Congratulations on a good set of numbers. So, my first question is on the music licensing revenue side. You did mention that there was a significant improvement in YouTube side of revenues. I just wanted to get a sense if there was any impact of any overflows happening during the quarter that may have benefited as well? And if yes, would it be possible for you to quantify a few numbers?

Actually, overall, the numbers are on a steady basis. There's no one-off that has happened during the year.

And the second question is with respect to your Q1 guidance that you mentioned like YouTube revenues can be reduced because of few one -offs which are there. Is it possible that, that can get set off with some incremental revenues from one of the large music OTT platforms, which was not available for a few quarters earlier? And so those revenues coming back starting given that I can see the names...

Swapnil, I'm not putting a negative projection on Q1. In the spirit of transparency, I just mentioned that on YouTube, April, May has been under some amount of pressure. I'm reasonably confident that, YouTube’s (on its own), June recovery should be smart. There may be a lot more advertising that will start, moment the elections results get declared and IPL also gets over. So, the quarter should start looking better. Anyway, as I always maintain and I've been doing it for, I think, over seven years, please look at us on a 12 -month basis. Please don't look at us on a quarter basis. And on a trail ing month basis, we are giving the guidance that Saregama's consolidated revenue, excluding Carvaan is going to grow upwards of 30%.

Understood. And just a last question on your cost side. If I were to look at it from a Q -on-Q basis, some of your costs like A&P spends and other expenses, they have increased meaningfully. Any particular reason that you would like to call out why were these costs higher -- slightly higher?

You are saying why had advertising increased?

Yes.

I've told you right now, we have invested close to INR 200 crores f or newer content. That includes marketing money also. So, every time a new song comes out, it needs more marketing. So, content investment is not just money that we are giving to the film producer, but also the marketing money that are going into it.

So will it be fair to say that your run rate of A&P was around INR17 crores to INR18 crores per quarter for a long period of time. Now it is INR 27 crores. So, will it be fair to say that, that is the new run rate that one should work with?

We need to look at a INR1,000 crores investment over the next three years. This includes some money that we will be paying to the film producer or the production budgets plus marketing money that will promote these songs.

Okay. And just the last one on the other expenses. Because other expenses, if I recall correctly, there used to be a meaningful impact because of Carvaan. And Carvaan, I think, has not done well in this quarter. So, any reason, still there is a decent delta Q-on-Q? .

I am asking Pankaj here...

Swapnil, on the other expenses, we had mentioned earlier also, we had one contingent liability, which is now settled. Yes, that was the charge taken in Q1. O n an overall year -on-year basis, you will see some increase in other expenses. Otherwise, no major one-offs over there.

The next question is from the line of Ankush Agrawal from Surge Capital.

Vikram, broadly I wanted to understand a bit about this artist management side of things. If like, we have qualified, what kind of revenue streams we are looking at over there? But qualitatively, how big of that business is currently in the overall music licensing side ? Is it like it is less than 10%? If you can guide a bit on that? And three years down the line when you're saying the music licensing plus artist management would be double. And at that time, would it become a larger proportion than what it is currently? Or do you expect a steady state it would stay range bound?

What you see in this quarter is not steady state, it is going to become bigger than that. Is it going to take over the licensing part of the business? No, it's not. At the end of the day, artist management is a by-product of the business of music licensing. Let me reiterate our philosophy, if we are releasing six songs in a particular language, we start wondering that why are we making the artist big and not getting a benefit out of it? Because as the song becomes a hit, it's not just a company that owns a song that makes more money, but the artist also become that much more popular. . So hence, this part that if we can take a position on their artists, there's no additional investment I'm making on their artist. I was anyway doing the song with them. Only thing we are now making it pre-conditional to the artist that if you want to do a song with us, you will have to – get into a long-term agreement with us. And then see if we can make money from this person basis weddings and brand management.

Right. Got it. But directionally, would it be, let's say, 20%, 10% of overall pie, something like that...

Let's give it a year. Again, as I repeat , the good part about this is as a by-product it does not take any major investments from our side. It's only the manpower which is sitting in there to manage these artists and that's it.

Yes. The reason I was asking this was that we know that music licensing is the most profitable part of the business, right? And here, say, events and weddings that we'll do with the artists, that might not generate the similar kind of long-term revenue or, say, the profitability that would be there. So just trying to understand that.

The overall company, guidance, is 32% to 33% on an adjusted EBITDA basis. The only thing which is left after adjusted EBITDA is the charge-off we are taking on new music. There's nothing else left. Everything else is before that, that will give you an idea. So, if I'm saying 30% growth on the overall basis, that doesn't mean we are reducing our guidance on adjusted EBITDA. We can't afford to have a situation where an artist management vertical grows at a significant fashion but generates no margin for us because then I can't hold on to 32%, 33% adjusted EBITDA guidance.

The next question is from the line of Lokesh Manik from Vallum Capital.

Yes. Vikram, my first question was more of a clarification. So going by the content charge for the year and your accounting policy that you have explained over the years, just a back of envelope calculation suggests a deal value, new music deal value coming close to somewhere around INR150 crores. Would that be right, or you would still stick at -- or should we take INR200 crores, as mentioned by you for this year?

A lot depends on which quarter, what has got released. K eep that in mind because – even the first-year charge-off happens, uniformly over the full year. Marketing happens instantly , so phasing has a very important role here. But that's why w e decided that we will share with you this time how much have we actually invested during the year.

So, the INR200 crores, so that was -- so I should take INR 200 crores because I was under the impression there might be some INR 50 crores non-music addition content on some other verticals, from some other -- but that's not the case, right?

That's not the case. Like I shared, INR 200 crores, please, for everybody, I'm stating this. This INR200 crores is on music content that we have invested across multiple languages.

Understood. Understood. Vikram, my second question was on Pocket Aces. So, this vertical, you are expecting a 25% CAGR going forward. This would be after taking in benefit of synergies of Saregama or prior to the acquisition, they were independently growing at this rate?

The synergies of Saregama are going to be there. I think the bigger driver of synergies for Saregama is the cost management. Pockets Aces, when we acquired was a loss -making unit, marginal losses only. As we go forward, we have promised you that this year, FY '25, we will ensure that it turns breakeven or a very small profit at Pocket Aces level. And that's primarily getting driven right now out of the synergies with Saregama. Lot of cost structure that those guys are having right now, we are removing them because they can just ride on our infrastructure expenses.

Okay. So, the synergies are on the cost side, not on the top line. Top line, they were growing any which way 20%, 25%?

Yes.

The next question is from the line of Pulkit Chawla from Emkay Global Financial Service.

Congratulations on a good set of numbers. Vikram, you were obviously highlighting that you'll be able to ramp up the content acquisition as such. Now so would you be looking to ramp up the number of songs? Or are you looking to, let's say, ramp up more expensive song as such? Or would you probably get into more digital music wherein the past, you've highlighted that ROIs have been better?

Yes, we will do a little bit of everything. When you buy music, you obviously take some punts on more expensive premium content coming from artists who are very well established. A t the same time, we keep on in vesting in the newer artists. The risk -reward patterns are very, very different in both these situations. You are investing in the premium guys; the risk is relatively lower because they already have a large established fan base. But they come expensive, so the return profile is also on that way. When you are working with absolutely fresh artists, the risks are massive. But if any of them clicks, the returns can also be massive. So obviously, it's a balance of the 2. It's a balance of film music and non-film music. It's a balance of Hindi, Tamil, Telugu, Malayalam on one side, and Gujarati, Bhojpuri, Haryanvi, Odia, Chhattisgarhi kind of languages on the other side.

Right. Fair enough. And my second question is, how does the performance of music typically vary -- if you're comparing, let's say, theatrical release compared to a direct OTT release? Where I'm coming from is just trying to understand if, let's say, Chamkila was a theatrical release, how would have music done differently as compared to when it's today released directly on Netflix?

Let me put it this way. Any film which is going direct to digital, the cost at which we acquired the music is also dramatically lower. In fact, in most of our contracts, we have the stipul ation that if a movie at the end moment decides not to go to theatrical ( theatrical definition is , how many minimum theatres in which movie should get released), and go directly to OTT, there is a reduction we are going to get on the pricing. We are protecting and covering ourselves through that. At the same time, we are realizing that -- it's not that a movie which is going directly to digital, the music does not do well at all. Chamkila is a good enough example. Now it's a theoretical thing fo r me to answer to you that had it gone to theatre, had it done far better? I suspect it would have. But then the cost at which I would have got the music also would have been that much higher.

The next question is from the line of Ankit Babel from Subhkam Ventures.

Two questions from my side. First is, you guided for a 30% plus kind of a revenue growth, excluding Carvaan. I just wanted to confirm, is it fair to assume a 30% plus growth in your pure music licensing revenue also in FY '25?

In that range, yes.

Because you had guided for doubling your revenue in next three years, right, so which translates to 24%, 25% CAGR. So -- and in first year, you are doing the 30% plus so what's...

In first year, , the content investments are also going up in a step-up function. As we go forward beyond two years, then they will start growing in a linear fashion, this is because we don't have any intent to acquire more than 25% to 30% of all the newer content that's coming in as of now. And hence, the nature on a 3-year basis, we are talking of the growth pattern that you're talking about here. But immediate year, there is a 30% growth, excluding Carvaan.

Okay. That's great. So how much content investment you mentioned you'll be doing in FY '25, including marketing and everything?

Next three years, INR1,000 crores .

Next three years, INR1,000 crores. Okay. Okay. And sir, what is the break up? Can you please provide the breakup of your intangible assets of INR 513 crores, which you have mentioned in the balance sheet? Last year, it was just INR114 crores. There is an increase of INR400 crores. I understand a part of it would be because of Pocket Aces. But can you just give me the incremental breakup, the breakup of the incremental number of INR400 crores?

Yes, broadly, I will tell you, goodwill is in excess of INR300 crores. This has come on account of the acquisition of Pocket Aces. Since it's a committed acquisition, we need to value the entire acquisition and accordingly account for in the balance sheet. There is also a corresponding liability under financial liability, you will see an increase, which is for the balance 48% stake acquisition. So primarily, that is the reason for the spike. Otherwise, the increase in intangible is only on account of the songs that we acquire.

So incremental INR400 crores, out of that INR300 crores is goodwill and INR100 crores is the songs?

It's the music assets, yes.

The next question is from the line of Aashish Upganlawar from Invest Q.

Yes. your comments are pretty helpful in terms of understanding where the business is going, and it's pretty commendable the way you guys are investing in content. Just a clarification, you said that EBITDA margins, you are comfortable, I mean, looking at maybe 31%, 32%. Below that, what remains is the depreciation item, which given the step -up in investment would al so increase by step. Is it possible to give some clarity on how much it would increase? I suppose we amortize a lot in the first year out of whatever is spent. So just a bit of a clarification would help us.

Our guidance there is that our profitability at the PBT level is going to double in the next 3 to 3.5 years.

Yes. On an annualized basis, is it possible? I mean INR 300 crores, we are investing, I think, 36% you amortized in the first year, split into marketing.

I think we are very open and transparent about the amount of data we are sharing. I'll hold on to our 3-year guidance here that it's INR 1,000 crores music content investment we people are doing. Our revenues at the consolidated level, all verticals combined, excluding Carvaan, we are looking at 25%, 26% growth rate as we go forward on a 3- to 5-year basis. And our PBT is going to double over the next 3, 3.5 years and 32% to 33% adjusted EBITDA , that's my long- term guidance. On a short term, which is for FY '25, we are saying our company's revenue, excluding Carvaan, should grow upwards of 30%.

The next question is from the line of Pradeep Rawat from Yogya Capital.

Sir, I have one question. Prior to 2020, our EBITDA margins used to be 10% to 12% and then it rolled north of 30%. Can you mention any reason for that?

It's doing far better than what we used to do earlier. The music industry itself has started shaping up far better. We have started investing in the newer content in a much more aggressive fashion. If you see our investments -- and in fact, I'll say, pre -2019, we hardly used to make any investments at that time. So overall, we are doing well and expect to get a pat on our back from you.

Yes. with respect to debt, currently we don't have any debt. And in 2021 we issued capital, of INR750 crores, I think so. So why aren't we taking debt? And why are we diluting equity?

This is a call that we people have taken in 2021, when we raised the QIP part as we people sit right now, I have mentioned this that the INR 1,000 crores music investment that we will be making over the next three years will be funded completely through internal accruals and QIP money.

The next question is from the line of Ravi Naredi from Naredi Investment Private Limited.

Vikram ji, first, congratulation and best wishes for next five years, appointment as MD. I must say, in last few years, we saw you were working, and in last 10 years, Saregama top line rises from INR200 crores to INR800 crores, while bottom line from INR6 crores to INR200 crores in your able guidance. so fantastic results you had given, and we wish all the best. Sir, Gen G, for songs and movies, new trend started in U.S. where people are liking, again, record that we play on the HMV, like this. And they are buying these cassettes -- buying these records instead of listening music on this our -- other channel. So is it -- you are aware of this?

Sir, I'm not very clear about your question. Are you talking about the music listing, which is happening now in the U.S. on Vinyl and LPs?

Yes, yes, Gen G. That is called Gen G.

–Sir, if you check it out on our website, we have already released nine different LPs and they are doing far better for us in U.S. than in India because very few people in India have LP players with them. In U.S., they are making a decent amount of money. In fact, I'll say, in some of the markets, even more than Carvaan for us.

Okay. I was curious how it will impact our company, but you have already issued...

Sir, as a company, we are consciously checking out what all is happening in the various part of the world. From an America, which is always ahead on the digital side, to a Japan, which is far ahead on the physical side, to artificial intelligence in terms of predictive modelling and generating part. We, as a company, take a lot of pride in the fact that we are not just a bunch of creative people here, but we are a bunch of tech people who are also in the world of creativity.

Right, right, right. Sir, in first few years, whatever movies we made, I am telling about five years back or seven years back, any film we have sold again the right when first right is completed, and any money we have received?

Yes, not many of those movies have come out because seven years haven't crossed. The couple that has, came out of one platform already licensed to the second platform.

And how much money we receive, can you tell -- the amount?

If you also remember or if I remind you, at that time, the movies that we were making were these INR1 and INR2 crores movies -- the strategy of the films has changed completely from how we started in 2017. On the ROI basis, the movies have done very well for us. But whatever money they are making must be seen in the light of the fact that they are INR1 crores or INR2 crores movies. They all have gone out there to the second round. The three movies that have come out, they are all on the next platform.

And last year, what percentage do you think ship to paid versus free consumption?

This is on audio?

Yes, yes, yes.

I'll answer this question in a different fashion and something I'm very happy about now is, for Saregama, the amount of money we are makin g, we made this year from paid subscription in India. We make a lot of money right now from paid subscription of Spotify America or an Apple America. I'm not using that. I'm saying subscription money that the platforms made in India. And they shared our percentage of that across with us. That number has grown by over 40% in FY '24 compared to 23, and it has now started touching double digits in crores. You see -- and this is one top of the fact that three guys are still not paid in India, Spotify, Airtel and Saavn have not turned pay yet. Only the other guys are paid. If I include YouTube revenue also because YouTube also has a paid service, that is growing in a very significant fashion. The paid economy has already started showing signs of growth. I hold my guidance that over the next 18 to 24 months, subscription business is really going to take off, which is going to add to our overall profitability.

The next question is from the line of Swechha Jain from Whitestone Financial Advisors.

Okay. Sir, first of all, I would like to understand your content cost write-off policy. I know you mentioned in the previous calls, but I'm kind of a bit confused. What I understand is we don't charge off in the same quarter, right? We write it off over three years. Am I correct?

I'll just repeat. Our life of content is 10 years, the new content. However, the charge-off is front loaded. As we have said earlier, the marketing gets charged off immediately. An d the content acquisition cost is distributed as 20% in the first year , 15% in the second year and remaining equally over the next eight years. So that's the content charging policy.

Okay. And sir, just one more clarification. I think in an a nswer to a previous participant's question, you were mentioning about content cost of INR 200 crores for music. So just wanted to understand, this INR200 crores calculation that came up, was it pertaining into FY '24?

INR200 crores odd is what we have spent on new music in FY '24. Not everything is going to get charged off in FY '24. Our charge -off depends on the timing on when did the music get released. If there was marketing that happened behind the song, i t gets charged off ful ly and marketing is typically 20% of the cost of a song. So that gets charged off immediately under the marketing side. While the remaining 80% gets charged off in a phased fashion, front loaded, but in that even the first year will get charged off over 12 months. In FY '24, when you see my charge -off, it will also have a charge-off of what we procured in '21 and '22 and '23 and also a portion of what we people have procured in '24.

Yes. Okay. Okay. And sir, would you be able to give me the revenue breakup for FY '24 in terms of revenue from, obviously, the Music, then the Yoodlee platform, the Artist Management and Carvaan?

If you see our results right now, there is a segmental reporting which is sitting there. You can get it. Music, which is Licensing and Artist Management, made INR 544 crores in FY 24; Carvaan business ended up making INR 130 crores odd. Video business made INR 116 crores and Events was 13 crores.

On music, we are spending INR1,000 crores.

Okay. And how much percentage would be in FY '25? I know you said this over three years. I just want to understand -- is it going to be more in FY '25? Or it's going to be evenly spread across three years?

See, the more granular we go , the numbers become difficult to be shared . Directionally, it is INR1,000 crores, and we have spent upwards of INR200 crores in this year.

Understood. Understood. Sir, just last question regarding a strategy for Pocket Aces. How exactly do you think it's going to sync well wit h our business? I mean what are we thinking about it from a 3- year or 4 -year perspective? if you could just throw some light around this acquisition, sir.

We believe that the GDP will continue growing upwards of 6%, which means the advertising business is going to grow in a substantial fashion. To sustain that kind of a GDP growth, far more consumption needs to happen, and consumption gives rise to advertising and the vertical which is showing the maximum traction under adve rtising is digital advertising. This way we are arriving at the fact that digital advertising is another huge growth factor . And you can refer to any of the projections made by various consulting companies, they're all arriving at the same conclusion, assuming that the GDP is going to grow. If we look at digital advertising, it chases eyeballs. As a consumer yourself, when you are on YouTube or on Instagram, or on Facebook, you either go and follow an individual or you follow a channel. Channel may be an entity and that entity may be a FilterCopy, a Star or a Sony also. Or you follow an individual, which may be RJ Karishma or Amitabh Bachchan. That's what people do. We, through Pocket Aces want to control both these. Our attempt between Pocket Aces and Saregama, is to control more and more eyeballs that are going out there on the AVOD platforms and ensure then that the advertising money that will follow, these eyeballs, we get a lion's share of that. That's a business idea behind the entire acquisition of Pocket Aces. Pocket Aces has got two big areas going in here. T hey are the biggest digital influencer Management Company in India, which means more and more advertisers are now reaching out to us. and saying, can I use your influencer? The moment they come to us for influencer, we also pitched to them that why not also use a song of Saregama in whatever the influencer is s aying about your brand. Both sides can go and make some revenue from it. Then we also own channels like Filter Copy, Gobble, Nutshell. They've got large amount of follower base on Instagram and YouTube. We tell the brand that I will give you the influenc er, I will give you the song, and I will put it on my channel so that you don't need to spend money promoting this message of yours. Because in any ad, you need to make the ad and then spend -- first spend money on making the ad and then you spend money ri ght now in disseminating the ad. We can offer them everything together as a combination of Saregama and Pocket Aces. This is the direction in which we are moving. There are already brands who are now liking this proposition of ours. Because when I'm offering three things together, along with the capability also to make the video for them if needed be, it makes their lives simpler and they're able to do it at a much lower price point. And we benefit across all parts of Saregama. So digital advertising is growing in a big fashion. And we together at the consolidated level want to have a lion's share of that.

Okay. Okay. So just a clarification. The growth guidance that you gave, a CAGR of 25% to 26% over three years, so what I understand, would that consider the paid economy, which we feel is going to really go up this way or that...

When we are giving you this growth guidance at this moment, we are saying this is independent of full subscription taking off. If the audio subscription starts taking off, you can add a few more percentages to this.

The next question is from the line of Akhil Gulecha from Pikadey Family Office.

Congratulations on great Q4 results. T here was this EY report which sugge sted in 2023, there are around INR 70 lakh paying subscribers of music in India, excluding YouTube Premium. What do you think is our estimate of the number of paying subscribers today for OTT music? And how do you see this number growing in the next two, three years? Are there any trends that you're noticing?

The numbers that you're talking about, they are a combination of subscribers and bundled propositions because bundling is also a common thing done by the telecom operators. And two of the OTT platforms are run by telecom operations, whereby they bundle up paid subscription along with the data packages that they are giving. So just for you to get a better flavou r of what these numbers are. I've already told you that for Saregama, in FY '24, the money that we made from paid subscribers, non-YouTube paid subscribers, India operations grew by over 40%. We are extremely bullish on subscription. We believe in the next 18 to 24 months, the entire economy may be moving to a subscription. Globally, there are around 650 million people who are paying for music subscription today. This is despite some of the platforms taking a serious hike over the last 30 to 60 days. But music has got that kind of stickiness that people are ready to go there and pay. This is going to eventually happen in India also. It happened in -- first between cable and DTH. Then it started happening on the video OTT side. And it's going to happen on the audio OTT side. Now the jury is out on how many people are going to be taking the paid subscription. -- If I go by affordability factor, some of the numbers I can throw at you is there are some 125 million people between digital cable and DTH today. That tells you some indication of how many people are ready to pay for some form of entertainment. There is anything between 90 million to 100 million people who are on some form of a video OTT app today. So that's a range of numbers we people are playing on. Whether it will happen at INR 50 per month, INR75 per month, INR100 per month, it's still up for debate. The number of subscribers that we can manage within three years of everybody turning pay can be anything between 50 million to 75 million. Price point can be anything between INR50 to INR100. That's a range in which we are playing. The way our deal structures are whatever the platform makes from a paid customer -- on an average, 50% of that money is distributed amongst the content owners.

Okay. Understood. That's helpful. Can you give us some idea? I know you can't give the exact numbers, but some rough idea of how much of a music label revenue today is coming from paid subscription versus MGs or free ad-supported revenue model?

All I can go back and say that the subscription part is still on a pr etty low side. It's not a high side. It's just that it's showing one of the highest growth rates. .

Okay, understood. And second question is around the content cost. I understand that you're writing off 50% of our content cost in the first two years. So are we recovering the same amount through revenues in the first two years.

Yes, otherwise my profitability would have taken a beating this year. .

Okay. Because it has been over two years since we've done the QIP. W e must have some data around, whatever the content we are investing in, how is the ROE, how are we recovering? You are recovering more than the 50% of the content cost in the first two years itself, right?

Yes. I have stated this, our internal policy is the payback period of five years. If I go by the last 4-year performances, we are doing better than that. I still consider that to be a beginner's luck. I'll maintain my payback guidance for five years, but we are doing better.

Thank you. Due to time constraint, that will be the last question for the day. I now hand the conference over to Mr. Vikram Mehra for closing comments. Over to you, sir.

So once again, thanks a lot for your patience. I've already given my guidance as we go forward. We believe that Indian economy is on a very strong path. Both advertising and subscription part of the businesses will keep on getting stronger. And when the customer is paying directly through subscription or indirectly on advertising, we want to get a lion's share of that, and we will get it both from the music as well as on the video side. We will not hesitate in investing and taking bold decisions while being extremely strong on the financial discipline. We repeat our guidance that our FY '25 consolidated revenue excluding Carvaan should be growing upwards of 30%. Our adjusted EBITDA guidance remains at 32% to 33%. On a three- to five-year horizon, we are looking at revenue, excluding Carvaan, growing at 25%, 26% odd, while our profitability to double in 3, 3.5 years. Thank you and look forward to your support.

Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.