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

Ladies and gentlemen, good day, and welcome to the UFO Moviez India Limited Q3 and 9 Months FY '24 Earnings Conference Call, hosted by Ventura Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand the conference over to Tushar from Ventura Securities Limited. Thank you, and over to you, Tushar.

Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities Limited, I welcome you all to UFO Moviez India Limited Q3 and 9 months FY '24 Earnings Conference Call. The company is represented by Mr. Rajesh Mishra, Executive Director and Group CEO; along with Mr. Ashish Malushte, Chief Financial Officer of the company. I would now like to hand over the call to Mr. Mishra for opening remarks, post which we can start the question-and-answer session. Thank you, and over to you, sir.

Thank you, Tushar. Greetings, everyone, and thank you all for joining our Q3 and 9 months FY '24 Earnings Call. The third quarter of FY '24 marked a notable turnaround for our business, defining the initial challenges posted by the Cricket World Cup in the early part of the quarter. The business this quarter, witnessed an upward momentum with the release of 502 movies, an increase from 484 in Q2 FY '24. Despite a subdued start with movies like Mission Raniganj, starring Akshay Kumar, Thank You for Coming, starring Bhumi Pednekar, Bhagavanth Kesari, Yaariyan 2, Ganapath and Tejas starring Kangana Ranaut. The momentum picked up significantly in the latter part of the quarter. Notable successes during the initial months included 12th Fail, Leo and Tiger 3, featuring Vikrant Massey, Vijay and Trisha and Salman Khan, respectively. However, the real game changer came in December, witnessing a surge in successful releases like Animal, Sam Bahadur, Hi Nanna, Dunki and Salaar. This positive trend translated into our advertising revenue, recording an 83% year-on-year growth in cinema advertising from INR 186 million in Q3 FY '23 to an impressive INR 341 million in Q3 FY '24. Caravan's advertising revenue also followed this positive trajectory driven by impactful campaigns from the Ministry of Urban Development and clocked in a revenue of INR 41 million in this quarter. As a result, Q3 FY '24 emerges as a standout quarter in the current financial year with EBITDA at INR 184 million, a 4% Q-on-Q increase and an impressive 83% year-on-year increase. Looking at some key figures on the quarter and 9 months ended December 31, 2023. Our consolidated revenue for the quarter stood at INR 1,184 million compared to INR 871 million in Q2 FY '24 and INR 1,109 million in Q3 FY '23. EBITDA margin for Q3 FY '24 improved from 9.1% in Q3 FY '23 to 15.58% in Q3 FY '24. Profitability after tax continued its growth momentum this quarter, reaching INR 46 million compared to the loss of INR 3 million in Q3 FY '23 and a profit of INR 33 million in Q2 FY '24. Regarding the 9-month performance, the consolidated revenues amounted to INR 2,909 million as compared to INR 3,093 million in 9 months FY '23. EBITDA in 9 months FY '24 was at INR 524 million, a substantial increase compared to INR 224 million in 9 months FY '23, 134% increase year-on-year. EBITDA margin in 9 months FY '24 improved from 7.2% in 9 months FY '23 to 18% in 9 months FY '24. On the profitability after tax front, PAT for 9 months FY '23 improved to INR 103 million against a loss of INR 120 million in 9 months FY '23. The consolidated gross cash at the end of the quarter was INR 882 million with net cash standing at INR 230 million after considering all outstanding debt. In terms of our advertisement screen network, it expanded to 3,407 screens as of December 31, 2023 compared to 3,303 screens as of September 30, 2023. This quarter witnessed a net increase of 104 advertisement screens with a notable boost in both prime screens and as well as popular screens. Also, post-Q3 FY '24 on January 3, 2024, we announced a tie-up with TSR Films, securing exclusive advertising screen rights across TSR's extensive screen network of over 403 screens. This collaboration has strengthened our presence in Gujarat and Southern markets, especially in Tamil Nadu and Kerala, expanding our network to 3,808 screens nationwide. This reflects the growing confidence in the critical movie experience, looking forward to Q4 FY '24, started on a decent note with movies like Hanuman and Fighter. However, upcoming line of movies, while subdued, get us a decent line up, including Teri Baaton Mein Aisa Uljha Jiya, starring Shahid Kapoor and Kriti Sanon, Mere Mehboob Mere Sanam, starring Vicky Kaushal, Lal Salaam, starring Rajinikanth, Article 370 starring Yami Gautam, Yodha starring Sidharth Malhotra, Laapataa Ladies produced by Aamir Khan, and Shaitaan starring Ajay Devgn and Madhavan, and The Crew starring Kareena Kapoor and Diljit Dosanjh. So the lineup looks good, and we are looking forward -- and looking forward, we remain optimistic to continue this positive momentum. Thank you. Over to you, Tushar.

[Operator Instructions] First question comes from Aditya Karant, an Individual Investor. Sir there is no response from Aditya's line, sir. Shall we go to the next question?

Yes.

Can you hear me?

Yes. If he manages to connect back, then we'll certainly take his question.

Mr. Aditya, please ask your question.

Yes, sorry. Thanks for this. I think it's a good quarter. Just had a couple of questions. One is your ad sharing percentage for this quarter is similar to last quarter, even though your ad revenues have gone up quite a lot. Your minimum guarantee actually has some operating leverage inside it, but that hasn't come to this quarter. So could you just share why the ad sharing percentage hasn't dropped to like 35%, 37%, even though your ad revenue has gone up. And second question is on margins. Just why the margins are lower in this quarter than last quarter and what do you expect long-term margins to do?

Yes. So your question relating to ad sharing is the first one. So let me take that first, the others have not quoted yet. Ad sharing percent, if you compare with previous year, it has fallen, but you are right, we need to also look at it on a Q-o-Q basis. And on a Q-o-Q basis, what you would see is that it has almost remained flat. But in Q1, it was at 48%. In Q2, it went down to around 41.5%. And in Q3 also, it is almost at the same level, 41.5%. The reason why from Q2 to Q3, you're not seeing any drop is primarily because as the cinema and large screen cinema viewing experience was well received by the audiences and in fact coming back to the theaters. Even as you must have seen, even in our results, the theaters which were closed down slowly started opening and better screens, which were in the process of getting opened up, they also started opening up. As a result, in the last 5, 6 months, we were able to get hold of better screens, when I say better screens, screens were near multiplex category or multiplex category where your minimum guarantee commitments continue to be slightly higher than average. And what happens is when you have these screens getting added to your network, which is evident if you see 100 screens that were added in just 1 quarter, these screens, my liability -- I mean my obligation towards minimum guarantee starts from day 1. But obviously, my sales team takes some amount of time for them to get the kind of revenue from these screen. So you will always see some amount of that -- lag rather. Sometimes it is 2 months, sometimes it is 3, 4 months. But then that new screen comes back in the fold of the cinema network being getting sold to the theater. So that is one reason. And I'm so glad that you have identified this as a problem. But structurally, yes, you are right. As we progressed from last year to this year as the revenues went up, the sharing percent went down. And this is not the end of it. You're right, as the revenues would start going up, the sharing would start coming down, except one caveat that I want to put is, there's one major, major very positive development that we announced last month and in this month, about partnership arrangement for advertisement sales of premium and key category screens down south with one of the players, TSR, a very strong player. Now over there also similar situation would arise for next quarter, I mean, this quarter, that our obligation would start from day 1, but for us to ramp up the revenue would take time. But structurally, yes, we should be able to see the kind of sharing which used to be there in pre-COVID, but slightly above that. So around 35% to 38% should be our sharing eventually. Second -- sorry, I missed your second point. Can you please repeat your second point?

Second question is just on margins. This quarter's margins being lower than last quarter's margins. Is that seasonality or -- and then what do you expect long-term margins to be?

So you're again right. So a very valid point that the margins remain at the same level what it were in previous quarters, slightly lower than previous quarter. And the reason is simple. As you know that we had announced to the shareholders in our beginning of the year earnings call that we have actually moved our salary from fixed to variable, and 20% of the fixed salary was moved to variable because we are not sure how the performance is going to be, of not the company, but cinema viewing whether it will be coming back with the same kind of proportion as that of the other industries. Fortunately, there is a turnaround. And fortunately, we all have gone back to pre-COVID levels when it comes to cinema viewing habits. And therefore, all the cinema service providers or exhibitors are slowly reaping the benefit. So what has -- the only thing that has moved is the provision that we have taken in this current quarter, which is INR 5.7 crores for the variable pay which part of it we have paid off and towards the incentive for the sales teams. So that is one thing that has -- so INR 5.7 crores if you technically add back to the EBITDA, then you probably will be able to see the growth that is visible in the percentage sharing -- I mean in the EBITDA margin as well. So this INR 5.7 crores in other words is not purely of this quarter, the hit has been taken in this quarter. And some of it is a provision that we have built in assuming that the current trend, positive trend will continue even in Q4 going forward because we don't want our employees to, in a way, suffer beyond a point when good days are returned. So please consider it INR 5.7 crores as onetime expense or an expense pertaining to previous quarters, partly. And then you will -- if you rework, you will get a better margin.

The next question comes from Ritesh Oswal, an Individual Investor.

Congratulations for the good numbers. I think we have across INR 100 crores plus cash and cash equivalents, consolidated basis. And expected INR 50 crores, INR 70 crores net cash in next year...

Sorry. Before you proceed, I missed the first line. What did you...

I think we have approximately INR 100 crores plus cash and cash equivalent.

Yes, sir.

Yes. And INR 50 crores, INR 70 crores in next 12 months. So any thought on reducing balance sheet, pay off debts?

So if you actually see our debts are slowly going down in FY -- I mean, December '22, my gross debt was INR 83 crores. And December '23, my gross debt is INR 65 crores. So my debts are going down, and we are conscious of that. Fortunately, we had -- we were in a situation where we kept the cash and kept our debt. And that really helped us in that horrible period of COVID because our revenues were 0 for almost 6 quarters. But yes, after that, now that for the last 3 quarters, we are seeing profitability returning and even the normalcy returning amongst the cinema viewers. We have consciously moved away and started reducing the gross debt. What it means is that the net debt reduced, but we don't really add more of debt from us because our business is such that for CapEx -- every year we do CapEx, and for CapEx, we need debt. For this year, we were conscious of CapEx also and some of the CapEx we have done through our cash flow. We are moving in that direction. But just to give you a comfort that while my opening remarks cover only the net debt probably. The gross debt is reduced by INR 18 crores. And yes, we are sitting on cash, but we will not be -- completely paying off the debt at this stage, maybe we would still want to keep a buffer with us, which historically we have been doing. But that is not a huge buffer. You must have seen the way the management has treated the cash in the past ever since IPO. Whenever there was a cash accumulation, if there was no meaningful opportunity to deploy the cash in the form of acquisition or the decline in business, we have time to time returned it to the investors. But at this stage, we'll continue with this trend where we are really consciously bringing the gross debt down, and cash is bound to go up because business is making money.

So next year, CapEx amount project, CapEx plan?

We should be going back to pre-COVID level, and that's again a healthy thing. This year, we consciously thought of curtailing our CapEx because that kind of demand was also not coming from the market. Next year, we should be going close to pre-COVID CapEx of INR 40 crores, INR 50 crores, but better clarity will emerge by the time we reach the -- before we reach the next earning call, full-year earnings call. But you can take it that we'll be going close to pre-COVID level, at least 80%.

Next question comes from Aditya Sen from RoboCapital.

Sir, do we have any updates on ad spending by the government because that would be another major driver. That is the laggard that we are experiencing as of now. So any updates on this front?

So on the central government front, ad spending, there has been certain uptake in that, but not to as great action as you would have been happy about. So central government, while they have done some activity, we still continue to remain on the lower side. As regards state government revenues, that we are pushing aggressively and trying to make up for the gap that has occurred due to central government spending going down across mediums. It's not only cinemas that they have gone up on, they have generally reduced that spend, I have mentioned in my earlier calls also. They have reduced their spends across print, television, everything. So it's conscious call by them. But as I said, healthy point is that they have started some activity in this regard in this current year.

Yes. So on data points because since you have this question and which is very critical, 2 things. One is that this healthy performance that the company has put up in this quarter on the back of a good quarter, which was Q2, this is in spite of central government, not really starting the spending. So in a way, if there is a change there and the central government ministry start using in cinema as a medium once again. Then that is going to be a phenomenal positive for the company. Honestly, we don't know when. None of us -- nobody from the industry would know that. But on the state government side, the data points are, last quarter, we did INR 7.2 crores. This quarter, we have done INR 8.8 crores state government. So it's almost 21% growth. And on Y-o-Y basis, against the INR 8.8 crores of this quarter in Q3 last year, we had done INR 4.4 crores. So it's almost doubled. So there is some healthy traction. Obviously, I'll caution the question -- put to cautious statement that when the election gets announced, then all the state government ministries are required to stop their campaigns. And to that extent, there will be some reduction from this particular segment, not overall segment. PSU's would still continue.

Okay. So this is a valuable information, specifically the part that they'll reduce the expenses in the coming quarter. And so given the fact that central government -- everything is dependent on central government, I don't think we'll be able to cross the pre-COVID highs of INR 200 crores revenue from this advertisement. Am I right on this?

So if you're having a time horizon of next 1 year, then answer is yes, we will not be able to cross. But the inherent strength of the medium is such that the only thing that was lacking was people coming back in cinema. Now that is really happening, and that is continuing. All it is the mathematics of number of minutes sold in this forte. So if we have to really increase the revenue 4x, I have to double both these parameters. Currently, I'm selling 5 minutes some of the better multiplexes managed to sell upwards of 20, 25 minutes. Obviously, I'm talking about 2x growth because my network is really large, and it's a combination of different categories. And the spot rate eventually plays out, which I don't need to say as the demand increases and the scarcity there, it goes up. Certainly, that is the biggest driver for us, the ability of this network to deliver on the same investment done in the network, with the ability of the network to deliver higher advertisement revenue. And that has been the draw all the time, but not in 1 year.

Not in -- yes that's true, we also foresee as of now.

Yes.

[Operator Instructions] Our next question comes from Rahul Vashishta from AKSA Capital.

This is Rishi Maheshwari from AKSA Capital. This is regarding your association with TSR. If you can highlight how have the contract been negotiated over there? What are the terms? As we understand, TSR itself is a digital chain for screening ads. So what are -- what is our association with them? That's my first question. If you can please let us understand the commercial terms over there.

So TSR -- the association with TSR is a basic understanding of acquiring the advertising selling rights of their screens. The basic purpose of this was to increase our footprint in the southern markets, especially Tamil Nadu and Kerala, where they have a good presence. So we have added around 180 screens of TSR in Tamil Nadu itself and Kerala another 54 screens and Karnataka 36 screens. So it gives us an increased footprint in the South market. And this allows us to capture Pan India campaigns from -- even in the North. The way it is structured is we have acquired advertising rights. I don't want to get into the actual sharing of the commercial terms over here because a lot of it is confidential also in nature. But basically, there is an amount agreed, and we pay it out according to that. The entire inventory of these screens is exclusively going to be marketed and sold by us. And that is the broad conclusion that I can share at this stage.

So Rishi, basically just to add on to what Rajesh said, once it is extremely critical, most critical for us to have a better footprint in South, which we have achieved through this. But the way a financial investor can look at this particular deal is, that this is an absolutely asset-light model where we are not going to incur any upfront CapEx, so to say, which we do in other screens. And in return, what we are getting is the ad rights of this good network, which we can sell as a composite network along with us, which in turn is going to get medium to long term, a lot of benefits. But which -- one of the earlier questions I was trying to answer about sharing, the nature of any arrangement, whether it is with a deal like TSR or an individual screen is such that my liability starts from day 1. And my ability to integrate that screen or that network in mine, takes at least 2 to 3 months. So till that time, there's a short-term gap you will see where my revenue from that network or that theater is lower than my commitment. But basically, it's an asset-light model. I'm going to be paying a fixed fee, which is in the form of IMG for acquiring those networks. And beyond that, the revenue gets added to my profitability, with me not incurring any CapEx on this.

Sure. Helpful. So just to extend this, how many of these 400 odd screens will you place in the premium screens?

Quite a lot of them because this is primarily a DCI network, which has installed the high-end equipments. And roughly 75% of the network I would place in the premium category.

Okay. My next question was to understand going forward, any association that we can assume with Qube in any other form that the management envisages. Or is that story done and dusted with?

I never say never to anything. But right now, we have just come out of a potential association. So right now, nothing is there on the radar or horizon. If something comes up, definitely, we will be always open to something. But right now, there's nothing.

What could be the cost associated in terms of the merger or the JV that was planned? Was there any cost that was built in 9 months FY '24 P&L?

Okay. So you mean -- just to understand your question better you mean was there any cost incurred estimated for completing and operationalizing this JV? Is that the question?

That is right. Absolutely.

Okay. So no, nothing. Apart from the...

Nominal legal fees and consultancy, nothing much.

Most of these costs were incurred in Q2, partly in Q3 and all of that was in relation to the legal fees and the advisory fees for putting the JV structure together and related activity, not -- beyond that there was no cost, and that was on your...

There's no cost, and there is no breakup fee or anything from that. It was a mutually agreed dissociation. So there's no other costing there.

Next question comes from Shivam Shah from Smart Sync.

I have a couple of questions. The first is, like, are we seeing any disruption -- potential disruptions from any other technology like cloud or Internet? And the second would be like there are -- there is -- on the Hollywood side, they have some sort of a JV like studios have like come together and developed their own standards. So do we see any potential threats from that side? Like something of that sort of happening here in India?

Not really because as far as the films that are releasing in cinemas are concerned, now Hollywood films are out of -- are under VP of Sunset editors. So even right now, there is a very little impact on the VP of film for us. Advertising, whenever the film is run in the cinema, we keep continuing to run. This is our agreement with the cinema. So Hollywood has really has no role to play in that perspective. So this consolidation at the studio levels doesn't really have much effect on our health at this stage.

And I assume one more point which you asked and that is very, very critical. And that was about technology disruption. Just to quickly tell you that since we are a B2B kind of offering, on the face of it, it looks UFO Service, offering. And therefore, somebody may infer you are not really adopting to newer technologies or you are offering what you are offering 18 years back, but that's not true. If you actually go in theater, you will find that the -- as simple as the server, which used to be in the more in the form of a PC environment, now it is a handheld device. What I'm trying to say is that unlike B2C, where Samsung when it rolls out S8, S9, S15, S20, S24, we all know that okay, they're upgrading and they are not Nokia. But in B2B offering, it is difficult, unless somebody spends time with us. ,It is difficult for us to explain. ,This is probably the forum where I can speak and for investors to know whether this company is really doing upgrades and catching up with the technology changes or no. So we have done this technology catch-up both on the server front as well as on the projector front. And probably, that's the reason why we are succeeding -- successful in last over 1.5 decades.

Okay. That answers the question. One last thing. How are we seeing the business as far as the Caravan Talkies is concerned. Can you please throw some light on that?

Yes. So Caravan Talkies did decent business in Q3 and some business in Q4 also in January, we have been seeing. Right now, the government is actively working on that and there are some corporate clients also. And we hope to see business on this front going forward. I think state governments will add up to it. The elections are coming up, they would be looking towards this. So we are pretty positive and hopeful on this front. Good thing is this business, I mean, it was shut down for almost 2, 3 years, and there was no imperilment. Right now, we have got imperilment on that and business has also started flowing in. And central and state governments have seen the benefit and impact of these events. We will remain optimistic on this front.

[Operator Instructions] Our next question comes from Krunal Shah from ENAM Investments.

Yes. So just a couple of clarifications. So this TSR deal that you signed. So TSR, I understand is a network like ours. So wouldn't they already have some advertising contracts in place and some advertising revenue that they'll be generating?

Yes. So you're right, they are also digital integrators like UFO Moviez, they have started in the South, and they have a significant presence there. And however, they do have certain screens advertising already booked with them and understanding is that these deals migrate to us, though not significant amount but that is my understanding because we pay them out from x date onwards, and anything prebooked on those things, will migrate to us.

Okay. So if I were to compare on a per screen basis say, like our revenue, YTD is INR 2.5 lakh advertising revenue per screen. What -- where would they stand in terms of percentage terms versus ours?

So in terms of actual revenue that they would have done up till now, they might not be stretching up as well as what we were doing because we have a much more larger ad sale network and even the screen network is much bigger, but the potential is higher, and that is where we further need to come together and tie our business. And as Ashish mentioned to the earlier caller also, this is an asset-light model for us. We are not investing anything in the -- already entirely invested in by TSR, the maintenance of that is by TSR on that front. So we just participate in the advertising rights over there, and that is a broad part of it. The potential is high on these things. I would not put the past track record as a benchmark for these things.

Okay, sir. Okay. And sir, just a clarification on the employee cost, INR 5.7 crores provision within the quarter. That would be for the last 3 quarters combined, sir, right?

Part of it is ,even for next quarter.

Okay, part of it is for next quarter also? Okay. Okay. So entire year FY '24 is taken into account almost?

Not really. I think part of next year as far as variable is taken. And as far as your advertisement sales incentive is concerned, it is still Q3.

Okay. Okay. Got it. Got it. And just one more question. So you've seen good traction in the corporate advisement revenue. Could you help me understand what sectors are in our platform basically right now?

What is the question?

Okay. You mean the industries that are spending on us?

Yes, yes.

Okay. So probably from Q4 onwards, we used to give this -- these details, which we got a feedback are very useful to the investors to gauge who was funding more. But I would broadly say that apart from -- I mean, pre-COVID scenario we used to have this satellite -- I mean the television channels used to be one of the major spenders, that segment has gone down. I mean, just to answer, I don't have that information ready with me and from Q4 onwards I will include it also in our opening remarks. So everybody has a reference to it. But quickly to tell you which segment does not come back. That is one segment which has not come back, but it is getting substituted partly not fully is with OTT and that is a very interesting thing because that is -- can be viewed as a competitor for us, but they are trying to advertise on us. So they are recognizing that we are mutually exclusive kind of mediums for entertainment consumption. Apart from that, the rest of the segments, unfortunately, I don't have data right in front of me, but I will putt it and give it to you, but my hunch is that apart from that one segment, the rest have come back. Maybe real estate is one segment which has not come back. When I say real estate, some of these campaigns that happen at a regional and local level. Those have not really come back, but let me do this comparison and come back to you. I don't have ready information now, apart from the television channel's data.

Okay. Got it. So just one more thing. Just in the industry, we're hearing the rural demand is very soft. How have you seen your ticket sales in your network of screens in the interiors?

Sorry, some part of your question I missed, rural demand is picking up. How are we seeing?

Rural demand has been soft. No, no, my question was rural demand has been soft. So just wanted to check with you, how have you seen your ticket sales in your network for the movies in the last 6 months?

So we can indirectly draw an inference about ticket sales because except one segment which is intact, we don't really, as a business strategy, get into the even the revenues of either distributor or exhibitor directly. And exhibitor for sure, we don't really count the tickets for various reasons, which we all know that they are not comfortable, but 2 things. One is rural demand softening or getting better doesn't really directly impact us majorly because cinema as such in India is not a rural phenomena. On the screens that if you see and if you map it with telcos, almost 90% plus, almost 93%-plus screens are not in rural area. So I don't know whether the same kind of softening you're seeing in urban as an overall phenomena. But in cinema, we are not seeing it happening. In fact, even if you say key multiplexes, which obviously cater to a different segment. Ours will be more or less same geography, but not really rural, rural, which is absolutely dependent on agriculture and stuff like that.

Right. Sir, my question is more on Tier 2, Tier 3 kind of cities. So actually, the inference that I'm trying to draw is that our advertisement revenue would also be to some extent correlated with the demand for ticket sales. And...

Yes, which is true and that we are not seeing dropping. I mean it drops a bit, okay let me put it this way. If you have a good movie, pursued it, people just go and block tickets over weekend, unless there is a negative mouth publicity happening on that movie. It will continue, which means people want to come out and spend, okay? And vice versa, if there is no content, like for example, October, November or currently Jan, mid-Feb, the content is weak. That time, you will not find, unless somebody is a diehard fan or somebody really wants to go out. People will not come out. But that cannot be an inference that it is a softening demand, it is more to do with the quality of content coming out. It will be both regional and Hindi.

So kind of footfall of the adverts as we say, is linked to the fate of the film. But definite trend that we are also seeing is the quality of cinemas, the multiplexes that are opening up in Tier 3 towns and even at times in the Tier 4 levels, the smaller multiplexes are opening up. That is a very healthy and positive sign for the business. Because cinema viewership is there. That is where the latent demand is there and -- this -- there is a definite growth in Tier 2, Tier 3 towns for the cinemas. So wherever cinemas closed down in the past also newer multiplexes, newer films are also opening up.

The only major advantage for all of us in cinema industry is that the unique viewers of cinema, various estimates are there, but probably none of the estimate goes beyond INR 8 crores or INR 9 crores. So in a country with a population of 140 crores, obviously, at least technically, 30 crores, 40 crores people can afford to go to theaters, right? If they are not going that is only and only because the availability of cinema screens around them is not there. So that is a major point that there are only 8, 9 crore unique viewers who are putting together -- maybe 10 crores, 12 crores, putting together 90 crores to 120 crores of ticket sales.

Got it. And in terms of advertising revenue, what kind of a sustainable growth rate that we expect over the next -- the longer term?

Sir, we are just -- I would say we have just got out of a super major shock, and people will wonder why we're referring to COVID, but for cinema industry, it was probably a long shock than others. Everybody else came back on track and saw super demand, pent-up demand, but nothing happened, especially in Hindi-speaking market for us for a long time. Three quarters, good. Some of the belief that we had are getting vindicated that cinema viewing cannot be substituted by small screen viewing, either handheld or television. Movies will not directly go on OTT was the second belief that we had. But our belief remained with us since such time it was validated. Third, belief, which is now getting validated is if the people go back to cinema viewing, cinema is a wonderful and a very effective medium for advertisers to carry their messaging forward in the form of an impact medium. So that is also getting validated. Fourth, we wanted to validate whether if central government really doesn't support this in-cinema advertisement, whether we will be able to pull the second engine of corporate and still be able to continue the growth, that is also happening. So what we are doing is we are really not living by the day, but more like trying to look at it quarter-by-quarter and thinking of the positive sentiments going around. So a little early for giving projections and estimates.

There is a follow-up question from Aditya Karant, an individual investor.

Maybe just a couple of follow-ups, your kind of key metric, one of them is this number of minutes sold per show per screen. So this one -- this is almost recovered to your 2019 levels, so you have about 5.3 minutes versus 5.5 in 2019. Can you explain what drives this metric? And do you think that this is like the peak like saturation level of this metric or similar to revenues, we should not expect this to exceed 2019 levels, this 5.5 minutes sold? Or do you see this kind of increasing going forward and drive...

So I think one of the previous questions where we were trying to estimate what is the possibility of this network to deliver. And the answer is no, this is not correct that it cannot go beyond 5.3, the better networks deliver more than 18, 20 minutes average. And that is known to all of us. We go and see movies in those theaters and we see advertisements. So certainly, that is one of the major kind of an opportunity for us. And consequently, the revenues should keep going up, and the only thing that can be questioned is once we reach a stage of say 10, 12 minutes, then there will be questions around what kind of growth we are seeing. But currently, we're really away from reaching a saturation point in our belief.

Okay. So 2019 is not like peak. It was just COVID happened and therefore, you saw a downflow?

Yes. Because see, you have to -- I have only one answer for yourself what number of minutes you think this network can sell, say a premium multiplex sells average 20 minutes, what would this network sell? 20 minutes, 18 minutes, 15 minutes? That would be an upper cap in your mind for the revenue. And then the spot rate is something which we'll all have to wait and see how it plays out.

Yes. I mean the question is actually that the central government revenue doesn't come back, which seems likely it maybe, they will not spend like INR 1,000 crores like earlier. What is your kind of network capacity to sell ads? I think that's the question.

So slowly, we wanted to -- for a long time, we wanted to disengage from dependency on central government. Unfortunately, we are pushed in this situation a little early. But more important question is whether, say -- I'll repeat, whether from 5 minutes, inventory of 10, 12 minutes, first, can be sold. I mean can be consumed in those screens. And if that can be consumed there, obviously, I don't think that there is dearth of advertisers who would want to spend there if actually this medium is positioned and proven, which was a case pre-COVID. We were almost there.

Okay. Got it. Got it. And then just last question, ad prices, again, they've been trending up nicely this quarter as well, but which is below the 2019 peak. Just -- can you just explain how the industry looks at this, like is that ad pricing at peak levels, will it exceed 2019 levels, just some industry context on like what's happening maybe with Qube, and how do you compare with that? And then second on that is just TSR's ad pricing for a minute, higher than yours? Or are they lower quality than yours?

So the spot rate is one area where we have chosen to not get into discussion on open calls because that really hurts the business because the medium is such that varied rates get offered to various customers. And probably that's the reason why everything else is there absolutely transparently from our side, except the spot rate, which could be derived. But we don't put it and we don't really discuss it. So we would choose to continue with that. But generally, our network currently is getting sold lower than premium multiplexes for obvious reasons and that kind of a gap would stay, but that would get bridged to some extent, but there will be a gap between the pricing of ours and pricing of premium multiplexes.

[Operator Instructions] Next question comes from Jay Sonthalia, an individual investor. There's no response from a Jay. Shall we move on to the next question, sir?

Sure.

[Operator Instructions] There are no further questions. I now hand over the floor to Mr. Tushar for closing comments.

Thank you. On behalf of Ventura Securities Limited, we would like to thank the management of UFO Moviez and the participants. Good day.

Thank you.

Thank you.

Thank you. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation. You may disconnect your lines now. Thank you, and have a good day.