SAREGAMA — earnings call
The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.
Prepared remarks
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
MR. PANKAJ CHATURVEDI – CHIEF FINANCIAL OFFICER - SAREGAMA INDIA LIMITED MR. B L CHANDAK - EXECUTIVE DIRECTOR -
MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR RELATIONS - SAREGAMA INDIA LIMITED MR. DEEPAK JAIN – SAREGAMA INDIA LIMITED
May 02, 2022
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to the Saregama India Limited’s Q4 FY2022
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 At 615 Crores this is the highest revenue Saregama has ever written and a PBT of 204 Crores is the highest PBT Saregama has ever written.
This year has been a year of multiple milestones for us.
Our music licensing revenue showed the highest year-on-year growth ever of 26% which is no mean achievement.
Do keep in mind we have been able to grow music licensing revenues by over 20% fourth year in a row, once again reiterating it is not a one year exception.
The foundation that has been built here is going to ensure that as we people go forward, this success story will continue.
In fact the licensing revenue crossed 360 Crores this year.
This is a result of both big investments in new content as well as our catalogue working harder.
In this year we took a content charge off of 46 Crores compared to 18 Crores in the earlier year that is FY2021, so we have been able to write a much higher PBT in spite of us taking a much bigger content charge off during the year.
Lot of you have asked me questions in the past about our films division as to when will it start making money and when will it become significant and I have been telling you that maybe FY2022 is the year and that is what happened.
For the first time films, television and series vertical crossed the 100 Crores annual revenue number and we delivered a committed margin of 15%.
Carvaan sales number during the year touched 4 lakh and this is in spite of zero marketing.In fact the sales numbers grew by 17% compared to FY2021, this is nothing but a reflection of the inherent strength of the brand and yes, as committed, we have done a breakeven on Carvaan this year too.
Overall we delivered an operating income before content charge, interest and depreciation (OIBCID) of 38% and our commitment was in the range of 32% to 33% But as we go forward we continue maintaining OIBCID guidance in the range of 32% to 33%.
FY2022 was just an exception.
During the year we successfully raised 750 Crores of fresh capital from the market.
This is going to be used for inorganic purchases in terms of music labels as well as more aggressive purchase of new content.
The first acquisition we did from this money was of a Telugu music label’s catalogue.
We have got around 1500 music IPs from 280 Telugu films.
This is helping give the initial boost needed for the Telugu business because as stated earlier we are now investing now heavily on Telugu film music.
Another story which I would like to share with you, something we are very proud of, during the time of lockdown we started this project called Punarjanam.
This involved recovering and digitizing some of the songs owned by Saregama belonging to 1930s, 40s and 50s.
They were owned by us but somewhere got lost over decades.
Those songs were sourced from original LPs owned by multiple LP collectors.
Each of the songs were cleaned up,
May 02, 2022 moved from analog to digital and then was serviced to every licensing partner of ours.
The good news is that from a 130k IP catalogue we had at the beginning of the year, we now own 142k IP.
This increase came through project Punarjanam, acquisition of Telugu music catalogue and new content acquisition.
So this is by and large the year gone by.
Let me now share more details about the quarter gone ie Q4. Revenue from operations grew by 46% while PBT grew by 28% compared to last year.
An obvious question can be why was the PBT growth lower.
This was because a larger proportions of revenue growth in this quarter came from the films and television business which is a 15% margin business.
Our operating income before content charge, interest and depreciation at 64 Crores grew by 57% compared to the same quarter last year.
This quarter was also a very big one from the music licensing perspective.
We released songs of two super hit albums.
First was Sanjay Leela Bhansali and Alia Bhatt’s Gangubai Kathiawadi and second was Mahesh Babu’s Sarkaru Vaari Paata.
If I take both these films and start looking at the cumulative Youtube views of the IP that came from these films, the numbers have already crossed a billion.
Remember Gangubai got released in February and Sarkaru Vaari Paata is yet to be released.
This is the power of new content if you get it right.
As shared in the past, we have made large investments in data analytics and predictive modelling to ensure that we get it right more often than not.
We continued with our investments in Bhojpuri, Gujarati, Telugu, Malayalam, Tamil, Bengali and devotional music.
Often some people ask us how will we sustain competition from some of the other existing players in the market, players who have been there in the market very actively for the last 15, 20 years.
Let me acknowledge - are they formidable competitors?
Yes they are, And we often look at them to replicate good marketing practices.
But also remember that inspite of these formidable competitors, we have been able to secure music rights of some of the biggest upcoming films in Hindi, Tamil, Telugu and Malayalam.
So why are the big film producers selling the music to Saregama?
I think it is our marketing power which is now being acknowledged by the industry.
Remember in the film industry the biggest marketing of a film is done by the music of the film, so more film producers are keen to partner with music labels that bring solid marketing strengths to the table and that is what we have invested in.
Let me take the example of influencer marketing which is the latest way to market any product these days.
We have invested heavily in data analytics once again to ensure that we work with the influencers who are the best in the category from customer segmentation perspective and who give a high return on investment.
We are tracking the performance of every influencer in every category to keep on deciding which influencer to work with and this is just a small example.
So its our marketing ability, our investments on the data side, on the predictive modeling side and our balance sheet position, If we want to do a deal with a producer, the producer knows that he is going to get
May 02, 2022 his money on time.
Also the impeccable record that Saregama enjoys in the market that we always pay money on time and we pay royalties which are correct.
All this is giving us a huge edge in the new film music acquisition space.
Our revenues on the digital side grew on all fronts.
They grew substantially on YouTube, on music streaming platforms, on sync side, on short format app side and we expect this trend to continue as we keep on investing in new music.
I will repeat something I have said in the last quarter.Our growth rate track record of over 20% is a combination of the industry growth of 11% to 12% and increase in our market share.
And market share is increasing because of the rising popularity of catalogue music that we keep on pushing and more importantly due to our investments in new content.
We will continue to invest in data analytics to ensure that we keep on investing in content which has got a higher probability of success and in infringement tracking technology to ensure that there is no leakage of revenue happening once we have bought any content.
The only black mark on the music licensing side during the year and the quarter, was public performance revenue.
We were expecting a lot to come from public performance during the New Year and Christmas time.
Unfortunately the 3rd wave of COVID raised its head during that time, resulting into celebrations and parties being cancelled.
Hence our public performance revenues are muted during the quarter and overall during the year.
Just like the last few years, Q3 is the biggest quarter for us from the Carvaan sales perspective because of the Diwali season.
So after the 141k units high that we sold in Q3, we managed to sell a pretty good 112k units during Q4. Overall the annual Caravan numbers were 4 lakh, which was a 17% growth over last year.
We have been maintaining this over the last eight quarterly calls, that till the COVID issue is not fully resolved both from demand side and supply side, our entire focus on Carvaan is to manage our cost structure both on the marketing as well as manpower side.
With retail markets opening up the demand side is improving, which is very clearly seen in sales numbers.
But the supply side is still an issue because of the global chip shortage.
We believe as we get into maybe Q3 of the year, the chip shortage issue may start getting resolved to some extent and that is the time you may see higher numbers coming on the Carvaan side.
Our focus and our commitment again in the year is that we will not spend any major amounts of money on manpower or marketing till the time the market is not fully opened both on supply and demand side.
And we will deliver atleast a breakeven on the Carvaan front during this financial year.
May 02, 2022 This was a super big quarter for Yoodlee, a product that has taken four years from the first year writing losses to this year finally turning profitable.
It was an expected journey.
It took us that much amount of time to establish our credentials in the market where we were relatively new.
We delivered our first digital web series to a leading platform during this quarter.
We also ended up doing two Marathi films and delivered it to various platforms.
The story looks even brighter as we go forward.
Somebody had asked me I think two quarters back that when will this division end up writing 100 Crores?
So yes that division has really written a 100cCrore number in this financial year.
But this 100 Crores is a combination of Yoodlee and TV business, Hopefully Yoodlee on its own should be able to write 100 Crores of the topline in an year or two.
Our TV serial business continues to do well in terms of TRPs.
Our Q3 was special because not only did we make money from serials being broadcasted on the channel, but a substantial amount of money came from YouTube.
Q3, being the festival time, is always the biggest quarter from YouTube revenue perspective.
Q4 in that sense is typically muted.
Overall we still did pretty decent numbers during the quarter.
Here we are ending financial year 2022 on a high with all four business verticals delivering both the topline and the bottomline numbers.
Also we are becoming a force to reckon with in the new content space, both on music as well as video side.
Thank you.
Happy to take questions from you now.
Moderator · Conference Operator
Thank you.
We will now begin with question and answer session.
We have the first question from the line of Dharmesh.
Please go ahead Sir.
Dharmesh
Good afternoon Vikram and all.
Thank you very much for giving this opportunity and great sets of number I am invested since 2018 and it is a remarkable journey with Saregama.
I have only one question Vikram that what kind of pricing power we may have in future because as we know which OTT stream we have around 10 paisa but looking ahead do we have any pricing power rather than increasing number only?
Vikram Mehra
Yes, in future I am much more bullish on the subscription part of the business taking off.
In streaming business, India is the only major market, which is so free content driven.
Globally the paid subscribers for music streaming are growing at a steep pace and they have already clocked over 500 million paid subscribers as I talk to you today.
I am bullish that in another 12 to 18 months, the subscription business is going to take off in India also, and that is what is going to give a huge dividend.
A paid subscriber when he listens to Lag Jaa Gale is far more valuable to us than a free customer when he listens to the same song.
Regarding
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 our pricing power ability, see the good part with music IP is that if you want to listen to Badshah’s Paani Paani or Gangubai’s Meri Jaan, then nobody can replace that song with any other song.
Because if you like a song, then you like that song and you will continue to listen to that song for the next 30, 40, 50 years.
And that is the power of Saregama’s catalogue.
We not only have the greatest songs from the 20th century sitting with us, sung by likes of Lata Mangeshkar, Kishore Kumar, Asha Bhosle, Mohammed Rafi, Jagjit Singh, MS Subbulakshmi, Chamkila etc but we are also now investing very heavily on newer content.
The combination of the two hopefully will put us in a very formidable position when we keep on negotiating with these streaming platforms.
Dharmesh
Thank you Vikram.
I will come in queue if I have another question.
Thank you.
Moderator · Conference Operator
Thank you Mr. Dharmesh.
We have the next question from the line of Mr. Vivek Gautam from GS Investment.
Please go ahead.
Vivek Gautam
Congratulations and once again good set of numbers very consistent performance.
My question is regarding this derating we are seeing in the western world of Netflix and Spotify what impact can it have in terms of us also pursuing some sort of derating in terms of price/earning, valuation whichever company was enjoying?
Vikram Mehra
I can only answer this on a hard data basis.
Both on revenues and profitability, you are seeing Saregama’s numbers constantly going up.
See that is the advantage we have as a content IP owner and not being a platform company.
We are not directly getting affectedby the ups and downs of a platform’s subscriber base.
More importantly, almost all our deals are either protected by a minimum guarantee or have a fixed fee component in it.
So we do not see any reason why our profitability is going to get affected just because some of the platforms maybe losing some numbers either on the video side or the audio side.
At this juncture I will put my neck out and say I do not think we will get impacted in the short run.
Vivek Gautam
On the second phenomena which is nowadays in India is that the Pan India presence of especially of the south Indian films like KGF part one, two and RRR so that the Telugu focus for us seems to be a very sensible step, but is there a risk of we overpaying for this musicright or that sort of a bonanza coming up for us because of this so far we were focusing only the Telugu movie was only in Andhra but now it is all over India thanks to the good report and response all over India?
Vikram Mehra
What you are asking is a very subjective question.
I would like to believe that we will end up paying the right price but there is always a supply demand negotiation that happens.
The
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 only part that I can give you comfort is that at Saregama we use data a lot to decide how much should we be paying for an album/song.
There have been deals where we people have just walked out because we thought it is overpriced.
8 out of 10 times we have proved to be correct, while in remaining 2 we lost out on great albums.
But I think we are okay with that.
We want to minimize our risks.
So 80% of the times if we are getting it right in terms of leaving a project due to overpricing, then I think we will take it.
Now to the first part of your question, You are right that there is a large market for multilingual films and their music.
We people had a Telugu movie called Shyam Singha Roy and then we had a Malayalam movie called Kurup.
They are not 1000 crores movies but they are still big movies for their markets and the music of these films was multilingual.
Music albums of both these films have done very well for us.
Vivek Gautam
How the society for artist headed by Mr. Javed Akhtar performing and sort of we are also getting the benefit accruing from it or not basically?
Vikram Mehra
That society is called IPRS, and Saregama has a Board member seat on it .In fact I myself sit on the Board of IPRS.
I think that society is being run very effectively and you are already seeing signs of growth coming in.
Globally publishing revenue contributes anything around 15% to 17% to the music labels’ overall revenue and I see as we go forward all of us enjoying that benefit.
If you google search for IPRS, you will realize that this is the biggest year IPRS has ever seen in terms of its collection, and they are going from strength-to- strength.
Vivek Gautam
Mutually beneficial for us and the artist also?
Vikram Mehra
Overall it is beneficial for the industry.
We love it when artist is also benefiting because at the end of the day we have to all acknowledge that we music labels or entertainment companies exist because of the artists.
So it is always great that artist also makes money and so do we.
Vivek Gautam
Fantastic thank you.
Moderator · Conference Operator
Thank you very much Mr. Gautam.
We have the next question from the line of Ankush Agrawal from Surge Capital.
Please go ahead.
Ankush Agrawal
Hi!
Vikram.
Firstly can you clarify a few things from this restructuring that you are going for what exactly is going to be demerged from the current entity?
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Vikram Mehra
Let me start with the genesis of this.
We people very strongly believe that the expertise we have developed within the company of distributing Carvaan on digital platforms can now be used to sell non-Carvaan related products too.
And hence this particular expertise we have put into a company which is being demerged.
This new company will become a nonexclusive distributor of Saregama Carvaan for digital distribution.
It will also try getting distributorship for non-Saregama non-RPSG businesses.
We have also put all our noncore investments including those in RPSG group companies into this demerged company.
These include our shares in CESC and Open Media.
Ankush Agrawal
I believe the current physical distribution is already outsourced for the Carvaan the offline distribution?
Vikram Mehra
Distribution of Carvaan is always an outsourced activity.
How does Carvaan distribution work?
Carvaan sales team appoints distributors to whom they bill Carvaan on cash-on-carry basis.
These distributors in turn sells it to retailers, who sell it to the customers.
So now this demerged company will become one more distributor of Saregama.
Ankush Agrawal
So any reason why the Carvaan itself is not being demerged separately and making Saregama the current entity as the pure play music licensing business any thoughts on that?
Vikram Mehra
We have always maintained we believe in the long term potential of Carvaan business.
Due to Covid this business showed a loss in FY20 and then two straight years of breakeven.
As we go forward, we believe there is potential to make money from Carvaan like it did in the first two-and-a-half years of its existence.
But till the time we do not feel that the supply and demand issues of Carvaan are fully sorted we will not be doing any spends on marketing or manpower enhancement
Ankush Agrawal
Yes, that is well taken you have highlighted that multiple times.
So secondly this recent Mango label acquisition so in the current quarter have we seen any benefits out of that library or do you expect it to accrue to us in the future negotiation that will come in FY2023?
Vikram Mehra
The way it functions is that on YouTube, you can see the revenue enhancement immediately.
While on short format apps, where we get into one or two year fixed fee deals, it will take some time for benefits to start accruing.
More importantly it gives us a solid ground now in the Telugu market.
Suppose we go to a Telugu TV channel for music licensing, we may not be in a position to cut a deal with music of just 4 new movies.
But now since we have a larger catalogue courtesy Mango Music IP, we are in a better position
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 to negotiate in that market.
So you will start seeing benefits getting accrued to us as we go forward.
Ankush Agrawal
Would it be a fair understanding that at the time of raising QIP you had mentioned that with this inorganic acquisitions we will accelerate our growth rate from about 20%, 25% to upward of 30% so do you see that coming in FY2023 or it will take some time?
Vikram Mehra
You are playing around with words as I never said that.
What I have been saying is that because of the investments we are making in newer content and inorganic purchases , the growth rate will move from 20% to 25%.
The 30% number that you are referring to was our stated ambition that of the new content that comes out in the market, we want to grab a 30% market share.
This will in turn result into music licensing revenue growing between 23% and 25% and I am holding onto that number.
Ankush Agrawal
Lastly Sir one more thing we have raised about 750 Crores in QIP out of that 60 Crores have paid out immediately and this what I believe we have invested out 30 Crores in group companies as well so this thing does not add up that you dilute equity and then although chunk of that?
Vikram Mehra
We have not invested in any group companies.
There are only two investments that have been made right now out of that money and we have declared that already. out.
The expenses of QIP plus the money that we have spent on the acquisition of mango music catalogue.
That is it.
There is no money flowing to any group company.
Ankush Agrawal
Not sure about it because you see the quarterly shareholding pattern there has been some increase in Saregama as a shareholder in a group company and the cash flow shows some 27 odd Crores of no investment in the state subsidiaries.
Vikram Mehra
Let me explain this right now; We people have a company called Kolkata Metro Networks which is a 100% subsidiary of Saregama.
This company was holding some shares of CESC, RPSG, Venture and Spencer Retail.
This company is eventually going to be merged into Saregama.
But before that we needed to transfer the shares held by this 100% subsidiary to Saregama.
These transferred group company shares along with the earlier shares held by Saregama, will subsequently move out as part of the demerged entity.
When Kolkata Metro Network finally gets fully merged into Saregama, the cash will come back into the parent company.
Ankush Agrawal
Basically have taken the share from the subsidiaries got it that was very helpful.
Thank you.
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Vikram Mehra
So the cash was 22 Crores that you are seeing right now sitting as part of Saregama’s 100% subsidiary and that as the subsidiary gets merged into Saregama the cash will move from this 100% subsidiary back into Saregama.
There is no other thing happening in here.
Ankush Agrawal
Got it.
Thank you.
Moderator · Conference Operator
Thank you.
We have the next question from the line of Ishmohit Arora from SOIC LLP.
Please go ahead.
Ishmohit Arora
Hi!
Sir, hope you are doing well congratulations for a hearty set of numbers.
What is our growth guidance for FY2023 are we still remain in the 23%, 25% guidance?
Vikram Mehra
Yes, we are maintaining the 23%- 25% guidance there and an operating income before content interest and depreciation number of 32% to 33%.
Ishmohit Arora
Second question was when it comes to the QIP proceeds what is the utilization status of that are we seeing any good opportunity for acquisition?
Vikram Mehra
We are in advance conversation with couple of more labels but till now the funds have been used only for two things: one is the issue expenses itself and second in picking up the catalogue of mango music.
Ishmohit Arora
Because I think we have been hearing that the private market valuation in this space has been actually reaching to a very high level so how do you think about that?
Vikram Mehra
That is what is taking time.
We want to pickup catalogues but somebody has to be willing to sell at a price that makes sense to us and the catalogue should be something that is relevant even now.
So that is why we are taking our time and not rushing into it.
Till that time, the money is fully secured and invested in debt and fixed deposits.
You can easily check this from our balance sheet.
Ishmohit Arora
Okay Sir that makes sense.
Thank you so much.
All the best for the future.
Moderator · Conference Operator
Thank you.
We have the next question from the line of Devanshu Sampat from Yes Securities.
Please go ahead.
Devanshu Sampat
Good afternoon Sir.
Just two questions from my side.
One is can you talk a bit about the economics and the expected investments and plan that we have for the artist management?
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Vikram Mehra
Listen it is too early for me to start talking about artist management.It is not something which requires large amount of investments from our side.
But it is strategically a very important part of our overall music strategy.
Financially it does not take too much of investment.
As and when we are in a position to talk about that, I will share more details.
Devanshu Sampat
Even if I look at some of the charts that you have this is the enormous size of the Indian media and entertainment sector the live event is a sector, nearly three times the size of the Indian music industry and is growing much faster and we have also mentioned that live events is something that we are looking at?
Vikram Mehra
Yes, I can talk about live events.
We started live events actually in the financial year 2023.
In the month of April, we had our first two concerts with a leading Indian artist called Diljit Dosanjh.
He is a very big Punjabi music artist and we are pretty happy with the way things went off.
We are now doing Diljit’s live events in US and Canada later this quarter.
Overall in the initial years, our projections for the live business is between 5% and 7% margin.
It will take us some time to stabilize that and after that we can look at a 10% plus margin on the live event side.
Devanshu Sampat
This would also probably help us get enrolls with these artists and probably get better connect with them?
Vikram Mehra
One of the biggest benefits of doing live events is the benefit that the music business ends up getting.
When you are spending that much amount of time with an artist doing his live events, there are all the other things you can work with the artist.
This includes convincing the artist to do some songs for you which with some of the artists is impossible to get otherwise or you get it at a subsidized rate because you are doing a bundle deal.
Devanshu Sampat
Sir can you give a sense of some of how big are the some of the players who are managing this, how big is the revenue of that type of the business for the live?
Vikram Mehra
Early days.
We are clear we are not getting into all kinds of live events, Our live events business will be connected to music only.
So if there is a fashion show happening, Saregama is not interested in getting into that space.
So ours will be limited only and only to either an artiste show or a musical play that we can go out and then put up.
If there is music then only Saregama will get involved in it.
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Devanshu Sampat
Last question from my side you were maintaining that we will not be upping our investments in Carvaan unless and until anything opens up this seems to have been the case now so what are the expectations from this business in the coming year?
Vikram Mehra
From which business Carvaan?
Devanshu Sampat
Yes.
Vikram Mehra
So Carvaan is funding for itself right now.
In light of the supply crunch on the chip side, we are gunning for a breakeven in the current financial year also.
Currently there are no plans for any fresh investments.
We sold 4 lakh units in the year gone by.
We should be able to show some amount of growth this year but that is all I can project.
All investments needed to go deeper in the market on the distribution side and to further build consumer demand are deferred till that time we are not 100% secure on the supply side.
And I do not see that happening over the next five, six months.
Devanshu Sampat
Okay Sir that is it from my side.
Wishing you and your team all the best.
Moderator · Conference Operator
Thank you Mr. Sampat.
We have the next question from the line of Aditya Nahar from Alpna Enterprises.
Please go ahead.
Aditya Nahar
Hi!
Vikram no question I just wanted to say congratulations on the demerger of the online business and the group company investments and specifically the open magazine it has been a long ask from a lot of people especially from a small vocal minority like us but thank you so much and wish you all the very best Vikram thank you so much.
Vikram Mehra
Very sweet of you thank you.
Moderator · Conference Operator
Thank you Sir.
We have the next question from the line of Mr. Jathin from InvestSavvy.
Please go ahead.
Jathin K
Congratulations on great results.
I had a few questions one is are there any tie-ups which you have planned with foreign music digital platforms which could help sell rights globally, so like streaming music across because I think collections are much more transparent and fair in the global market on this and global users are more willing to pay, the other question is in the demerger that is planned the publication business being hived off to the new firm or it is going to continue with the digital part of the business and finally in the balance sheet there is a share of the difference quarter-on-quarter on the unallocable expense net off input
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 which is actually making quite a significant difference in the net figures to show good quarter-on-quarter growth is that something is it a sustainable reduction or is it something which is only for this quarter, so three questions respectively?
Vikram Mehra
Let me answer your second question first.
Yes as part of the demerger, the new company has been created whose primary job is to be a digital distributor of goods.
Also in that company we have hived off all our noncore investments including the publication business, so Saregama as a parent company will not have the publication business with them any longer.
Your first question was not very clear to me, you are talking about aggregators?
Jathin K
No, I was talking about something like Gaana so other platforms which would actually allow the international users to use your platform to listen to your music and pay you a fee for that?
Vikram Mehra
Remember we people today, if I remember the numbers correctly, are available on some 42 different global streaming platforms.
The ones who are there in India, we are licensing directly.
There are few outside India, whom we are licensing through an aggregator.
Overall, you have a very wide distribution for our content.
Jathin K
Is that coming up well how is that shaping up?
Vikram Mehra
You are asking is the revenue going up?
Jathin K
Yes.
Vikram Mehra
Yes, so remember a large share of music licensing revenue comes out of OTT streaming.
If we are showing 26% growth this year on music licensing business, then obviously e music streaming has also grown pretty significantly.
This growth comes both from the domestic as well as the international markets.
It is more from the domestic side obviously but as a percentage even international is growing.
Jathin K
Lastly the unallocable expense net off converted to other income.
Deepak Jain
If you see Q4 generally we receive dividend from our group So if you see this year we will be having a dividend of around 7 Crores which is the only reason why our unallocable expenditure is showing a negative number.
Jathin K
So that means this quarter is more or less comparable to last quarter if we adjust quarter dividend received?
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Deepak Jain
Yes.
Vikram Mehra
The same thing happened in Q4 last year.
With those shares now being moved out to the demerged entity, you will not have the same phenomena happening from next year onwards.
Moderator · Conference Operator
We take the next question from the line of Mr. Ravi Srikant, he is a private investor.
Please go ahead Sir!
Ravi Srikant Veturi
Hi!
Thanks for the opportunity.
I basically had two questions related to the premium services that the streaming companies offer.
I think you mentioned that there is a move towards customers paying for the premium service, so for the premium services I know you do premium but I am not sure of the other steaming services there is an option to download the songs so how does that affect the revenue for the companies like yours and secondly if you look at the prices for these premium services say for example YouTube in the US and Europe they are roughly I think five or six times the cost in India so if a view comes from these geographies would it be fair to assume that the revenue that you guys earn will be five or six times if the view comes from India?
Vikram Mehra
Let me try to answer both the questions..
Yes, a YouTube view that comes from outside India, especially from Europe or US, ends up having a higher yield.
Our YouTube model is whatever advertising money YouTube makes because of any IP owned by Saregama YouTube gets 45% we get 55%.
Since the ad rates are far higher in European countries or US and Canada, we do end up getting up a higher amount of money per view from these countries.
The yield is better if the views are coming from other countries.
Some of the regional languages that we are investing in, have been selected keeping in mind the fact that a large amount of views end up coming from outside India.
Ravi Srikant Veturi
If the customer downloads the song on to music device whether you guys paid for it?
Vikram Mehra
Yes, first let me clarify that if you are a paid subscriber, you get the right to offline a song and not download it.
This means that whenever you turn off your subscription, all the content that you have offlined will automatically go away.
Since the song is not downloaded, you do not get a permanent copy with you.
Now the way our business deals work is that we get paid for everytime the customer listens to an offlined song.
Suppose you are a paid subscriber of a streaming app and you offline the song Paani Paani and then listen to it 7 times while in a flight with no data connection.
The moment you get off the flight and the phone gets data connectivity back, this information will be passed from the
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 music streaming application frontend on your phone to their backend (that this specific song was heard seven times).
So we end up getting money for every time you end up consuming something that you have offlined.
Ravi Srikant Veturi
So, basically there is no difference come in from an end point of view?
Vikram Mehra
Even YouTube video off lining works on the same principle.
Ravi Srikant Veturi
I just had one question on the valuations if you look at the global markets I believe there are two listed funds which are into the songs royalty business since they have mentioned that they typically acquire new content at around 15 to 16x the publisher share of income historical publisher share of income so what would be this sort of valuation metric in India?
Vikram Mehra
Every song has two rights built into it, namely sound recording (also called master right) and publishing.
Typically in India both these rights are bought by the same entity.
When Saregama buys a song, it gets 100% ownership as well as right to royalty for the master right.
On the publishing right front, Saregama gets 100% ownership but only 50% right to royalty.
The other 50% royalty is shared equally between the writer and composer of the song.
When you are talking about these global funds, very often they are buying the writer/composer share of right to royalty of publishing rights.
In India, no such move seems to be currently happening.
Somebody had asked the question earlier that how do we believe this publishing rights society is going to develop over time.
I think they are doing a fabulous job under Mr.Javed Akhtar and you will see that publishing rights will become more and more valuable as we go forward.
It will benefit us (as we own the right and 50% right to royalty) as well as the writers / composers (50% right to royalty)
Ravi Srikant Veturi
I understand correctly I think one of these funds which I was mentioning which is listed I think song royalty board or something had sort of given a notice that the sort of share of the song writer is going up I think YouTube and Spotify, etc., I think they have filed a counter suit against stating that the state should not go up but ideally the YouTube has to pay from their pocket.
Vikram Mehra
These are legal issues I cannot discuss that on this call.
But as mentioned earlier, in India the value of the publishing rights is steadily going up.
Till 3 years ago, this right used to make practically nothing for us.
But now this right is becoming more and more valuable.
As the valuation of that right goes up both the owner which is Saregama as well as the person who wrote the song and composed the song all the parties are going to benefit.
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Ravi Srikant Veturi
Got it thank you.
Moderator · Conference Operator
Thank you very much.
We have the next question from the line of Raghav Akar he is an individual investor.
Please go ahead.
As there is no response we take the next question from the line of Ishmohit Arora from SOIC LLP.
Please go ahead.
Ishmohit Arora
Just had a very basic question the entire revenue from YouTube is it variable or do we also have a licensing deal over here?
I cannot get into that specific detail. We monetise any IP which is owned by us
it may be a song that we have uploaded on the official Saregama YouTube channel or it may be a user generated video using our IP (a Saregama song that you have recorded in your voice and have put it up on your own YouTube channel).
Our backend technology will be able to track it immediately that you are using lyrics owned by Saregama and after that whatever advertising happens there the revenue split is 55% goes to the IP owner and 45% retained by YouTube.
I am not at a liberty to share any more details here
Ishmohit Arora
No worries thank you so much for answering.
Moderator · Conference Operator
Thank you very much.
We have the next question from the line of Ravi Naredi from Naredi Investment.
Please go ahead.
Ravi Naredi
Yes, Vikram Ji again very fantastic results.
To decide for web series selection how our internal system works?
Vikram Mehra
As to which web series to make?
Ravi Naredi
Yes.
Vikram Mehra
We have this core team that has been developed and remains on our payroll, Their job is to constantly read multiple scripts that keep on coming across to us. : In web series after reading the script, if we believe there is potential in it, then we take it to some of the digital platforms to gauge their interest levels.
Often we further work on the script basis the feedback received.
But we start shooting our series only and only if we have a firm interest coming from a digital platform to license it.
Ravi Naredi
Really Vikram you are doing a very hard work and very fantastic work we are proud on you.
Thank you very much Sir.
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022
Moderator · Conference Operator
Thank you Mr. Ravi.
We have the next question from the line of Akshay Jogani from Xponent Capital.
Please go ahead.
Akshay Jogani
I wanted to understand YouTube is little better how are CPMs evolving because I see it is this quarter we have seen a good jump in the number of YouTube views not for the CPMs are also holding and till date how are they doing would be good to hear that?
Vikram Mehra
That I think I will leave it to YouTube to comment on.
But overall remember Q3 is the best quarter for everybody.
Anybody who is dependent on advertising revenue Q3 is their best quarter.
But we people had a very good Q4 also primarily because there were some very big movie releases in that quarter.
Mahesh Babu’s movie SVP as well as Sanjay Leela Bhansali’s Gangubai, we have some two, three very big hits in Bhojpuri and Gujarati language too.All that helped in the views going up substantially on YouTube and hence also the money that we made from YouTube.
Akshay Jogani
Let us say if we take a three-year view how has YouTube on a per unit, per screen basis is all did we generally hear digital advertising growing at a much faster pace, is pricing also improving or is it just more consumptions leading to more ads?
Vikram Mehra
Sir it is a combination of both.
Pricing is actually quite seasonal in nature but directionally it is going up.
Over the last few quarters, we have seen a lot more advertising monies moving from television business into digital business.
This is the because the consumer eyeballs have moved from a pre-programmed television experience to an on-demand digital experience and YouTube is one of the big beneficiaries of that.
So we get a benefit on both sides.
With more people on digital platforms, we have a higher amount of views coming for each of our content pieces.
And since there is more money coming in, so either the fill rate goes up or the rate per ad improves .
Akshay Jogani
No, of course understanding the quality of that from where it kind of comes from?
Vikram Mehra
The comfort I can give you without sharing competitively sensitive information, is that it is sustainable.
We do not see this as a one-off phenomenon.
On quarter-on-quarter basis, we are seeing sustained increase both on the views side but more importantly on the revenue side.
Akshay Jogani
When you see over a longer run the industry is doing at 11%, 12% and you want to grow at 20%, 25% what we see is digital advertising itself is growing at 20%, 25% given the large
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 chunk of our digit comes from there while why is it that industry the streaming part of it is going at 10%, 11%?
Vikram Mehra
See a large growth of the industry is actually coming from streaming.
Streaming is a free business which does not get too much of advertising.
Audio does not attract too much of advertising in our country.
Most of the digital advertising chases video and not audio, which is skewed towards YouTube.
The real growth in music streaming business is going to come from subscription and not advertising.
The day subscription takes off in India. you will see both the industry in general and Saregama in particular growing at a rate far higher than the rate that we are projecting today.
I am personally very bullish on subscription taking off in next 18 months to 24 months.
But the 23-25% growth projection we are making for our licensing business is without considering any potential upside coming from subscription.
Akshay Jogani
Yes sure thanks and good luck continue the excellent performance.
Moderator · Conference Operator
Thank you Sir.
We have the next question from the line of Yash Mandawewala.
Please go ahead.
Yash Mandawewala
Thanks for the opportunity.
Just a couple of questions from my side.
Vikram if you see the revenue growth from the retro catalogue and by retro I mean music that was launched before 2000 the growth here for us seems to have slowed down significantly can you explain a bit what is happening in this portion of the catalogue and how would we expect revenues here to grow over the next three to five years?
Vikram Mehra
Sorry how have you arrived to that confusion?
Yash Mandawewala
The numbers are disclosed in the investor presentation.
Vikram Mehra
Which number has given you that impression.
So can you just tell me which table or slide are you referring to
Yash Mandawewala
You disclose the share of revenue by decades from 1960s to 1980s.
Vikram Mehra
The revenues from music belonging to 1981 to 2000 or 1961 to 80 has not come down.
It is the newer content which has disproportionately grown.
We were not investing in newer content earlier, and hence the share of 2000-2021 music was lower.
Please remember that the newer content always gives you the biggest kick, Please go to the large corporate presentation which is there on our website it will give you a very good idea where we have
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 shared information about music of various decades and what kind of a growth rate is it showing.
Our number is in the range of above 30% year-on-year.
Yash Mandawewala
If you just look at the absolute so you have been disclosing the licensing revenue and I do not know what slide this is Saregama music IP you also disclose a percentage of revenue from each of the decade.
Vikram Mehra
At the end of the day even if the licensing revenue from catalogue is growing at x%, if the new content start growing at 2.5- 3x, then obviously the share of new content is going to become that much bigger.
That doesn’t mean that the catalogue content growth rate has slowed down.
I just explained to you if we take our song Paani Paani which was released in June last year we have already crossed over 2 billion views cumulatively of all the videos connected to Paani Paani.
No old song can ever grow that way.
If we look at Mahesh Babu’s film or Gangubai combined they have contributed 1 billion YouTube views in less than three months.
So newer content grows at a different pace altogether.
As shared in the presentation, the catalogue content is still showing above 30% growth year-on-year.
So if something is growing at 60% and other thing is growing at 30% obviously the 60% will have a higher contribution.
Yash Mandawewala
Is the revenue from the old catalogue still growing at 30%?
Vikram Mehra
Yes, that is why the data we people are sharing with you are OTT streams data.
In YouTube it is possible that a view has come and no ad has come, but in OTT every stream is worth money.
Catalogue showing growth is not just a Saregama phenomenon, but is being witnessed by all the global music labels.
And the primary reason is easier discoverability on the digital platforms.
Yash Mandawewala
Maybe there is an error in my calculation maybe I can take it offline.
Vikram Mehra
We will be happy to help you right now.
Yash Mandawewala
Right, that is it from me.
Moderator · Conference Operator
Thank you Sir.
We have the next question from the line of Nitin Sharma from MCPro Research.
Please go ahead.
Nitin Sharma
Hi!
First of all congratulations on great set of numbers.
I have a fundamental question just to understand that for a new song what is the typical number of streams that you guys see
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 for let just say first set of months and how it times out in over a year if you can throw some light on that?
Vikram Mehra
I cannot share that information because then my negotiation power with the film producer goes away immediately.
Nitin Sharma
General understanding would be fine.
Vikram Mehra
All I can tell you is something we have shared in the past, that for all the music that we acquire in a financial year across all languages, both film and non-film, our commitment to our Board is a payback period of five years.
Nitin Sharma
Understood thank you.
Moderator · Conference Operator
Thank you Mr. Sharma.
We have the last question from the line of Devanshu Sampat from Yes Securities.
Please go ahead.
Devanshu Sampat
Thanks for the followup, just two more questions.
So can you please give us the revenue numbers for the quarterly performance in FY2022 versus 2021 and if you can also like what was it in the pre-COVID era?
Vikram Mehra
No, so I will not be able to share our revenues from any specific one vertical.
It is all competitively sensitive information.
But as I said we have managed to grow our numbers by 26% in spite of PPL not contributing in last year.
PPL even did not contribute the year before that.
PPL contributed last during the pre-COVID era.
And now we are out of Covid, we believe this year PPL should start contributing.
Devanshu Sampat
Last question if you can just elaborate a bit on this, I just want to know a bit on how much of an issue piracy is right now and how are the industry bodies of companies involved basically tackling this and if not what are the challenges that you are facing to do particular apps or particular B2B sharing apps something about that if you can just give some sense on that?
Vikram Mehra
Sure enough. apart from being the Managing Director of Saregama I also happen to be the Chairman of the music industry’s apex body IMI.
In that capacity I have worked closely with the government on controlling music piracy.
Over my last 7 years in this industry, I have seen a massive difference in the country on the piracy front, both in music as well as films and it is a combination of carrot and stick policy.
One the very easy access of
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 legitimate music through digital apps and short format apps and YouTube has ensured that more and more people now want to listen to music legitimately rather than using the pirated route.
Who is going to go hunting for a pirated version of Meri Jaan, when you can easily get the legal version at the press of a button.
On the stick side, we have seen a massive change in the overall mindset where people have started acknowledging now that the piracy of a song is as heinous a crime as maybe going and stealing somebody’s car.
Earlier times people did not understand how can IP piracy be stealing.
Now we are getting more and more courts coming out very strongly against IP piracy which is helping a lot in India.
And lastly, one of the biggest changes that has happened is that from 2014-2015 onwards people like you and me have changed our content consumption vehicle.
Earlier we used to listen to music or watch videos by going to a laptop or a desktop and typing www.something.com on a web browser .
In those days it was very difficult to control the pirates because the server used to be based in countries where we have no jurisdiction and no control.
But from 2015 onwards, many of us have started consuming content through mobile phones.
On a Smartphone you would consume content through an app store which will be either a Google or an Apple app store.
Both these companies are very helpful when it comes to controlling piracy.
Our investments in technology enable us to track content infringement by apps relatively faster.
We then immediately reach out to Google and Apple and seek their help to remove the infringing app from the app store.
The combination of all this, namely easy access to legitimate content and the stick used by both judiciary and Google/Apple is ensuring that the piracy is falling very steeply in our country.Is it zero now?
No it is not zero.
In the smaller towns it still exists,In smaller towns we are hitting piracy a lot through Carvaan because the easy access of that content makes it that much easier for parents not to go for illegal side loading.
I would like to believe that in another few years, piracy will start vanishing even from smaller towns.
Devanshu Sampat
Got it thank you and all the best.
Moderator · Conference Operator
Thank you gentlemen.
As there are no further questions I would now like to hand over the conference to Mr. Vikram Mehra for closing comments.
Please go ahead Sir!
Vikram Mehra
Thank you everyone.
A great year for us.
We needed your support and all of you have backed us whole-heartedly.
The sustenance of both revenue and profitability numbers, both during and post COVID is a testament that the fundamentals of the company are now strong.
Environmental changes which are temporary in nature are not going to impact either topline or bottomline that significantly any longer.
We maintain our bullish stand on music licensing; we are looking at 23% to 25% revenue growth in this business over the next three to five years.
We will continue aggressively with our investments in newer content both on
SAREGAMA INDIA LIMITED · MR. PANKAJ KEDIA - VICE PRESIDENT, INVESTOR
May 02, 2022 the film side and the non-film side.
We will also be on a lookout for any inorganic purchases that we can make in either Hindi or other regional languages.
Again continuing our cautious approach on Carvaan side, the objective is to ensure that we control our costs and we will not be making any major investments here till the time the market is fully stabilized.
We commit to at least a breakeven during the year.
The films and TV series vertical is expected to grow around 20% to 22% as we people go forward, and we are looking at a 15% margin in that vertical.
We have already entered into live events this year.
In the initial years we hope to deliver a margin of 5% to 7%.
As we stabilize the vertical we may look at a double digit margin as we go forward.
Overall we are looking at a 22% to 25% revenue growth for the company with an operating income before content interest and depreciation levels of 32% to 33% as we move into FY2023. Thank you and look forward to talking to you guys for Q1 call of FY2023. Bye!
Bye!
Moderator · Conference Operator
Thank you.
On behalf of ICICI Securities that concludes this conference call.
Thank you for joining us.
You may now disconnect your lines.