Shemaroo Entertainment Limited (SHEMAROO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 conference call of Shemaroo Entertainment Limited, hosted by Valorem Advisors. [Operator Instructions] 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 Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the first quarter of the financial year 2025. 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. I would like to introduce you to the management participating with us in today's earnings call and hand it over to them for the 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 and 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 first quarter of the financial year 2025. Let me first start by giving you some key financial highlights, after which our CEO, Mr. Hiren Gada, will give you some operational highlights. For Q1 FY '25, the revenue from operations stood at around INR 154 crores, which was flat on a year-on-year basis. EBITDA loss for the quarter was around INR 13 crores, and net loss was reported at approximately INR 17 crores. With regards to the new initiatives. In Q1 FY '25, the expenses amounted to about INR 8 crores. And if you were to adjust for this investment, the adjusted EBITDA loss from the existing operations in Q1 would have been approximately INR 5 crores. Digital media revenues for the first quarter stood at around INR 69 crores, but up by approximately 20% year-on-year. Traditional media revenues for the first quarter stood at around INR 86 crores, which declined by around 11%. Now I will request our CEO, Mr. Hiren Gada, to give you the operational highlights for the period under review.

Thank you, Amit, and good afternoon, everyone. During the quarter, viewership of the entertainment category as a whole experienced a decline on both traditional and digital platform due to IPL and the World Cup and the general election. This shift led to many key advertisers reallocating their expense towards sports and new [ genres ]. However, we believe that advertising expenses on entertainment categories are anticipated to recover later in the year, driven by festive season and improving rural demand. The company's margins were under pressure due to a combination of 2 factors. First is deferred B2B deal closures in the pipeline. And second is the continued accelerated inventory charge-off, a strategy which we have initiated last quarter. Our inventory has come down from INR 682 crores as of March 2024 to INR 640 crores as of 30th June 2024, which is a reduction of about INR 32 crores. However, these charge-offs are early accounting in nature and do not reflect the monetization potential of the content library, its revenue, or the ability to generate free cash flow as far as the company is concerned. Excluding the impact of these charge-offs and deferred deal closures, the company exhibited healthy performance metrics on all counts. Moving forward, the company will continue to strengthen its balance sheet and focus on operational efficiencies to discover its intrinsic value. In our digital segment, ShemarooMe continues to gain traction, particularly with our Gujarati content offering. This quarter, we released 10 new titles, including movies, web series and play, expanding our content portfolio. Noteworthy premiers include the blockbuster movie, Vash, Yuva Sarkar and Lagan Special. And YouTube FilmiGaane has achieved a remarkable milestone of becoming the 23rd most subscribed channel globally with approximately 69 million subscribers, reflecting our growing digital footprint and audience engagement. Our general entertainment channels continue to perform well with Shemaroo GEC channel securing a viewership share of approximately 7.8% in the overall GEC genre. Additionally, our newly launched kids and youth channel, Chumbak, continues to do well and is gradually stabilizing. We are also excited to announce the launch of AI-powered games on ShemarooVerse in partnership with GMetri. This strategic collaboration enables us to offer an enhanced immersive gaming experience to our users, showcasing our commitment and innovation and leveraging cutting edge -- sorry, showcasing a commitment to innovation and leveraging cutting-edge technology to engage our audience. With that, I open the floor for the question-and-answer section.

[Operator Instructions] The first question is from the line of [ Dhruv Mukesh Bajaj ] from Smart Sync Investment.

Since I'm pretty new to this company, so pardon me if my questions are a bit repeated in the previous con call. The first question was that how much percentage of our overall margin fall is attributed to the accelerated write-offs of inventory versus delay in the deal that we witnessed in this particular quarter?

So I mean, it works both ways because the delay in the availability would have definitely had a certain amount of impact. Right now, I'm not able to quantify that because these deals will fall, when? We don't know. However, the broad indication I can give is the additional accelerated charge-offs during this quarter was in the range of around INR 30 crores, INR 32 crores.

INR 30 crores, INR 32 crores. Sir, I was just trying to understand that basically, how long do we feel that this impact will keep rising in this inventory write-off? Because earlier, we used to make like 8% to 9% types of EBITDA margins. I was just trying to understand on that front, yes.

So if you work backwards, those kind of margins are available even now, the additional inventory charge-offs this is kind of operating. In fact, the operational performance this quarter actually has improved. The margin structure actually has been better. I would say that -- and we have -- just to repeat what we have said in the last call is that we expect that the inventory will be written out by about 40% from where it was.

And sir, what is our plan spending on the new initiatives like OTT in FY '25? Because I guess we spend around INR 100 CR in FY '24. So any number on that front for FY '25?

So thank you. The numbers that you are mentioning, it's actually towards the new initiatives, which also includes broadcasting. We have never specifically given any number specifically allocated to OTT or broadcasting per se.

So how do we see that in this current plan or like if we can get some understanding on that front?

The budget for this year, I think we had shared it at the -- in the Q1, I don't remember. But I believe it was about around INR 60-odd crores. INR 60 crores, INR 65 crores.

And sir, my last question was that how are we seeing the debt levels and industry payment considering -- I was just looking at our balance sheet and our cash position doesn't look that huge by alluding to the challenges that we are facing in the legacy business. Free cash preservation has also been a little lower than the interest payment for the past 2, 3 years, if I'm not wrong. So if you can give us some overview on the debt repayment time line.

So as we have spoken about this, this will like -- this actually began in the last quarter that to get the balance sheet correction in place and there are 2 parts to that. One is the accelerated inventory charge-off and other is the accelerated debt repayment, and we have targeted that. In 2 years, we will bring down the debt by about INR 100 crores from the March level that we -- where we were in March '24. So we were at...

INR 338 crores as of March.

Yes. Last reported, we were at INR 338 crores. So we may see some quarterly fluctuations around, but -- so June, we have -- from INR 338 crores, we have come down to about INR 324 crores which is a reduction of roughly about INR 13 crores to INR 14 crores. However, I would say that within quarters, there will be fluctuations. Also, some amount of lumpiness would be there due to the B2B deal closures because some cash flows come out of those deals also. But we are fairly on track for this. We believe that we are fairly on track for this target that we have set out over the next 2 years period.

And this will be funded primarily from our internal accruals, right, versus...

We have not raised equity in [indiscernible].

[Operator Instructions] The next question is from the line of [ Judy Singh ] from [ Arian Capital Markets Limited ].

So sir, similar question as per earlier participant on the revenue side and overall margin EBITDA side. So like, as per our earlier discussion, you have mentioned like we will overcome this election and T20 World Cup thing. And partially, we'll be able to do better. But again, we are on EBITDA loss. So I wanted to comment on that and for the future visibility, if you can give us some.

Judy, I think -- just to reiterate, if you -- in case you missed the discussion earlier, we have -- and in fact, even in last quarter, we have shared is that we have embarked on exercise to correct our balance sheet through combination of inventory -- accelerated inventory charge-off and debt charges. Now the impact of inventory charge-off is on P&L where there is an additional hit. And this was a number I was mentioning in the previous question also, which is in the range of over INR 30 crores and INR 32 crores -- between INR 30 crores and INR 32 crores. Is there additional inventory charge-off hit that we have taken against what would have been normally the [ expense ]. So to that extent, actually our profitability and margins are quite healthy. There is a noncash accounting charge-off -- additional accounting charge-off between INR 30 crores and INR 32 crores on this account. So impact on -- and as I shared on -- earlier, in my opening remarks also that operational metrics for this quarter actually have been very good.

And sir, if you can guide us for the future reference, what are expectations for the upcoming quarter?

So while we have never had a practice of giving forward earnings guidance, but what we are seeing definitely, we expect that in the festive season and thanks to a decent monsoon, we are expecting the overall demand also to revive and kind of steadily grow back and festive demand linked spend. So both of these, we expect that to certify around the festive season, which kind of starts kicking in September, October onwards. So that -- we are expecting that to be reasonably strong. And secondly, on the operational front, we have kind of been operating on a very tight and strong budgeting and, I would say, working on improving the efficiencies strongly. So both these combinations, we are expecting that the operational performance and operational metrics will continue to -- I mean, we are hoping that they will continue to remain strong.

So let me just add [indiscernible]. It's the fact that we are relentless, so we expect our advertising spends to improve in festive and beyond. And also, again, we mentioned in the previous quarter is that from B2B deals and pipelines for closure, that also once it closes, it certifies. That also will come in the revenue lines in the future quarters.

So sir, I mean, Q2 will be decent for the IFRS comparably with Q1.

I mean, I can't take Q2, but I'm saying over the next 3 quarters, you would see those deals certifying and [indiscernible] basically October, November because of the [ values ] on the 1st of November. So the last part of the festive revenue will happen in October, which is actually in Q3.

So basically, second half will be better for us.

[indiscernible]

[Operator Instructions] The next question is from the line of Yash Kukreja from Equitree Capital.

So my first question is, what is the current status on the launch of new channel? And how are our existing channels performing? Like have you reached breakeven levels? Or how long will it take to achieve that? So this is coming from [ elections ] given that our revenue has been around -- almost around INR 150 CR for the past 8 quarters, except to which we had B2B transactions. So first question is that.

So let me try and answer that, Yash. In terms of new channel launch, we -- as we said in the last call also, I think we are, first of all, evaluating and the process of evaluation continues. So we will see how the market opens. We are basically ready from the back end, but in order to press the green light is something that we would see as the market evolves. We are not -- that is always in the pipeline, but we'll take a call as the year moves on. In terms of performance, I think Hiren mentioned in his opening remarks that the 2 GEC channels are at about 7.8% share -- viewership share in the first quarter. This is also an increase over the last year, same quarter at this time. So we are doing well. And the new channel which we had launched last year, Chumbak, the kids and the youth channel, has also grown steadily and is very gradually almost stabilizing. So that's how the channels are performing. We are seeing good traction for our shows and the initiatives that we're getting. But at the same time, as Hiren had talked about, we have been very prudent in the way in which we have cost there and budgeted for our shows so on, so forth. So the channels are doing well. In terms of profitability, that's something which is -- where we are in the [indiscernible] of launching new shows and this is a gradual purpose. For example, profitability, we have answered this question multiple times over the last few quarters. It's a long way process, and things are going as per our plan is all I can say right now.

And sir, could you provide some insights into the quantum and frequency of this B2B transaction?

The quantum is something which we cannot say because it depends on deals and [indiscernible]. But normally, these transactions are very lumpy in nature, Yash. So sometimes, it happens is how it happens in the bulk. It's happening last quarter, it happened over 2 quarters. But as we are seeing now, we are in the advanced stage of discussion is that we're very close to closures. But on the closure, it's taking some time because it's multiple agreements and a [indiscernible].

There are lot of protests, part of the documentation and many other...

Because there's also a lot of [indiscernible] values and all that. So that is -- there is a lot of profit involved. We have balanced, truly on top of it. And we should see some reasonably good closures towards the end of -- towards Q3 and Q4 because we are already in August -- we're almost entering August, so I think towards Q3 and Q4, we should see some relative signs -- good signs of closures. [indiscernible]

And my last question is, sir, I have one bookkeeping question. Could you provide the operating cash flow figure for Q1?

We'll get back to you on that.

Sorry, sir, couldn't hear you.

Yes, we'll get back to you on that.

[Operator Instructions] The next question is from the line of [ Pradeep Rawat ] from Moga Capital.

So I'm pretty new to the company, and I have one basic question. So what do we have in our inventories and why the inventories are being written off right now?

I mean, 2 parts to the answer. One is, of course, you probably need to study the company a little more deeper to understand why there is some mystery to it, which -- and try and summarize it. But we can -- if there is a longer answer, we can probably take it offline later. But yes, so the inventory is basically all our film, IPR, all the content IPR copyrights that we own. So all the Bollywood, the TV shows, the Gujarati content directly. Everything. All the content operators, primarily 98% of the inventory would be that, 100% of the inventory would be the film copyright. So that's the formidable library and that is yielding us cash flow on a daily, weekly, monthly, yearly basis because we monetize that across different platforms. So the short answer to the charge-off and all of that is that. So during the buildup of the digital consumption era, so when the digital ecosystem was kind of getting -- growing. And then prior to that, or in anticipation of that, we have invested significantly to shore up and build our overall content library so that we are ready for the monetization in the digital era kind of unfold. And this is an investment. In fact, we did our IPO for that, we raised debt and various things. It kind of came in as a stock. Now this stock is extremely valuable. We believe the value of the stock is significantly has on the book value because the monetization, new monetization stream developed. And then there's a long tail monetization that is available. However, the queries that we kept getting from a lot of investors was that in relation to the scale and everything, that inventory is on the higher side. And so is debt. So we decided to kind of relook at the whole financial gearing of the company and the balance sheet and see how we can fix that so that we are able to unlock value. Now all of those don't have any impact. It's purely an accounting, this thing, because the charge-offs that we do have to go and extends to the P&L account. And so there is an additional expense every quarter that we have kind of taken on as a part of that. And the charge-offs has more correlation to the monetization potential of the content. It has no correlation to any of the business operations or the cash flow generating ability of the company or of that content, and to the value of that content. So I think in short, I try to capture the answer. If you want a longer answer, we can take it offline.

So I have a follow-up question on that. So while we are acquiring IPs or copyrights, so what kind of ROI do we have in our minds before acquiring them?

Typically, at the time of acquisition, we look at an 18% IRR.

[Operator Instructions] The next question is from the line of Yash Kukreja from Equitree Capital.

Sir, my question is regarding -- as you mentioned, the accelerated inventory for this quarter was around INR 30 CR to INR 32 CR. Sir, my question is will these be handled linearly? Or do we have a different strategy for writing off this inventory?

I did not understand the question.

So sir, as you mentioned that the accelerated inventory write-off for this quarter worth INR 30 CR to INR 32 CR, correct?

Yes.

So will it be handed linearly in the following quarters? Or do we have a different strategy for this write-off?

INR 30 crores or INR 32 crores was for the quarter that went by. For the succeeding quarters, there will be [indiscernible].

So I tell you -- okay. There are 2 parts to this. One is that the charge-off in the given quarter. So there are multiple parts to the inventory. There is one large block of inventory where we have put a -- like an equated charge-off on a quarterly basis. But there is some other inventory which is linked to some event or sale or telecast or release or those kind of things. So this INR 30 crores, INR 32 crores, what we are saying is what -- in this quarter, as per our earlier method of charging-off and what would have been the difference between these 2 is roughly in that range of around INR 30 crores, INR 32 crores. That may not necessarily hold true in the next quarter.

And sir, could you explain a little bit on what is the major contributor in the operating expenses?

Conclusion is to the amortization of the charge-off of the inventory only, and there will be distribution expenses for broadcasting.

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

Sir, first question. When I start this accelerated inventory charge-offs, so if you look at historically, essentially from accounting terms, it means that currently, the profits are higher than what is reported because it's an accelerated charge-offs. But at the same time, historically, because they were not charged-off at the right rate, the profits were inflated. So going forward, what is that...

[indiscernible]

So sir, so essentially, what we are saying is that we are charging-off inventory today at a higher rate, right? So -- and you say that there is no economic rationale for that because, in your view, the value of inventory is much higher than the book value, right? So it's accounting statement, right? That's the point that we are trying to make. My point is that now we are doing it from accounting perspective, that means that earlier, whatever revenue that we booked against that, we charged-off certain inventory at certain rates based on the accounting principles.

I really don't agree with that thought process.

Can you explain how should we look at it? It's not about past. I'm asking is that today, whatever content that you acquired, right? How do we ensure that the charge-off of that content is in line with the economic value of the inventory used. How -- what is the principle that we are using, so that this kind of situation doesn't happen in future?

Dhwanil, this is not a situation -- I think, Dhwanil, this is a wrong way of approaching this whole -- this thing. We have looked at it more from a positive perspective. We are looking at it from a negative perspective. I really don't agree with the approach, firstly. And I would like to correct the understanding in the following manner. These are not something that the content that we have, okay, has a really long shelf life and monetization value. Now where and how this monetization and at what pace it will keep growing is anybody's guess, right? How much the consumption of a particular content will yield or what is the revenue it will yield is anybody's guess beyond a point. We can estimate maybe in the next 3 to 5 years. But beyond 5 years, how it is going to be is nobody's [ thing ]. As the -- what we are experiencing is as the technology and reach of entertainment has increased, so has the consumption and monetization expanded. Okay. And our policy, which was there earlier, was exactly in line to capture that. Now even within that policy, anything that we own perpetually, these were charging-off in 10 years' time, right? If you remember the...

No, I'm aware about that part.

Now does it mean that after 10 years that content is not going to yield anything? That content is going to yield -- continue to yield beyond 10 years, okay? And therefore, if I would have even charge it off over 15 years, it would have been justified. We didn't do that. We just charged it off within 10 years. Now what we are saying is instead of 10 years, we will charge it off in 3 years' time, okay? So does it mean time was wrong and it impacted the profit? It did. All I'm saying is that we have decided that -- so we were always, I mean, first, because we feel that we got from lasts about 2, 3 years additionally on the inventory. So we always kept -- I mean, our own comfort to carry the inventory and stock at this level was high because we knew the monetization potential always kept growing in what was the monetization potential of that library. However, when we looked at and collated a lot of the feedback, we all took out a collective decision that this inventory [indiscernible] for whatever, 2 years' time and let this whole -- overhang, which a lot of people think of. So in relation to the scale of the organization, et cetera, et cetera, is surprising some ROI ratio are growing inventory turnover, churn is -- number of days is too high, et cetera, et cetera. We thought that let;s kind of bring it down to what the overall investor community will be more comfortable with. And that's the exercise we are doing. This is not at all -- or to do anything that charge earlier when -- over, whatever, overstated or underreported or those kind of things. I defer on the...

So my question is by more towards the future, right?

But when you start the question from that, the question itself goes into a long direction. That is my concern, sir.

So again, coming back to the future, right, whatever we acquired today, how do we charge it off? Let's say, we acquired some content for INR 100. Do we charge it off in 3 years, 4 years, 5 years? What is the policy on the accounting side that we are using?

So it's based upon the -- what kind of content we are acquiring. If we are acquiring negative rates, again, it will be charged-off over kind of 2 cycles kind of thing. So -- and with respect to the digital, it will be around 10 years, if it is a longer period. So -- and if it is a shorter period, than it is 5 years. So depends on -- is based upon the full estimated life of the asset.

Second question. I think to [indiscernible] I think we had aspiration and we still probably have aspiration of reaching 15% of market share as it was once indicated in one of the presentation, but we have been hovering around the 7.5% to 8% market share for some time. And so -- and I understand, I think there is some recalibration happened, and that has some impact on the overall percentage. But given where we are today, how do we see the journey from here to, let's say, reaching double digits or a higher number? And are we seeing any increase in our effective rates or realizations because it was -- the increase was to come with some lag? So what is the status on that?

So again, I mean, let's just -- you're right, we are in that range of 7%, 7.5% and so forth. But there have been enough increase in the shares in this quarter compared to this time last year at the same quarter. Are we fully happy with the way it is right now? This is as per our plan. Remember, we had said that we will be very prudent while we have the aspiration and the aspiration is still very strongly with us reaching double-digits here. I don't know where the 15% came from, but yes, we really wanted to be on a double-digit share. And we want to go up to 3% also. But the fact that, at least in this quarter, we were -- our budgeting was very, very -- we are very mindful of the budgeting in terms of how many shows to bring in and all that because we knew that in this quarter, there will be a headwind around a lot of activities, which is outside the digital category, which is in terms of IPs, frequency and also the general election. So yes, our objective is to reach that share, but it is also to reach it in a profitable manner, in a manner that we can sustain ourselves. So reaching that kind of share would mean that an increasing number of shows and so and so. But that also needs to come with an adequate amount of profitability. In terms of ER. I think that ER, as I've said in many calls in the past also, ER is a concerted demand in the market, right? I mean, one is obviously your rating and your standing in the hierarchy of the channel, but it's also a function of the demand in the market. And the ER has been growing steadily. I mean, I'm not in a position to tell you what the number is. The ER growth has been in line with the ratings growth, and we are happy with the way the ERs have moved. But as the demand picks up, keeps ticking up further and further in the month of -- in festive and beyond. We hope to see the ER trends continue and reach a level which we are profitable. So that's all that I can say right now on the ER. It's on a very healthy growth trend as per our plan.

I would add one more point that we had set up the sales team about roughly, you can say 3 quarters ago. And in 3 quarters, the sales team has significantly stabilized and is now -- so our clients counts and all other operating metrics are on an extremely healthy impact, on a high -- on a -- literally on month-on-month basis.

Yes. I think that is on one point. I think one point which is -- while I know that a lot of questions come on. But I think one of the more important metrics on ad sales in TV and broadcast is the number of clients, the client count. And we are at a very, very healthy level compared to our [ religious ] standing also. We are at a -- we are over-indexed, I would say, on our client count numbers, which is a very healthy place to be in. And as Hiren said, there's 3 quarters of the sales still are coming. It takes just time to [indiscernible] and we are very, very sure that we are on the right track as well as ad monetization and broadcasting.

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

So again, the quarter is not [indiscernible] as far as [indiscernible] is concerned. So I have good questions. First is the accounting policy [indiscernible]

The line is not clear. I'm not able to hear you.

Yes. Can you hear me?

There's a static behind you.

Now can you hear me?

Okay. This is better this time.

So 2 questions from my side. First is the accounting policy we have been following now it is for -- you are saying that we are discounting the expenses in 3 years, amortizing something like this. So it is in line with the other peers. First question is this. And second question is the revenue. I know it is not in our hand. But as far as the operational cost and expenses are concerned, we are not in the cash profit. So why can't we just have a control on the adding inventory and putting some efforts to have some property in our books of accounts?

I think you've probably either joined late or you missed the context of the call, but I'll just repeat. Our inventory has actually come down, okay? We've not added. The inventory has come down from INR 680 crores to INR 640 crores. So that's fine. Number two...

We are in a loss, right?

That's because there's an additional approximate 30 -- between INR 30 crores and INR 32 crores of additional charge. If you...

So it is in line with the peers. That is what my first question is.

So unfortunately, intellectual property is something that is -- there is no benchmark available or no account there...

There is no standard policy.

No standard available, that's unfortunate. And different regions follow different policies. We used to follow a consistent policy for more than 15 years -- 15 to 18 years, we have followed that. We just -- in last quarter, we have decided the accelerated policy, and therefore, that additional charge has come in. And one more point which you mentioned about cash loss. Actually, the debt has come down by nearly INR 13 crores to INR 14 crores. Now that cannot happen if there is a cash loss. If there is a cash [indiscernible], borrowing would go up. So just to kind of indicate. So all performed on the operating metrics. While if you see there is a strong performance actually in this quarter, underlying performance, it's this additional noncash charge-off, which has kind of changed the picture.

And one last question is, I have just gone through that, we have added -- we are also part of the GEO, fiber and other platforms, right? So my question is, do we get per subscriber revenue or it's a lump-sum basis yearly, quarterly, monthly, whatever? Can you explain what the metrics we follow?

Unfortunately, I'm not at liberty to talk about any specific deal because of various nondisclosure clauses.

Not for the company side. In general. Whether do we charge on the subscription or subscriber basis.

So there are different models in which we work. And there is no specific -- any transaction base that, okay, we do this, this or this. But there are different models. So there could be a lump sum number that is arrived, which is normally arrived at -- based on estimation of consumption, subscriber base, et cetera, all of that. There could be a per user number. There could be a consumption-based number also that how many hours of content has been consumed. There could be an ad linked kind of number. It could be different. I mean, there are at least 4 to 6 different commercial models that -- and each platform was different. And we partner with virtually every platform where entertainment is sold.

And are those contracts for a longer period or it is renewable every year or 2 or something like that?

Typically, digital platforms are between 1 and 3 years, not more than that because the space is evolving and growing in different speeds. So what is relevant today may not be a relevant price or commercial model 2 years down the line. Television is a much more stable platform. So we typically license our -- and that's again a trade practice, industry licenses moving for higher advertising.

The next question is from the line of [ Pradeep Rawat ] from UK Capital.

So a couple of questions. With respect to our cash flow, so how much free cash flow do our current business generate yearly?

Pradeep, this would vary year-to-year because one of the major thing factor for cash flows in the B2B deals. We are expecting for next 2 years since we have committed a repayment of INR 100 crores, we expect around that much to be generated in next 2 financial years.

I'll try to answer it in a slightly deferent way. In the last 3 to 4 years, about 4 years, I would say, we have invested about -- so we have a couple of new business initiatives, which is a TV broadcasting business and ShemarooMe OTT app. And if you see our -- every quarter, we share what is the net investment that we are making in these businesses. If we look at net of that, each of the last 3 to -- about 3 years, we have been relating about -- probably at about INR 50 crores to INR 60 crores free cash flow. However, we have been investing a little more than that because of it. So typically, we've been in whatever our investment need is there. Around 75% is funded through internal approval, and 25% through borrowings, which is something that, in the last quarter, is what we have changed and we said that we will be focusing on accelerated monetization and accelerated charge-off. And as a result of that, we are aspiring to repay about INR 100 crores of debt in the next 2 financials -- within in '23 -- sorry, '24, '25 and '25, '26. So roughly, you can say that is broad amount of free cash flow that is being generated.

And my second question is with regard to our leverage. Are we planning to bring down the leverage with internal accrual only or are you planning...

Internal accrual.

And my last question is regarding our like gaming collaboration. So what could be the future potential of this? And are we looking to expand further into the gaming industry?

This entire gaming and [ develop ] industry is in its infancy. It's in a very intensive stage. We want to be -- we are part of it purely largely from a futuristic point of -- there is -- right now, we do not see any immediate future with what's in -- any major monetization potential there. However, there could be a lot of possibilities opening up in the future. And what we are doing is investing just enough to be future-ready. We do not expect any return right now, but we are just keeping this entire thing alive. And from a future point of view, it is something what we have started with this gaming collaboration is certainly very interesting where people can go into our site and play games, AI-powered games, through our -- using our iconic characters. Not just that, we are part of this entire process, and we will see how the world evolves. Right now, it's very difficult to comment how it will pan out in the future. But we definitely have hope.

I would clarify that there is not some entry or plan to get into the gaming business. This is more driven from the Web 3.0 metaverse and future of how the whole web -- Internet ecosystem itself is moving. So this is a part of that initiative. If you read last few quarters, we've been doing different partnerships with people like SandBox and many other partnerships we've announced over the last couple of years, which is all part of the overall theme of being future ready with the move of technology.

That was the last question. I now hand the conference over to Mr. Hiren Gada from Shemaroo Entertainment Limited, for closing comments.

Thank you all for participating in this earnings conference. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers, Valorem Advisors. Thank you, and see you next quarter.

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