Shemaroo Entertainment Limited (SHEMAROO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 FY '21 Conference Call of Shemaroo Entertainment Limited hosted by Valorem Advisors. [Operator Instructions] I would now like to hand the conference over to Mr. Anuj Sonpal, CEO at Valorem Advisors. Thank you, and over to you, Mr. Sonpal.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. I hope everybody is safe and well. My name is Anuj Sonpal. We represent the Investor Relations of Shemaroo Entertainment Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the fourth quarter and financial year ended 2021. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is barely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings conference call and give it over to them for the opening remarks. We have with us Mr. Hiren Gada, CEO and CFO; Mrs. Kranti Gada, COO. Now without any further delay, I request Mr. Hiren Gada to give his open remark. Thank you, and over to you, sir.

Good afternoon, everyone, and thank you for joining today. It's a pleasure to welcome you to the earnings conference call for the fourth quarter financial year ended '21. I hope everyone is keeping safe and well. We've had a very tough and challenging second wave of COVID. Let me start by giving you the key financial highlights first. For the first -- for the fourth quarter ended financial year March '21, the operational income stood at INR 78 crores, EBITDA for the quarter stood at INR 11 crores and EBITDA margin stood at INR 14.3 crores. Net profit after tax reported was at INR 2.2 crores. Talking about the full financial year, entire year performance, the operating income was at INR 311 crores, EBITDA reported was at INR 12.6 crores and EBITDA margin stood at 4.04%. The net loss after tax was at INR 22 crores. As most of you are aware, the company has been in an investment mode with various new initiatives. Hence, it is important to note that expenses made on these new initiatives, net of revenue for the period under review. For Q4 financial year '21, expenses on the new initiatives, net of revenue were at INR 13 crores. And for the entire financial year, it was at INR 58 crores. If you were to adjust for these investments in new initiatives, the adjusted EBITDA from existing operations would have been approximately INR 24 crores for Q4 FY '21, representing a margin of 31%. And for the financial year ended FY '21, the adjusted EBITDA would have been approximately INR 70 crores, representing an EBITDA margin of 22.5%. For the fourth quarter, digital media revenue stood at around INR 37 crores, which were down by 20% year-on-year. And for FY '21 ended March, the digital media revenue stood at INR 149 crores, which is down by 25% year-on-year. Traditional media revenue in fourth quarter stood at INR 41 crores, which was down by 47% year-on-year. And for FY '21, it stood at INR 162 crores, which was down by 49% year-on-year. Though the start of Q4 '21 continue to witness an upswing in economic activities, advertising and overall consumer sentiment, this was dampened in March due to the advent of the second wave of COVID. During the second lockdown, there was -- there -- sorry, during the second lockdown, there will be some impact on subscription advertising and syndication revenues across Shemaroo business, although we expect that it should not be as severe and prolonged as the previous lockdown. I'm happy to inform that even after the business got impacted during the second wave of COVID, we were able to turn around the cash flow and profitability of the company during the fourth quarter through continuous cost rationalization. On the business side, we relaunched ShemarooMe's, Gujarati back in April 2021, thus positioning it as a premier Gujarat-focused OTT service offering with a mix of original web series, Gujarati nataks and movies, including digital-first premieres. Through this, we aim to serve the underserved Gujarati audiences in India and abroad by catering to the entertainment needs of all Gujarati-speaking audiences on one platform. ShemarooMe also partnered with du in UAE; and Telekom Malaysia and Digi, both in Malaysia during this quarter. Further, during Q4 '21, while the company continued investing in its broadcasting channels, both the channels witnessed an uptake in monetization through advertisements. Shemaroo TV also marked its entry into original content creation with the launch of its first production, Jurm aur Jazbaat. On the digital media front, we crossed 50 million subscribers on our YouTube channel, Shemaroo Filmi Gaane, and the channel became the 21st most subscribed channel in the world. In conclusion, we are hopeful that now with the lifting of this current lockdown and aggressive vaccination drive, and most of the world, including India likely to go back to normalization by second half of the year, we should see a significant revival across all our business segments as well. With that, I open the floor for questions.

[Operator Instructions] The first question is from the line of Dhwanil Desai from Turtle Capital.

Three questions. The first one is our syndication business. So pre-COVID and before the economic slowdown happened, we were doing run rate of around INR 400 crores on syndication side. So do you think that in a year's time, we will be back to that number? And if so, are you seeing any green shoots on that side in terms of broadcaster's opening up dialogue or pipeline getting filled? Can you throw some light on that?

Sure. So just to correct the perception, we never did INR 400 crores on syndication revenue at any point in time. The numbers were significantly lower in any 12-month period. Now to -- in fact, it was like significantly lower than that. To -- just to answer your question, yes, some green shoots have been visible. It's still very early days because let's not forget that the entire media entertainment sector suffered a big loss of advertiser revenue over the last -- this entire COVID period. So in many cases, the -- and considering this wave 2 and all of that, there is a certain, I would use the word cautious optimism to invest, but still invest with caution. We hope that -- and -- so there are 2 aspects over here. One is, there is no doubt that there will be a -- the business will kind of restart and resume in this financial year. Now what is the quantum right now is currently not visible or we don't have sufficient visibility on that front. But otherwise, I can definitely say that, that business is on its way back. In fact, to answer your other question that when it will reach those numbers? Whether it will reach those numbers or not? It's too early to say. If you ask me, in terms of outlook, I mean, right now, it's too difficult to say that. What is happening is that in this period of last 12 to 18 months or even thereabouts, the channels have consumed what I would call a lot of period of their rights that they have without replenishing those libraries. So now many libraries will come up for renewal and expiry over the next 2 to 3 years, which need to be replenished. So under normal circumstances, 20% of -- roughly 20% of the library would get replenished in a year basis. But if it's not being replenished, it doesn't impact you maybe in that year to that extent. Maybe for some more time, you could hold out. But after that, the pressure of good libraries getting expired comes and hits you in a big way. So yes, right now -- I mean beyond that, it's difficult for me to comment and give a more definite outlook on that.

Okay. Okay. Got it. So second question is for our 2 new channels that we have started and the new initiatives, we have been spending money behind those initiatives. So any road map that you have as to at what revenue level, what time frame will we significantly bring down this bond rate for the new businesses?

Sure. So if I had to give a broad road map on the new initiatives or the new businesses, let me take a step back and actually talk a little bit about the thought process and philosophy behind it, firstly. So these are -- fundamentally, we want to connect the brand much more on a B2C side of the business. So that was the reason why television channels; that was also now a reason why the whole Gujarati part, which I explained during my opening comments. And these are initiatives which are helping us take the brand much more wider and connected in a different way. Now if I had to -- so television side of the business, the investment planned for this year is definitely lower than what was invested last year. And in fact, we are hopeful of tapering it off significantly quite soon, except that -- so our original plan or the business road map showed us a breakeven at some point in second half of the current financial year. But of course, the second wave has pushed it back. So it's a little dynamic situation and a moving target to that extent. But suffice to say that these are investments which are quite significantly helping the brand take its next journey. Coming to the digital side, again, these are initiatives that we are -- or the whole Gujarati movement or -- I mean primarily, at this point, it's the whole Gujarati cohort that we have targeted, which was a clear need gap that we saw. We examined. So we looked at it in 2 ways. One is the scalability that the market or this segment offers. And second is, what is our right to win. And in both cases, we saw a great opportunity, and that's something that we definitely are looking forward to capitalize on. So -- and that, in a way, helps us secure our digital future significantly more through a direct B2C connect.

Yes. Okay. So a related question, a follow-up on that. So any -- I mean if you can outline your strategy in terms of increasing viewership in 2 of our channels because both the genres that we operate in are pretty competitive, lot of existing players. So what is the strategy to increase the impressions and viewership in both the MarathiBana and Shemaroo TV?

So there is a -- so MarathiBana, we've, in fact, gained a very good consumer connect. We did some research recently, and the consumer connect is pretty strong. And I would say, for a channel which is just about less than 1.5 years old, 16, 17 months old, the affinity has -- of the consumer to put it in a consideration set as far as the movie genre is concerned is very strong. And the next phase for MarathiBana is the content ramping up phase, where there are some significant content tie-ups that are underway. And this will play out over the next 2, 3 quarters in terms of the whole programming part, et cetera. How it -- so that's something -- there's a clear road map on the content side in terms of newer tie-ups for that. And that will, of course, be accompanied by marketing push on the channel side because -- so these are the 2 key drivers for MarathiBana. For Shemaroo TV, again, there's a whole new programming strategy, particularly, considering the upcoming season -- advertising season in second half. That is kind of underway. It's in formulation. And accordingly, the content tie-ups, et cetera, are being put in place. So we knew from the beginning and has been shared and discussed that the GEC is a longer game in terms of investment and in terms of revenue and creating the connect with the audiences. And that's something that we are cognizant of. In fact, we were cognizant of right from the beginning at -- when we started. And our first initial thing was to establish the distribution, the various -- stabilize the channel at a certain level. Then we started the monetization part, and now the next phase of content programming and marketing. That's underway and being chalked out with a view of the upcoming seasons.

The next question is from the line of Shikha Mehta from Equitree Capital.

Sir, I just had a couple of questions. For the full year FY '21, our expenses on the new initiatives were around INR 58 crores. This was in the P&L. Apart from this, was there anything that was capitalized in the balance sheet?

Some amount of content would have been capitalized in the balance sheet. Apart from that, nothing. So all the operating expenses have gone into the P&L. Only some amount of content would have been capitalized. And both ways, we had existing content which was already in the inventory, which was being consumed also. So that, to the extent of consumption, would be charged off. And certain content rights, which we may have bought, depending on that consumption, it would have been -- it would have gone into the inventory.

Okay. And sir, is this going to be an annual run rate, around INR 60-odd crores, give or take?

So as I just explained to the previous person, was that -- the overall -- as we move along, at some point, the channel should be breaking even, at which point that number should be coming off. But considering the fact that there is a continuous -- I mean -- so the idea is in terms of investment, these are all finally initiatives which go with the strategy of taking the business B2C and paving the way for a far more sustainable growth and cash flow. So -- and to that extent, these were made over a period of time with those thought process. And we understand that on television side, there is a certain gestation period for it to actually reach those breakeven levels, et cetera. And we are -- obviously, COVID has changed those numbers and time frame to an extent. But otherwise, this is an investment that is very much part of our strategy.

Right. So assuming towards the end of the year, towards the last quarter or so, we breakeven. So our quarterly run rate was around INR 12-odd crores this quarter. And assuming the other businesses also pick up, so would that be a reasonable INR 12 crores and north of that would be a reasonable quarterly run rate for us at the PAT level, et cetera, breakeven just mathematically?

Yes. So mathematically, what you are saying makes sense. But I'm -- right now, it's too early days for me to give more color on that. A, anyway, we -- I mean it's difficult for me to overall give a guidance. B, with considering the whole COVID situation, how fast the advertising bounces back and related issues. So for example, right now -- so there was, for example, shooting was not there. So there was a whole lot of things on supply and revenue side, both impacting the business. So whether it will happen in that time frame, it will get extended. So as I said earlier also that we had budgeted for it to breakeven in the second half of the year. At this point, definitely, the second wave has pushed it back. There's no doubt about that. How much back? I think only time will tell and it will be very difficult for me to put a number on that.

Right. And sir, are we considering inflow from the promoters? Are we expecting them to increase their stake? Because -- I mean there is definitely value at this -- at these levels. So is that on the cards?

You mean to say, infuse -- cash...

Promoter stake.

Capital inflow into the company?

I mean to say, are we expecting an increase in promoter holdings at these levels.

I'm not in a position to talk on behalf of the promoters at this point in time. But let me put it in a different way. So at this point, the company doesn't need capital. I mean we've, in a way, on the whole -- the peak cycle of the cash flow, I would say. So the organized -- the company doesn't need cash flow. I mean we are very stable. Even our borrowing level has remained stable. Our cash flow is absolutely on a regular basis, monthly. I mean so we all are -- salaries or financial payouts to say or commitments to bankers, et cetera, are all being made through internal accruals on a monthly basis without a single day delay. So that's why...

Right, but not even from a capital infusion point of view, just there's definitely value in the company at this point from...

But that I'm not -- I cannot comment on behalf of the promoters at this point in time.

Also if you could speak on your -- next for yourself, would you consider at this point in time?

I mean I can talk about the company's performance. I don't think I should be talking about the view on the stock price.

The next question is from the line of [ Siddharth Mohta ] from B&K Securities.

So first of all, how do you see these FTA channel, Marathi, the movie channel, which has come with Zee Chitramandir affecting Shemaroo's MarathiBana because from the past 2, 3 weeks, we have seen significant share dropping, plus they have more movies library. So how does that affect the Marathi channel?

Okay. So the viewership actually had surged during the lockdown. If you see pre-lockdown viewership, the GRP was in the range of between 45 and 50, and that's where we've kind of settled back with the reopening of the lockdown. So in a way, we know the full impact only over the next 1 or 2 weeks, whether it comes down further or not. But as of now, we seem to have settled in the same range where we were. So to that extent, my sense is that what it has done is it has grown the market and added more viewership to the whole this thing. So there's absolutely no doubt that Zee has a formidable content library. And to that extent, that will reflect in their numbers. At the end of the day, for us, it's an economic proposition that based on the investment and costs that we run, what is the revenue along with that. So that's the focus that we are working with. And as I mentioned earlier to Mr. Desai that we definitely -- we have a few -- we have impact of early robust content infusion plan in place. We've actually already moved significantly on that. And some of it will roll out over the next 2 to 3 months, which we'll see a visible change in the channel's entire positioning also and the whole content bank availability with the channel. So in that sense, I would not be -- I mean I'm not right now seeing any drop. So what I'm trying to say is that the entry of Zee Chitramandir, actually, what it seems to have done is that, it seems to have grown the market. And if I have to actually take a step back, what we have observed on free-to-air and free dish is that whenever the content offering has grown and become stronger and more robust, the platform as a value proposition and an offering to consumer has grown significantly. So our estimate is that Maharashtra will see a good growth in the FTA base itself because now there's a very strong content offering in Marathi, along with the Hindi this thing. So actually, we expect the market to actually grow. And this has gone out. So if we go back literally 5, 7 years back, the -- or maybe 7, 8 years back, the FTA installed base was less than 1 million. It was only after the free dish installed base of less than 1 million. It was only after the entry of the big 4 broadcasters and their respective movie channels that the free dish installed base surged from 1 million to upwards of 30 million. And all estimates right now are that it has actually surged further significantly from that 30 million in the last 6 -- 2 quarters or so. So on the back of a great content offering that its supply creates its own set of demand. So in that sense, we feel that it will help grow the ecosystem rather than actually taking away anything.

Okay. And second, how do you plan to bring down your inventory because it's rising on a constant basis? And secondly, debt also because if we see as you mentioned earlier that you're not planning to raise any capital. So how do you plan to pay off your debt? Because as per the current scenario, net debt is really high. So how do you plan?

So just to highlight, the inventory in September was INR 743 crores. In March, it is at INR 730 crores. So actually, in the last 6 months, the inventory has come off.

No. But if we consider because it is blocking your net capital -- net working capital.

I understand what you're saying, but...

FY'19, FY '20 -- FY '18-'19, it was less than INR 500 crores or INR 600 crores. And now it's...

So as I mentioned earlier also, regarding the syndication business to television channel, that's a business which has kind of been challenged for the last several quarters, and that is something where for various reasons with the broadcasters balance sheets, et cetera, cash flows and advertising revenues, et cetera, that business has remained challenged for last few quarters. And that's really where the inventory kind of added up. And we've actually, in the last more than a year, not added any significant content to that. It's been much more focused in terms of the newer investments and initiatives. So in that sense, actually, if you see the inventory has stabilized. It's actually not really gone up to that extent. And so as the debt, by the way. So in...

No, no, that is fine. But what I'm asking is because of this COVID times, every other company is bringing down its debt, deleveraging the balance sheet. So what are your plans? Basically -- because if you're adding more content and your inventory is not getting monetized and the business is not going to pick up, your debt is going to pile up. So what is your plan for debt reduction?

No. I don't -- I have never said that the business is not going to pick up. In fact, I think the -- we are probably headed for some of the best times of our life in the next 2 to 3 years.

No. But that was the scenario 1 year -- so 3 months or 4 months back, you were also confident about that in the first quarter, everything will be back to normal, but then the second wave hit. So it will take more than 6 to 7 months to get recovery. So I just wanted to know that.

Yes. But that -- but for a 6 to 7-month period, I cannot leave my strategy and change something, do some tactical move for 6 to 7-month period. Business is in a much longer continuum. And I have no doubt that over the next 2 to 3 years, the cash flow and balance sheet will be significantly different than where it is today because that's the potential of all the initiatives that we are doing, that's how the whole digital business has been put together. That's how the whole content library, in fact, has been put together. So I have absolutely no doubt about that aspect.

Okay. That's fine. And secondly, how is the business currently? So basically, last year, because of this lockdown and everything, the advertisement and everything was like significantly down. We could see the new media revenues, which is the digital revenues also getting affected. So how -- is it better? Is it -- how is the business compared to last year? And what is the scenario on that one?

So if I compare to last year, definitely, it is better. No doubt about that. It is -- so the advertising, last year during the month of April and May, had come off by literally more than 80%; and June, probably by 70% -- 60%, 70% kind of thing. Compared to that, the business is significantly better because that's not what has happened. If I compare to last quarter, compared to the March quarter, that's where the tempering is there. So if I were to give a overall sense in -- if -- pre-COVID, if we were at 100% and that went down during COVID to 20%, 30%. In March, it was probably, I would say, somewhere about between 80% and 90%. And the expectation was that from April, it should get to 90% and 100%. And if we go by all industry projections by various experts, this year, at least was expected to be at par with FY '20 pre-COVID year. That part, and the first quarter, definitely, if we were between 80%, 90%, we are now at maybe 70% to 80%. So it's been a tempering maybe by about 15% or thereabout, maybe -- in that range of 10% to 20%. Business-to-business, it will be different, but at a broader rate.

Okay. Sir, because -- I just wanted to know because currently, we are seeing the new media revenues. We have seen that there is a quarter-on-quarter decline, and then it's still 20% down from Y-o-Y. So was there any exceptional or one-off item in the base because we haven't seen growth in the digital space also where other companies are showing growth in the digital space?

Something that we have discussed in the past also is the whole telco revenue on this front, which is -- so we earlier had a large business with the telco, which was forming impact at peak, probably upwards of 50% of our digital revenue is coming from that. That has now -- and that was a VAS-based offering -- VAS and WAP-based kind of offering, which was suited...

Yes. That I remember. But I just wanted to know...

So that impact of that loss of revenue still continued. In fact, last quarter, also someone had asked this question, and I had at that time also said that we should get done with that around Q1 of FY '22. So this quarter should be amongst the end of that impact over there. So 1 more quarter is what we expect that impact. So if we -- net of that, there is a robust growth happening in the other part. I would add one more thing, I'm sorry, is that to what extent the syndication revenue also probably -- digital syndication on side, to an extent, I would say, had -- I would call it stabilized or this quarter, we did not see any significant growth over there. So that also, to an extent, contributed to the minus number. So it was kind of flattish.

So I just want to know one thing. So new media revenues include this TV business, which you have been initiating?

No, no, no. That is traditional media.

That is traditional. No, no, because...

New media is entirely so it's been classified as digital media. So all -- so if I have to give you the components of that, telecom revenue, YouTube, all syndication to various platforms like Netflix, Amazon, et cetera, and then ShemarooMe. So all digital platforms that we work with is where the new media revenue comes from. And traditional media includes syndication, it includes the DTH business and it includes the broadcasting channel that we have launched.

Okay. So this is what -- so basically, what -- one thing I've got from your point is that the telco revenues are not improving, and they are on a constant decline.

Yes.

So is it that there is a Q-on-Q decline every quarter because we saw from the first quarter to the second -- the fourth quarter, we have only seen INR 4 crores increase because In the first quarter, the INR 34 crores of new media revenues and fourth quarter is only INR 38 crores. So is there a Q-o-Q decline in the telco revenues also? Or no, it was just till the last year only.

There is a Q-o-Q revenue. There's also -- I would give you one more point over here is that there is a level of seasonality also. So if you actually see in between Q3, the number was upwards of INR 40 crores in Q3 because of a certain seasonality element over there.

Sir, my last question, what like -- what are the -- what is the next forward? Or what is the magnitude of hitting upwards at both the businesses? So I can expect traditional media to be again be down, not down as the first quarter, but still down on a quarter-on-quarter basis. How will the new media revenue shape up? Because -- how are you targeting? Or what is the run rate you can provide us for the first half of FY '22?

So my own -- so as I said, considering the telco impact that I had expected to continue into Q1, I am hopeful that this -- the degrowth and growth, if it cancels out and we are near about flat also, I think that would kind of be a very good place to be because kind of it -- then at least shows that the telco impact is kind of done with. That's how I would look at the digital business.

The next question is from the line of [ Satur Kumar ], individual investor.

I wanted to know which are the new initiatives that you think are performing the worst according to your expectations?

Worst?

Yes.

Well, definitely right now, considering all the challenges that happened due to COVID, the broadcasting business is behind its plan and behind its curve. Worst or best is all a little relative. But what I can say is that what is behind the curve or behind its -- plan and projection is the broadcasting business is behind its plan at this point in time. Others at this point -- so if I have to put it. So we keep reviewing our various initiatives from time to time. And we have rationalized and if something goes beyond it -- point significantly below behind its curve, then we have been kind of shutting those down and shutting some of those initiatives. Another initiative -- again, I would put it on COVID is the whole devices business that we have the Bhagavad Gita and Bhajan Vaani devices business. Again, due to the retail challenge in the lockdown that we've had, we've shifted that business significantly to online, but the general trade and large-format retail markets have been challenged on that business.

Okay. My question really was, so you said we regularly review our new initiatives. I just wanted to know, maybe some example of -- some ideas that you have called or -- what is the outer timeline when you would actually want to start cutting down some ideas which are not really working out?

Well, it's a much deeper conversation. I think at this point it's difficult for me to have on -- in this way. But what -- so...

Okay. Have there been some instances there you've cut off some ideas, some...

Yes, yes. Many instances. Not one. So to give you an example, we had launched the Bollywood-based cloud kitchen business called Mukka, which we shut in March. Similarly, there are other instances. So businesses which -- so I'll put it this way. You -- there is a constant innovation track that one needs to keep looking at and seeing how we can associate Bollywood and the brand in different aspects. And for that, we keep working on different proof-of-concept kind of things with a certain defined budget or outlay and a regular review mechanism on that. And in a way, if I have to use a different terminology, kind of a stop-loss mark. If it's hit, then we kind of review it and figure out that something works, something -- whatever. If it didn't work, is there still a way forward? What were the reasons? And accordingly, we take a call on that. So there have been at least 4 to 5 initiatives, which we have closed in the last 12 to 15 months.

Right. I respect that you're trying to do new things and trying proof-of-concepts. Since you mentioned stop-loss, I just hope and expect that you would stick to your stop losses. You'd be more ruthless in cutting your losses. That's my request.

Sure.

The next question is from the line of [ Harsh Parekh ], individual investor.

First of all, Mr. Hiren, congratulations for driving the company in the toughest times and making the cash flow positive and turn it up in a profitability. I just have 2 small questions, sir. Number one, what is our long-term debt reduction plan? In current financial year, we have reduced the debt by INR 9 crores. So what is the overall plan going ahead in a phased manner? Do you have any picture in mind? Second thing, in last Q3 con call, you have said that the investment -- fresh capital investment in the new initiatives will be restricted or will be completed by this Q4. So -- and afterwards, in this financial year, by this first or second quarter, the company will be absolute free cash flow positive in terms of net CapEx will be restricted or will be sufficient for the initiatives. So is that the plan? Are we have completed the CapEx cycle for all the initiatives? Or still there are any plans in?

Sure. Sure. So I'll answer the second question first. I'll recap what I had said, basically, is that we -- so we -- the fresh investment that is needed or the investment that is needed to support our new initiatives should be coming out of internal approvals. And we therefore do not need or should not be dependent on external capital by Q1 of current financial year, is what I had said, and that's something that I reiterate, even now. In fact, in one of the earlier questions also, when the question of raising capital, et cetera, had come, I had kind of highlighted that, that we've kind of gone through the peak of the cash flow trough kind of a cash flow requirement, kind of a thing. And at this point, that seems to be the direction in which we are headed. I -- of course, that -- thanks to the second wave, this timeline could be a little off here and there, but I still don't see any significant change in that thought process. So that's the second -- that's your second question. The first question is in terms of the long-term debt kind of thing. So a couple of things I want to put here. We are sitting on an extremely valuable content library and asset base, and we are monetizing it, and in a way, using that content library to actually create our next future business plans. And what we have to that extent done is that to that -- a certain part of that, we are doing through leverage. Will we reduce the leverage? Definitely, that's the thought process. According to me, we probably have reached past our peak in terms of borrowing. In what time frame will it get deleveraged? Right now, it's too early to say. But my own sense is that we've crossed the peak on our fees borrowing. I don't expect the borrowing to go up from here, rather it will go down. At what speed and in what manner has many dependencies on how the business grows, how the economy grows, media and -- many different external and some internal combination. So -- but we from here should be looking at a deleveraging kind of balance sheet.

Okay. Okay, sir. So the last point is, how about employee expense coming down in Q4 and trajectories forward?

Sorry, I...

There was a significant part that played role in...

Can you repeat the question, please? I was not able to hear that properly.

How about employee expenses coming down in Q4 and trajectories forward?

Yes. So Q4, the employee expenses has actually been lower, in fact, compared to Q3. But I would say that this -- so let me put it in a different way. Let's not compare quarter-on-quarter. Let's look at the year-on-year. So in March '20, for the financial year -- previous financial year, March '20, the employee expense was nearly INR 68 crores. And that came down in the last financial year, which is FY '21, it came down to INR 59 crores from INR 68 crores, which is roughly about 12% to 15% reduction. So of course, this was achieved. So we did -- thankfully, we did not need to cut salaries of our staff, but we did not even give raise or increments last year to our staff. But some of the new initiatives that we kind of cut down, the related teams had to be let go. And that's how this reduction was achieved primarily. Going forward, so this year, we have already announced our salary increments in April itself and have put it in the normal payout cycle. So that has happened. And to some extent, some of the businesses as they grow, there will be some normal -- natural team requirement. And to that extent, the cost would be going up in the current financial year. So one is there's an increment that has happened, and other is newer -- there would be a net addition to the headcount in the current financial year, although not significant, but it will be.

The next question is from the line of Dhwanil Desai from Turtle Capital.

Sir, 2 questions. The first one is recently we saw that Amazon bought out MGM at a very significant value, and the library was valued very handsomely. So any thoughts on wherever we have permanent titles, can we -- do we have any monetization possibility through onetime sale and kind of lightening of the balance sheet? Any such arrangements that you think is plausible, you are considering, any thoughts on that?

See, there are 2 aspects to this. One is, should I sell part of the library or monetize part of the library and lighten the balance sheet? Or -- and I'll -- or the second question is that, should I sell the entire library off? Or to that extent -- I mean so let's look at it this way. Fundamentally, the library is the core asset of the company in terms of fueling many businesses, fueling the cash flow, revenue and many new forays. I mean today, when we have to set up or look at anything, something new, we always have a initial starting point, thanks to our existing library. And then we kind of grow that offering from there onwards. So that's the strength and the ability that the library provides us to build. It's -- there is no doubt that the library is an extremely valuable asset. I mean I don't want to preempt any number work, but it's a significant value that we hold. Now the question is, should I sell some part of it? According to me, that would dent the competitiveness and further growth driving initiatives. Existing business library itself will get driven and all of that. But it would significantly dent newer initiatives that we today can do much more easily, thanks to the formidable and significant library that we hold. Then the question is, should we sell completely, et cetera? That's right now outside the scope of this discussion, frankly. So I'm -- it's difficult to -- because then it's a very different approach. Having said that, I mean while there has been a lot of discussion today regarding the whole debt and everything. Frankly, if you ask me, our internal accruals and cash flows are comfortable enough to -- for us to service this debt. We don't see this actually as any significant overhang. Let's also not forget that we are in an very, very low interest rate environment. Even if the interest rates do go up marginally, it's still a significantly low cost of capital that we have. So -- and media industry, if we have a positive outlook for the next 2 to 3 years, I think having a level of leverage is definitely not a bad thing. That's how I view it. Definitely, we are working on -- and we've -- as I said earlier to the previous question also that we will be deleveraging and lightening the balance sheet through internal approvals itself. And that there is a certain -- in fact, there is a clear-cut thought process and possibility of that happening. So I don't see that as a issue. But to sell off, it's almost like selling an arm and a leg. I don't see that to be a rational decision.

Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Hiren Gada from Shemaroo Entertainment Limited for closing comments. Over to you, sir.

Yes. So thank you, everyone, for participating and joining us today. All I would like to say is that we've -- it's been a great turnaround for us in a difficult situation and a difficult year. And we've actually looking at taking the business to the next level because a lot of the hard work in terms of investment, et cetera, has been done in the last 12 to 18 months. And we are hoping that this should hold us good in the next 2 to 3 years as the industry completely grows to the next level. And I have no doubt about the media entertainment industry's growth prospects over the next 2 to 3 years. So yes, I'm looking forward to seeing everyone in the next quarter. Thank you. All the best.

Thank you. On behalf of Shemaroo Entertainment Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.