Shemaroo Entertainment Limited (SHEMAROO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 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, sir.

Thank you. Good afternoon, everyone, and a very 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 second quarter of the financial year 2022. Before we begin, I'd like to mention a short cautionary statement. Some of the statements made in today's con call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to defer from those anticipated. Such statements are based on management's beliefs as well 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 Chief Financial Officer; Mrs. Kranti Gada, Chief Operating Officer; and Mr. [ Ramnith Haria ], Vice President of Finance. Without any further middle quest, Mr. Hiren Gada to give his opening remark. Thank you, and over to you, sir.

Thank you, Anuj, and good afternoon, everyone. It's a pleasure to welcome you to the earnings conference call for the second quarter and first half of financial year FY 2022. I hope everyone is keeping safe and well. Let me start by giving you the key financial highlights. For the second quarter ended September 21. Yes. For the second quarter ended of financial '22, the operational income stood at INR 123 crores. EBITDA for the quarter was approximately INR 10.2 crores as against INR 7.1 crores in the previous quarter. EBITDA margin stood at 8.29% and net profit was reported at INR 2.7 crores with a PAT margin of 2.21%. For the first half of FY '22, the operating income was INR 198 crores. EBITDA reported was at INR 17.3 crores and EBITDA margin stood at INR 8.76 crores, while net profit was at INR 1.4 crores with a PAT margin of 0.69. In the past quarter, our profitable it took a hit primarily due to lower ad spend muted buying by broadcasters, and our ongoing investment in new initiatives. As is evident from the financial results, I'm happy to share that we are back in the green in terms of profitability in Q2 and also for H1, boosted by a significant growth in the traditional media revenues, which was inevitable as we had been discussing in the past. As most of you are aware, the company has been in an investment mode in the various new initiatives. Hence, it is important to note the expenses made on these new initiatives, net of revenue for the periods under review. For Q2 FY '22, expenses on the new initiatives, net of revenue were INR 16 crores. And for H1 FY '22, it was INR 32.5 crores. If you were to adjust for these investments in the new initiatives, the adjusted EBITDA from existing operations would be approximately INR 26 crores for Q2 FY '22. And for the half year ended FY '22, the adjusted EBITDA would be approximately INR 50 crores. For the second quarter, digital media revenue stood at INR 47 crores, which were up 21% year-on-year. And for the first half, the digital media stood at. revenue stood at INR 87 crores, which is up 20% on a year-on-year basis. Traditional media revenues in the second quarter stood at INR 76 crores, which is up by 27% year-on-year. And for the H1 of FY '22, the traditional media revenue stood at INR 110 crores, which is up by 52% on a year-on-year basis. On the business side, as consumer and business sentiment across sectors continued to improve during the quarter, there was a cautious revival in demand from broadcasters, resulting in an increase in top line for the company. The company's endeavor to transition from a B2B to B2C company. In that same endeavor, we are increasing our focus on creating and strengthening the brand connect across our broadcasting channels and digital businesses such as ShemarooMe and Shemaroo Channels on YouTube. We also released 16 new titles during the quarter on ShemarooMe Gujarati, with content across movies, web series and plays. Some market titles that were released included theatrical blockbusters, such as Shu Thayu? and Chasani. We also released our original web series Poori Paani on our ShemarooMe OTT platform, which has been well received by the audience. On YouTube, we crossed 55 million subscribers on our YouTube channel, Filmi Gaane. The channel continues to maintain its foothold as at 21st most subscribed channel in the world. On the broadcasting front, the gradual unlocking of states and increase in out-of-home mobility affected the overall television viewership. In fact, it has affected the overall media viewership entertainment consumption. This had an impact on the ratings of Marathi movie genre, including MarathiBana. However, on the positive side, programming changes and investments in marketing expanded at Shemaroo TVs reached during the quarter, which has given a boost to the channel's rating. To conclude, with the aggressive vaccination drive, most of the world, including India is returning to normal, and we are witnessing a significant revival across all our business segments as well. In conclusion, I would say that we are cautiously optimistic that in FY '22, the company's performance will show a revival. With that, I open the floor for questions.

[Operator Instructions] The first question is from the line of Viraj Mehta from Equirus PMS.

Great to see us doing so well again. I have 2 questions. First, if I look at our expenditure side, in spite of seeing a significant growth in revenue of almost INR 48-odd crores on a sequential basis. And our investments in new initiatives remaining same on sequential basis. Our costs have gone up significantly apart from the new initiatives. Can you throw something like where has this money gone?

Primarily consumption of the inventory for the traditional media sales. So the channel sales that we would have done, the underlying content cost would have been charged to the P&L.

Okay. But that should have meant your inventory should have also gone down to that extent, which it hasn't, it has gone down only some INR 20-odd crores.

Correct.

So for the half year only, entire half year.

Yes...

I'll probably connect to your finance team to understand this bit in a little more detail. Is that okay?

Yes, sure.

The second part, I wanted to understand, if I look at the digital media growth of around 20% for the half year and even for this quarter, can you split that a little bit more into how much has YouTube And how much has other business has grown?

While I cannot give the growth rates per se, but broadly, I would say that the overall share of each of our different revenue contributors has broadly remained the same. So just to recap, as we have shared in the past also is that YouTube is approximately 50% to 60% of the top line now. Telco business is less than about you can say, 10-ish %. And the remaining comes from a combination of syndication and ShemarooMe. And that share, which in the past has actually been -- so if we see a few years back, YouTube was probably less than 30%. So YouTube has obviously expanded significantly. Of course, it has also come at the cost of the telco business shrinking significantly. So that contribution share has been changing, but this quarter, we haven't seen any significant movement on that. So that's broadly remained on similar lines.

Right. The third thing I wanted to understand is, if I look at the business as such, I mean if we have this growth in digital and which essentially is a very low -- I mean, reasonably high operating leverage business. And in spite of seeing reasonable growth in top line, we aren't seeing that operating leverage playing out in your assessment at INR 120 crores, INR 130 crores, if they're not seen, what is that number post which we'll start seeing the operating leverage play out for us?

The operating leverage is also so One important thing to keep in mind is the -- where is the focus of the investment and capital allocation that is in. There is a clear focus on building the B2C businesses out and investing in the B2C business. Now those businesses are yet to see the positive cash flow because once those things start then the operating leverage definitely could kick in. But there is some time away from that point of view. Otherwise, so the whole idea -- and this is something we have been discussing for the last few calls for last few quarters. that the focus of the company's investment is in the B2C opportunities and the [indiscernible].

Sure, sure, sure. Right. Also, what I wanted to understand is if we look at -- I mean I was talking more about operating leverage, excluding the new investments because our new investments are roughly similar at INR 15 crores, INR 16 crores loss a quarter. I mean for the last 3, 4 quarters, if I look at it. So...

But no, see, one is we are looking at it only from a top line point of view. I would look at it also from the capital allocation point of view because I could invest in the older business model of B2B and achieve a certain level of operating leverage by doing but I'm not -- I've chosen not to do that and go the B2C route. And therefore, there the turnover of that capital is to that extent limited.

Understood. Understood. And as far as if you can throw some light on how the syndication business doing, are we seeing like traditional media now seems to be picking up, we are seeing green shoots. I wanted to understand, is that growth path continuing. Second, will we see MarathiBana breaking even sometime later this year by Q4? Those are the 2 last questions.

Okay. So to answer your first question. Yes, this quarter, we have seen some amount of cautious of buying, I would say, from broadcasters. That we are hoping it's too early still to talk about how it will play out over the next couple of quarters. And definitely, the overall advertiser sentiment has improved. It's still not back to the pre-COVID level. till there are quite a few segments which are under the west and to that extent, the broadcasters are cautious. -- what I would currently rate some of the business to be more pent-up demand in terms of certain library of content getting expired and need replenishment or certain refresh of library that is needed. That is more the thing I wouldn't say that it is still a full-fledged back to normal kind of a level. But as I said, it's too early. At least have 6 to 5 months or up to 5 months remaining for the rest of the year. So I don't know how this will play out on the broadcasters buying side. On MarathiBana, I would, at this point, actually refrain from giving any indication on when we expect it to break even. I'll also tell you why because the situation has been dynamic. As I said earlier also, as I said earlier, we've really not had what we could call a normal quarter or a normal period. We've been living in abnormal periods, and therefore, fluctuation [indiscernible] I mean, so during the lockdown, the viewership shoots are significantly but advertising drop. In the unlockdown viewership drops, advertising probably lacks behind because the business confidence may not still be fully back or all sectors may not be fully back. So considering all of that, we have kind of in that kind of a period. So while we have a definite plan of how we want to take this forward in place. But to [indiscernible] right now, I would refrain from -- that I know in the past, I have discussed this, but unfortunately, the whole COVID-led situation has played out differently from what everyone probably had anticipated a couple of 2, 3 quarters back. Another thing I would add overall is that we have a definite content and programming and overall strategy in place. Kranti, do you want to talk a little more about that? Marathi one?

Yes. So I would say that MarathiBana has gained considerable mindset amongst the Marathi movie audience. We are in the consideration set, which is for a young brand, we think it's in the right direction. And in the last 3 to 4 months, and you may already be if you watch the channel, you'll notice, we've invested a lot on the adaptive programming. We've been doing a lot of innovation on the programming to help set the oil audience and definitive identity for the channel. And I would just say that you can maybe just visit the channel even now, and I'm sure you'll see exactly understand what I mean. So there is I'm saying while revenues are playing out, we also see an opportunity to define the identity and get like a strong mindspace in the consumer language...

This lays a strong founder overall for the [indiscernible].

[Operator Instructions] The next question is from the line of Shikha Mehta from Equitree Capital.

And I just have a couple of questions. So our traditional business has grown significantly this quarter, but we haven't seen much inventory reduction. So could you give some color on that or when we'll see inventory turnover levels touch 1 or be below 1?

Actually, the inventory has come off. I don't know why -- I mean, if we see in March, I mean, if we see year-on-year, we were -- we've come up by almost INR 35 crores on the inventory. And even if we see from March, it's down by INR 20 crores. So do we see this reduction in continuing going forward or do we see like our inventory turnover ratio is coming to 1 or below 1 or something of that sort. If you could give some color on that? So one other -- so one thing that I would say is that while -- so there is definitely certain content investment for our newer initiatives, which are part of -- which definitely would have some or the other place in the inventory that is currently being reported. But secondly, directionally, the target and thought process is to be bringing down the inventory in a steady manner.

So sir, you said some amount of the inventory is for the new initiatives. Could you give some color on what our inventory right of policy is for those Is it the same as the traditional business or is there a different policy?

It is linked to consumption. So for example, if there is some, say, television episode that we have flattened from a broadcaster supposing. And so it's for a, say, 3 telecasts or 5 telecasts but we charge it off when we have the first telecast. And but when we have acquired it, it would sit in the inventory, I mean, supposing I acquired a show, which has say 300 episodes. Then that content would fit in the inventory until it is consumed. And as and when it is consumed, it would get charged off.

Okay. Right. And sir, just from getting that ratings have suffered because of the IPL and now the T20 World Cup. So if you could give some color on where we stand on data channels and what we aspire -- where we aspire to reach over the next 3, 4 years on an overall percentage share of the total ad revenue or something of that sort.

See, more than IPL, the [ rates ] have actually suffered as we've discussed just because of the unlockdown, people have during the lockdown, sitting at home, the consumption of entertainment, both on television and digital was at its peak during -- when the unlockdown has happened, the movement back to work or whatever outside movement has kind of brought down overall media entertainment consumption -- home entertainment consumption. And that we have seen reflected even in our digital business, including the YouTube numbers, if you see for the quarter also. It's been uniformly felt across the board. So that has been a bigger impact on the overall viewership. Now to answer your other question on what kind of market share and -- or what kind of revenue so all I want to say is that the addressable segment that we are looking at. So Marathi advertising pie on television is estimated to be between INR 800 crores to INR 1,000 crores. And as per the Hindi general entertainment pie is estimated to be around INR 7,000 crores to INR 8,000 crores annually. So these are the 2 segments that we are currently operating our channel, 2 channels in. And we believe that they are large enough to offer scale and at a certain scale, definitely a decent ROI on the investment.

So even if you could give a ballpark figure that you're looking at achieving say 2%, 3%, 5% of the total addressable market over the next 3 or 5 years. Just a ballpark target.

That would not be fair on me to kind of put that kind of a number, unfortunately. But as I said, these are the 2 segments that we are addressing and -- or kind of operating in. And we believe that there is a -- for both the segments, the opportunity size is fairly large enough, the addressable pie is large enough to offer profitable scale.

Okay. And sir, the traditional...

Sorry to interrupt, Ms. Mehta. May we request that you return to the question queue? There are participants waiting for the turn. The next question is from the line of [ Ankit from Bamboo Capital ].

Sir, on the ShemarooMe...

We'll move on to the next that is from the line of Dhwanil Desai from Turtle Capital.

Hiren, you're able to hear me?

Yes, we are able to hear you, sir.

So Hiren, 2 questions. So just on new initiatives, we've been spending INR 15 crores. We were -- so I was expecting that since in Q2 ad spends have revised across the industry, we would have kind of at least reduce some burn on some of our broadcasting channels. But the number has remained broadly in the same range. So how should we look at this number Is it because that we have invested more money in something like ShemarooMe Is it because of 2 kinds of things that the number has remained around INR 15 crores? Can you throw some light on that?

Yes. Yes. It's -- this is a consolidated investment, which includes ShemarooMe.

Okay. Okay. So no, what I'm saying just -- so is it fair to assume that our bond on the broadcasting channel would have come down?

I would say it's probably maybe marginally. I don't -- considering also, as Kranti had earlier explained that we have made this additional investment in the Marathi content part. So considering that I would say maybe it's marginally come down, not significantly.

Okay. Okay. And the second question, as an extension to that, I mean, we are all making investments with the hope that things will play out as planned, and we have already spent INR 130 crores, INR 140 crores on these new initiatives. Now -- but any kind of a plan in place as to now will pull the plug if certain parameters, certain indicators are not met or certain investment limited as because we can't be remaining in perennially investment mode right so any thoughts around this way?

Yes. And no also. And the reason I'll tell you, yes, that's really how we have pulled the plug on many of our investments. So I don't think we are married to any of our investments from that point of view. So that is definitely about the thought process. And if I would use the word discipline, definitely. However, as I just said earlier also that unfortunately, we've not seen a normal time. So what is -- where this thing can be placed in a normal time, only then we can put account to say that yes, this is now playing out as we thought or not playing out or where there's a significant gap or what can be done. So that is the challenge that we have faced. We are hopeful that this quarter-end, as this whole festive season ahead of us plays out, at least we may be at a good level compared to pre-COVID. And I mean, all of us had hoped in January or February, we were all looking forward that from April onwards, we should be broadly back to pre-COVID levels but then Wave 2 hit us. And we have to -- has it many businesses much more significantly in terms of sentiment than anything else. So the fear of Wave 3, et cetera, has made many traditional advertisers quite cautious. And second, many industries have faced supply chain issues because of which also there advertising has come off. So we definitely know in automobile or some of these other categories have and which they are definitely large advertisers on television. So that's what I'm trying to tell you that considering that what we have tried to do is try to, 1, gauge whether at the core, the offering is being accepted, are we gaining market share? Are we gaining mind share? Are we -- is the offering being accepted? Secondly, are we overall as in -- so, therefore, the first question is, are we in the consideration set of the audience or not. The second question really to think is that how do we minimize or reduce the overall investment in the interim to a level which is more whatever, more sustainable or at least more conducive kind of a level. And third, of course, we also try to ensure that we -- it doesn't cause a balance sheet trend. So if you see the overall balance sheet, our debt level we have kind of maintained it broadly at where we were. And therefore -- and while meeting all our obligations, financial commitments, et cetera. So at a broad level, it kind of shows the strength of the underlying cash flows of the rest of the business. So these are some of the things because the opportunity size is such that we have to give this particularly the broadcast business we have. And we also know for a fact that the broadcast business has a certain gestation period. So the opportunity size and the fact that there is a higher gestation period, I think it needs to be given a fair chance to bloom and then examine whether one approach is how do we -- whether to pull the plug other approach is, how do we make it profitable or at least breakeven because the business gives significant other advantages in terms of the brand connect and things like that.

Okay. My second question is with respect to syndication business. So I think in the earlier calls also, we have indicated that we may continue syndication business, but may not want to grow or at least say incremental capital may not get allocated to syndication business in a significant manner. So compared to where we were in FY '19, FY '20, where do we see our syndication business stabilizing and in the current quarter, whatever growth that we have come -- we have got around INR 20 crores to INR 76 crores Q-O-Q. -- is significant part of that coming from syndication? Can you help me understand that?

Sure. So you're absolutely right in the understanding that -- and this is something, again, we have discussed in the past that the capital allocation for us is focused much more on B2C versus B2B and syndication, the -- so there are -- in the syndication business, there are 2 parts to that. One is the trading part of the business. And then there is the syndication of existing content library, et cetera. So that anyway continues because those are the rights we own, and we monetize it across all media, including the television media. But the trading part, consciously, we have reduced the overall capital allocation there. And -- to that extent, it will definitely, over a period, not now. But I mean, again, we are in abnormal times. But if we were to stabilize where we were saying by '18, '19, we would be at a lower share of that to the overall business pie. And the third aspect to that was about this quarter. Yes, in this quarter, definitely, there has been -- and we have mentioned it also in our earnings release or I spoke about it in the opening comments also that yes, there has been a certain cautious revival of demand from the broadcasters. And to that extent, there is a certain contribution of that. In fact, I would say a large contribution of that to this quarter's top line.

The next question is from the line of Rishikesh Oza from Robo Capital.

Sir, my first question is if you could share the loss split for all our initiatives. And broadly, if you could share when can we leave these losses?

I just said this at the beginning of the call, but I will repeat it. The overall investment for this quarter, INR 3 crores, and for the half year, it was INR 32.5 crores.

Okay. So actually looking for loss split for our initiatives. A split of losses for our initiation.

Yes, split is not possible to give at this point in time. And we've not shared the split overall -- and yes, the other question, what was the other question?

Sir, my other question was broadly if you could share when can we leave these losses for these initiatives?

So as I shared in one of the earlier questions also, we had estimated, for example, for the Marathi channel to break even in a certain time frame. But given what we saw on the COVID front and COVID has an impact on viewership as well as on advertising. So it's not one thing. It affects both. So given all of that, we -- the time line obviously got extended and our COVID proved wrong. And therefore, I would like to refrain from giving that estimate of when it would look to break even because as I said, these are abnormal. If it was normal time, we could see a certain trajectory. And we saw a certain trajectory of growth, some or the other of these factors came and hit the overall numbers.

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

I just wanted to understand, in your opening remarks, you did mention that our adjusted EBITDA for first half is about INR 50 crores, right.

Yes.

So that's about 25% kind of EBITDA margin that is on an adjusted basis. So I just wanted to understand, maybe it is because of your initiative or the expenditure in your new initiatives that is driving the difference between the reported and the adjusted EBITDA margin, right?

Yes, yes...

So I just wanted to understand by when you see the reported margin converging to your adjusted margin?

As I just explained to the previous caller or question that -- so it will ultimately happen when these initiatives break even or are at least in a positive form. Now what is that time frame I'm refraining from kind of estimating right now because, as I said in my past estimates have been proven wrong by COVID so it's very difficult right now to put that kind of time line, unfortunately.

Yes, understood. But even a year or 2, something a little on the broader...

If I have to give a broader time line, yes, hopefully, it should be much shorter than that. But it's difficult to put a, to pin down right now because each time we were in a certain trajectory, and we thought that the line of kind of breaking even is visible now to us on 1 or 2 of the initiatives, something or the other. So COVID kind of came and hit, second wave hit. And now the unlocking is hitting in a different way because the overall viewership of home entertainment has come down. So it's -- as I said, we're still not, so to say, normalized.

Okay. I understood. And this quarter, where expenditure net of revenue in new business was about INR 16 crores, right?

Yes, yes.

The next question is from the line of [ Ankit from Bamboo Capital ].

On the hiring on the traditional media side, prior to disruption in starting FY '20, in FY '19, we did report close to INR 396 crores or around INR 400 crores of revenues from the traditional media side. Of course, over the last 2, 3 years, our focus has been more on B2C. But let's say if everything normalizes and there is no more COVID third wave, so where do you see this revenue stabilizing in our overall stream of things and removing the broadcasting part from this. So let's say, if in FY '19, we did not have any revenues from broadcasting. So on a broad-based comparison, let's say, in FY '23, let's say, things normalize, how do you see the revenues for traditional media?

See, as I explained earlier to one of the questions, I think Dhwanil had asked that question. So the focus of investment, see the traditional media earlier model was kind of a further trading and investment kind of a model. Now if I, for example, were to have allocated the capital which we allocated in new investments towards that business, then we probably would have been in that trajectory to come back to that revenue maybe by FY '23 or I don't know the time line, but we -- because then you are kind of turning over the capital into the same business. But given the fact that we have consciously decided to do the B2C investment in the newer initiatives, B2C business focus. The capital allocation has kind of been allocated more towards these newer B2C initiatives. And to that extent, there will be a gap in the -- so since there is a gap on the investment side of the traditional model, it would result in a relatively lower thing. The whole idea is that how do we move from a business which is more B2B, more trading-oriented and more -- a little more lumpy towards the business which is far more stable, predictable, brand-led, consumer connected and therefore, much more sustainable kind of thing. That's the effort that we are -- that's the journey that we have embarked on. And we moved a significant way on that journey. And yes, I mean, we believe it's a matter of time before that kind of materializes or that manifests. And to that extent, what I would say is that one cannot so while we may compare where this business will go versus where it was, but it wouldn't be fair to say or expect given the new -- the change in the whole strategy and approach. And therefore, what we are doing is replacing that with a significantly more sustainable and regular kind of more predictable business. So that's really the effort transit...

In fact, I'd like to say that last few quarters, I mean, I would say we've not had the traditional media syndication deals and yet the revenue sustainable revenue lines that we had been building already building have sustained the company through this time also and funded some of the new initiatives. So bulk of the new initiatives. So Hence, the company is moving towards, as Hiren said, a more predictable, sustainable business. Also B2B deal we figured that a dependency on few buyers was becoming very large. And the value unlocking in actually being a B2C brand and getting the value out of the consumer can be a lot, a lot more. And you're already experiencing it, which has actually kept the company going in the last few quarters.

Yes.

So on this, the trading part of the traditional business of the syndication business, but do you think over the past few years, there has been a significant impact of OTT is coming in, which has impacted the viewership of the movies that we syndicate to the TV chance.

TV viewership is not down and what has impacted is advertising, fallen advertising because of COVID definitely. And even before COVID hit, if you remember, India was going through a lean period, and broadcasters who are already seeing a drop in advertising at that point and then COVID happened. So what has led to the drop in buying from broadcasters is the advertising revenue drop. So viewership, if you look and check independently and viewership on television has not suffered.

But is it that the viewership on TV movie channels has suffered? Do you have some data on that? I think I don't have that chunk.

What was your question?

The viewership on the TV movie channels has suffered significantly post the pickup of OTT?

No, that data is really available. You can -- but data is really available. You can go and verify it.

The next question is from the line of [ Rohit Trivedi a private investor ].

Great. So my first question is about ShemarooMe. So bulk of the investment that we are making would be on the part of our TV channels and ShemarooMe. For TV channels, we have got a benchmark data about the profitability and return on equity kind of effect from other players. So we can hopefully keeping the fingers crossed, expect that over a period of time, we will kind of quite trend towards the same line, right? But on the part of the OTT, that is ShemarooMe, even bigger players than us kind of right, who are well funded, who are well-capitalized, are also making huge losses, right? And those losses are sustained still. I know we are in a niche category. We are a differentiated player. We are looking for kind of like a specific regional kind of right segment, so on and so forth. But still, could you give me some color around what is our thought process around ShemarooMe in terms of finance, not in terms of the right content part of it in terms of finance, how much are we putting kind of like roughly, let's say, of new initiative into ShemarooMe? What is the trendline that we see in terms of subscriptions over there? And when, right, hopefully, we can see the profitability or kind of turn in around on the part of the ShemarooMe?

Okay. I'll just try and address it in a couple of different ways. This is at very, very early days in the OTT journey, the OTT business is a journey. And to that extent, this is a phase where investment is sort for and probably going to be required for a certain amount of time in terms of building the technology, the brand, and the content, all the 3 parts that -- and of course, the overall user experience and things like that. And I agree that a lot of people have been spending a huge amount of money. We have, in fact, been extremely cautious about, firstly, kind of deciding when to do the B2C rollout because only when we saw certain trends of consumers paying, et cetera or starting to pay and all those kind of things was when we actually embarked on the B2C strategy. Till that extent, we were more B2B 2C. Secondly, we have attempted to -- until now at least, we've been fairly successful, I would say, in keeping the overall cost structure of the entire thing, relatively much, much lower compared to many of the other players. And when I'm saying cost structure, it is technology is a large -- very large cost. We've kind of attempted to keep it as low relatively as possible. Considering the fact that we are a regional player, we cannot afford to have the technology costs go out of hand. And third is the content partner content, of course, depends on the market situation as well as various other things. In fact, that is exactly one of the reasons why we have refrained from sharing some of the numbers till now. Obviously, one is it's too early days, but more importantly, it will impact the economics as well as the competitive scenario significantly if we put out numbers because this is a time when all and suddenly are trying to enter this space. And if they have -- if we share numbers if people know numbers, we'll certainly see a large flow of fresh offerings in this space. So we really have tried to maintain the leadership position and reach a place where we kind of become the de facto player in this. Now these are some of the aspects of thought process as far as the ShemarooMe Gujarati offering is concerned, we started from a very strong position of having a great right to win. Our team has successfully added some great new content created a commissioned grade content, which has been very well received and, I would say, loved by our consumers. But I would say that the journey of this OTT business is still just the beginning. This is probably the first or second step in a 1,000-mile journey. If we rewind back, for example, say, 20 or 25 years back, when the television was at this stage, at that time also, the television journey kind of played out in a certain way, the initial period was a period of investment funding, brand building, consumer connect, content, et cetera. But once that business crossed a certain scale, the players who kind of grew with it or they all kind of did great. So that's really the larger, bigger picture that we are kind of looking at.

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

I have a question about the average weekly viewership in the Marathi channel, I think you guys started at over 100,000 views. What would that number be currently for MarathiBana and also for the Hindi TV channel?

I'll have to come back to you, Harsh, on this number because each week, the number gets reported. I don't have the exact -- you reach out to our IR team, they will be able to help you with that.

Yes, I will. And just a follow-up. What do you provide segmental breakup currently as to how much of the conventional revenues come from these 2 endeavors like Hindi TV and Marathi TV channels? No. What we are currently -- in fact, something that we have been split into 2 different data points that we have been providing. One is a split between traditional media and digital media businesses. And second is the investment in new initiatives in that respective quarter.

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

I just had a couple of follow-up questions. Sir, if you could tell us what your inventory turnover would be what your aim is over the next 2, 3 years?

Well, I can -- I mean, sort of giving you any figure. What I would like to obviously say is that we'll have both the levers playing out over the next if I have to -- look at the next 2, 3 years, our target would be to play out both the levers, which is a lower inventory and a higher turnover. So to that extent, the inventory days would change significantly. Also, as we discussed at some of the newer -- so inventory related to some of the newer media a shorter cycle also of consumption. So that ultimately should lead to a lowering of the days or increasing of the turnover, whichever way you want to look at it.

And sir, broadly, on our traditional media revenue and or our inventory, whichever is preferable, could you give a breakup as to how much we use for our own consumption and how much we use for trade currently?

Very difficult because -- I mean, digital -- I mean it's a deeper, but if I had to put it in a different way, wherever we have the digital rights, for example, so it right. So if I have the digital rights, we monetize it or distribute it or consume it in some of the other formats, whether it's YouTube or some of the other OTTs or telco or ShemarooMe, I mean -- so since we have multiple touchpoints and distribution endpoint available, consumption points available, we kind of optimize or look to optimize on that. And sincerely, if it's traditional, then either we would have syndicated it to a TV channel or right now, we -- on Hindi, we movies, we are -- since we are running a general entertainment channel, we don't have movie programming slot by large, for that. So we don't consume any Hindi movies for Shemaroo TV. But Marathi, of course, is a movie channel. So their inventory or our content is being consumed for our in-house purpose.

And then on average, What would be our margins be broadly on the traditional media?

Sorry, but I'm not in a position to give you the breakup.

Okay. But we're still maintaining the 18% IRR, right?

That is really the guiding part overall. That's what we've been saying and driving at so that IRR to us is far more important overall compared to the margin front.

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

Hiren and Kranti, can you share some thoughts on the content strategy for those Shemaroo TV and MarathiBana? Because when I look at the channel in use channel, so in Shemaroo MarathiBana, I see certain efforts to kind of to dub the Hindi movies and show them. And I think probably we are also showing Bahubali in dubbed manner. And on ShemarooTV, other than Jurm aur Jazbaat, I hardly see any original content. So how do you guys think about it and what is the game plan there?

Yes. So Marathi, you are right. We have been doing some of the movies from our existing library and as well as we have acquired certain in language films for tubing into Marathi and that's something that has kind of just been started a few weeks back, and we have more content lined up because there is a logistical issue of dubbing, censoring and then -- so it takes its own certain time line of putting out a -- Kranti?

Yes. So Dhwanil, to run a movie channel, you need a certain amount of content. And while when we started, we had a strong library to sustain us, but because of COVID and theatre being shut, the release pipeline of new films really dried up for us. So we innovated, and we said, why don't we bring in blockbusters from the south, whose production quality, content levels, et cetera, is superlative. And it's proven that it works in Hindi. We also did a lot of research about how the audiences in Maharashtra view that content, even though it's in Hindi, and we felt that it could work. And hence, we have tried to use this as an innovative strategy and we said it could be a good differentiator also for us. Although some of the library movies from our own library, we've tried to dub. And again, just like a few of the movies which you may have seen Hindi dubbed at Shemaroo library movies, which we can -- the content is lying with us, we have just dub it and put it out there. So we thought it was worth refreshing the channel with this kind of content where there is blockbuster content being delivered in the language, which is preferred by the region. And I'm happy that you've seen the Bahubali promos and we would have actually ideally spoken about it in the next call because it's being done in this quarter. But the creative effort behind making it a superlative product has been great. I mean really, a lot of effort has been invested and maybe we speak to it in literally quarter. Yes. On HCV, I will say that initially, when we launched the entire strategy was led by acquired content, and we decided to produce our [ show ] Jurm aur Jazbaat. But following that, we've been hit by Wave 2, the COVID Wave 2 and we saw that the advertising revenues were looking difficult. And therefore, yes shooting was also was halted. So given that we put a pause on that strategy, -- In the meantime, some other insights that we gained and research that we did, we've done a lot of even consumer-level research on ShemarooTV now. And we've now divided a daypart, if you see there's a very clear daypart strategy that we have evolved led by our own Shemaroo Bhakti slot, there's a kid slot after that. They are trying to evolve the crime slot in the middle and then the prime time. Some of the acquired content is working well for us, and we are definitely exploring creation. The thing with acquired content is that we get proven according with a proven track record already. So...

And at a relative per lower cost per episode at this point in time.

But that being said, we'll definitely look at the production with the right concept.

Ultimately, we would be looking at creating more shows or creating shows and taking it to that next level. But this is only once we reach a certain level and as well as the ad revenue itself also reaches a certain level. So -- but thankfully, as I said in the beginning or on the positive side, our ratings actually are probably at a -- I believe last 2 weeks, we are at a high in the year for the entire year. So we've actually -- some of the at least some of the initiatives that we've taken or programming changes, et cetera, have actually resonated well with our audiences, and that's kind of giving us lot of confidence on the TV front. Yes.

Hiren, I also want to add that on MarathiBana, we've done a lot of ground-level B2B work in terms of during the whole B2C work on ground BTL activities. So during the whole Ashadi Ekadashi Vitthal Festival, we've done a very extensive like maybe 15 to 20 centers wide activity on the ground. And then during the Ganesh festival, again, we have done. So connecting, therefore, connecting the brand at a very grassroots level has also been a continuous focus for us.

Just a follow-up, if I can.

Sorry to interrupt, Mr. Desai, may we request that you return to the question queue. The next question is from the line of Rishikesh Oza from Robo Capital.

Sir, my question is if you could share margins on YouTube that you earned.

Rishikesh, I'm sorry, we're not in a position to do that normally due to competitive reasons because it impacts many different ways on -- particularly on the content acquisition side when we have to put out. So sorry about that.

Okay. And also, sir, second question regarding our purchase of library or content. So in a longer term, can the business sustain it around INR 50 crores to INR 100 crores of purchase.

I'm not able to understand the question. Can just elaborate a little bit more to try and address?

Basically, the content or the library that we are purchasing, we might have to keep updating our libraries. Okay. And you might have to show some new content and some new series, et cetera, et cetera. So on a longer term, whether our business can sustain with just around INR 50 crores or INR 100 crores of purchases?

That's a relative question for 2 reasons. One is, firstly, INR 50 crores to INR 100 crores is not the purchase that we do, we do significantly more than that -- In any of the past years that if you see it significantly manically higher than that. But more importantly, we will follow in terms of capital, it will go towards the B2C initiative significantly more. So whatever is the demand or need of that respective business to -- that is being invested in. That is what will go and therefore, it's -- we don't look at it that way to say that INR 50 crores to INR 100 crores, we will invest what is needed for that business to reach certain metrics that we are looking forward.

Okay. Okay. Okay. Just last question from my sector. So basically, just wanted to know our bonded stop loss on OTT. If you see all -- and also if you could share your underlying assumptions for starting OTT because all players are bleeding, content production house like INR 250 crores is still bidding and they still have no visibility as well. So if you could share these 2 points over here.

So I'm not in a -- I mean, so while we have our business plan for the Gujarati show, 2 aspects to that. Firstly, just to understand what is the overall opportunity that we are addressing. So Gujarati essentially broadly speaking, 3 markets that get addressed. One is the Gujarat resident audience, second is Bombay. And third is the international audiences because there are 2 to 3 pockets of a fairly large Gujarati-speaking audience. And in fact, a couple of those territories are highly high ARPU or high-paying territories. U.S. U.K. So we got to map all of this. Firstly, Gujarati happens to have about approximately 5% to 6% of India population is a Gujarati speaking population. So that is, in a way, the addressable market. Now with that, if you break it up to Internet penetration and things like that, you arrive at what is the video thing, and then where we are today in terms of SVOD offtake is obviously significantly low. But in a period where the consumers on NET has been growing year-on-year in a stance over a period of time that as you kind of play out that number kind of at quite a decent kind of number. So that's really how the assumptions have kind of been built out. Now to answer your other question on what is the stock put or what is that -- so while we have -- I mean, so we have budgeted for it. I'm right now unfortunately not in a position to share that with you because it can cause different kind of tremors or different kinds of assumptions upon our competitors or other industry participants. But one thing I would say, as I said earlier also is that we have overall been extremely mindful of the cost factor. I can -- you can look at numbers across, and you will understand that what we are spending is a fraction of what anyone would spend. And therefore, our idea also, we understand that this is a much longer game. And the whole idea is to finish first, you have to first finish. And to do that, how much can create a sustainable kind of a situation in terms of cash flow or thing so that -- because we all know that when this plays out and when it grows, that number can be humongous. And at that point, the delta that you get on that in terms of -- because your rest of the costs are broadly the same. It's the delta impact that you can get is -- can be significant. So...

Rishikesh, I'd also like to add that what we are also doing is actually strengthening the expectation of the Gujarati content overall. So apart from ShemarooMe, also we're building other revenue models for the same content. We have some DTH services that I think, we have a YouTube very good derivatives of the content up. And looking at some other monetization also for that same content. So that -- again, as Hiren said, that it can be more sustainable and the entire globe does not only fall on ShemarooMe.

I now hand the conference over to Mr. Hiren Gada from Shemaroo Entertainment Limited for his closing comments.

Yes. So thank you, everyone, for joining us today on our Q2 FY '22 earnings call. And we hope to see you all back next quarter. Thank you, everyone. Bye.

Thank you. Thank you. Ladies and gentlemen, on behalf of Shemaroo Entertainment Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.