Saregama India Limited (532163) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the Q2 FY '24 Results Conference Call of Saregama India Limited, hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Pulkit Chawla from Emkay Global Financial Services. Thank you, and over to you, Mr. Chawla.

A very good afternoon, everyone. On behalf of Emkay Global, I would welcome you to the Q2 FY '24 results call of Saregama India Limited. From the management, we have with us Mr. Vikram Mehra, Managing Director; Mr. Pankaj Chaturvedi, CFO; Mr. Saket Sah, Group Head Investor Relations and ESG Reporting; and Mr. Pankaj Kedia, Vice President, Investor Relations. Without any further delay, I'll hand over the conference -- the call to Mr. Vikram Mehra for his opening remarks, post which we'll take the Q&A. Over to you, sir.

Good afternoon, everyone. The quarter 2 financial year '24 saw our operating revenues of INR 172 crores and PBT of INR 65.6 crores. If you look at -- see these numbers on a year-on-year basis, you will see a degrowth in the revenue numbers, which only and only because of the events vertical. Remember, events vertical is seasonal in nature. Last year, quarter 1, quarter 2, we have seen 2 of our international tours happening, which did pretty well in the Q1, Q2. This year, the focus has been a little more on the domestic side, which starts peaking in Q3, Q4. As I always say, please look at our number only on an annual basis and not on a quarterly and quarter basis. This is actually very much true for events and the films business. Before I get into the Music segment, I want to once again reiterate what I shared last time. The company was in dialogue to settle a very old contingent liability, which is under litigation. We are very happy that this liability is now fully settled and the entire contingent liability of INR 58 crores has been knocked off from our balance sheet. Let me jump onto Music segment first. While our numbers are looking very decent, I think the bigger good news that I want to share with you is that now Saregama is actually working with the biggest production houses in the country. Whether it's Dharma Production's Rocky Aur Rani Ki Prem Kahaani, which got released in quarter 2, or their upcoming movies like Mere Mehboob Mere Sanam or Sarzameen. From that to Sanjay Leela Bhansali's Gangubai and his upcoming movie, Baiju Bawra, or Vidhu Vinod Chopra's 12th Fail, or Imtiaz Ali's Chamkila or Jio Studio's Stree 2, and many more -- such big production houses are actually partnering with Saregama. And the scene is not different in the Telugu or Malayalam space. We are the biggest houses like Mythri who were the producers of Pushpa. They all are now partnering with more and more movies and choosing Saregama as their marketing partner. It's more heartening -- it's most heartening because there was a little bit of skepticism that people had when Saregama decided to reenter the new music acquisition space. There was a doubt whether Saregama has it in them to play this very competitive game. And I think through our innovative marketing strategy, use of technology, data analytics, and the professional way in which this entire work has been handled, has now convinced every major movie studio and a lot of independent artists to start choosing Saregama as their preferred partner. In this quarter, we saw the release of huge hits. In Hindi was Rocky Aur Rani Ki Prem Kahaani, then Kushi, all the songs in Telugu got released, which was the big musical hit. And Malayalam, we had the biggest hit of that market called RDX. Remember, this is coming immediately after the success of Zara Hatke Zara Bachke in quarter 1 and Romancham in Malayalam in quarter 1. So you're now having 2 quarters back-to-back of getting great albums coming out from Saregama. Almost every single chart you have in this country from AirCheck, which is a chart for what radio plays, to Spotify chart or a YouTube chart or an Airtel Wynk chart, now it's becoming a routine to see Saregama songs featuring in the top 10 or top 20 list of these platforms. So we are not just into new content, but we are now becoming very, very successful player in the new content space. Now commercially, if you look on the impact of these new successful releases, please keep in mind that the immediate impact will be seen only on YouTube, which is a purely variable model that all of us work on. If a song video does do very, very well, more views are there with results straight away into higher revenues. But the impact on the other 2 verticals, which is OTT streaming and short-format apps like Instagram or YouTube shorts is going to be coming with a lag because of the nature of the deals, which are minimum-guarantee-driven or fixed fee in nature. You don't see the immediate impact of it, but the impact will start coming with a lag of anything between 3 to 12 months. More importantly, I think all of you who are invested in Saregama, have a deep appreciation for the quality of catalog we people have. It was some very, very foresighted management people who were running this company in '70s and '80s who decided to invest in the content at that time. And all of us who are running the company now, are privileged enough to enjoy the fruits of those decisions. Similarly, these big successes that are coming out now of the newer albums will ensure that 30 years down the line when a different set of management and investors may be sitting in here, they will also be equally happy about the fact that we invested in some very high-quality content today. Remember, music has got the longest shelf life of all the IP that's there in the market, anything between 60 to 80 years, and you still have songs of '50s -- 1950s, and 1960s and '70s still being played out here in a very big fashion. And I don't see any difference in the newer content that's coming out. I'm no -- I'm 100% convinced about this that 30 years from now, when today's 18 and 20 and 22-year-olds, when they become 50-year-old, they will still listen to Tum Kya Mile or What Jhumka. If you look at the coming quarters, there are many more big movies whose music is going to come up. There's Kanguva, which is a Suriya's movie in Tamil. There's Sudeep Kichcha 46 in Kannada. There's Mere Mehboob Mere Sanam, which is Vicky Kaushal's movie coming out. There's Diljit Dosanjh, A.R. Rahman's Chamkila. There's again Ajay Devgan and A.R. Rahman's Maidaan. There's Mammootty's Bazooka. There's Gippy's Warning 2, which is coming out in Punjabi. So you have a very strong lineup of releases, which is there scheduled for quarter 3 and quarter 4 also. And combine this with the individual artist releases that will keep on happening as we will go forward. So you have a rocking year, hopefully, in front of you. See, if I look at the -- from a monetization perspective, so I've spoken about the new content creation and acquisition, let's talk about monetization a little more. The biggest shift that we are seeing in the industry is the adoption of subscription-based revenue models by various streaming platforms. For the longest time in India, all the streaming platforms were relying only on advertising-driven model, whereby we were putting all their content on a free basis, and there was very little focus on pushing the customer to the paid model. That's changing. Three platforms over the last few months have decided to put their entire content behind paid wall. Even the remaining 3 guys who are there were still having the content on the free side, the biggest guy, who's the global biggest guy, has now started putting in serious effort to convince more and more customers to go behind paid walls by giving more privileges and bells and whistles to the paid customer and taking them away from the free customer. This movement which is happening from free to paid is something that all of us as music labels are also helping push. The problem with streaming platforms always has been that if they move from a free model to a paid model, on day 1, they all start from a zero subscriber, so their revenues plummet. To support these people, all of us have taken a call that we'll stop charging them any minimum guarantees, which means in the short run, labels, especially the bigger labels, are going to face some amount of pressure. Our revenues are going to come down. But the moment we start looking right now in 18 months -- 12 to 18 months horizon, at the 24-month horizon, you see a huge jump that may come out of the subscription revenues that we'll be able to get. I've been sharing this data multiple times. Our understanding is that the money that we make from streaming platforms should go up by anything between 150% to 300% as the market moves from a free model to a paid model. Are we asking for something very unexpected in India or expecting something very unexpected in India? No. You have close to 600 million people globally, including a large number in China, which is now paying for music. Why should India be any different? Our -- on the -- when there is very cheap cable available, over 100 million people odd right now are now paying for either a digital cable or DTH, which tells that people have an inclination to pay and people have the affordability power to go back and pay, somebody just needs to push the customer to come behind the paid model. Even if I look at the video OTT services that are there in the country, even they are doing pretty well. Reasons maybe -- I'm not getting behind the reasons. All I'm debating is, is there affordability in the market and is there a willingness to pay? We don't see the first 100 million people who have to be moved behind the paid model on music should be a that bigger challenge in our country. So short-term pressure, but on a medium-term basis right now, serious upside shifting for a company like Saregama. This quarter if we see, we started, I think, from Q1 and Q2, we had 3 of our partners completely going behind the paid wall, namely Resso, which is a ByteDance company, Gaana and Hungama. So there were pressures. We were able to counter those pressures through a significant increase that we have seen on the YouTube revenue side. YouTube revenues are going up. The primary reason for that is the newer content that we people are putting on the YouTube. In fact, I'll go back and share with you something which is very heartening for us, that the growth in quarter-on-quarter views that we are seeing on YouTube. This is only on Saregama-owned channels. I'm not talking about YouTube Shorts here. I'm not talking about user-generated content here. Only content that you can also validate on your own. Check the total -- all the Saregama-owned channels, how our views are growing vis-à-vis the top 4 competitors of ours in the market. We are seeing quarter-on-quarter, year-on-year, the fastest growth coming in the market. And this is -- 2 reasons, we are investing in new content, and our hit ratio seems to be far better than anybody else in the market, which is all coming out of the fundamental changes that we have brought into our company, which is data-driven approach and decentralized decision-taking model. So I believe this competitive advantage that we have right now to be a sustainable one. Let me now jump into the biggest growth trigger that we people have gone out and adapted, which is acquisition of majority stake in Pocket Aces, a top digital entertainment company in India. Let me tell you what is the biggest trigger for us for taking this decision. We are seeing the evolving nature of advertising industry in India. If I go by Dentsu, which is one of the biggest global media buying and planning companies, let me quote what these guys or one of them predicted. They are saying that the advertising market in India is going to be growing at 15% year-on-year, which is very, very -- when the GDP is looking at a 6% growth, advertising market growing at 15% right now is a very, very easily understandable and believable number. That's not the real point. The real point is something that Ernst & Young has also said in their report, Dentsu is also saying in their report, that the shift is now happening. From the -- advertising earlier used to happen on television, radio and print, that seems to be moving big time onto that digital world. They are now saying that the advertise -- digital advertising is expected to grow at 31% CAGR. In 2022 -- it's just data. In 2022, digital advertising accounted for 35% of our advertising, which is expected to grow to 45% just within 2 years, that is 2024. Is it sounding that bizarre? No, it's not. If you talk to any 12-year-old, 15-, or a 25-year-old also now and ask them, when is the last time they saw an ad, their initial response is, we are anywhere not there -- we don't watch TV any longer. Most of them are shifted either to an AVOD service or SVOD service. And in their free time, they prefer watching short-format app like Instagram and YouTube shorts. So there is more and more eyeballs of the younger generation that is shifting onto that digital media landscape, advertising is just going to go back and follow them. So we are saying 2024, maybe the digital advertising is going to be 45%. We won't be surprised that -- if this pattern continues and every reason that this pattern will continue because smartphone penetration is going up, broadband speeds are becoming far better. You will see more and more people now moving on to these platforms and the share of digital advertising may become 60%, 70% also in the days to come. Now what does that have got to do with us? We are very clear. If digital advertising is going to be coming in, where will it go? It will either go on AVOD platforms like YouTube or is going to go on short-format apps like Instagram and YouTube shorts and the like from the domestic guys. Whomsoever controls this landscape in terms of reach here, not -- so the money comes out there onto the platform. We have no interest to get into platform business. We don't want to open another YouTube or Instagram. What we want to be there to be the preferred content-consuming destination for the customer on these platforms. Saregama has been very, very strong on the YouTube space. We have got close to now 100 million-odd people -- followers of us on our Saregama officially-owned channels. Our weak point always has been right now, the social media where the younger generation is growing. What Pocket Aces brings to us is that demographic. You now have a -- Pocket Aces has got a massive play on to the Instagram world, whereby -- Pocket Aces over has got 95 million followers on the digital media, majority of them are sitting on Instagram, and that's what makes us very, very heartening that if advertising is going to be coming on to the digital world, we need to control both the AVOD, which is YouTube, which is Saregama's trend, and manage the short-format app, which was going out there and becoming Pocket Aces trend. They, in fact, let me share with you, got 64 million people coming -- followers on the digital platforms. This ensures that when the money flows, the large chunk of money is going to come out there to Saregama. That was the biggest reason why we were looking at our digital entertainment company and Pocket Aces came #1 there. And the second reason, though Saregama has got very few weaknesses, but if there's anything, if there's any area we always have been striving to work hard on, it is how to make the company talk to the younger age group. Saregama has always been a pro-culture company. We are the people who make mainstream music, which is heard by families. So we are very, very strong in this 0- to 12-year age group for children whether it's rhymes or it's good model songs or stories. We even have a Carvaan in that particular space do very, very well. All we do very, very well right now is with more mainstream stuff, which starts attacking the age group of 30, 35, whether it's some of the greatest music from the yesteryear films or even the latest Rocky Aur Rani Ki Prem Kahaani, Zara Hatke Zara Bachke, Kushi, RDX, they're all good examples of mainstream content. Where we people were weak is how to talk to this more rebellious 12 to 25, 12 to 28 year of age group. Pocket Aces just fills that need gap of ours perfectly. The main strength of Pocket Aces is they have a large following in this age group of 12 to 28. They are, what I call right now -- and the content that they create at times is what we call counterculture. No 18-year-old wants to watch the content that their mother and father are watching, that's their nature. We were also like that when we were younger. We never used to wear the clothes that our parents were wearing. That time, [Foreign Language]. But today, the children of our younger want to listen to what they consider is their music and not -- it's not that they are against what their mom, dad are listening, but they want their own music also. And the kind of content they end up listening to at times can be bordering on something which I call it nonmainstream music. Pocket Aces, with its great positioning of being the most youth-oriented brand on the digital space, is able to -- is going to help us in this area from all these 3 perspectives. They get me a younger audience to talk to. Their 65 million follower base that are sitting on Instagram is all primarily on that. They make us very much attractive to the creators of content that wants to talk to the younger people. I'll tell you because it very often happens right now that our content team, when they are talking to these younger 22-year-old content creators who make content for an 18 to 20 age group, those creators are very uncomfortable working with a more traditional company like Saregama. They want to -- according to them, this company will -- their rebellious content will get lost or diluted in the overall sheen of a company like Saregama. We have been contemplating for some time of launching app, indie music labels, independent of Saregama so that content creators can get comfortable. Now that ambition of ours will get fulfilled through Pocket Aces. If we have to create a hip-hop label, if you have to create a rap label where the lyrics can be something that many of us may not find very couture, all that can be housed under a younger company like Pocket Aces because creators are very comfortable dealing with that age group. And the third part are the brands. The advertising money that Saregama makes on music from brands is big. But we always end up getting more conventional brands that want to talk to the middle-aged people. The moment we go to brands that want to talk to an 18-year-old kid, they find us not as their best partners. Pocket Aces has got a massive strength in that particular age group because they create content for that age group only. And brands are far more comfortable talking to them rather than coming and approaching us to find a brand solution. In a single stroke, we have been able to go back and fulfill this need gap of having a youth-base positioning and hence the ability to target that segment. The third benefit is this 95 million additional follower base that Instagram brings along with it, it's going to become a big -- give us a big edge in new content acquisition. When we go and talk to any production house and share that we want to partner with you on the music side, the biggest thing that the guys are looking for apart from money, right, money is given, but everybody ready to go back and give money, is the marketing power. Until now, our strength was 100 million odd that we were able to go back and talk to them. We are literally doubling it. With this double strength right now, we will be in a far stronger position to get newer content from movie studios. We -- let's look at the financials of Pocket Aces. Pocket Aces wrote a revenue of INR 104 crores with a loss of around INR 16 crores in financial year '23. We are fairly confident that if I look at financial year '25 because we're already 6 month into '24 so we cannot make any projection for '24, in '25, you are looking at an annual growth of minimum 23% and a breakeven at the PBT levels happening at Pocket Aces by '25. But that's not the -- that's no big story. Why am I just talking only a 23% at this juncture and breakeven because it will take us a few months to build and operationalize all the synergies that we have identified between the 2 teams. If we go on a medium-term basis, we are fairly confident that we will be able to grow the combined revenues of the 2 companies at anything between 27% to 28%, which is a big jump from a 23% that we have been talking about Saregama in the past. We will get this additional growth, both on Pocket Aces and Saregama combined numbers. Also, this growth which should not come at the expense of profitability margins. We have taken it as a challenge upon us that we will stick by the adjusted EBITDA guidance of 32% to 33% that we have been making in the past for Saregama. The combined numbers of Saregama and Pocket Aces should hold on to the same 32% to 33% adjusted EBITDA target. So you are talking about, in the very strongly growing digital market, Saregama and Pocket Aces combination growing at a much faster pace. In a faster-growing industry, we combined growing at a faster pace, while maintaining our profitability in percentages. We are very bullish, extremely bullish out there in this acquisition, and hopefully, the numbers will start following suit. Let me share the second development here within Saregama. We have been speaking about launching our artist management vertical. This was done in quarter 2. What will this entail? We have presently signed 3 artists on a 360-degree monetization basis. We will invest in creating songs for them, their music videos and marketing these artists on a wholesome 360 degree over the next few years. Not only will we make money from the music that they create but once these guys get established, we will monetize them by promoting them on the live circuit, that means various corporate functions that keep on happening, live ticketed or non-ticketed events that happen, wedding. These are huge markets for artists today. We will push them, advocate them at these places. And whatever money these people make from that, a big chunk of that will be retained by Saregama. So through this 360-degree artists, not only are we securing the next-generation artist availability for Saregama's music business but also creating -- building an absolutely new vertical whereby we get a share of the artist's earnings. Since we're anyway doing it and setting up this infrastructure to promote and push our artists in the live circuit, we have also decided to create one more vertical here, whereby we are now representing close to a dozen artists for their live business only. That means these are artists on whom we are not going to invest anything. They are small- to medium-term established artists. We are telling them that Saregama will represent them on their live side and whatever money we are able to get for them from the live side, we'll keep a commission on this. Our commission percentages will be higher on a 360-degree artist because we are investing in them, lower on the live artists because we have zero investments in that particular space. It will become even better now with Pocket Aces deal happening. Pocket Aces has got a huge influencer management vertical that they have, which is nothing but again, a different form of artist management. Their strength is brand management and selling their artists right now to various leading brands of the country, especially youth-focused. Our strength is selling the artists on the live space. So what we will be doing is all the artists who come and singers who signed with Saregama, we will continue managing their live part, but also try to convince these artists to give their brand sponsorship mandate to Pocket Aces. Similarly, all the influencers who are getting signed by Pocket Aces, their brand will continue to be managed by Pocket Aces but we will try to convince those influencers to give their live mandate to Saregama. One more big area of synergy, and that makes both of us very attractive, Saregama and Pocket Aces, very attractive to any artist who is there in the market now, because the artist becomes big through the various video content that Pocket Aces are making and the music content that Saregama is making. We monetize them through brand strength that Pocket Aces has and live event strength that Saregama has, which is win-win situation for everybody involved. Let me now jump into the space of technology. What are we doing in that space? In the times to come, the content business is not only just going to be about creativity. Creativity is a very, very important part here, right? But it's not going to be only about creativity. Technology will start playing a bigger and a bigger role in this particular space, the entire content creation space, whether its audio or video. That's the reason we are conscious -- within the company right now, very serious about making investments in both predictive artificial intelligence as well as generative artificial intelligence. Our predictive AI investments are already bearing fruits. That's why we have a success rate of our music albums doing far better than anybody else in the market today. We are also working on generative AI, whereby we can teach tools that we are developing in-house, to learn from our own music so there's no copyright infringement because this is our own 150,000 songs with billions of data points about which song does well where, on which platform. Use that data to go out and create, maybe generate newer content on an automatic basis. A big future, let's see how that rolls out. We are also upgrading all our hit songs to the latest technology, which is Dolby Atmos mix for better listening experiences. These songs may have been created in '70s and recorded using the technology that was available at that time. But today, if you're an Apple Music customer or any of the other platforms, you have far better quality speakers that you have access to or AirPods you have access to. So we are going out there and upgrading, if technology allows us today right now, to take the music that was created 30 years back, break it into individual stems, that means individual parts, upgrade those parts so that when you listen to this music now on an Apple music, you actually get the benefit of the latest technology that's available. Now all these things just differentiate us vis-à-vis any other player in the market. We are preparing this company constantly for tomorrow and not just trying to make money for today. Let me share another very interesting development, which is going to roll out in the days to come. We are about to launch our own music learning app, which will teach music fans how to sing songs or play instruments. All this is being done using artificial intelligence. It's not just a tutor who is going to manually go back and teach you. Yes, there are sessions available where if you have a doubt, there will be a human element coming in who will take a session for you digitally. But the bigger part is that artificial intelligence is now going to help people on a regular app, which will be available both on the Android and the Apple Store. Now to keep on honing their skills either on vocals or while playing the instruments to see how good/bad they are, improve their skills and then get in a position to sing some of the greatest songs that Saregama has, whether it is Lata Mangeshkar's Lag Ja Gale, or Arijit Singh's latest Tum Kya Mile or What Jhumka. Suddenly, there is a comfort that people sitting in their homes, whether it's a 7-year-old kid or a 35-, 40-year-old lady or a 19-year-old boy who wants to impress his girlfriend, all of them can now learn scientifically how to sing songs or play instruments. And the cherry on the cake, because the app was launched by a music label, we are also offering the opportunity that the best-performing people who are using this app and are evolving as singers or instrument players will get a chance to release songs or music albums with Saregama. Now most people give the right arm just to appear in a singing or a dance show on television. Just imagine if they come to know that it's not just about that, it's about India's most prestigious and oldest label now will give them a chance to release a song. I think there will be a decent amount of traction that will be coming in for the learning app. Remember, the learning app needs to use the IP that belongs only to Saregama. So nobody else can go back and teach them. And no other company out here has got the quality of rich catalog that we people have. Just another example of how like Carvaan, we are constantly looking ways of monetizing the IP that we already own. No other label was able to go back and match with us right now in the Carvaan space because they didn't have that kind of rich catalog. Similarly, we believe we'll have a massive advantage -- competitive advantage on the music learning app also. Since I touched Carvaan, a quick update on that. The numbers of Carvaan continue to grow, primarily on the back of mobile phones. This are the feature of -- Carvaan-branded feature phones. Good news is that the unit sales is going up, but it is matched by the average realization per unit sold going down. Remember, mobile phones are typically all under INR 2,000 units that we are selling in the market. So average learning share is lower on these, but the comfort I can give you that the percentage margins that the people are maintaining on Carvaan, doesn't matter whether it's mobile phone or the high-end Carvaan, they are well maintained. On the films and series vertical, actually, there wasn't any action in this particular quarter. All the big releases are planned in quarter 4. There will be very little action happening in quarter 3 also. Difficult to believe, but I'm still holding our guidance that by the time we end the financial year, the films and series vertical of ours will see 25% growth this year on a like-to-like basis. The FY '24 will grow by 25% over FY '23. There are multiple movies and very big Malayalam and Punjabi movies are all lined up in the January to March quarter. On the events side, quarter 1 and quarter 2 were relatively silent. Quarter 3 will see a Diljit Dosanjh tour of Australia and New Zealand being done by us. Our overall approach on films, series and events business continues to be that of being cautious in nature. I shared last time, again reiterating that our total capital allocation to films, series and events business at any particular time will not exceed more than 18% of the total capital allocated. Currently, this number stands close to 12%. So we will find a way. We make smaller steps here, take baby steps, keep on growing this big part. And hopefully, the vertical itself is going to throw enough cash to fulfill our growth ambitions. Overall, I want to reiterate that we have just touched the tip of the iceberg. We have got our foundation in place in the company on all parts of IP whether it's a 1-minute short-format content through Pocket Aces or a 3-minute music video through Saregama or a 22-minute content through Saregama or a 45-minute content through Pocket Aces or 120-minute content through Saregama. We are covering all bases of ours. The world of digital is growing very, very rapidly. We are investing in technology in a very big fashion to keep us very, very steady as we go ahead. We are relying more and more on data analytics in a decision-taking power, and we are investing primarily in tomorrow. Investing in tomorrow doesn't mean that you'll have -- you should have pain out there today. Today will be stable but tomorrow, with all these fundamentals in place, should look even rosier. And remember, the content that we create today, especially on the music side, the music is going to be heard and pay us revenues not today, just today, not just tomorrow, for next 10, 20, 30, 50, 60,80 years also. On that note, thanks a lot for your patient listening. Happy to take questions.

[Operator Instructions] The first question is from the line of Aditya Nahar from Alpna Enterprises.

Vikram, hope you're doing well. Vikram just -- congratulations on your acquisition of Pocket Aces. Just for my understanding, we have paid -- we have bought 52% for the amount mentioned and the remaining is on the -- based on certain benchmark goals, correct?

That's correct, Nahar. Pankaj, this side. Yes.

So -- and this is -- the funds for this has been from the QIP?

So let me just clarify. We will be closing the transaction shortly. The first tranche, we will be acquiring close to 52%. Within the next 15 to 18 months, our acquisition will be close to 92% as we have already declined. And yes, you're right, the QIP funds would be used for this inorganic acquisition.

Okay. Great. Pankaj, since I have you, any timeline on the listing of the -- of Digidrive?

Sorry, timeline for?

The listing of Digidrive.

Digidrive, the good part is the shares have been credited to the demat accounts. We have received the approvals from both the stock exchanges. We are in the process of getting the final clearances from SEBI, which we expect should be completed in about 2 to 3 weeks. And our endeavor is to get the listing as soon as possible.

Great. And sorry, Vikram, my last question to you is, this is an open-ended question, any thoughts on the Taylor Swift controversy of re-recording our old songs again with licenses being renegotiated with newer artists? If you could just talk about that briefly.

I'll not touch that. What I can tell you is the way rights in India are, they are very, very different from the way rights are procured or secured in the international world. And so in our case, we have both, what I call, sound recording rights, that means the right to the song that's created as well as publishing rights, which is the right to the composition and right to the lyrics. That's why we are in a complete 100% secure position at this juncture to do recreation of anything that we people want and nobody else can do it.

The next question is from the line of Saket Mehrotra from Tusk Investment.

Am I audible?

Yes, please.

So I had a question on this Pocket Aces acquisition that you mentioned on the medium-term guidance. This is over what time frame are we looking at this growth of 25% and 28%?

Anything around 3 years odd.

Okay. And secondly, are there any specific synergies with respect to being on the cost side? Like I understand that even Pocket Aces is into production. So will we be running 2 cost centers or is it going to create some sort of savings? Do we have any actionable numbers for that to like bring our cost down?

So -- see, multiple things here is -- on the video side, you're right. Both of us are into the production side, and that's a great part. We are doing more films from Saregama, and we are doing more series work for digital platform targeted at youth from the Pocket Aces side. There are already projects that have been kickstarted to start doing benchmarking on both the sides and see that if the people are procuring simple things like lights or a camera work that's happening out here, can we do start now doing combined deals, which takes care of both -- the requirement of both sides of the spectrum and get cost savings done. So yes, there will be cost benefits coming on that side. The moment I'm talking about our music promotions, a large chunk of our music marketing budgets actually end up going and getting spent right now on various influencers that are active on social media. Now we have access to a large number of those influencers through Pocket Aces because Pocket Aces is representing them. So we will be in a position to go out there and negotiate a far better deal or a lower deal or, for the same amount of money, get bigger bang for the buck. So there are advantages both on the revenue side that will accrue to Pocket Aces and to Saregama also on the cost side.

The next question is from the line of Lokesh Manik from Vallum Capital.

A couple of questions from my end. One is clarification, in your presentation, under music license and monetization, it is mentioned that strong revenue growth in medium to long-term despite short-term pressure due to minimum guarantee is going away. Clarification was this is solely attributed to the music apps that are going behind the wall, I mean they're going paid?

Only that.

Yes, it's only attributed to that. Okay. Great. Second was on the live artist management. In the event, let's say, does not work out, and the artist is not successful. How is the exit plan then? Do we have any liability to carry forward for the next 5, 10 years of the contract period that we get into, how does it work?

See, there are 2 kinds of artists as I mentioned, the one which are a 360-degree artist, there is a very short-term commitment on those artists. There is a short-term commitment, I'm not going to run away from it, but the numbers are not that huge. And 360-degree play of us is going to be limited and diligence is only 3 artists, at best, it may become 4 or 5 artists. On the -- the real numbers are going to be coming right now where we take the live event monetization mandate of artist, there is zero commitment there.

Okay. Understood. Just the last one. So the growth rate that you have up from 23% to 27%, 28%. So 27%, 28% would become 20% from '25 onwards, just a clarification?

Yes.

The next question is from the line of Pulkit Chawla from Emkay Global Financial Services.

Vikram, given that now the largest OTT platform has also restricted several features, do you see that short-term pain that you're talking about becoming slightly more worse in the near term at least? And let's say, all these platforms then do move behind the paid wall, I mean do you see any impact on piracy also going up because of this issue? And second, do you foresee payback period also going up from the current target?

Payback period for music?

Yes.

Okay. So let me answer the second part, no. We are holding on to our guidance of a 5-year payback period for music. We are not going to differ from that. So for whatever reasons, if there is serious amount of pain which is going out in the market, that means the acquisition costs will have to come down. So we are not changing our 5-year payback guidance. That's one part here. Let me try to answer your first question. Will there be a pain right there? Yes, there will be a pain. The good part is out of the 6 guys who were all giving free, it's -- the movement to pay is happening in a phased fashion. Three have moved to pay, other 3 have not moved to pay yet. It's good news or bad news, I would have loved had everybody moved to pay in a single go so that we were done with this. But from a commercial perspective, we still have 3 of the guys who have a large amount of free business that's going on. If 1 or 2 of these guys start deciding to move towards pay, yes, there will be a serious pain in a quarter or 2 when it happens. But the jump that you're going to be seeing from free to pay in terms of our revenue is massive. You were asking, there was a part 2 to your first question.

Yes. So do you see an impact of piracy?

So piracy, it's a pretty good question. See, I also -- I'm sharing the apex body of the music industry in India called IMI. And we are working a lot with the Commerce Ministry in that space because we come under DPIIT, which is part of Commerce Industry. And we keep on picking or working with government a lot on various carrot and stick measures that are carried out to take care of piracy. Piracy is declining. And in the larger towns, if you talk about the Bombay, Delhis and Bangalores of the world, literally, there's zero piracy. You will always have those kids who have a way right now to download some of the content on an illegal basis. But those days where music was available on CDs at every corner of the street, whether Bombay or Delhi, 20 years ago right now, on fort, there used to be 20 shops selling illegal music or illegal pen drive. All that has gone. So what will the customer do? In the same part, music -- cricket is sitting behind a paid wall but people are going out there and paying. The amount of piracy that used to happen earlier, not happening in our country any longer. And this will be the same journey that China has gone through. There was a serious amount of piracy problem there. As technology is evolving and people got used to the flavor of great experience on a streaming app, people are refusing to go back to the old days. So I don't see personally, at least in all the Tier 1, Tier 2, Tier 3 towns, it's happening. In the smaller town, there may still be some incidents as well. But the good part is those guys are anyway not on the OTT platforms today.

That's helpful. Just one more thing. Is there -- has there been an increase in the competitive intensity for the new content addition?

See, there are limited number of players which are sitting on the newer content. So if your question is saying, has the pricing gone up substantially, pricing is completely disconnected to these dynamics of how -- what music is doing well. If you have in a language some 10 hits coming in, in a year and all are doing pretty well, that language costing starts going up or some other language takes a beating in that case. So it is a competitive market. It's not -- no new guy can ever play this game because they don't have the catalog to play this with. They don't have number of songs, that big labels should release. Among the existing guys, I think we're in a fairly strong position today, which is reflected by the amount of content we people are acquiring.

The next question is from the line of Swapnil Potdukhe from JMFL.

I have three questions. One is that given that we are going through this transition of paid subscription to -- sorry, free subscriptions to paid subscriptions, how should we see the music licensing revenues trending in the next, let's say, a couple of quarters or so because I would presume there could be some pressures over there? And when we are guiding for 27% to 28% consolidated growth, are we expecting the music licensing business to grow at a similar rate? Or like how much -- so basically, how much of that will be coming from music licensing?

So something is -- let me answer the second part first. Music licensing is the largest source of revenue that we people have. If we people are striving for a 27% or 28% growth 3 years from now onwards, I cannot achieve that growth right now unless music licensing also fires at the same pace. So yes, with this synergy that was going to get created between the 2 businesses, especially artists management is a large contributor there on the music side, we are expecting on this 3-year horizon basis, our music revenue also to start touching 27%, 28%. And I'm reiterating this does not include the positive kicker we will get the day everybody goes behind a paid wall because the streaming business alone can grow between 150% to 300% for us. So that will be over and above this. But even without that, just the synergy of the 2 companies will ensure that 3 years from now, you are looking at 27%, 28% growth in both businesses combined, including the music business. That's part one. Your other thing was?

The other thing was near-term revenue trends in music.

See, near term, it will -- things keep on fluctuating. I will hold on a stable basis, numbers of something around 23% growth on '22, '23 that we say on the music licensing side. A quarter here and a quarter there misses, but YouTube comes back and supports this. We are growing our publishing business, which is all about brands in a significant fashion. We are trying to grow our public performance business. So hopefully, we will be able to counter this pressure. If I look at this 12 to 24 months horizon, where all this transition from free to pay is going to be happening.

Got it. The second question is with respect to one of the major platforms missing from your PPT with respect to the partners, which are working with you. So can you elaborate on that?

So all I can say is that this is a natural part of doing business here. If you look at any music label and platform partnership, half of the -- or I think 90% of the labels will have some issue going on with some platform. Yes, we are in commercial dialogue with them. The commercials are not matching at that particular time. Hopefully, we'll sort it out. So it's usual way of doing business. Somebody will not be there on platform A, somebody will not be there on platform B. We just need to go out there on any platform and look at the content, you'll come to know. What I want to give you a comfort is because majority of our deals in these cases are all variable in nature. If a customer does not find Tum Kya Mile or What Jhumka on a platform A, that person does not start listening to some other song. The person moves from platform A to platform B. So I don't end up having a 100% loss of the revenue. The revenue to a great extent gets made up by some other platform revenues start going up significantly. That notwithstanding, it's our intent to get the commercial deal in place with the said platform too.

Right. And the third question is on the cost side. So we have seen a significant sequential dip in some of the -- majorly on cost items like royalty fee -- right, any other expenses, too. So how should we see them playing out in the near term given that -- I presume this is -- and this has a direct correlation with the fact that music licensing is going through some certain pressures. But how should we see the cost side moving in the near term as well?

So Swapnil, Pankaj this side. On the royalty, the absolute numbers are pretty much stable, although as a percentage, they have been declining and we have explained the reasons why. On the other expenses, as you have mentioned, we spoke last time when we said that we were addressing one contingent liability and there were some estimated provisions that we were taking. And hence, you see a small jump last time. But costs have now, in fact, come down as compared to the last quarter. They're pretty much in the normal state now. So as we move forward, these fixed cost as a percentage to revenue will always keep declining. I hope that helps.

Right. Just one clarification. The A&P spend that we have right now of around INR 13 crores for this particular quarter, that was completely attributable to the music licensing or like does it also include Carvaan and few films business?

Carvaan, as mentioned, we don't spend on the marketing side. The entire A&P that you see in the P&L consists of all other segments. There were some A&P spends on events and films last quarter, which are not there this time. Also depends on music, what song gets released when and we promote those song at the appropriate time. So other than that, there is nothing specific as such to highlight on the A&P.

As we said, on the A&P side, the music-linked A&P, there were no change. There were a similar amount of numbers. But since there were no events that were done for all the A&P connected to events and to that extent, films also were not happening in quarter 2. There's no top line, so there's no reason for us to spend money on advertising. Does that answer your question? So the numbers will look different in Q4 when there will be a large amount of films of ours getting released from the Yoodle side, there will be corresponding marketing money that was -- cost will also come in.

Got it. Very clear, Vikram. Just one last thing. Carvaan continues to be breakeven or it is also contributing to some profits right now?

Carvaan was breakeven. Carvaan is now looking at a -- but it's a very thin margin.

The next question is from the line of Vikas Tulsiyan from Vision Ahead.

Sir, from the last 8 quarters, your results are flat basically. And at the same time, the listed peer like Tips Industry has performed so well. So sir, why you have not performed in the last 8 quarters and what you will do to rectify it?

So listen, let me not go on the competition part here. We people -- the revenue that we've firstly seen right now on -- the moment we finish our entire year, the events business is the only business right now where you're seeing this kind of fluctuation happening. And when we got into events, we have given this heads up because those are blocky and chunky in nature. They come in a quarter in a big fashion, then they don't come out in the other quarter. If I look at the more steady part of our business, which is music, there has been a steady growth that we people are seeing on the licensing side. We, at the end of the year, always end up sharing the licensing revenue from you, but licensing revenue is growing at 22%, 23% per year, and it's not flat in nature. It's the other parts of the business which are chunky. There was Carvaan business that used to be big, which has come down because we did not want to have any losses going on out there. And that business at this juncture is going at a steady to little degrowth -- a little degrowth path. Films and events business will, and I'm maintaining the guidance right now, is going to grow at 25%.

So sir, why don't you demerge in music division also? There are so many loss-making division or flat division. And the result is...

We don't believe they're loss-making divisions. We believe there are a serious amount of synergies between the various verticals that we are carrying out, that's point number one. But remember, there's a big -- in our company, when we are looking at content IP and Saregama as a company, we are not only looking at improving numbers in this quarter, but how to keep company in a very solid position, 3 years, 10 years and 30 years down the line. So we are taking all the steps to build the foundation for the next massive story. We don't want to just be a profitable company. We want to be India's biggest entertainment companies that is also generating a large amount of profits. Our approach is a little more long term in nature. What I can give you and give you the comfort is films business is going to be riding up 15% from margin this year. It's not going to go below that. Events business we have just started, and we have requested for time for 18 months. We'll take a call if that number is going up or not. It's critical to the artist management business, it's critical to the music business if you're also on the live side. You talk to the same singer. And if you can manage their live business also, chances are that they will also give songs to you, which if you're not in that business, may become a little difficult for some of the other competitors.

The next question is from the line of Sukriti from Laburnum Capital.

Just a couple of questions. One on the minimum guarantees. So it's great that they are sort of fading away, and we're going to see largely clean variable pricing-based numbers. Any sense of dimensioning how big the fall will be due to that? Second question is as we see a consolidation play out in distribution platforms, are we concerned that our own revenue share may come under pressure because for the last few years, you've had multiple platforms trying to build viewership, trying to build growth, and they may have been a little more generous with payouts but going forward, would that change? And specifically, folks like YouTube or maybe Spotify that become more dominant, could you see them squeezing harder? Finally, on Pocket Aces, you articulated your rationale for doing this very clearly. I'm just curious if we did a build versus buy analysis. How do we feel in terms of time and costs that we have taken to build this out organically versus what we paid for it?

So let me answer Pocket Aces first. It's -- in the case of Pocket Aces, the rationale was outlined. Yes, we debated between build and buy. The issue is culturally -- and organizations have to go back and understand this. Culturally, we are a traditional family culture-driven organization. We create content, which appeals to the more mainstream audience that wants to watch content along with their families. For me to go back and say that within the fold of Saregama, can we go out and create content, which is more rebellious, in-your-face kind of content, maybe parents may be a little itchy about -- it is a difficult task. We would have had to go back and start it completely outside Saregama, not taking -- leveraging any of the benefits of Saregama and create it. We realized that is going to be a Herculean task. Most likely, it's not going to go back and happen, and it's going to take a very, very long time. It's better that if we get -- if we are able to get the #1 player in this particular space, which is professionally run, has got a very, very formidable reputation in the market. It maybe from the cost perspective also right now may make much more financial sense. And more importantly, we are able to capture that digital audience today when the transition is happening rather than later and immediately, and we are really seeing the impact of that. Every major movie studio head has already called us up and they have taken notice of this fact and congratulated us about how people are thinking of future. So we know immediately it's going to give us the benefits in our content acquisition pace. That's the second part of your question. The first part, on the consolidation that may happen on the OTT side. First, how big the kitty can be? I've stated it, I'll again repeat, we believe when the transition happens from a free economy to a paid economy, you are looking at the kitty that we all generate from streaming platforms to go up anything between 1.5 to 3x in the short run. The dynamic is very simple. I'll like to explain it to you. On an average, when a free customer listens to a Saregama song, we get on an average paid INR 0.10 every time if you're a free customer, you listen to my music. But if you're a paid customer who listens to my music, then our deal primarily is that whatever you have paid to the streaming platforms, around 50% of that is going to be earmarked this content pool. And that content pool will get divided equally amongst all the songs that you heard during the month. So now let's take through a number that suppose you are paying INR 100 to your streaming platform on a monthly basis, which means that content pool will be equivalent to INR 50. An average Indian customer listening to, on streaming platform, 64 songs. If I look at that number, then everybody gets paid close to INR 0.80, INR 0.90. Let's not look at that. Let's say, you are now a hardcore customer and you listen to 100 songs in a month, that means I get INR 0.50 per stream. Even if you not come at INR 100 per month, you come at INR 50 per month, then also we get paid INR 0.25 per stream. So there is a large amount of upside which is sitting in with -- for all of us, all music labels, once the movement happens from the free to the paid side. Your other question was if consolidation happens. I think remember, India is a very competitive market. But if I look at America today, there are only 3 big platforms playing out there. There's Spotify, Apple and Amazon. There's nothing else. It's not gone out there and diluted the position of the 3 of the big music labels that are sitting in there, Universal, Sony and Warner. I see a similar situation happening in India because what we are selling or licensing is not commodity. If you are a fan of a song that you've grown up with or your favorite Shah Rukh movie or Amitabh movie or Ranveer movie, then you are going to listen to that song, that song cannot be replaced by some other song on the platform just because my song was not available. You may go out then and change platform. So in this IP versus platform game, we strongly believe that the people who are owning the IP, especially on the music side that you want to consume on a very frequent basis, I think we people are equal footing with them. I don't think there's a big edge of the platform has over us.

Got it. And really helpful. Could you just -- any dimensioning around the extent to which things should fall as the MGs fall away?

See, again, it all depends on phasing. You have 3 of the guys out. So their MGs are completely gone, and we are now building the subscription business there. There are 3 big guys, the #1 to 3 are still there in the market, all on the free side. It all depends whether a single guy goes out and other 2 remain, then it will be phased on fashion. If all 3 goes out, it does make an impact. But that means also that the growth in the subscription is going to be that much deeper. So there may be a big dip for a quarter but a massive increase coming from maybe the third quarter onwards. If they go in a phased fashion, there may be small dips happening over 1 to 3 quarters and an equally gradual improvement that's happening on the subscription side. But all that is a matter of 12 to 18 months. And the endeavor of our company is that we counter or neutralize the impact of this to whatever extent possible to increase on our YouTube revenue and our publishing revenue.

And could you give us a sense of what percentage of the revenue today comes from minimum guarantees?

I can't get into that specifics. Remember, there are only 3 platforms left. If I -- there's only -- everybody else is behind a wall and all paid wall guys are on a variable basis.

Got it. And of those 3, all of them are at the minimum-guarantee level or could some of them be paying you more than the MG?

You're getting into very, very specifically out there again. But what I can tell you is in majority of the cases, earlier days when everybody was there on a free side on major -- our MG numbers typically for us used to fare anything between 90% to 110%, 120%. And these deals were renegotiated every year to ensure that there is some amount of parity which is sitting in.

The next question is from the line of Yash Bajaj from Lucky Investment Managers.

I had a couple of questions on Pocket Aces. So first is that I wanted to understand how different is the business model if I compare it to the traditional Saregama module? And it would be really helpful if you could answer that in context with the P&L and balance sheet. That's my first question.

Okay. So -- see, our primary business model right now on the music side or the films side was create IP and license it out to platforms. That's our primary model. We don't take a content to the customer directly. We license it to people. The model -- the primary business of Pocket Aces is to create content and get brands along with that to get integrated into the content. That content is going to be hosted on their own Instagram pages or influencer's Instagram pages. That's why we have got a massive strength going on, on the brand relationships. Saregama wants to evolve in that space. So that I'm also not only dependent on platform, but I can make some money directly from the brands. When these 2 strengths come together, the sum is more than the -- the net result is more than some of the individual parts. Have I answered your question?

Yes. So just to understand, so Saregama is more of a catalog model, where the catalog is the inventory from balance...

Sir, licensing is not catalog model. Catalog is old content. We are an equally stronger in the newer content. Our business is to create IP, retain the IP, license it. Pocket Aces on the video side does exactly the same thing. They also create content. We create more content on the film side. They create on the web series side, but that's a video part of their business, which is a smaller thing. The bigger part, again, is they create content and rather than licensing it to anybody, they get brands to come right upfront. And that becomes a business model.

Okay. So is there anything on -- anything significant on the balance sheet of Pocket Aces then?

No.

So when you say significant maybe...

I'm asking from how Saregama creates the IP and it forms part of our balance sheet.

First off, IP does not on part of the balance sheet. If you look at the older songs, we are not keeping them on the goodwill basis right now on our balance sheet. These guys follow the similar model. They charge off the entire cost of the content in the years in which they are creating the content and book the revenues, whatever the corresponding revenues that have come in.

Okay. Got it. Got it. And my second and final question is...

Listen, we have -- if we have invested in Pocket Aces, it's not because of the IP that they have created, but for the digital follower base that they have which believes in them and their capability to create content which is relevant to the younger people. The content that has been created and sitting with them as an IP owned by them is a least of things right reason because of which we have invested. I hope we have clarified that part.

Yes. Yes. And second question is a follow-up to Pocket Aces only that what are the -- are there any exclusive agreements with these influencers? Or how are the agreements like given to influencers?

Typically, artist management contracts for whatever mandate artist is giving you are exclusive in nature. And remember, I want to clarify this in continuation with the question that he had asked, what is the artist looking for? Why does an artist want to go out there and sign up with any company and share his revenues with that company? There's a reason artist wants to do it. Every artist wants to become even bigger. And how do you become bigger? By becoming more visible. Saregama's ability to make its own artist big, the only access we had till now were our music videos. Pocket Aces, the only access they had right now was to create content for this influencer for the Instagram and the YouTube world. Now what we are going to be doing, our artist is going to create -- the content for our artist is going to be done by Pocket Aces. And for Pocket Aces, guys now can start appearing in the music videos of Saregama. So for an artist, it becomes the ultimate destination where he or she can become big using the IP creation power of both the companies combined, which means Pocket Aces, which is already the #1 player in the digital influencer space, should be able to grow that part of the business at a significant pace.

The next question is from the line of [ C.A. Garvit Goyal ] from Nvest Analytics.

Am I audible?

Yes, please.

Sir, you have earlier guided for 22% to 25% growth if we take across the segment. Then going by that, we should have reached somewhere around INR 900 crores by FY '24. But in H1, we did only INR 340 crores. So although we -- this was supposed to be entirely organic growth. But even if I add Pocket Aces that will contribute, I think, in Q4 maybe around INR 30 crores. So are you confident enough that we will be able to make the revenue of INR 530 crores in second half?

22%, 23% is the growth that we will have been saying for this financial year. And you have to give me time till the fourth quarter. Fourth quarter, I'll reiterate, we'll see bulk, maybe about 75% of the revenues for the music or events vertical coming in that particular quarter. So at this reason, though there are serious pressures of the streaming applications going behind the paid wall, we are still hopeful that with this -- with these acquisition that we people have right now and our own growth rate, on a combined basis, though we will get Pocket Aces numbers only for a few months, not more than that, we should be somewhere close in that space only. We are not changing our guidance for '22, '23 as of now.

Understood. And sir, secondly, on the acquisition of Pocket Aces only, means I agree it is beneficial for the company in the longer term, definitely it is going to be as you explained. But it doesn't fall under the intended utilization of QIP, as it is not a music label, it is more of a web series creator. So with this acquisition, don't you think we are going against the strategy of strengthening our music IP with the songs that were released during 2005 to 2020 that we mentioned at the time of QIP release?

At the time of QIP, since I only was addressing at that time, I had said anything that helps out in music business. Now music business has got 3 arms -- 3 areas which are helping music business today. One is just pure IP buying either new content or older content if somebody else's catalog. That's one. Anything that helps me make my position better in terms of acquiring newer content, which is the marketing power that you end up getting it. This is where Pocket Aces fits in beautifully. When I now go to a movie studio and say that we want to acquire the content that you guys will be releasing in terms of song, and we put combined power of 100 million of Saregama on digital side and another 95 million, we become that much more attractive vis-à-vis any of our direct competitors. So this acquisition is helping us a lot on the new content acquisition space. I'm also telling you there's a third space also out here, which is the AI or technology space. The old world of saying music is all about go out there and pick up a song. It is valid, but there are other areas today. It's not about just getting music. It's about making the music become very big where marketing is very important or our technology starts -- will start playing a very important role here that tomorrow, there's a great AI-based firm, which has built specialization in that area, we may even look at that. Anything that helps our music business. What we are not going to be going out there and start using the funds right now, as I stated earlier, and I'm reiterating, is for a films business or an events business or a Carvaan kind of a business. That will all be managed right now through our internal growth.

The next question is from the line of [ Govindarajan C. ] from CSIM.

A couple of housekeeping questions to start with. In your notes to account, there is a mention of INR 15.32 crores of provision written back. Could you tell us where this is directly to the balance sheet or is being taken through the P&L? And if it's the P&L, that it has been accounted for? That's question number one. Secondly, you see a significant increase in inventories in the first half. What is that due to? And the third question is something that Vikram, you answered many times, but just wanted some clarity. What is the total amount that's spent by the industry on music acquisition every year? I think you have mentioned a number of INR 700 crores, INR 800 crores. And you want to be 30% of that. Is this the cash outflow? Or is this -- does this include commitments based on minimum guarantees, et cetera? Or this INR 800 crores is the outflow each year that is made by the label? These were my three questions.

Let me answer the third one and let Pankaj take the first and second. The total size of the industry this year should be -- of total content sold should be more closer to INR 1,000 crores odd. INR 800 crores was the number 2 years back. When we are saying INR 1,000 crores, it doesn't mean INR 1,000 crores cash flow will happen. Typically, when we acquire content, especially on the films side, we only -- the music is the first right that any of the production house ends up selling. At that time, we just pay -- just a token percentage is paid to block and sign the agreement. Real cash outflow start happening out here closer to the release of the film. But that also means that a movie that we acquired, maybe in financial year '22 or '23, payout may have happened -- actual payout may happen in financial year '24. Though we had acquired the move in 2023, but the movie never got released and hence the songs were not released. So that's answer to your question number three.

Yes. I'll just take the first two questions. So on the note that you're referring to, just want to highlight that this is completely in the normal course of business wherein we take certain provision based on estimates, then we actualize them in the subsequent months or quarters. There's a good practice we've been disclosing this now for some quarters in the past. So there is nothing as such abnormal about it. And yes, it does impact P&L, as you were asking whether it is in the P&L or balance sheet. That's question number one. Question number two was on the increase in inventories. So we've had a lot of films that have got released, which were actually sitting in the work-in-progress side. Once they get released, we account them for as inventory. And that's the reason you see the inventory levels going up. No other particular reason.

So it's fair to assume this INR 15.32 crores of write-back of provision is a onetime positive impact on the profitability?

Listen, this is just a normal course of business, something similar happened in last quarter also. We -- as a company, we people are very conservative here. We take provisions here. And as the actual data keeps on coming out here, that gets revertive. I think just as good housekeeping, we have now started saying that we will start disclosing it to the market.

Thank you so much. Ladies and gentlemen, we would take that as our last question. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.

Thank you, everyone.