if you don't have a very strong marketing setup within the company or monetization setup, then you will fail. So we use the first 2 years to do this. Also, we had a commitment both through investors and our promoter that we were not going to raise debt to invest. The existing catalog had to be refined to the extent it can throw that much amount of cash that we can invest. We were finally in the position -- you would have seen a larger investment happening in 2021 itself. Many of the movies were getting locked. Everything got pushed to the next year now.

So basically, sir, going forward, that 20%, I saw in your presentation that 20% of new music would be -- use the Saregama's share and the new music launches. That is going forward.

That's going forward. The new music market roughly is anything between INR 380 crore to INR 400 crore per year is the acquisition cost of the new music. We want to go back and pick up at least 20% of that. And we will see how does it go. If it works greatly, we will come to you guys and tell you if we are increasing that number. If for whatever reason right now, we believe in a year or 2 after trying it out all these assumptions, somehow we're going wrong, we will continue and start deducing it.

Okay, okay. And one final question is on your [indiscernible]. Is there any -- I mean, in traditional movies, we know there is a kind of benchmark for that movie [indiscernible] and movie [indiscernible]. In case of OTT movie, is there any way of knowing whether the movie has fared very well in that in terms of how many views?

Sir, unfortunately, the platforms actually formally share that data. We come to know through an informal level, that also -- that amount never comes to us. The very nature of deals is that we do a fixed-fee licensing deal to them. That's how platforms have been able to negotiate it at this juncture. So it's all qualitative. Our bigger benchmark is if the next [indiscernible] that we are giving to them, if we can drive a higher valuation, it means that previous films had done better.

Okay. Okay. So it is not kind of revenue sharing?

It's not. No. It's a [ fixed piece ], so upside and downside, both are there.

We have a next question from the line of Ayaz Motiwala from Nivalis Partners.

My question is on the -- in your presentation, you talked about the music industry being worth about INR 1,500 crores going up to INR 2,000 crores. And the various constituents of that with the biggest sort of contributor now being the subscription services, which you talked about. So taking a reference from that, would you be able to sort of give us a sense on the music, which is monetized not by you internally, which you shared by decades, but on the industry currently of the size of INR 1,500 crores or INR 2,000 crores? What would be the more -- the recent decade contribution to those industry revenues, if you can give some...

That will be difficult, how will I get hold of that precise information because we have hadn't had a very big play in the newer content. The big newer contract is -- when I say newer content, I mean Bollywood film content. Our share was on a lower side because we were not investing in that space at all. So I may not be able to give you very specific number here because that's sitting between competition, not with us.

Right. Let me sort of share the reason that I would like to learn this is your stated intent on trying to have a payback of about 5 years for the new purchases as one sort of point that you've guided us to appreciate your purchase decisions and the science behind it. And the fact that the Bollywood or the entire music sales -- this is not only Bollywood, but the other genre that you're trying to go on, including languages, is about INR 400 crores, INR 500 crores of sales, let's say, right? So if you want to link the payback to this, I was trying to understand if the industry itself is only worth INR 1,500 crores to INR 2,000 crores, so it clearly sounds that a lot of the music is either under-monetized, which maybe would like to learn from you, or that it has a massive amount of decay and the fear that we have as investors not understanding the subject to purchase very clearly. And that's where I was trying to understand. And this question on the recency and if the recent ones make it, then you're on the track to make your 3-year, 5-year payback that you intend to. Else, you are sort of shooting with other people there, but there aren't enough sort of, I don't know, birds to shoot at, et cetera, in terms of making money.

So I don't know, but I'm not -- let me not pretend that I've understood your question completely. Let me still try to go back and answer this. To give you an idea right now on this decay rate that we are talking about, and it's there part of our presentation. If I see the decade 1961 to 1980, the 2 decades during that period. Of the total 130,000 songs from that Saregama owns, 26% of its songs belong to films or were released between 1961 on 1980. They are contributing 34% of my total revenue. What was my music licensing revenue last year, right at INR 238 crore. 34% of that came from the music, which was released between 1961 to 1980. Hopefully, that will give you comfort right now that the great thing about music is, the investment that you're making today, we may charge it off in 6 years, but it's got a very, very long shelf life going in.

Yes. No, no. No, I appreciate that. I mean I was just trying to understand how this new investment is going to pan out.

The other data point I can give right now, which is our internal benchmark, yes, on a block of music that we have acquired in any year, our internal partners and the payback periods have to be maximum 5 years. Of the music that we have acquired in the last 3 years, we are doing better than that. Our other benchmark is that any song that any song -- any album that we are releasing, 38% of the cost has to get recovered in year 1 itself. That's a minimum number that we go back and work with. Usually, the numbers are far higher than that if that gives you a little more flavor.

So you changed the write-off norms on account of that, right, sir?

So our write-off norms are getting changed right now because they were -- we were following both 5-year write-off and 10 years. So outside 4 years and 10 years is what people were working on, which were making it a little -- we're keeping internally because the guys who are acquiring the music now have started playing that should we do a 4 year or should we do a 10 year, which was not the right thing in my -- according to us, but our earlier benchmark was that if you're buying a movie on a royalty basis, then the advance of that was getting written off in 4 years. But if you're buying a movie right now without royalty basis, we were writing off in 10 years. All the regional content that we people buy is without any ongoing royalty going to these people. And since we were increasing the play of the regional content, we were seeing that the content cost was getting written over 10 years. So we said it's better right now that we have a uniform policy going within the company that -- irrespective of the business model under which -- or the financial model under which the content is acquired, royalty or no royalty. We do the thing, which is the right thing to do for the business rather than trying to play around the accounting policy, and we have standardized it across 6 years.

We have the next question from the line of Jinesh Joshi from Prabhudas Lilladher.

I just have a couple of questions. Sir, first on the A&P spend. Now I understand that in this quarter, obviously, they were lower because of lower sales of Carvaan, which you mentioned in the opening remarks. But if I look at FY '20, our consolidated number was approximately INR 92 crores to INR 93 crores, and if I'm not mistaken, we sold approximately 740,000 units of Carvaan. So now I mean, FY '21 might be a washout. But from a 2- to 3-year perspective, if we were to achieve that kind of sales for Carvaan, I mean how much of A&P spend would that require? Are we through the peak investment cycle as far as creating awareness is concerned? Or will we require a similar kind of spend?

Sir, the advertising and sales promotion head, as I mentioned earlier, is not just Carvaan, it also includes all the new music marketing that we people do, includes Yoodlee marketing that we people do and also include marketing for retro music. So it's a consolidated head that you have seen right now. It's not a Carvaan head. I just want to clarify that part first. Yes, you're right. This year, we've taken a conscious path because retail networks may not be open for majority of the time, that there is no point investing in building the -- opening up new markets for Carvaan. Hence, Carvaan marketing spends have taken a beating. It also happened right now because no new music was getting released by us, even that marketing has come to a stop. So the money that you are seeing right now are a little bit of Carvaan, a little bit of retro music and some amount of Yoodlee marketing that we have done.

Okay. But sir, going ahead, now say, for example, in FY '22, especially for Carvaan, will we require that kind of marketing spend? And if you can just share out of this INR 92 crore, how much is explicitly for Carvaan?

I'll not be able to share that information. What -- I gave you the comfort in the beginning that Carvaan on this year will breakeven. And going forward, we will invest in Carvaan, in sync with the returns it's going to get. Carvaan is not going to get a subsidy from our side. They were never an intent to subsidize Carvaan business. Last year, just quarter 4 went in a way that nobody thought because of COVID. Hence, we ended up incurring a loss. Carvaan will remain right now breakeven to a positive margin product. And remember, Carvaan's rub off on music licensing business is massive.

And sir, secondly, out of this INR 200 crores, which we have envisaged to spend over the next 3 years, is it possible to kind of share how much will it be for Bollywood and how much will it be for regional?

Why do you want to know that? Your are asking -- competition [indiscernible]. Just imagine if my producer exactly knows what my budgets are. It becomes that much easier for them to start negotiating with us that much more. No, sir.

Okay. Because our Hindi library, I mean, if I'm not mistaken, it is at about 25% odd and majority of the music is either regional or devotional. So I just wanted to get a sense as to how much are we going to spend for the Bollywood music rights? What's the whole idea?

Bollywood will always be less in number, more in revenue because of the simple fact that Bollywood is the biggest film industry we have here. After that come Tamil and Telugu, Telugu and Tamil. And we will be -- we have a play right now both on being Hindi side and the Tamil side. So you will see a -- while that devotional is cheaper to make, the numbers can be built up very, very easily right now in terms of [indiscernible], but the returns are also lower compared to a Bollywood song in absolute terms.

We have a next question from the line of Aditya Nahar from Alpna Enterprises.

Congratulations, great performance to you on your and your entire team. Two questions, Vikram. One is on the fact that KD has gone for the rights of Hindi remake have gone. I just wanted to understand how does the terms of trade work? How does -- what's the logic behind it? And how does the entire cycle work? That was the first question. And the second question is the sales and advertising expenses in the consolidated and the stand-alone number. So it's almost INR 14 crores in the consolidated and about INR 7 crores in standalone, approximately. I was just wondering why there is such a large difference in the 2. Just these 2 questions, Vikram.

Aditya, I'll try to answer the first one, and I'll ask Vineet to take your second one.

Sure, sure.

On the KD specific, if you're going to be asking right now that how much did the rights go for? I think it's -- what it tells you right now that licensing to a digital platform is just one window in which we people monetize. Till now of the majority of the films that we people have done and licensed out, that's your only window that we have monetized till now, license it to a digital platform. We are now, as our reputation is growing in the market of finding alternate windows, other, which mean additional sources of revenue. One of a movie is going to get out there is going to get licensed to a TV channel. Hopefully, the deal should get over in quarter 3 itself, which means TV window is also opening up. Otherwise, TV typically ends up taking only very high budget Bollywood films. They don't end up taking smaller budgeted films, but that window is opening up. Remake right is another window, which is opening up. Now remake rights, movie by movie depends right now. You may take a remake. If you are very bullish on the story, then you sell the remake right at a pretense, but keep a share of the remake that will get made. If you believe, no, you are doubtful about what's going to happen to the remake, then you go back and sell the remake rights without any royalty coming from the remake, so it's an outright sale that you're doing. But the rights of other languages stay with you. The rights of prequel/sequel stay with you, all that stays out there with you, only one language remake rights go to somebody else. Are you with me?

Absolutely.

Now you were asking right now the question that why is there a big difference in the advertising and sales expense between standalone and consolidated?

Yes.

So actually, these are film transactions happened between the subsidiary. So that's the reason it's a transaction. So there's a couple of transactions happened for international subsidiary and one for Indian subsidiary. And then consolidated get knock off. So that's the reason.

This is right. So these are -- you're saying one is for the international subsidiary and one is for the domestic subsidiary.

Indian subsidiary. Yes.

We have a next question from the line of Ankit Kedia from Phillip Capital.

Sir, I just wanted to understand on the TV segment very less has been discussed. When you said you make for Sun TV, now Sun TV on the Sun NXT app actually deal with telcos and the same content has been shown through telecos. Also, they have a deal with Reliance, where they are selling their programming there. Do we have a play there or when we produce for them, all the rights are passed on to Sun TV and only the YouTube rights are with us to monetize?

So you're asking me, very specific question here. The IP of the series is sitting with us of all the content we ever produce for Sun TV, which is 6,000-plus hours, which means putting it right now on a YouTube or a Facebook or sort of a TikTok or a ShareChat or a Malaysian platform or a platform in Kenya, all the rights are sitting with us. With specific to Sun NXT, we have given them the rights right now that the content can also fit in part of Sun NXT and wherever else Sun NTX in turn goes.

Sure. I think that is helpful. But don't you think now -- so does that also mean that the realizations for us when we are producing, the rates go up because they can monetize in turn on Sun NXT and sell Sun NXT to multiple platforms because then the IP ownership with us has little meaning because I can install the Sun NXT app and then see the same content everywhere.

I'm not going to dispute what you are saying. Please remember, we people, the way we look at internally. We drive our profitability from the money that we make by putting the program on Sun TV itself. Everything else we are making right now is additional money coming in. We don't justify our investment based on the additional source. Our DTV business is profitable on its own through that television channel itself. Digital is over and above that.

Right. But given the current nature of digitization going forward, as some of the other businesses also having tailwinds of that, don't you think this business model should also be tweaked a bit so that we get the long-term benefit of digitization as well?

I'll just say noted. Are you right? You are right, right now. This is all about what kind of business negotiations can you have. Sun TV at this juncture is -- majority of the producers there are working on a commission model, which means that IP is fully retained by Sun TV. Saregama is one of the very, very few producers who -- because we refused to work on commission model are working on an IT-based model and are holding that position. So I'll just leave it there.

We have a next question from the line of [ Amit Kumar ] from [ Litterman Investment ].

I just had a 2-part question. The first one was, what kind of a deal did you have with TikTok and what is the status of that currently, given that they are banned in India, but they are still operating in a few countries like U.S., et cetera, where they might be using our content? And the second bit was that because this was not orderly sort of wind down and one fine day, the government just said, shut it down, are there any sort of receivable position you have with them in terms of your past accruals of revenue bookings from them? And just what is the status of those receivables basically?

So I can't comment on specific TikTok deals. I think it will be unfair to TikTok also. All we can tell you right now, we have no receivables from there.

So -- but I'm just sort of trying to understand that they will be taking your content primarily for the Indian market, but also for international markets. So are you sort of still booking some revenue from them? Or what is the...

Our current deal is still on. Our current deal is still on, and we have no receivables. I mean that...

But then what happens to the -- because they are not really running their business in India, which is the major -- which I presume would be the major driver of a deal between you and TikTok. How do you -- is that -- has that deal being sort of renegotiated or what happened?

We can't discuss specific deals between Saregama and a partner.

No, no, I'm not asking for specifics. I'm only basically sort of saying that is there a sort of renegotiation to the terms of the deal. I don't need to know the terms of the deal at all.

Right now, we are not discussing individual company deals so far and also what we people are doing. In general, TikTok's going away. In India, there have been a large number of these video-sharing apps that have come up. ShareChat and Moj are one of a few of them. There is another one right now, which is making Triller. There's something called Josh. There are multiple of these coming in the market, which, again, gives a great opportunity for label like ours to go and give them music licenses.

We next question from the line of [ Ankit Gupta ] from [Bamboo Capital ].

Vikram, I just wanted to understand the new music market currently is around INR 380 crores to INR 400 crores per year. What has been the growth rate for this market over the past 4, 5 years? Let's say, in FY '15, '16, what was the size of the market?

Listen, I will have to find, but the costs has not gone up that substantially because the number of players who are acquiring music are not that many. There is few. The entry barriers in our industry are massive. So it's not easy for a new guy to suddenly turn into a big music label. [Technical Difficulty] Sorry. are you there, [ Ankit ]?

Yes, I'm there.

And on the big music label side, there are just a handful. Not that many, and it's difficult for anybody else to match. A movie has got typically 5 songs. If you end up buying 100 movies' right, you get 500 stronger in a year. Do it for a decade, you can do 5,000 songs. You do it across 5 different languages, you make 25,000 songs. You need to be playing this game right now for 50 years to come anywhere close to Saregama. So it's not a market right now. These days where anybody can just jump in, unless you acquire some other labels. So the number of players we're acquiring new film music being that few, the prices haven't gone through the roof as such. They've not increased that much.

Because what I'm trying to understand is that producers also understand that the way the monetization of this music is happening in the way the streaming apps and the YouTubes have penetrated our lives, does the value of this -- the way in which this new music can be monetized has increased substantially over the years? We have seen that as the piracy has come down substantially globally. So just trying to understand whether they have also increased their costs and there is competition among players to acquire this music, right?

It's a typical buyer-seller negotiation. So if the seller believes right now that the buyer can monetize it big time, they will try to up the price. If seller ups the price too much, there is no buyer going out in that market. So that part is very much there. The comfort I'm giving you, we people are working on a payback for 5 years. If we believe the payback of 5 years is not happening right now, we are very happy to go back and slow down once again.

That was the last question. I now hand the conference over to the management for closing comments. Over to you.

Thank you, guys. Lots of question this time, and I'm happy to see right now that a lot of you guys have belief in us. As -- I'm just going to repeat some of the points I made in my opening statement. As digitization increases in India, it increases great opportunity for a company like Saregama to monetize its content. With 130,000 songs, over 59 movies, 6,000 hours of TV content, we are in the unique position. No other company in India has got such a large entertainment IP catalog. We are in a unique position to monetize this. We expect our licensing business this year to be growing at 18% to 20%. And from next year onwards, once COVID impact is completely off, come back to a 22% to 25% growth year-on-year. We will continue with our investments in new music in the Hindi, Tamil, Bhojpuri, Gujarati, Punjabi primarily. Some of these songs are going to get released in quarter 3 and quarter 4 onwards, especially the regional content. Which means when you are looking at quarter 3, quarter 4, please keep that in mind right now, there will be content cost coming in because that's the only way we can keep this company growing in a sustainable basis. We will continue our very cautious approach towards Carvaan. We will keep on -- to follow a wait and watch policy to see whether the market is fully revised or not. Until that time, our spends are going to be minimal. We will be managing our breakeven during the year on films -- on Carvaan. On the film side, we continue following our broad principle that at least 60%, 70% of the films that we people are producing have to be presold. That means even before I start working on the film, somebody would agree to become the buyer of it. Our exposure will be limited only to 20% to 30% of the film that we people are making on our own. We believe we will be able to grow the films business anything between 15% to 20% on a year-on-year basis. On the television side, things will remain -- come back to a last financial year status. At any particular time, we have 2 to 3 serials on Sun TV. Right now, we have 2. A third serial will be going on air in the third quarter. Overall, we are bullish on the stay-at-home phenomena and the resulting digitization and the resulting content consumption, which means Saregama will have a big play in the India of tomorrow. Thanks a lot. Look forward to hearing from you guys end of quarter 3.