UFO Moviez India Limited (UFO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the UFO Moviez Q4 and FY '20 Earnings Conference Call, hosted by IDBI Capital Markets and Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Urmil Shah from IDBI Capital. Thank you, and over to you, sir.

Thank you, Faizan. On behalf of IDBI Capital Markets and Securities, I welcome you to UFO Moviez Q4 and FY '20 Earnings Con Call. I trust and wish that you and your dear ones are safe in this challenging environment. I also thank the management of UFO Moviez for giving us the opportunity to host the call. On the call, we have UFO Moviez' senior management represented by Mr. Kapil Agarwal, Joint Managing Director; and Mr. Ashish Malushte, Chief Financial Officer. We shall have the opening remarks by Kapilji, followed by a Q&A session. Over to you, Kapilji.

Thanks, Urmil, and greetings, everyone, and thanks for joining us on the UFO's Q4 and FY '20 earnings call. Well, first of all, I do hope everyone on the call today and your loved ones are -- and colleagues are safe amid this unprecedented COVID-19 pandemic. The world has never experienced an event with such a drastic impact on business trade and personal life. As you are aware -- let me now come to the business. As you are aware, the WHO declared COVID-19 outbreak as a pandemic on March 11, 2020. And soon after that, the cinema started shutting down. In fact, cinemas were the first to be impacted as social distancing was the only way to stop the spread of COVID-19. In a few days, all cinemas across the country shutdown and the company's operations came to a complete standstill. In this challenging time, we remain committed to all our employees. You'll be happy to note that your company has not laid off any employee. More importantly, the health and safety of our employees are priority. As such, we have extended the facility of work from home to our employees to ensure their safety as well as the business continuity. Also, we continue to engage with our customers and community at large. Well, since the operations are temporarily shut, we have stopped generating any revenue, and we continue to incur cash outflows primarily on account of salary expenses and fixed costs. To help us tide over the current situation, we have taken certain measures to minimize the adverse impact on the business. Like we have optimized costs like manpower and SG&A wherever possible and curtailed variable and discretionary expenses. CapEx expense have been put on hold till further notice. We have taken relief of the term loan facility and credit facility offered by RBI on interest and principal repayments. Our current liquidity position -- overall, our current liquidity position is comfortable, and we are confident that we will be able to meet all our obligations with the available cash and working capital limits, which are available to us right now. Looking forward, cinemas are keen to reopen in phase 3 -- are likely to reopen in phase 3 of unlocking as announced by the government. However, the date of reopening remains uncertain -- absolutely uncertain as it will really depend on how the COVID-19 situation progresses. At this time, we are keeping ourselves prepared for the reopening. We have also held a wide-ranging discussions with various stakeholders on trust-building measures for the audience, so that the audiences are comfortable coming back to cinemas. Implementing SOPs and protocols in cinema is the best way to make them feel safe. While national multiplex chains will be able to implement these SOPs and protocols by themselves, independent cinemas, including smaller multiplexes and single screens all over the country, will require support and guidance. So we, at UFO, have taken it upon ourselves to help them with the implementation of these protocols, including training their employees. These will be like thousands of cinemas and tens of thousands of people around the country. But before we do that, we are just waiting the government norm on the SOPs and protocols that have been submitted to the government by the multiplexes and by us before we start this process. With the cinemas are reopened, footfalls obviously are expected to be impacted, and this is going to influence revenues until the situation normalizes. However, we are cautiously optimistic about the future. Coming to the headline numbers for the quarter and full year ended March 31, 2020. In Q4 '20, as the operations started shutting down post March 11, the company's financial performance has been significantly impacted. Consolidated revenues stood at INR 1.094 billion, lower by 43.6% Y-o-Y on account of weak government advertising revenues as -- and the impact of COVID-19. EBITDA stood at INR 275 million, lower by 58%. PBT stood at INR 94 million, and PAT stood at INR 68 million. The total advertising revenue -- now I'll come to the advertising revenue because that is the main factor from this decline because COVID factor was only for few days in the month of March. The total advertising revenue during the quarter stood at INR 302 million. In comparison to Q4 '19, the in-cinema advertising revenue declined by 58% to just INR 301 million. Government revenue declined by 76% to INR 114 million on account of cut in the government spending by the central government. This, we have been reporting in the first few quarters also. Just the central government -- you see out of the government sector, which comprises central government, state government, PSUs, just the central government revenue declined by 93% Y-o-Y to just INR 2.4 million during Q4 '20. The central government contribution to the total revenue has reduced from 74% in Q4 '19 to just 21%, from 74% in '19 to just 21% in '20. And on that, there is a 93% decline. So the corporate revenues were lower by 22.3% to INR 187 crores primarily on account of COVID-19-led shutdown. So it's just the impact of last like 20 days. Similarly, the Caravan Talkies business was also impacted on account of spending by the government. Talking about the fiscal year, the consolidated revenue stood at INR 5.039 billion. EBITDA stood at INR 1.194 billion. PBT stood at INR 522 million and PAT stood at INR 388 million. Profitability was impacted primarily on account of weak government revenue, which I just talked about, performance and the impact of COVID. The advertising revenue -- now for the whole year, the advertising revenue stood at INR 1.547 billion. The in-cinema advertising revenue declined by 30.5% to INR 1.481 billion. The government revenue declined by 54.6% to INR 509 million, and the central government in that declined by 77% Y-o-Y. So for 12-month period, central government revenue, which used to be a big contributing factor, which was 68% of the total revenue, has declined by 77%. So -- and the corporate advertising revenue degrew just by 3.7% to INR 972 million. So it's been flat. So it showed a marginal improvement in first 9 months, and there is a slight decline because of the last 20 days. Finally, moving to the balance sheet. As on March 31, 2020, the net cash declined to INR 454 million from INR 890 million as on December 31, 2019. That's mainly because on account of the dividend payout of INR 457 million in March. The CapEx intensity during the year stood at INR 428 million compared to INR 400 million in FY '19. So it was more or less same -- at the same level and in line with our guidance which we have been talking in the past. The company's net cash flow from operations remain healthy at INR 1.203 billion during the year as compared to INR 976 million as on March 31, 2019. The DSOs have also improved. So DSOs were down to 95 days as on March 31, 2020 compared to 119 days on -- as on March 31, 2019. So with these headline briefing, I now take this opportunity to open the floor for discussion and to take your questions. Over to you, gentlemen.

[Operator Instructions] The first question is from the line of Krunal Shah from ENAM Investment.

I have 2 questions. One is regarding the cost structure. Can you help me understand what are the cost levers present in our business currently, so that at least we can expect what kind of loss to expect in FY '21 if business doesn't begin as usual?

In terms of cost structure, overall, we have brought down our costs by almost 65%. And in that 65%, actually, 2/3 is the salary cost. And overall, we have optimized salary substantially. In fact, effective for the month of March, myself and the Managing Director, Mr. Sanjay Gaikwad, we didn't take -- we cut down 50% of our salary in March. And from 1st April, we have not been taking salary, at least for the first 3 months. And we did a graded reduction in the salary. So overall salary reduction was 37% from 0% for the lowest-grade employees to -- it went up to almost 45%, 46% for the senior management. So the average salary reduction that we achieved was 37%. And that forms 37% of our -- that represents 2/3 of our fixed cost -- I mean, the total cost right now. And -- but I'm very happy to inform that we have not laid a single employee. So all our people on the payroll as well as indirect employees. So we have -- the company has had that human fare because we believed that in this difficult time, I mean, laying off employee will be really cruel for them when -- it will be very difficult for people to find another job. So since we saw that our cash flows could support, so we have not laid off a single employee. Even an off-roll employee, we have not laid out. We are paying everyone.

Okay. Okay. And in the other expenses line item, any cost reduction that you would like to highlight?

No, we have done all the contracts, cost reductions, like, for example, rental expenses, other costs. Everything, we have renegotiated. All costs have been brought down. Like I told you that the salary cost has gone down by 37%, but the overall cost has gone down almost 55%. So we have done very drastic cut in all the expenses. Because our idea was that the operation should continue, and we should see through this difficult period. Because of a good cash flow position, we still took very proactive measures. And actually, in March itself, we took all the decisions. As soon as the operation shut down, we took the decision. By first week of April, we had renegotiated everything and we have cut down everything. So it's all effective from April.

Okay. Got it. Got it. My second question is in terms of the government ad revenues. So this year has been really bad in that sense. Can we expect this to be the new base going forward? Or do you think there can be a sharp bounce back, not probably right now, but say, 2, 3 years' time?

I think, well, the government revenues in the past have been very consistent, and we have seen in last 10 years, actually, very healthy growth. This is the first year that -- first time, we have seen actually right from April, May, we have seen that impact. And as I said, the government -- central government revenue is down by 76%, which constituted almost 60% -- 68% of the overall government revenue. It's down by 93% in Q4 and by 76% in the whole year. I don't believe it to be the new normal, but because this year has been bad for the government finances, so probably that is why this cutdown has happened. I think over a period of time, I can't talk about the immediate future like this year because, again, government finances are under stress, but I don't believe this to be normal because our medium is one medium. You see, this is the basic difference between us and a lot of multiplex chains. Because they don't -- they -- the government doesn't advertise there because the government messages are not for the classes, they are from the masses. And we have a very large mass base, and government has been very actively utilizing that mass base, whether it is the in-cinema advertising or even our other product called Caravan Cinemas (sic) [ Caravan Talkies ]. So I think government has been a very steady buyer of advertising -- user of advertising on our medium. And I think it will -- it should come back. I don't think it's a new normal. But yes, in the immediate future, at least in this year, this stress should remain.

[Operator Instructions] The next question is from the line of Kinjal Desai from Nippon India Mutual Fund.

Sir, I just wanted to understand on cash flow position. So right now, we have approximately INR 40 crores of debt on book. Do we see -- I mean, over the course of the year from the visibility we have right now, what is the kind of debt increase that we would be expecting?

Well, the -- so obviously, there are no new debt being taken by the company. And we have also taken advantage of the announcement by the Reserve Bank of India for -- just to maintain a healthy cash position with the company. Right now, it is not a question of profit and loss, it's really a question of survival for all the companies in India and globally in our sector. So we have been maintaining healthy cash position. So we have taken 2 -- we have done 3 things which we are pushing. What do you see is the net cash position. But one, we have taken advantage of the RBI announcement regarding deferment of repayments of principal and interest. That is number one. Number two, in the past, we were not using our working capital limit. So we have started using working capital limits so that we have healthy cash, gross cash on the books of the company. And third, we have been very aggressively pushing our data collection. So I think all 3 things taken together, we are in a comfortable cash position for this year at the current level of expenses. And should the expenses -- should the situation prolong -- I think I'm answering many questions with this answer. Should the situation prolong beyond expectations because we expect that July, August, the cinema should start opening, and we should start having the cash revenue streams towards the end of this year. With that in mind, we are in a comfortable cash position to meet all our obligations. Should the situation prolong or this -- should the situation worsen, we will further relook at our current expenses and further optimize then.

Sure, sir. Sir, second thing, would it be right to assume that in Q1, we would be having 0 revenues? Or is there any revenue stream which has taken, sir?

Absolutely. Nothing -- no operating revenue will be there, apart from maybe some treasury revenue on our cash deposits and all. But there is absolutely 0 revenue.

Okay. And sir, 1 last thing. From the cost structure point of view, you mentioned, so if my understanding is right, approximately 40% -- if 100% is the revenues, then 40% of revenues would be fixed cost? Or would be -- would the fixed cost be higher?

Ashish, would you like to answer the question because this is really the financial number? I mean, I have not looked at it from that point of view. Ashish, will you take that, please?

Yes, yes. Sure. So out of a total revenue, if you see, the cost per se on a full year basis, on a consol level, should be a little over 30%, but broadly in the range of 30%, 35%.

Okay. And so -- and we would -- would it be right to assume that the variable costs are -- would be down like a good 70%, 80% in terms of absolute control that you would be having?

Substantially down. So the revenue-related expenses, which are not really directly called -- I mean, referred to as a fixed cost, those would go down substantially. In fact, these have gone down substantially.

[Operator Instructions] The next question is from the line of Arun Prasath from Spark Capital.

Sir, I just want to understand now...

Mr. Arun Prasath, this is the operator. Please increase the volume of your phone.

Sure. I am I audible now?

Yes, sir.

Sir, I just wanted to ask, now that among the -- within that advertisement is -- now assuming that government revenue is going to remain same, now the corporate portion of the -- corporate and hyperlocal revenues is -- as a percentage of revenue, it has increased substantially. So I just want to understand what is your sense on that? Is that the volume, that slot is not going to be filled or the pricing or ad rate, how it is going to pan out in your thing, sir?

I think our major stress is on -- in fact, last few years has been to enhance the corporate revenue. And I mean if I look at 7 or 8 years back, the corporate revenue was only like 20%. And now, obviously, it is a healthy 60%, 70%. So that is how -- I mean, in a normal situation, it's approximately 50-50 between -- divide between the government and the corporate. This year has been a bad year for the government. That's why the corporate revenue is higher. So corporate revenue is something which we have been giving very, very high stress to. And as you can see, even this year, apart from the last month, the corporate revenue has been stable despite generally situation in the country being -- expense being down. Going forward, I think depending on how the situation emerges, we will realign our thinking and our policies to basically ensure that we get healthy rates and healthy corporate revenue. Although when the situation reopens, I think a couple of months there will be obviously stress because -- but there are sectors who will be now coming back, bouncing back and will be advertising heavily. So I think a couple of months after the reopening, it should start stabilizing, the corporate revenue.

Yes, sir. My specific question is regarding how -- whether there will be a cut in the headline rates or -- so that you can fill the volume or how it will be? There will be initial discount? Or the volumes will be filled? Or volumes will go off?

I think our major stress policy-wise will be on making sure that the cash registers are ringing. Admittedly, I think initially, the rates will be under pressure. And we won't mind giving concession on the rates to achieve the cash flows of the company.

Okay. My second question is on the single screen owners. With your interaction with all the single screen owners across the country, do you feel that this obviously 3, 4 months of 0 revenue, is it pushing -- will it push them more towards finding alternate source for their property because most of them own the land, so do you see the trend accelerating that we have been seeing in the past?

Not really, not really. And I'll embrace your question in 2, 3 parts. So first of all, while the -- the fixed overheads in the case of multiplexes are very high, the fixed overheads in the case of single screens are pretty low on, say, per stream basis. Because number one, these are owner-driven single screens, so -- and who have second-generation, third-generation ownership of these single screens. So they are not like -- run by large professionals, expensive provisionals. So one, they're owner-driven. Secondly, they have, on an average, maybe 3, 4 employees who are not paid at the scale at which the multiplex employees are paid. So their overheads are pretty low. That is one. Second, there was a pressure at one point of time of conversion of single screen taking -- leveraging their real estate into malls or into alternative uses that you also pointed out. We do not see -- looking at the currently the situation of the real estate in the country and the way we work from home is going to happen and the online shopping, this 3, 4 months of lockdown has actually pushed us all into that, we believe that the single screens will find it very difficult to find alternate revenues -- alternate use of their real estate. So I don't think that there is going to be a massive shutdown. But admittedly, we expect that 2%, 3% of the single screens will probably shutdown during this period. That's our estimation.

[Operator Instructions] The next question is from the line of Vaibhav Badjatya from H&I.

So as far as the government business is concerned, on the ad rate side, you've clarified on the corporate side. For the government business on ad rate, is it anyway linked to the either in form of contract or in form of some understanding that it is linked to eyeballs and footfalls in the screen? Because even if the lockdown opens, there might be reduction in footfalls in the screen. And I just wanted to understand, can that have an impact on government ad rates? Or it will not have an impact?

Okay. So the government ad rates are fixed on a per screen basis, irrespective of the footfalls. And basically, they are divided in 2 categories. The screens with seating capacity of up to 500 seats and screens above 500 seating capacity. So the government rates are fixed, which are decided by the DAVP, and they were fixed like 10 years back. I think in 2010, they were fixed for the first time, and there was an increase of 20% a couple of years back, but they are fixed. They are not linked to the footfalls.

[Operator Instructions] The next question is from the line of Gaurav Arora from Avendus.

So basically, I have a very basic question. I just wanted to understand when you talk about government advertising, what sort of advertising is this? Is this predominantly the government advertising their social schemes? Or I mean, what kind of other forms of advertising are included in this? And second question would be, have you seen such drastic fall in government advertising in other media as well? Or is it cinemas that have been hit especially hard and other avenues of advertisement are not hit as hard? So those are my 2 questions.

Okay. So I'll take the second question first. This government advertising is down across the board. So if you analyze the radio company, like radio -- like the companies, which are listed companies in radio, the central government advertising even there is down by 80%, almost 80%. That's what we have been analyzing. And even in our case, for the year, it is down by almost 76%. So that is the -- so it is down across the mediums, whether it is newsprint, whether it is radio, whether it is cinema. So it's not that it is against the cinema. Across the board, it is down. The first question, in our case, the government advertising includes 3 revenue streams: one is the central government; second is the government; third is the PSUs, like the banks, LIC, for example; and fourth are the political parties. Political party advertising is miniscules. I will not even talk about that. That's what I said 3 streams. PSUs are all commercial. So whether an LIC is advertising, when a State Bank of India is advertising, these are all commercial advertising. Like a private insurance company or a private bank will advertise for their products, similarly, these people do. Only thing is when it is PSU, it goes to the -- gets classified as government. When it is other banks and other insurance companies, they get classified as corporate. Then the central government advertising. Central government advertising is largely -- which is a single largest advertiser in this segment of government advertising, central government advertising is largely the government messages to the -- social messages to the masses. Like, for example, Jan-Dhan Yojana; like, for example, all the messages of the Health Ministry, for example; messages relating to the elections. So all those messages go from the central government. And the state governments are largely like central government, the social messages within the state, and many states also advertise for the -- promoting the tourism in their state. So this is how basically it gets classified.

Mr. Gaurav, does that answer your question? Mr. Gaurav, your voice is not audible. Mr. Gaurav, please unmute your line from your side. We're having no response...

Yes, sorry about that. Hello?

Yes, sir. You may go ahead.

Yes. So just a follow-up on that. Out of these 4 streams that you mentioned, would all of them have got hit as hard? Or are there any ones which are still kind of resilient?

Well, the central government has been hit the hardest in that segment. I can give you some figures. So central government -- I mean, if you look in the whole year, the central government is down 77%, PSUs are down only 11% and states are down by 17%. So as you can see, there is 10% to 15% in the state and the central -- PSUs, but central government is down 77%.

Okay. And I assume central government would be the biggest chunk among these 4?

Central government in the year...

No, I mean, generally, over the last few years, your experience.

That's right. Central government is the largest. So out -- in the total government advertising, central government last year was -- I mean, FY '19 was 68%, and in FY '20, it is only 35%. So overall, it is down. And that -- so from 68%, it is down by 76%, being a single largest sector.

The next question is from the line of Sunil Kumar, he is an individual investor.

Considering the current situation of health pandemic, various stakeholders, like distributors, exhibitors, so everybody is not having any revenues. So let's say, once the situation normalizes and the theaters open, will there be any change in the revenue sharing dynamics between your stakeholders and yourself, like distributors and exhibitors? If you can throw some light?

Yes. I think -- well, that's an excellent question, I must say. There will be change in dynamics. I can clearly envisage some change in dynamics the way business is done. For example, we have already started -- we are already engaged -- when the business comes back, we are already engaged with all the stakeholders, including distributors, producers, exhibitors. While -- currently the way we charge, like in the Hindi market, we charge on a pay per show basis. So first week, we charge INR 425 per show for any movie irrespective of what movie it is. And the second week, we charge INR 360 per show. And third week onwards, we don't charge anything. So like this, we charge them. Now we are already talking to them because we believe that there will be less footfalls. The people will be under stress. So we are already engaged with them as to how we can change that dynamic. Can we charge instead of a fixed per show basis, can we charge on a percent -- as a percentage of the collection because that will give them relief. And for us, we will not lose any revenue because if the collection -- because today what happens is, I'm charging whether the movie is doing INR 200 crores or INR 400 crores of revenue, I'm charging INR 425 per show in first week, INR 360 in the second week and overall we cap it at INR 20,000. We don't charge more than INR 20,000, and we don't charge less than this per show basis. So if a movie does INR 300 crore of business, even then I'm capped at INR 20,000. While a movie which doesn't do well, I may be getting INR 5,000, INR 7,000, INR 8,000. So by linking it to the box office, we will get higher revenue on films which do well, and we will do lower revenue which films don't do well. So overall, we will average out, but the industry will get a relief, the guy who makes more money. So these kind of things are already being discussed within the industry. And we have been socializing with the industry on behalf of that...

Okay. Any -- similarly, any change in the dynamics between you and your, what you say this, exhibitors who are -- as you mentioned, like 1% to 2%, I mean, the total business, any additional sources of revenues, which -- like you have a wide network of theaters, like are you planning something and so that it can admit their revenues also?

No, with the theaters, there is -- there should be no change in the dynamic because they are basically essentially -- you see they pay a lease rental to us for the use of equipment. But in that lease rental, we also maintain the equipment and we also replace the equipment over a period of -- when the equipment go out of life. So essentially, what we are charging the exhibitor is just the maintenance and the equipment cost. So obviously, that we can't -- which he was supposed to bear, the exhibitor is supposed to bear that cost. So we are financing that cost, and we are charging the lease rental from him and part of that is maintenance charge. So no change is envisaged in that dynamic. And he also gets the revenue share of the advertising from us. So we don't envisage any change in that dynamics.

Great. And my next question would be like, see, considering the situation -- financial situation of all the players, some like yourself, I'm assuming that whoever is efficient will come out with flying covers from this situation. So do you see more consolidation in the whole industry?

I don't know. I don't know. I really don't see much consolidation happening right now because if you look at the multiplexes, whatever they could consolidate they have already consolidated. And multiplexes generally -- whatever smaller chains are left, they are really not interested in that. Otherwise, that consolidation would have happened. On the exhibition side, we don't see much consolidation happening. Similarly on the content side, we are all -- no, it's a very fragmented industry, the production of films. So I don't honestly see any much consolidation happening. And I said in my opening remarks, so far as we ourselves are concerned, we are cautiously optimistic about our future because of the comfortable cash flow position that we have to tide over this crisis.

Yes. If I may squeeze in 1 more question, is it okay?

Okay. Please go ahead.

Yes. I mean, currently, you're having around -- more than 55% market share, so do you see your market share going up after this pandemic, so because I assume that you are a listed company, you are efficient and all these things?

Honestly, all other players in our industry are unlisted. So we really do not know their financial position because their data is not published. Our data is published. So we -- everybody knows our data and where we stand. So it really depends on the situation of other people. But we do believe that over a period of time, the efficient players will obviously should gain a bigger market share and the market share of the inefficient players should eventually go down.

[Operator Instructions] The next question is from the line of [ Junaid Shabbir from Moneycontrol ].

So my question is based on this current situation, pandemic situation, do you see any transfer in share or transfer in revenue from your industry to the OTT industry? Or -- and how you're going to counter this change, if it is there?

Well, admittedly, as you are saying, you see, number one, this is a question -- this is a very live question actually in every platform for all the multiplexes, for all the producers, for all the distributors, what impact is the OTT going to have on the industry. We believe that -- you see, first of all, for the film the entertainment, for the exhibition sector, for the cinemas, there have been many competitions in the past. And every time, it has been predicted that, that is going to kill the cinema, but cinema revenues are only growing. You see, OTT is not new. OTT came a few years back. And every time, it was questioned whether the exhibition sector will go down, but it didn't. Actually, last year was the blockbuster year, and even the first 10, 11 months in the exhibition sector saw very good revenues. There was a substantial increase in the revenues, which is gone by the numbers of the listed exhibition company. So that is number one. Secondly, right now, with no visibility of the cinemas reopening, there is some content which is ready. That content, they have their own -- the producers may have their own financial stress. To relieve that stress, it is their prerogative if they have to go to the OTT. So some films admittedly will go to the OTT, but we don't see it as a trend. I think the movies are made for big screen. They will continue to be released on the big screen, the name and fame and the revenues, when 60% to 70% revenue of a film comes from the theaters, I don't think that it will be a large trend that movies will start going to the OTT. So that shift, although it may be temporary for the next few months, but once the cinemas come back, I think everybody aspiration, every content creator's aspiration is to go to the big screen, which contributes to 60%, 70%, 80% of the revenue. And then the next window of the satellite TV and the OTT comes. However, for the OTT, now, we are seeing Netflix Originals, Amazon Originals. So there are a lot of movies, which are being separately made for them, but you don't have to invest so much of money in making those movies because they are for the small screen experience. So we don't see any major change over a period of time in -- I mean, I don't see a threat from the exhibition sector from the OTT sector.

[Operator Instructions] The next question is from the line of Urmil Shah from IDBI Capital.

Kapilji, my question was more on the content side. So based on the interaction you would be having with the industry, when do you see good content coming up once the lockdown is open? Secondly, we have lineup of Hollywood content in July. Are there any discussions going on to -- for that content to be shown on the non-multiplex network because it's -- of the uncertainty as to when the multiplexes will open up?

Okay. So I'll take your second question first. So yes, admittedly, as you know, Unhinged is due for release on the 10th of July. Tenet, which was on the 17th of July, is now 31st of July. Mulan is on the 24th of July. Wonder Woman is on the 14th of August. So there's a lot of Hollywood content. Cinemas in America has started opening up and all these theaters, all these movies, and they are planning big releases, actually, even in India. I mean, the sense that they will be -- they're expected to dub them in multiple languages and release them in a big way. So currently, I think it's not just outside the multiplexes, they release the movies on the DCI system, the DCI compliant system or the 2K system as we call. In 2K, also, we are the single largest player and in the non-2K also -- in our own system, also, we are the single largest player. So the movies will release definitely on the 2K system, which is their system. We are engaged with a couple of studios, and they have shown interest. So right now, those discussions are on. And it is possible that the movies may release on the non-DCI systems also. And I'll just remind you that it is not the first time if it happens, it will be happening. If I may remind you that in the case of Universal, The Jurassic World, Universal Studio, Jurassic World and Fast & Furious were 2 movies which were released very widely on the non-DCI system as well in India. So there is history. There is precedence to that. And so I won't rule it out. But if you ask me that if there is a deal today, no, there is no deal today on the table, but it is under discussion. So that is the second question. The first question, so far as the content is concerned, the Indian content is concerned, right now, we have, I think, almost -- between 125 to 150 movies, which are ready currently. Out of which, 1/3 of those movies are in the ready to release stage and the balance 2/3 movies are probably in the stage where some post-production is left, which can very, very quickly come back. So various associations are already engaged with the government. In some of the states, the post-production has already started. So the effort is that all those movies come back and get released when the cinema start reopening. So a lot of movies are going to release. And by the time, this release is over, more movies will start getting because there are lot of movies which are like half finished, which are in the shooting stage. So slowly, as things start opening up, it will happen. There is also one more important thing I'd like to point out. You will say 125 to 150 movies, how long will they last? So now entire industry, from east to west, north to south, are working together. So it is not that earlier, the case was that like 30 to 35 movies were releasing every week. And they were really fighting for the screen space. They were releasing in different parts of the country, the Tamil films used to release more in Tamil Nadu. Telugu films used to release in Andhra and Telangana. Hindi films in rest of the country. So if a Hindi film is released, it will get maybe a 20, 25 screens in entire Telangana and Andhra Pradesh. The rest of the space was taken by Telugu movies, for example. Now there is a discussion -- pan country discussion between the various film makers, what is going on, is that every film should see a wider release. And let us not compete when there is a shortage of content with each other. For example, when Sooryavanshi releases or an 83 releases, let it release in multiple languages all over India, let it get a much wider release. And let a RRR, for example, a Telugu movie, should not release at that point of time. When RRR releases, it releases in Hindi language and in other languages, also let it -- in Bangla, let it get a much wider release. So let the movies which are available should not compete with each other and each movie should get a wider release. So that is the network and the collaboration, which is going on at the industry level to ensure that the audiences get to see the content, cinema halls are not empty when the theaters reopen. So that's what is happening at the industry level. So that should give a lot of comfort and revenue streams to the cinema.

Sure. Sir, just last bit. So given what you just mentioned, thanks for the clarity, would it be safe to assume that for now, it looks like FY '22 content would be at least similar to FY '20, there should not be a risk as regards to the supply of the content. The performance needs to be seen, but as regards to supply of the content, we can have a similar lineup as it was in FY '20?

I don't know how to understand or answer your question, Urmil, because FY '20 was another year, there was 1,700 movies released -- 1,700-something movies released. And obviously, that many movies are not going to release in this period, number one. Number two, you are not going to see -- once the cinema is open, even if they open by end of July, middle of August, that is the expectation, it will take at least a couple of -- 2 to 3 months for the audiences to gain the confidence and start coming back to the cinema. Big movies will not release till the audiences are back, and the audiences won't be back till they have won the trust of safety, their safety when they go to the cinema. And secondly, if the big movies come. So this is a catch 22, and this is the paradox which is going on in the industry. So 2 or 3 months, it will take. And after that, as I explained, you will not see 30, 35 movies release, like you saw every week, what you saw in FY '20. What you will see is lesser movies will release, but each movie will see a wider release. So the cinemas will have the content. And you will not -- moves will not fight for the screen space.

The next question is from the line of Sunil Kumar, individual investor.

Sir, my question is related to your business of Nova Cinemaz. This asset-light franchisee business which you have. If you can just tell us how many screens are there currently under [indiscernible]? And what is the outlook for the next 2 to 3 years in the pipeline? That is the number one question. Second thing is like, what is the difference in the revenue sharing dynamics of a normal screen versus a Nova screen, if you could help us?

So currently, we have 52 screens across 25 sites across the country and another 10 screens are currently -- which were under installation. So a total of 52 plus 10, 52 operational, 10 upcoming screens. So that is basically 62 screens is what we are talking about. We are now -- during this lockdown, we are working aggressively on how to push this model going forward and how to create the local entrepreneurs who will own -- and as you rightly yourself pointed out, this is an asset-light model. So this is how we are pushing it. Our revenues really are the franchisee revenue. So we are not making any investment or even if we are making investment to give confidence to the people, we're making very miniscule investments. So what we basically charge is a franchise fee on a per -- say, per ticket sold basis. There are multiple models, but this is how we work in this. So our objective is not to be in the exhibition space but to make sure that there are more screens in the country because we only have 7 screens per million of population in the country. Our objective is to work at the industry level and push more screens in the country. Theoretically, we should have another 15,000 more screens in the country. Obviously, we can't do all that, but we are starting this movement of franchisee. So at one point of time when it picks up, we may expand that thousands of screens should get added over years, but we won't be the cinema owners, we will only be -- we'll own the brand, and we will help people come up with a cinema.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Urmil Shah from IDBI Capital for closing comments.

Thank you, Faizan. I thank you all for participating for the call and for UFO Moviez and management for sparing time for the call. Thank you so much, and stay safe.

Thanks, Urmil. Thanks, everyone. Thank you so much.

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