Shemaroo Entertainment Limited (SHEMAROO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '22 Conference Call of Shemaroo Entertainment Limited, hosted by Valorem Advisors. [Operator Instructions] I now 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 warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. 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 first quarter of financial year 2022. 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 purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call. We have with us Mr. Hiren Gada, CEO and CFO; and Ms. Kranti Gada, Chief Operating Officer. Now without any further delay, let me ask Mr. Hiren Gada to give his opening remarks. Thank you, and over to you, sir.

Thank you, Anuj. Good afternoon, everybody. It's indeed a pleasure to welcome all of you all to the earnings conference call for the first quarter of the financial year FY '22. I hope that everyone is keeping safe and well. Let me start by giving you the key financial highlights first. For the first quarter of the financial year '22, the operational income stood at INR 75 crores. EBITDA for the quarter stood at INR 7 crores. EBITDA margin stood at 9.56 crores -- 9.56%. Net loss after tax reported was INR 1.4 crores. For Q1 '22, expenses on the new initiatives net of revenues were at INR 16.6 crores. If you were to adjust for these investments in new initiatives, the adjusted EBITDA from the existing operations would have been approximately INR 24 crores for Q1 FY '22, representing a margin of 32%. Digital media revenue stood at around INR 40 crores, which were up 19% year-on-year. Traditional media revenue stood at INR 34 crores, which were down 34% year-on-year. Due to the advent of the second wave of COVID-19 and the resultant lockdown, advertising, subscription and syndication revenues continued to remain under pressure for this quarter. And this impact was felt more in traditional media than in the digital media. However, we believe that with states unlocking and vaccination drive underway, consumer and business sentiments across sectors will improve in the coming months, thereby driving the economic recovery for the media and entertainment sector. We continue to take adequate steps to improve operations and rationalize those businesses that have been severely impacted due to COVID-19. Further, on the digital media front, I'm happy to report that the digital media revenues are back on the growth track despite the impact of the loss of revenue from the telco business over the last few quarters. This has been driven by the strength of our content library, newer revenue streams that we have been able to build and, of course, the sector's underlying growth. Further, Shemaroo -- so we crossed 53 million subscribers on our YouTube channel, Filmi Gaane, and the channel continues to be the 21st most subscribed channel in the world. Furthermore, Shemaroo was also the distribution partner for a docu series titled Alma Matters: Inside the IIT Dream, released on Netflix. We also rolled out ShemarooMe's B2C strategy this quarter on the back of ShemarooMe Gujarati with an impressive lineup of direct-to-digital movie releases and original web series with a leading star cast. This was aided by an extensive marketing campaign, both on television and digital media. Through this, we intend to make ShemarooMe the most prominent OTT video destination for the Gujarati audience. ShemarooMe also partnered with Zain, STC and Mobily in Saudi Arabia and Etisalat in UAE. Further, for the global distribution of ShemarooMe on Android TV devices, we have partnered with Zeasn, a smart TV solutions provider. On the broadcasting venture front, we continued investing into our broadcasting channel, Shemaroo MarathiBana and Shemaroo TV. While both the channels witnessed an uptake in monetization through advertisement, the second wave of COVID-19 affected the advertising spend by brands in this quarter. Shemaroo MarathiBana maintained consistent ratings throughout the quarter. There were -- and the -- Shemaroo MarathiBana has built a strong connect of the brand in a very short period of time. Though Shemaroo TV started in a challenging economic and competitive scenario, but the company is strengthening its proposition through a focused approach towards building programming, marketing and distribution. In conclusion, we are hopeful that now with the settling of the second wave, along with the aggressive vaccination drive, most of the world, including India, is likely to go back to normalization by second half of the year, and 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 Shikha Mehta from Equitree Capital.

I just have a few questions from my end. So the current scenario, are you seeing any improvement in the ad spend as on this quarter, as on Q2? Or is it similar to how it was last quarter?

So if I have to say -- so July is probably towards the end of the month. And if I were to compare it with the scenario we saw during the peak of wave 2, which is roughly, say, mid-April to end of May, from there, definitely, the things are better. But if I were to map it with where we were, say, during the Jan to March period, we are definitely lower yet.

Okay. And do you have any insights on when you see this increasing a bit or even coming back to Jan to March levels or something of that sort? Or is it right now just too early to give an opinion on that?

So definitely, it is a little early yet, but I would look at -- I would just add a couple of aspects that -- the way we are seeing things. One is also -- so one is, of course, whether there is a third wave or not. I think it's something that a lot of people are kind of speculating and to an extent have been holding back. I think once the vaccination drive reaches a certain critical mass -- already the last month or so has accelerated quite well. I think the confidence of consumers and therefore of brands will definitely be much much stronger. Secondly, we are -- if we look at literally from mid-August, around 15th August, the next almost 6 months period is a very, very strong festive period. So you have [indiscernible], you have Dussehra, and then Navaratri, Diwali, Christmas, et cetera. So in a way, we are headed into a festive period which normally has been associated with a lot of product launches with a lot of brands' money, et cetera. We believe that if we don't see a third wave, we should see -- would come back off advertising revenues overall -- advertising spend rather, let me put it that way.

Also, so if you could give us some insights on the IRR you're currently generating on your inventory? I understand that you said in your opening remarks that our EBITDA margin, if we didn't include the investments in new initiatives, is much better. So just to give a better view, if you could give the IRR you're generating on your inventory?

So at a content level, it is -- we are -- on an average, we are sitting around between 18% and 19%. But given the fact that syndication, et cetera, has been low key for a few quarters now, thanks to the overall COVID-led scenario, that content is in the inventory and what we are seeing in the landscape is that the overall demand and pricing factor, will indicate IRR on similar lines.

Okay. So I mean 18% to 19% IRR is something what we will be able to maintain for even this year in irrespective of…

We are hopeful of that at this stage, yes.

Okay. Also sir, I think before the pandemic, we had alluded that we'd grew to 5x in the next 5 years, which I, of course, understand has been disrupted because of the situation. But today, do we think we have stuff in place to do that over the next 5 years?

We are definitely -- so if you look at the structural change that we've made over the last 2 years where we had a lot more dependence on syndication and deal base business, we moved into more B2C-led and recurring revenue streams like on the digital side or even on traditional side whether through broadcast business or other businesses that we have. So that we feel paves the way for a strong growth in the coming years. I can say that our team is extremely passionate and motivated to deliver strong growth, trying to change -- change is not the right word. But to work towards a strong growth over the next few years. And also, I would say that given the focus on the B2C part of the business, the brand's own journey that we have lapped over the last couple of years and the strength of the content library that we have, that has clearly kind of played out even during the pandemic in terms of numbers, cash flow, et cetera. And we are definitely aiming for a very strong growth forward.

Right, sir. And if you could also tell us your revenues from YouTube because our subscription has been growing consistently and that channel has been doing quite well. If you could just help us understand the revenues from YouTube.

So while we have not been giving the exact revenue number, broadly, what I can say is that from the Digital Media business, YouTube would be now at about between 50% to 60% of the revenue. Telco would be roughly in the range of about 10-odd percent, and the rest would be a combination of syndication and other channels.

The next question is from the line of Sidhant Mattha from B&K Securities.

Just 2 questions I had. First of all, traditional media. If you see the past 12 quarters, so for the first half, 6 quarters in the 2Q FY '20, the revenues -- average revenues were 977 -- around INR 97 crores -- INR 98 crores, INR 97 crores. And for the next 6 quarters, it felled to INR 47 crores. I know there is the COVID impact and the slowdown in the economy and everything. What target are you achieving? Because just wanted to know a ballpark number. Do you think that we will reach the INR 97 crore mark because you have added the broadcasting business also in your portfolio? So just wanted to know how do you see growth in the traditional media business?

See, if you break up the INR 97 crores on a monthly basis, that works to between INR 30 crores, INR 35 crores kind of revenue. And obviously, at this point, we are probably at around 50% of that. Now the question is what is the journey from here to there and beyond? Is that the question, if I understand correctly?

Yes, because as we have also discussed in the periods that the telco revenues are dropping, but the broadcasting business has come. So just wanted to know how the -- how much that will compensate.

Just to clarify, the telco revenues are in the digital business. And there, we now kind of in a way, moved beyond telco and are on a growth path at least from this quarter onwards. But -- so on the traditional media side, 2 things have definitely impacted. One is the overall slowdown in syndication revenue that has affected us even pre-COVID -- previous 2 quarters, we had that challenge because as we all recall, when we entered COVID also, the economy was on a downturn at that point in time. So that affected the business. We are definitely looking forward for that part to revise -- maybe not to that peak levels or something, but definitely be on a certain path. But more importantly, for us, strategically, we looked at the broadcast business to kind of create a much stronger brand connect as well as a more predictable and stable revenue stream. Now broadcast business itself has a certain gestation period and to -- we got hit by COVID even in this current quarter. We are looking at -- I mean, I cannot give a forward guidance on that, but definitely, traditional media, in fact, we believe that it has a potential to reach that number and probably surpass that over the next few quarters. I don't have -- I'm not in a position to give you a clear guidance on that. More than anything else right now, it's inappropriate for me to give our guidance. But we have mapped a few forward strategies. And that path is there. Of course, there are certain external challenges and environments related to the COVID and economic revival linked to that. So it is definitely being in the -- within that economic environment, operating within that economic environment, we are dependent on that -- to that extent. But if that happens, I think we have fairly strong levers in place.

Okay. Okay. Okay. And do you have any one-offs in the first quarter of FY '21 because…

Yes, we had. Some carryforward deals of previous year which were kind of booked in that Q1 of FY '21. If we take that effect off, we probably would have a marginal growth on a year-on-year basis.

Okay, okay. And so – sir, I was wondering because -- so what I am understanding is because if you see the second COVID wave had a less impact than the first COVID wave, broadcasting business must have grown around in double digits or in any -- so there won't be any marginal growth. So if there is -- so if there is a strong growth in the broadcasting business and if we exclude and we see like-to-like, there is a marginal growth of -- which is shrinking, just I wanted to know that.

No, broadcasting business definitely got affected because of this – because, as I said, literally, by the time March ended, the second wave had kind of set in, and that impact was felt throughout the quarter. And the -- some part of the growth gap that you -- that we are seeing is -- I mean, in fact, bulk of the growth gap, I would say, is from that aspect only.

The first quarter last year was also very depressed. And what other companies or other competitors are saying is that there is a double -- like there's a 100% revenue growth or something like that. Radio company is also reporting 50%, 60% advertising revenue growth Y-o-Y. If there is a 30% revenue growth or any big amount, there must be 10% revenue growth in the broadcasting business. So I just wanted to know, is any segment in the traditional media declining, that's what I'm asking?

So as I said, there were a few carryforward deals in Q1 FY '21, which if I take it off from the base, then there is a growth. So the core business has grown. It's the deal-based part, which in the previous year has affected the base.

Okay. Okay. And can you just -- can you give me the debt number, what outstanding debt as per June 30 of the current outstanding.

June 30 debt is INR 257 crores.

INR 257 crores. And FY...

March was INR 268, so it's about INR 11 crores lesser.

Do you -- so has the debt peaked off? Or do you think FY '22 the debt will peak off?

Based on everything we are seeing right now, we believe that the debt has peaked off probably in the Jan to March quarter. We think that there is definitely over the next few quarters as some of the businesses -- at least even if the economy comes back, I think there is good room for unwinding of debt.

Our next question is from the line of Deepak Poddar from Sapphire Capital.

Sir, you have been talking about strong growth over the next 2, 3 years as you expect business to pick up. Now if I see your historical performance or maybe at the peak that we did in FY '19 in terms of top line and even the performance. So what the -- so is there any thought process that we want to reach that that standard of performance that we did maybe in FY '19? So any thought process on that would be helpful.

Yes. So as I was explaining to one of the earlier question, it's the same thought -- continuation of the same thought that -- see, what we've done in last about 2 years is a big shift in our business itself from a much more deal-dependent business to a much more stable, predictable cash flow and revenue kind of business, which include many of the different revenue streams that we've built over the last 3 years or so. And the whole thought process right now for us in terms of the focus is to accelerate further on that part much more than get into doing a few deal-based things for maybe some short-term kind of a gain. Rather we're focusing on the -- on this path much more is giving much more cash flow, giving much more brand salience and it's adding overall to the predictability of the business. Now at what point we will reach that past top line? We don't know. Obviously, we are on that path, and we intend to do it as early as possible. But doing it through a trading route of deal-based business or doing it through building brick by brick, these different revenue streams. That's the strategic shift that we have been talking about in the last 2 years or so. Of course, there is another aspect that how the economy shapes up because media entertainment sector is ultimately a highly economic dependent sector. And to that extent, how the economy shapes up and grows will definitely impact how fast we are able to reach that point.

Yes, understood that part. And then even on the margin front, how do you see -- like we are way off whatever peak margins have been. So any comment on that?

So as I shared in my opening comments, that if we look at net of investments, actually the -- that core business margins are actually back to around 30-odd -- in fact, between 27 -- 25%, 27%, although this quarter, we did even more than that. But still what we've been talking of, it's the new investments which have weighed down the overall profitability itself. Since we have treated all these expenses as revenue expenditure, none of them have been capitalized. So that's one of the reasons why the margin picture is looking lower than what the core business has been kind of generating. Now as and when these businesses at least turns up or get into a next phase, post the investment phase, then based on their own journey, we will see whatever the weighted average margins are getting generated. But again, if you look at what we attempt -- what we are working on over here as an organization or as a team, it's really about taking the -- building those different revenue segments with a much stronger consumer connect. And that's something that we believe that is something that will hold us really strongly over the next many, many years.

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

So 3 questions. So the first one is on the continuation of the alternative deal for earlier question. So what you are saying is that essentially, we are trying to build a revenue stream which is far more consistent and not so much transaction based. So if I look at the numbers, our traditional media business was anywhere between INR 350 crores to INR 400 crores now in FY '20. And a large part of that was the telecommunications business. So if we adopt this approach, does this mean that to reach to that level, our broadcasting business has to actually go at INR 100 crores, INR 150 crores levels to reach to FY '19 kind of number?

Yes. Probably that plus, of course, the digital media business also is -- would be contributing to the growth, which is already something that we have been seeing, I mean, if we actually see the impact of the telco business or if we compute it net of the telco business impact, that business has actually been growing at more than 25%. In fact, probably around 30% kind of a thing for last few years. And even -- so I think it's both combination. Yes, telco -- the broadcast business will have to generate a certain number. And second is the digital business will -- which is also on a growth path.

But that -- so in this equation, we essentially are either by choice or because of the change in environment, are assuming that the syndication business may not go back to earlier levels or we may not want to take it to earlier levels, whichever way you want to put it. Is that a fair assumption to me?

Yes, I agree. And it's actually more the second -- more the latter than the former, that is -- to that strategically, because to that extent, it's a capital allocation decision also. And to that extent, it's also business model kind of question. So with both -- that combination, the focus from syndication would be definitely lower. We have a large library and therefore we will not be making it -- we will not be moving completely out of it or away from it. But definitely, it would be -- consciously, the investment focus for the last few quarters has been on the B2C part. And we've been talking about it virtually quarter-on-quarter in terms of where we are looking to invest.

So second question is on just broadcast. I think every quarter we gave [indiscernible] which is around INR 15 crores to INR 16 crores. So any kind of decrease in terms of at least one of the channels becoming breakeven or bond rate going down significantly in next few quarters? How do you manage to come up with that?

So originally, we were looking at a much shorter breakeven part. But obviously, COVID and the whole ad spend scenario, thanks to COVID has changed that. I would say that -- and inside last quarter also, there was a discussion on this and someone had asked this question. And I had said that because of the wave 2, something that we were probably looking for a breakeven as early as Q1 or Q2 in one of the channels of FY '22, maybe shifted by 3 to maybe even 6 months, somewhere in that range. The other channel -- I mean, so both the breakevens have in a way moved 3 to maybe 6 months. There are a lot of changes and new things that we have been working on, on programming, on distribution, on marketing trend on both the channels, including -- we are introducing some interesting programming changes on Marathi literally in the next few weeks. And we are -- so there is a lot of change and movement happening. I'm hopeful that we should be on a good path on both the channels. So -- and I would also add on -- see on Marathi, I think, overall, we've established a brand connect with the consumer and advertiser extremely well. We are benchmarking with the top channel in terms of -- and for a channel, which is less than 2 years, in fact, just about 15 to 18-month-old, this has been achieved in a very, very short period. And on the Hindi front, definitely, it's a much more competitive scenario. And to that extent, it has been a little slower than what we would have liked it to be. And again, for there, there's a bunch of changes that are being -- that are in the works or rather already in motion, I would say. So we are hopeful that over the next 2 maybe or 3 quarters, we should be in a good position on this business.

Just one suggestion, we have spent quite a bit of money in terms of the building the broadcast-based business. If you can share some quantitative data points with your shares in revenue, it would be really helpful in terms of understanding the direction. I mean I understand these are all nascent businesses, but to understand direction, quantitative data will be very nice. So if you can tell.

We'll try and see how we can incorporate as much of that. I take on board your suggestion.

Got you. And last question is on ShemarooMe. So I think you are -- you guys are trying to build a very good platform on the Gujarati language. Can you give us some kind of a data point in terms of the subscriber base, where it is today, where you want to take it? How large the market you see? And most of the OTT platforms even after a scale keeps on burning money. So I assume that we also must be burning money on that. So how do you guys think about not scaling up and continue to kind of spend money and not make money? How do you guys think from 3 to 5 years perspective?

Okay, I will try and answer that question. So obviously, the digital video services or OTT services as they are popularly known as is a very strongly emerging space overall. If we see the -- so at this point, we don't have our current numbers. But if we look at some of the projections, overall space over the next 5 years, this is expected to be a business upwards of about $5 billion as an overall OTT video space. Now within that, the way we see it is that India is a heterogenous country or heterogenous market and there is scope for segmentation of -- on language and many other user or other interest kind of groups basis. And we decided to -- so we looked at 2, 3 aspects. One is, of course, is the scalability available. Second is that if -- do we have a right to win? And Gujarati emerged as a natural choice for us because of the massive content library that we were already sitting on. And the strong brand connect that the local audience, the Gujarati-speaking audience, had with us. So to that extent, it became a natural choice for us. Now if we see Gujarati-speaking population is roughly around 4% to 5% of India's population, within that we see that -- so there are 2 other factors. One is that spending overall higher over the last few years, Gujarat has seen much stronger growth as a state in comparison to the rest of the country. So -- and it continues to see that higher per capita state GDP kind of growth. In which case, the spending power of Gujarat is probably likely to be much higher than that of rest of the country. Or among the higher, more better spending states, let's put it that way. It may not be the #1 state, but it will be among the top few states. Secondly, if we see in terms of content offering, it's very, very limited because there's just one general entertainment channel and 1 movie channel in Gujarat. Unlike most other regions, whether you talk of the south languages or even other languages like Bengali, Oriya -- even these languages have much, much more television and other content entertainment offerings compared to what Gujarat has. And therefore, we clearly saw a mid-gap that is available to be filled up. And with this -- so we obviously started with a certain assumption and with a certain base thought process in mind. I fully understand and agree that -- with you that to that extent, in the initial few quarters, it is an investment or negative cash flow kind of business. But as we move along, we expect that gap to reduce, okay. We -- I would also say that we have -- try to stay as frugal as possible in terms of overall -- so whether it's platform cost, whether it's marketing cost, whether it's content cost, on all the 3 fronts, we try to stay as frugal as possible and still create a multiplier effect in terms of impact. And because we understand that we are playing a regional game and not the national game over here. So therefore, the economics will -- for signal is going to be much different from national. And that's something that our team very well understands. And to that extent, we've been looking to play within that, within those boundaries. But we know and understand that till we don't reach a certain critical mass of scale, it is going to remain a negative cash flow or an investment kind of -- it is going to remain in an investment phase or a negative cash flow kind of a phase. So yes, that's broadly the way I would look at it. Also, I would like to add -- sorry, Kranti.

I also want to say that by going for a segmented approach. So Gujarati is the first segment that we have green lit, but by going for a segmented approach, the kind of steering away from the very over competitive mainstream space, which is being fought with very, very deep pockets and the burn over there is multifold. And the stickiness over here is higher because you're serving a segmented base with kind of serving them in the best way that they would want.

Yes. And also I had one more thing. Interestingly, -- this applies much more for Gujarat or Gujarati language is that actually Gujarati language is 3 markets. So one is people in Gujarat, other is Gujaratis outside Gujarat, and third is Gujaratis outside India. And all 3 have an interesting spending power and an interesting scale. I mean U.S., for example, U.K., for example, have -- both have very strong Gujarati speaking -- a fairly good Gujarati speaking community numbers. So to that extent, the Gujarati language does offer us additional markets that we could look at, which many other languages may not necessarily have that kind of a thing.

[Operator Instructions] The next question is from the line of [ Rohit Trivedi ], an individual investor.

This is [ Rohit ] here. So my first question is concerning market pricing of movie titles currently. So let's put it like this. We had kind of a 2, 2.5 years of inventory built up pace where we acquired a lot of movie and other titles. So let's put it like this that if we kind of say that during that time, the pricing of the movie titles were 100, right on an average, then for the same or similar titles right now, what would be the cost? Would it be 100 minus 10%, hundred plus 10%, 20%? So how is the current market pricing for the same or similar content that we acquired during the built-up phase?

I would -- based on recent transactions that we've seen or even some of the negotiations or discussions that we are having currently, the pricing would be at 100-plus at least 20% at this point in time.

Right. Then second question is on the similar line, concerning our content acquisition strategy pre- and post-COVID, right? Because pre-COVID the situation was completely different. There was not much prevalence of OTT platforms and other platforms, while post-COVID, the taste of the audience has changed. A lot of OTT have entered into the game or penetrated very nicely into kind of right for the regional segment as well. So how has this steered your content acquisition strategy in the kind of right current situation? Has it -- so let's say, kind of right, for the like-to-like content, right, what are the content that are we acquiring? And what is the cost of that?

So 2 or 3 parts to your question. Firstly, I would say that as far as the core Bollywood offering is concerned, we have not really seen any major shift in audience taste and preferences or consumption preferences. For example, Jab We Met is being consumed on television in a certain way or in traditional media in a certain way. On digital also, it is being consumed with the same -- in the same manner. And this is just one example. Or if a movie is not being consumed here, it's not getting consumed there also. And whatever we are experiencing or seeing in terms of -- the consumption of films continues to stay extremely strong. But the newer OTT services that have added is the web series part, which in a different way, if we mirror it with TV, it kind of reflects the general entertainment TV show. So instead of a TV series, there is a web series, which is a different story telling format than TV series is concerned. Film format actually has stayed as it is in a way and been in terms of consumption, et cetera, has continued to be a very strong consumption. So to that extent, content, which is connecting well with the audience, connects by and large, we have observed across all media, whether it's television or digital media or even on YouTube, et cetera. So -- and we -- our teams are mining data on a continued basis across all media platforms, we are -- our own consumption across our own platform or many other platforms. So across that, we have -- we are actually seeing a continuation of that same trend play out broadly. So to that extent, we are happy that the content strategy that we overall followed in terms of looking at marquee content, owning a large formidable library is playing out. And that, in a way, as we discussed earlier also, has reflected in the growth of the digital media revenues during this quarter also. So that is one part. I would add one other aspect is that, specific to digital, we have been hiring few -- acquisitions or buyouts of content for -- so we did, for example, launched something called Bollywood Premiere, where we picked -- we've been doing small low-budget films, low-cost films that which in terms of curation of content, based on the taste and preferences of the digital audiences who are willing to try out newer things, willing to experiment, et cetera. And that's something that continues for us. So that's one of the things that we've done. And the other thing which we've done as we've even shared in this quarter's announcement is that we -- so we've, for example, looked at distributing some of the different series on various digital platforms. And one of the announcements we made in this quarter is the Alma Matters: Inside IIT Dream that we distributed to Netflix during this quarter.

Yes. I mean in terms of digital revenue, the numbers match to your description. But traditional media, is there some missing link? Because your description and numbers say something completely different story. Not I'm talking about kind of last quarter year-to-year comparison, but even quarter to quarter. So last quarter, the traditional maybe it was INR 40 crores. This quarter, it has come down to INR 34 crores, which is kind of like a degrowth of 25%, even after your kind of like comments that both the channels are doing very well and everything. If both the channels are doing very well in the broadcast media and the content is relevant that we are showing, then that means the syndication revenue has come down significantly. And if the syndication revenue has come down significantly, that means the syndication content is either not at all relevant or the broadcasters like we and all are not interested in our content, right? So -- because if they are interested, then that should get reflected into traditional media revenue as well. It should be at least stable, right, as compared to Q4 of '21. So where is the missing link?

No, as I said earlier also that one of the key missing links was the fact that -- and this was, in fact, we had discussed it even during last quarter that the impact of COVID wave 2 will be visible in the next quarter on the advertising revenue side because we clearly saw a slowdown in advertising revenue. So what advertising revenue we had from Jan to March, and which was reflected in Q4 has significantly come off in spite of -- I mean, so irrespective of ratings. Spends on advertisers during wave 2 was lower, and that clearly has had an impact on the revenue streams and the revenue of the channel. Secondly, as far as the syndication piece is concerned, please understand that it's the same channel who is also -- or rather the buyer for syndication part of the content is also dependent on the same advertising revenue that we discussed, which kind of came off. And to that extent, they are also facing lower revenue, lower profitability and lower cash flows. And therefore, to that extent, there is a pause or a stop on their buying activity. So that's something that we have seen, and we have kind of faced during this quarter as well. So it's not about whether the content is relevant or not, it's right now that people do not have the -- given the whole economic scenario and the advertising spend getting slowed down, there is -- the industry is seeing a lowering of the business, and that is reflected in their own spend and activity.

My last question, please. So going forward, it seems from your commentary that Shemaroo MarathiBana and Shemaroo TV would be kind of like the key growth drivers and revenue and cash flow contributor for us. So let's not take a short term. Let's take a medium to long-term view, like, let's say, I think about 4 to 6 kind of quarters ahead, what would be the IRR kind of like if Shemaroo MarathiBana is not in the top 5 and Shemaroo TV GEC is not in the top 10 kind of, right, free TV channel because in the current kind of right way that it is going on and I had peek at kind of TRP data, which seems that they won’t to be able to crack the top 5 and top 10, respectively. So even if that doesn't happen, whether the channels be profitable or not, 4 to 6 quarters ahead? And what could be the IRR? Would it be 18% that we have benchmarked or not?

So there are 2 things that we are looking at. One is what is the space? What is the revenue potential of the -- of the underlying segment that we are addressing or playing in. Now Marathi, the estimates in a normal year are about INR 800 crores to INR 1,000 crores of advertising revenue for the Marathi pie. And in the Hindi general entertainment space, the advertising pie revenue is estimated upwards of INR 7,000 crores. So one is, these are the 2 segments that we are playing. We have confidence that these mobile channels will be able to generate an IRR upwards of 18% down the line. We are in an extraordinary situation where the ad spends are extremely erratic, where the confidence of many of the brands own underlying businesses, et cetera, have been challenged due to COVID. And even when things were kind of seeming to come back during the Jan to March quarter -- and everyone was, in fact, hopeful of a reasonably good 21%, 22%, we just -- at that point, we were hit by a second wave of COVID. And that definitely has affected advertising revenue across the entire economy, I would say.

Great. Just 2 quick suggestions, if I may, Hiren. One is related to numbers. I’ve requested this kind of right open into the con call and reiterating that again. Because for anyone to really map that what is going on, along with the qualitative management commentary that is often [indiscernible] in nature, it is always kind of like better to give some numbers, some indication kind of right to the community so that we know that what is going on. So for example, kind of right, anything related to how is the ShemarooMe subscription going on? Why -- how the broadcasting kind of right, both the channels are playing out in terms of TRP, in terms of revenue, in terms of kind of, right, any quantitative number that could be compiled over a period of time would help us to better get the map of the business, so to say, that is number one. And number two is, I have reached out to your office, to you by e-mail and to Valorem Advisors by e-mail also and by phone to kind of right, have a short meeting and I have never received any reply whatsoever, even not negative, which is a big surprise to me. So I think it's something should be looked out to that, right? If the management is kind of not ready to meet, that's perfectly fine. But then kind of short and humble view kind of like other companies are doing even we expected at least.

Sure. I'm sorry about that. I somehow -- I don't think -- I mean, I don't recall seeing a mail, but I'll recheck in my mailbox again, but I will anyway get our IR firm to be in touch with you on that. And the first part I have noted, and we will see how that we can represent that data.

Sure. I mean, we are not looking for any competitive information, which would harm the interest of the company because we are also shareholders and long term, in nature. So that's what is not something we are expecting. But as a kind of, right, part of the company as a stakeholder, we should also be getting some information about the direction the company is going on. I hope you understand.

Sure, noted.

The next question is from the line [ Nayan Shah ] from [ ML Services ].

What I want to know, I think so, first of all, thanks because this whole call was very informative and gave a lot of perspective about the company and where we are headed in the future. So first of all, thanks. I know it was a challenging time for the company and the way you guys are managing it is appreciated. My only question is, as a shareholder, because as a shareholder, what I look for is the value and how my investments are headed. So just wanted to know, considering in terms of the subcategories, right, from the digital part is doing, like inventory sits on the growth trajectory. So are there any plans to split the digitization business and list that particular part of the business in future? Because that can create a lot of value, and that's the niche segment where you don't have any other peers listed on the process. So I just wanted to know, are there any such thoughts which will add a lot of stakeholder value and the shareholders?

At this point, there is no such plan, but -- I mean, we'll keep looking at the strategies from time to time. But I would definitely say at this point, it's not on the cards.

Next question is from the line of Dhwanil Desai from Turtle Capital.

Just one follow-up based on the discussion and the answer that you gave. So typically, our content strategy -- acquisition strategy has been where we acquired second cycle and subsequent type of movies, right? But let's say, if we -- if our intent is to build a more consistent revenue streams and syndication, like [indiscernible] on syndication, don't you think our content strategy also needs to be adapted slightly differently? And also, there may be an opportunity to kind of monetize some of the content which we may think that will give you some firepower in terms of scaling up more strategic business units faster.

So to answer your second question, Dhwanil, is that we are definitely seeing still opportunities to monetize the content through syndication opportunity. Because what we are -- I can say one thing is that there are many platforms or many relationships or deals, et cetera, that we are doing. On the strength of a larger scale or order of magnitude of library that we are able to offer to many platforms. Now if I, I can, for the short term, take some of it and part with it or something, but that kind of would compromise the strategic impact that we can derive on many deals at this point in time. So if I -- if we weigh the cost benefit of that, we would rather be better off doing syndication deals and getting back revenue. So definitely, we are on that path and generating revenue out of that and investing it onto our newer initiatives. In fact, if you see quarter-on-quarter, our debt has been coming off. So to that extent, that also indicates that the underlying cash flows are very strong. But whether to part with certain part of the library and reduce the overall strength is something I wouldn't be too comfortable. In fact, I don't think we should be doing it at this point in time because there are many times, many interesting things that keep coming up on the library part in terms of monetization because it's a very dynamic situation. Kranti, you want to...

Dhwanil, I also want -- you know the new content, which even – say,for example, ShemarooMe Gujarati, we are acquiring new content, right? That may help in marketing the platform, but when the consumer comes onto the platform, you need to give him a very wide variety of content. And the consumer, you will be surprised, watches content of all eras. So it's -- I would say, even on platforms like the leading platforms, even the mainstream leading platforms that we have where we syndicate content or we have given on certain -- we get reports back, we know that the good content is getting consumed as strongly by the consumers. So it's something that keeps the consumer on the platform. It’s his daily bread and butter. The consumer is not only watching new. The new maybe the reason to buy a pack or something like that, but to stay on the pack, you need the base, and we are actually being appreciated as a provider of that base across platforms.

Yes.

Just -- I understand from where you are coming from. But the only question is that, so let's say, we are acquiring 100% of [indiscernible] and everything was second cycle kind of content, with the new kind of business model in it, maybe that we show is same from 100 to 75. Is that a fair assumption to make?

Yes. So that ratio will definitely change as the business model is changing. By what ratio it will happen, we don't know right now. And to some extent, there's also a cost difference -- major cost difference between Hindi and regional languages also. So at this point, we are very averse to really taking the big-ticket Hindi kind of A-list movie bet because those, in many cases, we have seen are literally like a binary event. And therefore, the risk is -- over there is significantly higher, but just the sheer capital involvement is also significantly high. Rather than that, we have a very good thing going with what we are doing, stick to that and keep building with that what we have. I mean, if you see -- just, the YouTube numbers, for example, in terms of views, et cetera, consistently it's been growing. It's the same set of second, third or later cycle content. It's the same audience. It's the digital audience, everything that we all say, it's still on a month-on-month basis or quarter-on-quarter. It may not be on every month, but quarter-on-quarter basis, the views and monetization. And in a different way -- and the reason why we share the YouTube graph is that it's reflective of what's happening in the ecosystem overall. Kranti?

Yes. Also, for example, Hiren spoke about our Bollywood Premiere service. If we were going to complete 100 weeks and almost 2 years, there we have given 1 digital premiere every week to the consumer. So to that extent, we've added 100 to our digital libraries.

Thank you. Ladies and gentlemen, as this was the last question for today, I now hand the conference over to Mr. Hiren Gada from Shemaroo Entertainment Limited for closing comments.

Yes. Thank you. Thank you, everyone, for participating. I think we had a very good discussion. It definitely was a challenging year -- quarter -- Q1 of FY '22. But we are hopeful that if the third wave doesn't happen in an ugly way, I think the economy should do well and therefore the media entertainment sector should benefit from that. Thank you very much. See you next quarter.

Thank you.

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