Shemaroo Entertainment Limited (SHEMAROO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q3 and 9 months FY '24 Conference Call of Shemaroo Entertainment Limited, hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you, ma'am.

Good afternoon, everyone, and a warm welcome to you all. My name is Purvangi Jain 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 call for the third quarter and 9 months ended of the financial year 2024. Before we begin, a quick 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 differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the 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 I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Hiren Gada, CEO; Mr. Arghya Chakravarty, COO; and Mr. Amit Haria, CFO. Without any further delay, I request Mr. Amit Haria to start with his opening remarks on the financial highlights. Thank you, and over to you, sir.

Thank you, Purvangi, and good afternoon, everyone, and welcome to our earnings call for the third quarter and 9 months ended for the financial year 2024. Let me first start off by giving you some of the key financial highlights, after which our CEO, Mr. Hiren Gada, will give you some of the operational highlights. For Q3 FY '24, the revenue from operations stood at around INR 156 crores, which witnessed a growth of around 4% on year-on-year basis. EBITDA loss for the quarter was around INR 18 crores and net loss was reported at approximately INR 30 crores. For 9 months ended for the financial year 2024, revenue from operations stood at INR 508 crores, representing a growth of 30% year-on-year. EBITDA stood at approximately INR 7 crores, but net loss was INR 26 crores. With regards to the new initiatives in Q3 FY '24, the expenses amounted to about INR 28 crores, while for 9 months ended for FY '24, it was about INR 71 crores. And if you were to adjust for this investment, the adjusted EBITDA from the existing operations in Q3 and 9 months would have been approximately INR 11 crores and INR 78 crores, respectively. Digital media revenues for the third quarter stood at around INR 65 crores, up by 8% year-on-year, while for 9 months ended for the financial year, it was around INR 185 crores, witnessing a growth of around 8% year-on-year. Traditional media revenues for the third quarter stood at INR 91 crores, which grew by around 1%, while for 9 months, it stood at INR 323 crores, witnessing a growth of roughly 47%. Now I would request our CEO, Mr. Hiren Gada, to brief you on the operational highlights for the period under review.

Thank you, Amit, and good afternoon, everyone. During Q3 '24, the overall sentiment, particularly rural demand, continued to remain weak, resulting in lower advertising spend across the entire sector. Challenges within the start-up ecosystem persisted during the quarter, contributing to reduced advertising spend, especially on the digital platform. In addition to the above, a significant portion of advertising budget was allocated to the World Cup and state elections, impacting overall advertising spending on other entertainment categories. About 1/3 of the advertising spend during the World Cup has been contributed by major FMCG advertisers, typically known for their substantial investment in entertainment categories and not sports. Furthermore, thrilling World Cup matches drew attention away from other entertainment options, resulting in decreased viewership across most non-sports categories. Due to this, the company faced a twofold challenge: reduced viewership and muted advertising revenue across both traditional and digital businesses. In addition to the above, planned investments were made in content, people and marketing to capitalize on the festive quarter, which further put pressure on the margins. Moreover, while some planned B2B deal closures also, which occurred in Q3, the revenue realization was deferred to subsequent quarters, which is current and next quarter, which also impacted the revenue growth. The company has already undertaken several cost rationalization measures to address the external advertising slowdown, and we are confident that these efforts will yield positive results in the upcoming quarters. However, we believe that until the rural demand picks up, advertising spends will continue to remain under pressure. This is the overall big picture context under which the operational and financial performance has come in. On other operational aspects, on ShemarooMe front, we released 13 new Gujarati titles during the quarter with content across movies, web series and plays, including digital world premiere of blockbuster movies, Hu Ane Tu, Bau Na Vichar and release of original web series, Goti Soda 4 -- Season 4. On YouTube, with 67 million subscribers, Shemaroo Filmi Gaane is the 22nd most subscribed channel in the world. As far as the broadcasting business is concerned, we launched original programs across the channels. So we launched on Shemaroo TV a mythological show called Karmadhikari Shanidev and on Shemaroo MarathiBana, we launched Sau Pratap Manasi Supekar. Shemaroo GEC channels have a viewership share of around 7.6% in the overall Hindi GEC genre. On the Web 3.0 front, we launched ShemarooVerse, which is the first official metaverse platform on Android devices and desktops, and we have partnered with Sandbox to create immersive experiences for various Shemaroo IPs on the Sandbox metaverse. With that, I open the floor for question-and-answer session.

[Operator Instructions] We'll take the first question from the line of [ Dhaval from DVT Capital ].

Hiren bhai, in terms of the expenditures that company has done and the losses that we have done in new initiatives, they are significantly higher than what you had earlier guided. So was it that you were taken by the extent of slowdown and the surprise in the revenue, which just did not come in or the expenditure just shot up for us much more than our expectation?

No, I think that -- I mean, it's a good question. The first scenario is what played out. So as I even alluded to in my opening remarks that the planned investment played out, but the revenue shortfall was significantly lower than the budget or the expectation. So therefore, the gap kind of shot up. It's basically the revenue gap.

So when I look at not only the digital -- not only the broadcasting piece where I can understand the -- a large portion of revenue did go to World Cup and some of the other things, but even in digital, if you look at the kind of viewership, it's kind of flattened out and significantly lower than what it was post-COVID. But it kind of -- we have stopped seeing growth in that as well in terms of viewership, which is kind of impacting our revenue even in digital media. For now like 3, 4, 5 quarters, our revenue growth in digital media is like single digits, right, which is kind of very low. So would you care to explain there?

Yes. So the revenue growth in digital media, actually this year, which has been the challenge. But as far as viewership, so there are 2 parts to it. So revenue growth has happened. We've actually -- till FY '23, there has been a level of revenue growth in the digital media. But FY '24 has been the challenge because of the large component of various digital video platforms, which primarily comprises of YouTube, Facebook, et cetera. They have all been very flat in terms of their monetization and revenue. And second point was on the viewership side. So yes, viewership, this is still, I would say, the adjustment of post-COVID probably playing out is what we can gather. And this is in a way a phenomenon which is playing out broadly in the entire digital media per se. It's not just these -- from what we hear from various OTT platforms in terms of their number, viewership, et cetera, et cetera. It's all been on a lower trajectory and that, while it is all a new normal compared to what it was pre-COVID and all, I think finally the consumption growth at some point will start kicking in. That's how I would look at it. Arghya will just add there.

I just want to add a few things here, [ Dhaval ]. I think you're right, yes, the headwinds on the advertising front did impact broadcast significantly in the last quarter. But also from a digital point of view, there are 2 things happened. The World Cup saw unprecedented levels of viewership, especially with the kind of performance that India did right up to the Finals. Also the fact that it was free and hence even on the [Audio Gap] and Facebook viewership, for those times got significantly affected. Also, in a soft advertising environment with the major cricket advertising by advertisers in the form of gaming companies and auto world so and so forth, the gaming companies have not really been in advertising given costs, external and other reasons. So some amounts of advertising in digital and/or broadcast, which is done by FMCG companies, that also moved towards cricket. So it has been a double whammy in that sense this quarter.

Right. And my last couple of questions, Hiren bhai. First on the employee expense. If you look at the employee expense cost curve, it's significantly higher. Like we were last year same quarter 21 and change across, last quarter 28 and something, and now 31. So every quarter, there is 10%, 15% jump in employee expenditure, which is kind of unprecedented in our history and it is actually much higher than any other company in the industry. So like what -- and I understand you're employing more people for newer things. But in a time frame where revenue is a challenge, do we look back and kind of scale down on such expansion?

So a couple of things. I think, firstly, about 1.5 years back, roughly, we embarked on this whole significant shift and upgrade in terms of professionalization and various aspects linked to that. Also, the future that we saw for media entertainment in the economic backdrop, we believe that the opportunity is humungous and the best way to play this, and if we have to play this on the front foot, the best way to scale up is through having a significantly professionalized team driving the entire thing. And therefore, we invested and I have discussed this quarter after quarter, and we invested significantly in dialing up the teams and people. Now a lot of those joining, which has happened, has kind of happened into -- in fact, into this Q3 is when the last of that significant addition has happened, which was all planned, and appointments happened, earlier closure and joining. At this point, we expect that -- so this is not an investment for the short term, this is investment for the long term. And as of now, we believe that we have broadly reached a kind of near peak or about peak of that team size, strength, quality, et cetera, et cetera. So from here, I don't expect it to further go up significantly. Obviously, as the new joinees, they are settling in and starting to contribute on various fronts, et cetera. We are definitely seeing that. And as the economy also recovers on the consumption side, we believe that we will be much more strongly poised to take advantage of that.

Sure. Last question is on borrowings. Our borrowing in even last few months have gone up. And with the operating performance, how much will it be? Like INR 315 crore is the last reported one, but what will be the current debt?

No, our September -- okay, Amit will talk about this.

So current debt is at INR 362 crores. We expect this to come down by around INR 8 crores or INR 9 crores in terms of utilization of limits, but it would be -- we would be closing at around INR 350 crores for the year.

And September was INR 332 crores.

Right. Right. And so like now -- again, I mean, this year, it was expected to come...

Sorry, 1 second, I -- what was in September -- okay you continue.

Hiren bhai, I mean -- and I understand the challenging environment, but the balance sheet detriment is like really fast for us. So I mean, how comfortable are you -- like would it be fair to assume that this now is surely peak debt for us?

Like Hiren mentioned that we were kind of taken aback with the kind of slowdown in the revenue and hence we had to support the business with the extra borrowings to continue for the same. And with the austerity measures that we have taken place, I think so this should be the peak debt. At the max, it can increase to INR 360 crores or around that.

Sir, we already are at INR 360 crores.

Yes, so [ Dhaval ], this 360-odd number, whatever is there, I'm very confident that this would be the peak because, of course, few factors have played out to throw us off-guard in this quarter. And we -- including some of the B2B deals, et cetera, that we have in the pipeline, they will all -- they are cash flow accretive. So we are very, very confident that from here -- in fact, we had intended to repay and reduce rather, but because of this challenge, that seems unlikely in this financial year. But we are very conscious about this. We have stayed conscious. I mean we have invested almost -- more than 80% of the investment has come out of internal accrual, and we don't expect this. In fact, we are confident that this is the peak.

And last, what is the inventory as of now? It was INR 738 crores as of September.

It is INR 727 crores for quarter ended December.

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

Sir, my first question is, so if I look at like from the larger picture perspective, the overall construct is that whatever effort that we are putting in into building this broadcasting business, but a large part of our profitability and revenue is kind of driven by external environment, while the cost is something which we are currently increasing every quarter. So given this construct, if the external environment is not favorable, let's say, for two years, we don't know how the future plays out, right? So given that, how do you guys look at this construct given the balance sheet shape that we are in with INR 360 crores of debt, where we were actually earlier thinking that we will reduce debt by INR 30 crores. So it's increased by INR 20 crores, INR 30 crores. So given all this, don't you think it's a good idea to consolidate first and then go for more aggressive scaling up of the business?

Yes, I agree with you. And that's exactly what we alluded to. So when you -- understand one thing, the construct of this quarter. This was a festive quarter, right? So festive quarter is when everyone expects the revenue to be at the peak. So therefore, the investments are also planned to peak in the festive quarter. And since that didn't happen, it's a double whammy that kind of resulted. Having said that, if the market -- if the advertising scenario doesn't improve, obviously -- and since the quarter went the way it did, immediately, we have put in a lot of measures to mitigate all of that. And strategically, we are putting in place our next year's business plan and operating plan for the next year. And we will be looking at the whole approach in a far more -- relatively more cautious way. Having said that, there are two things, I mean. So one is, more or less how long this rural advertising slowdown will last because there are 3, 4 different factors which have contributed to that. But at the same time, we don't want to end up taking a drastic measure, which ultimately impacts the long-term opportunity that we all believe. And if we just take a step back, if you also, the question is, from a big picture point of view, I think we all need to look at it from that point of view that if India is looking to grow from a $3.5 trillion, $4 trillion economy to $5 trillion to $7 trillion kind of number, then without consumption picking up, that's really not going to happen. And for consumption to pick up, and as and when consumption picks up, advertising grows significantly faster than that because of various reasons related to that. So I think structurally, if we all believe that this is a part of the economy at, whatever, 7% kind of GDP growth rate or 10% to 11% nominal GDP growth, then without consumption growth, that's really not going to happen. So I think considering that, we also don't want to take a step which kind of compromises on the ability to take that. So we have to balance out both. And I fully agree with you, we are very, very cognizant of that. And I think given the context -- however, as I said, in a short time frame, when the revenue expectation -- I mean the revenue shortfall is so high or the market challenge is so high, to fully turn the ship around and do it within a few days is never possible. It does take its own set of time.

No, that part I fully understand. I am saying more from let's say 2, 3, 4 quarters' perspective, I understand that on a quarterly basis, you can't reduce that suddenly, that part is fully understood. My point is more that generally, long-term opportunity, you guys are convinced that is what you are trying to achieve. But generally, good companies do manage short term also by taking tactical decisions. And that's what I'm alluding to that...

Yes, yes. So that we have already taken. So for example, we have pre-shut a couple of shows on our broadcast TV channel, et cetera. So that bleed, we have already taken measures to do that. Arghya wants to add.

Yes. So Dhwanil, the point is -- and I understand your point and appreciate what you are saying. The only thing is, we have already taken -- as Hiren said, we have already taken certain measures to tactically manage the situation right now. But the broadcast business, especially original business, takes its time to get built. And completely taking knee-jerk reactions in our business -- and yes, we don't know how the world will pan out over the next couple of odd 2, 3 quarters. But at the end of the day, we believe in the longer story of the economy and the way we are poised right now with our channels around that. We will be prudent, we will be careful, we will be cautious, but we will maintain the shift in a manner that we are able to cash in whenever the demand goes up.

Okay, okay, fair enough. So since last quarter, there was a World Cup and those kind of events. Do you think that Q4 will be slightly better at least both in terms of viewership and ad spend on the entertainment channels? And since we have already embarked on cost cutting thing, it will...

So Dhwanil, viewership yes, but from an advertising point of view, as Hiren said in his opening comments, unless the rural economy and the consumption really opens up, there will be continued stress on advertising. So that we are fully convinced that this pressure is going to stay for some more time. And yes, viewership will improve, but will it translate into monetization is something that we are not very, very confident of at least happening in the recent -- next 1 or 2 quarters.

[Operator Instructions] The next question is from the line of Maan Vardhan Baid from Laurel Advisory Services Private Limited.

Sir, just quickly wanted to understand, I mean, the World Cup got over sometime in November. And we have seen 2 months, December and January post the World Cup. So just wanted to understand what's the monthly run rate on the revenue in these two months, so that one can kind of iron out what sort of the World Cup factor and kind of -- and same thing on the cost front also, for these 2 months, what is the operational cost metric moving like? Like I mean, in September, we were doing approximately INR 65 crores, INR 66 crores of sort of operational revenue on a monthly basis in the September quarter, which is probably down to INR 50 crores, INR 51 crores in this quarter. So just wanted to understand where are we in December and January, so that this World Cup thing...

Yes. So Maan Vardhan, I'll just break up the revenue part into 2 things. Firstly, so one is we have the deal-based B2B business, and then there's a B2C business. So one of the challenges this quarter was that the B2B deal were deferred to Q4. So that will come in -- 1 or 2 large deals we are expected to come in, in the Q4. So that is there. But the B2C part of the business, which has a monthly run rate, that rate, which normally -- so for example, to give you a different example, YouTube, normally, December is the highest month of the year. But in this case, this year, December was probably at par with November. And what has happened, again to bring back the point with which we started the opening comments is that because of significant allocation of expenses for the World Cup, a lot of advertisers' budgets have kind of been consumed or diverted towards that spent. So then their remaining spends have been tepid or lower actually, and that has impacted. And that is what Arghya was also alluding to that the spends -- so while our -- for example, on YouTube, our viewership share metrics, operating metrics are phenomenally good. I mean December, we probably closed YouTube with one of the highest viewership shares on most of our categories that we have had in many months. But the translation of that on revenue front due to these challenges, the start-up ecosystem, et cetera, et cetera, because of that, the translation into revenue has not happened. Given the broadcast viewership ratings and all, while they do fluctuate from time-to-time, but in general, they have been trending upward over the last few weeks. Again, translation of that on revenue front is relatively under-indexed due to the adverse external environment. Now this external environment, whether it turns around in a few weeks or few months, right now no one is able to guess that. And if you read our -- here most of the people in the consumer business, they all are facing a challenge of demand, and which is kind of translating into their own discretionary spends and things like that.

We will take the next question from the line of Prashanthi Duvvuri from Wealth First.

So my first question is that how reasonable is it for us to expect probably like a 24% growth quarter-on-quarter for the next quarter to achieve the FY '24 revenue target, like which is about INR 700 crores? That is my first question. And the second one is more generic that in the presentation copy that you provide, investor presentation, is it possible for you to include more financial data and numbers for Shemaroo in general and not generic data that is relevant to media industry? That would be really helpful.

Okay. So to answer your first question, I mean, we've never given forward guidance on revenue and profitability. But 9 months, we overall have grown at nearly 30% on a year-on-year basis on top line. So yes, I mean, if the momentum is maintained, that number -- I mean, then it's an arithmetic calculation. But yes, we hope that we are able to maintain the momentum. Second question regarding this thing, we have noted your suggestion and Amit...

Sure, we will look into it and we will get back...

Yes, we will try and improve that.

So my first question is more on like, given that the rural demand is weak and we also cannot really predict how it will be going forward, it might change in the next few months or like few weeks. So is it possible -- how possible is it to maintain the same momentum like 20%, 30% growth for Q4? Or would you expect it to be better probably in FY '25? That's more my question.

So there are various parts of our business, Prashanthi. If you have heard Hiren when he said that there is a -- we have a B2B business also, right, which is a lumpy deal-based business. So some of our deals, which were supposed to happen in Q3, have got deferred to Q4 for various operational, very mundane reasons, but this has got deferred. So it switched on in Q4. So to that extent, those deals will deliver a certain kind of run rate, which is required. But in terms of the B2C, to really predict whether we will be able to grow at 29%, 24% is right now difficult for us to say, but we will see how far we can go. If you see that our full year number is at 29% growth, but our quarter growth is at 4.6%. So there has been definitely a -- first half was growing at about 40-odd percent. So to that extent, the growth has come down. And we will see how the quarter goes. Because as I said, we do not expect overall B2C part, which has the advertising-led business, to really kick in very strongly because of all the factors that Hiren just talked about, World Cup and monies being shifted. So we will keep our fingers crossed and just see. Right now, very difficult to predict what is the quarter-on-quarter growth going to remain.

The next question is from the line of Yash Kukreja from Equitree Capital. Please go ahead.

Sir, my first question is, in the last quarter, we have reported a revenue of around INR 200 crores despite the low ad demand, but this quarter, we have -- our revenues fell to INR 156 crores. So -- and I understand also this was mainly because of World Cup, but IPL is also lined up from March. So how do we look at it? And sir, second is, in our investor presentation, 2 factors have been mentioned. One is reduced ad spends, and second is lower viewership. But on a contrary, our viewership has actually gone up from 7.4% to 7.6%. So how do we look at both of these things?

Sorry, what was your first question?

So sir, my question was, IPL is also lined up from March. So how do we look at the demand scenario?

So Yash, I think first question you talked about Q2 being INR 200 crores and INR 199 crores and Q3 being INR 150-something crores, that was your first question?

Yes. Correct.

As you remember, again, this has been said probably, again, as I said, we have 2 different parts of our business which are very different, right? There is one B2C, and there is one B2B. B2B continues to be a deal-based business. So for example, our syndication business, these are all B2B businesses. These are all deal based. So in Q2, we had large lumpy deals both at a domestic as well as at international level in terms of B2B.

In fact, we had shared that in the presentation also that a good amount of that or that growth has been contributed by the B2B side of the business.

Correct. In our last con call, our investor call in H2, after quarter 2, we had called that. So that was one of the big reasons there. If you look at it from a B2C business, there is not much of a change. Going forward, I feel it's something that we are -- so World Cup was something which was, that kind of viewership and viewing, it was not really planned for. We were caught by a little surprise. And more than World Cup -- while World Cup is coming out as a theme, but more than World Cup, it is the overall reduction in the ad spend or softening of the ad spends is where the problem really lies. So the similar issue will happen in IPL, and we are -- obviously, we are...

However, I would add here that IPL is a -- in many ways, IPL is a planned event. World Cup comes once in four years. IPL is an annual event. So the entire ecosystem is prepared for it in the sense that there are a lot of advertisers who typically participate in cricket. They plan their budgets and allocate budgets for IPL within their overall budgeting framework. Even the programming, et cetera, so new show launches, et cetera, normally get deferred to post IPL, et cetera. So on cost and revenue front, the entire ecosystem now is used to IPL and plans around IPL in general. So of course -- and World Cup on the other hand is a once in four year event. And having said that, I would also add that the actual viewership and revenues or spends on World Cup actually were lower than IPL. But it's just the fact that in the tepid advertising environment, they took away money from traditional entertainment advertisers who were themselves facing a slowdown. That really kind of put everything off guard.

Got it. And my second question is, considering the deferral of the revenue recognition from the B2B segment, can we see an uptick in the Q4?

Yes, we are quite confident that will happen.

On the B2B front.

Yes, yes.

Yes. Got it. Got it. Sir my last question is, as far as our new investments are concerned, out of the total outlay of INR 75 crores, we had already spent INR 43 crores. So how much have we spent in Q3?

No, no, we said that total is INR 71 crores. So we spent in this quarter -- this quarter, it was INR 28 crores. So the 9 months is at INR 71 crores, while we had projected INR 75 crores. In fact, that was the very first question of today's call that the number has gone up. Is it because of higher cost or lower revenue, and I replied to that, that it is because of lower revenue.

The next question is from the line of [ Animesh Modi ], an individual investor.

This quarter numbers are not up to the line and expectations, as we all know. But my question is that, though income is not in the hands of the company, right? But as far as planned expenditures are concerned, we have already planned for this current year, so it's fine. But what we expect into the coming quarter or coming next financial year is that how much planned expense we are going to make, and do we have any policy that some percentage of the revenue we spent for planned expense or it's just on numbers basis? This is my first question. And I will have one more question later on.

No, I fully agree with you. And as I alluded in the opening statement also that we have taken a lot of corrective measures, which are short term tactical measures to at least bounce back in the fourth quarter as much as possible. Our next year's annual planning exercise is underway. So right now, I'm not in a position to comment too much on that, but in terms of the thought process, I can tell you what we have been applying. And I don't think that will change is that, we will -- based on these business' plans, we will see where the overall position lands up. And based on that, what is available for us to invest, plus to -- we have a stated intent of bringing down the debt exposure. So with all of that combination, we would look at really how much we have available to invest and how we want to fit into that. That's’ one now. That availability of investment, et cetera, et cetera, is all, of course, based on various performance ratios and financial margins, et cetera, of each of those businesses. So ultimately, it's a well thought out planning exercise that kind of flows through. Of course, it all assumes certain market conditions. If that market condition doesn't play out, then obviously we -- this is what happened in this quarter, basically.

That's correct. Because see, if income is not in our hands, but we can also plan our expenses, so that we can make our margins intact, right? And next question is, what is the current status of the GST search happened and what we are -- can you give some more light on this?

Sure. Amit...

Yes. So there is an investigation going on by the GST department. There is actually no other progress as such, but internally, the paperwork, documentation, et cetera, is going on. Other than that, there is no movement as such from the last stated position.

Yes, because the demand has been raised by the department, whatever...

No, no, no. There is no demand that has been raised till now.

Yes. It may be some figure that has been there now, INR 17 crores...

That -- I mean, some press has given some figures and all of that, which we don't know anything about that. There is no official demand raised by the department. With this quarter, there would be some details, et cetera, that we have cooperated with giving them. But as such, the next step has not yet been taken by the department.

So no formal demand letter or communication from department regarding any stated demand has come in.

Fine. So there is no show cause notice has been issued?

Not yet. We will announce as and when we get that.

We are bound to announce.

Yes, we will be announcing. We don't know how long it takes and what is the procedure, but at some point, yes, we will have a show cause notice. And we will -- of course, which we will contest and all of that. But yes, we will announce it as and when it comes.

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

So Hiren bhai, the question is that the cost structure that we have built, is it fair to assume that in order to make a reasonable EBITDA margin, our revenue has to be upward of INR 900,000 crores, then only we can make 15%, 17% EBITDA margin, because that's what it appears like. And a corollary to that question is that, so in terms of -- to achieve that number, do you think that with the current viewership share and ad market normalizing, we should be able to get there or we need to be even higher in terms of viewership share to get to that number where we can make respectable margins?

Dhwanil, this is Arghya here. I don't know where you got that number from. Profitability obviously depends on various things in terms of how many originals -- I mean, there is a lot of stuff. It's not really unilateral. First of all, the biggest thing is, what is the demand-supply situation in the market in terms of advertising as well as from a content point of view. With a lesser -- if the demand really [indiscernible] comes from demand, if the demand is good enough, at even lower GRPs, with lower original shows, you can monetize much better. So the rates go up as a function of the advertising demand. So that is one piece. Secondly, in terms of our -- we have a massive content library with us, right? How well we are able to monetize it during our various B2B deals, what are the kinds of margin success we are able to connect. It's a function of various things. Second is we have embarked on a serious aggressive plan of international syndication, which would mean syndicating content from global market and for selling it to global markets. What is the kind of margins we make. So it’'s a function of various things. So I would not go into that. The point is, as somebody asked in the middle, we have taken some tactical measures to ensure that we become a little more prudent and cautious while we do not sacrifice the overall long-term picture. And I think we are growing in that path. And as Hiren has been saying in multiple calls, I've heard him say, we believe in that $3 trillion economy going to $5 trillion to $7 trillion economy. If that happens, which we strongly believe it will, it has to be a function of consumption and it is a function of demand and that will translate into advertising. So we are saying we could be, of course, maintaining the right -- I mean, we want to increase our viewership share irrespective of anything else. And whether the market comes down, goes up, whatever happens, we want to increase our viewership share. We want to become a much bigger viewership share channel. So that objective does not stop. So I don't think these two are related, but at what number we will be profitable and all that, I don't think that is such a straight line answer.

Okay, got it. So I think also on nine-month basis, how is our broadcasting business as a bouquet? Is it breakeven? Doesn't look like. But I still want to confirm with you.

You're right. Definitely not in breakeven position. A large part of this investment of INR 71 crores has gone into the broadcast. Within this quarter itself, INR 28 crores what you are seeing, large part of that has gone into this thing. So that is definitely the gap on that business. Having said that, as I mentioned in between that, for example, we have pulled back on a couple of shows on some of the other cost aspects and all of that. So we are taking corrective measures, but as you can appreciate, you can’t abruptly stop a show. You have to reach it to a logical conclusion, et cetera, et cetera. so all of that takes its own time to play out. We worked out some innovative model with some -- I mean, commercial model with some production houses to further reduce that. So there are a lot of measures that already we have taken. And again, I would actually go back -- someone in between asked regarding the people world. I think it's this people asset, we can, very confident, will not only turn this ship around, will actually take the business significantly way forward, and they are excited about the whole future and everyone understands that this is a speed bump, but everyone is extremely passionate and I would say very bullish and very committed to achieve what we all have collectively set out to achieve. I think that, if you ask me, is undoubtedly the sentiment amongst our key team.

Yes. Good to hear that. The only reason I asked this question is because we were to breakeven in second half of FY '23. And it doesn't look like we'll break even in FY '24. So going forward, are we kind of discussing that how to break even in FY '25? Or it will always be a function of external environment?

No, not really. So let me, without -- we are getting into our AOP process right now, Dhwanil, right? So how we shape things and how we take things, that's all under discussion right now. Yes, I will say a large part would still depend on external environment, but having said that, we can -- there are tweaks which you can do with your overall positioning of the channel, where you want to play, how you want to play. There are various ways of managing it. We are re-looking at that and we always want to make the broadcast business profitable. Obviously, that is the objective. But we will continue to hear external factors, but whatever internal possibilities and the ways and means of rejigging the channels and the various GCM models that we are thinking of, there are other ways of controlling, which we are in the process of planning right now.

Okay. And last question. So we were to launch a new channel in this year. Are we still on course or we are kind of relooking that?

So we deferred it, obviously, given the market conditions and all of that. But yes now -- so we are ready with the channel setup, but we deferred it, obviously, because of market conditions. And we will soon be launching it.

The next question is from the line of Maan Vardhan Baid from Laurel Advisory Services Private Limited.

Just wanted to understand, in our existing broadcasting channel, how many hours of content are we sort of playing without the reruns?

So your question is on original programming?

That's right.

So on Shemaroo TV, we have 3 shows which are original. We have 2 mythological and social-mytho and 1 is a crime show, which is a 1-hour show. On Shemaroo Umang, we actually at peak we had 5 shows, which we have brought down to 2, and we will probably -- so we are launching 1 more show next to next week, which has actually just been announced. It is being launched with -- actually, Balaji Telefilms is the producer. So that's a show we are launching next to next. So we will probably -- we are evaluating, but looks like we will probably close the year with 3 shows coming down from the 5 that we peaked at. And on Marathi, we have 2 shows.

Okay. So just wanted to understand, I mean, since sort of with 3, 2, 2, I mean, these are very meager numbers in terms of shows on these channels. So sort of what would attract an advertiser to come and advertise on these channels, and besides...

So advertisers -- so I don't think that is the correct thing to say whether these shows are good or those shows are good. I don't think that's the way to look at it. And that's not how it works. We have had channels working at great numbers and delivering great GRPs with these 4 or 5 original shows. So I don't think that is the question. This is also a function of the various qualities of the shows that you run and the kind of programming that you do. Remember, we are also syndicating a lot of content. And a lot of syndicated content is also first time in the bullish market. So it's not just originals, it is...

Yes, so structurally, I mean, fundamentally, advertiser looks for audience. So I think that is what is the important thing. So it doesn't matter whether you have one original, two originals or no original. So for the first two years, we had no originals when we were establishing and still we had viewership and revenue. So it's actually advertisers look for audience finally. So how we are programming with a combination of originals, reruns and syndicated content is really about how we are able to attract the audience.

Okay. Fair enough. Okay, so maybe I understood it wrong. So if we were to club all these categories together, and without repeatability of any of the content, I just meant to understand what is the sort of the content that is for the number of hours that is being run, which is not being repeated again. For example, the same content which tends to be repeated during the day and that way and that was the original part of this content, whether it...

So all content in all channels, Maan Vardhan -- so all content in all channels is repeated, okay? All the prime time shows, whether I have 2 shows or 5 shows or 6 shows, they will be repeated through the day time. So we have a day-part, [indiscernible] half. This is called [indiscernible] day-part, so they are all repeated. So you will not have shows that are not repeated. The question should have been actually how many original shows we are running.

So as I said earlier that we run with syndicated or licensed content as well as original and repeat of original. That's how the programming mix happens. And actually, what I would advise you is that if you can probably go through our programming, you can see our channel live on various platforms. All our channels are live on various DTH and cable platforms. So you can actually see the programming to understand. So for example, in the morning, you have a bhakti part and various programming slots are there based on audience consumption preferences and our own channel programming strategy, et cetera, that we have.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Over to you sir.

Yes. Thank you so much. Thank you, everyone, for attending the Q3 call. And, of course, it has been a tough quarter and we hope and are very confident that it doesn't disturb the long-term picture, and we are fully on track for the long-term picture. Thank you so much and see you in the next quarter.

Thank you members of the management. On behalf of Shemaroo Entertainment Limited, that concludes this conference. We thank you for joining us. And you may now disconnect your lines. Thank you.