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Ladies and gentlemen, good day, and welcome to the Saregama India Limited Q4 FY '22 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Bhupendra Tiwary. Thank you, and over to you, sir.
Thank you, Sima. On behalf of ICICI Securities, we welcome you to the Q4 FY '22 Results Conference Call of Saregama India Limited. We thank the management. From the management we have Mr. Vikram Mehra, who's Managing Director; Mr. Pankaj Chaturvedi, who's CFO; Mr. BL Chandak, who's Executive Director; and Mr. Mr. Pankaj Kedia, who's Vice President, Investor Relations. So without much ado, I'll hand over to Vikram. Over to you, Vikram.
Hi. Good afternoon, everyone. Let me first start this call by welcoming Pankaj, who has joined our company as the CFO. Our old CFO had some kind of illness. So he is on leave at this moment. So Pankaj has come full time as the new CFO of the company.
Financially, FY'22 saw operating revenues increasing by 31% and PAT by 35%. It's very tempting to call it a bump a year. But I believe that will be very misleading. That gives you a feeling as if it's a one-off phenomenon. It's actually just a continuation of Saregama's resurgence story, which started a few years ago. Remember, financial year '14, '15, our PBT was just INR 6 crores. We spent 3 to 4 years, this is between '14, '15 towards '18, '19, we spent that time right on rebuilding the foundation of the company, on the technology side, contract side, data side, people side. And what you saw after '18, '19 was a very, very new company. And the results immediately started showing.
Just to jog everybody's memory, our PBT for financial year '19 was INR 84 crores. FY '20 was a COVID-based aberration, so I will not count it. '21 was INR 152 crores. And this year, we are ending up PBT at INR 204 crores. So this, by no means, is an exception. This is just a continuation of a story, a story where a company like Saregama, which is the custodian and the owner of the largest IP both in audio and video in the country, is finding its place under the sun by monetizing its IP to the fullest. And that's why the old filmy dialogue [Foreign Language]. We believe right now, the story is far more bullish as we will go forward.
At INR 615 crores, this is the highest revenue Saregama has ever written. And at the profit, PBT of INR 204 crores, this is the highest PBT Saregama's ever had. This year has been a year of a lot of milestones for us.
Our music licensing revenue showed the highest year-on-year growth ever of 26%. No mean, achievement. Do keep in mind, we have been able to grow these revenues, music licensing revenues, by over 20% now for fourth year in a row. Once again, reiterating it, it is not a 1-year exception. The foundation that has been built here is going to ensure that as will go forward, the success story will continue.
In fact, the licensing revenue crossed INR 360 crores this year. Combination of both a big investments in new content, as well as our catalog working harder. In this year, we took a content charge-off of INR 46 crores compared to INR 18 crores in the earlier that is FY '21, 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.
A lot of you have asked me questions in the past about the film division as to when will it start making money and when will it become significant. And I have been telling you that maybe FY -- the year gone by '21 is -- '22 is the year, and that's what happened. For the first time, films, television and series vertical in FY '22 crossed the INR 100 crore 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 0 marketing. In fact, the sales numbers grew by 17% compared to FY '21. 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 interest and depreciation. Our commitment was in the range of 32% to 33%. We have delivered a 38% of OIBCID. But as I go forward, I'll continue maintaining that as we start investing in content even more aggressively. We will be delivering an OIBCID to the range of 32% to 33%. FY '22 was a great exception to it.
During the year, we successfully raised INR 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 a more aggressive position on new content. The first acquisition we did from this money was of a Telugu music labels catalog. We've got around 1,500-odd music IP from 280 Telugu films. What that is helping us to is to give the initial boost that we needed for our Telugu business, because as stated earlier, we are investing now heavily on the Telugu film music.
Another story which I'd like to share with you is something we are very proud of. During the time of lockdown, we started this project, which we internally call Punarjanam. What was this about? It was about going and recovering some of the songs owned by Saregama belonging to maybe 30s and 40s and 50s of the previous century. They were owned by us, but somewhere were lost to the pages of time. Those songs were sourced from -- by going through various LPs, which were in the custody of LP collectors, primarily in the city of Kolkata. Each of these song was cleaned up, moved from analog to digital and then were serviced to every partner of ours. The good news is that from 130,000-odd catalog we used to have a year earlier, a combination of Punarjanam project, be picking up Mango Music's catalog and our own new content investment, we now have 142,000 songs IP under Saregama.
So this is, by and large, the year gone by. If I get into a little more detail about the quarter gone by, which is Q4, our revenue from operations grew at 46%, while PBT grew by 28% compared to last year. An obvious question can be why was the PBT growth lower? Because remember, a larger proportion 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 INR 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 2 of peak superhit albums. One was Sanjay Leela Bhansali, Alia Bhatt, Gangubai Kathiawadi and second is Mahesh Babu's, Sarkaru Vaari Paata. Both these -- if I take both these films and start looking at their cumulative views of the IP that was thrown by Sarkaru Vaari Paata and Gangubai, the number has already crossed 1 billion. Remember, Gangubai got released in February and Sarkaru Vaari Paata has yet to be released.
This is the power if you -- of new content, if you get it right, and we people, as I've shared with you in the past, have done large investments on data and analytics, predictive models to ensure that we get it right more often than not. We continued with the 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 people, our players in the market, players who have been there in the market very active for the last 15, 20 years? Let me acknowledge, are they formidable competitors? Yes, they are. And in a lot of places, we even look up to them to get the right market practices. But also remember, there may be a formidable competition, but the fact of life is this: in Hindi, Tamil, Telugu, Malayalam, some of the biggest films music have already been sold to Saregama. And why are the big film producers selling the music to Saregama? I think it's a marketing power, which is now being acknowledged by the industry.
Remember in film industry, the biggest marketing of a film is done by the music of the film. So more film producers are very keen to partner with music labels that brings solid marketing strength to the table. And that's what we have invested in. We've invested -- smaller thing, if I look at influencer marketing, which is the latest way to market any product these days, we have invested heavily in data and analytics once again, to ensure that we work with the influencer who is the best in the category and who gives the best return on investment. We're tracking performance of every influencer in every category to keep on deciding which influencer to work with. And this is a small example.
So 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, a producer knows that he is going to get his money on time. That's also the impactable 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.
But needless to say, the quarter numbers itself are approved of it, but our revenues on digital side grew on all fronts. They grew substantially on YouTube, on music streaming platforms, on sync side, on short format upside, and we expected this trend to continue as we keep on investing in new music.
I'll repeat something I said in the last quarter. Our growth rate of over 20% and last year 26% is a combination of the industry growth of anything between 11% to 12% and increase in our market share. And market share is increasing because of this rising popularity of catalog music that we keep on pushing, but much more importantly, our investment on new content. And we will ensure that through the work that people have on predictive modeling, data and technology, that we keep on investing in content, which has got a higher probability of success based on the track -- their recent track record, and use technology to ensure that there is no leakage of revenue happening once we have bought any content.
The only black market financing 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, that's the time COVID once again had raised its head with the Wave 3. And overall, the celebrations were not happening in the country. Most of the parties were banned. Hence, our revenues are very, very muted during the quarter and overall during the year from public performance. Every other vertical has fired.
Just like the last year or the year before that, or even the year before that, quarter 3 is the biggest year for us from the Carvaan sales perspective because of the Diwali season. So after the 141,000 units that we sold in Q3, we still managed to sell a pretty good 112,000 units during the quarter 4. Overall, the Carvaan numbers for 4 lakhs, which was a 17% growth.
We have been maintaining this over the last 8 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 side as well as the manpower side.
With markets opening up, the demand side is improving. We should very clearly see in the numbers. But the supply side is still -- is an issue, as I talk to you. Because of the overall global chip shortage, we believe as we get into maybe quarter 2 or quarter 3 of the year, the chip shortage issue may start getting resolved by that time to some extent. At that's the time you may see higher numbers coming on the Carvaan side.
Our focus and our commitment again in the areas that we will not spend any major amounts of money on manpower or marketing until the time the market is fully open, both on supply and demand side. And we will deliver at least a breakeven on the Carvaan front during the financial year.
This was a super big quarter for Yoodlee, a product that has taken 4 years from first year writing loss 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 through a leading platform during this quarter. We also ended up doing 2 Marathi films and delivered it to various platforms. The story looks even brighter if we people go forward.
Somebody had asked me, I think 2 quarters back, when will this division end up writing INR 100 crore? So yes, the division has really written INR 100 crore number in this financial year. But this division when INR 100 crores is a combination with Yoodlee and our TV business. Hopefully, Yoodlee on its own as we go ahead in a year or so should be able to write INR 100 crores at top line. Our TV serial business continued to do well in terms of TRPs. Our Q3 was special because, not only did we make money from our serials being broadcasted on the channel, but the substantial amount of money came from YouTube. Q3 is always the biggest quarter right now from YouTube perspective. Quarter 4 induction were more muted. But overall, we still did pretty decent numbers during the quarter 1 TV side too. So here we are ending financial year '22 on a high -- on all the 4 verticals, delivering both the top line and the bottom line numbers of ours, and becoming a force to reckon with in the market on new content, both on the music side, as well as on the video side.
Thank you. Happy to take questions from you now.
[Operator Instructions] We have the first question from the line of [ Dharmesh ].
Vikram, thank you very much for giving this opportunity, and great set of number. I am invested since 2018, and it's a remarkable journey with Saregama. I have only 1 question, Vikram that, what kind of pricing power we may have in future? Because as we know, each OTT stream, we have around INR 0.10. But looking ahead, do we have any pricing power rather than increasing number only?
Yes. So if you ask me, in future, I am much more bullish on the subscription part of the business taking off. In streaming business, which is music streaming business, India only -- is only a market which is so free driven. Globally, the paid subscriber for music streaming are growing at a very, very steep pace, and they've already clocked over 500 million paid subscribers as I talk to you today.
I am bullish that give it another 12 to 18 months, in India also subscription business is going to take off, and that's what's going to give us huge dividends. Our paid subscriber when he listens to Lag Ja Gale is far more valuable to us than a free customer when he listens to Lag Ja Gale.
Regarding our pricing power, our ability, see, the good part with music IP here is that if you want to listen to Badshah's Paani Paani or if you want to listen to Gangubai's Meri Jaan, which is a super hit song of Gangubai. Now, you have -- as a listener, I can't replace that song by any other song. Because if you like a song, you like that song and you will continue to listen to that song for the next 30, 40, 50 years.
And that's the power of Saregama's catalog. We not only have the greatest songs sitting from the 20th century, which is Lata Mangeshkar, Kishore Kumar, Asha Bhosle, Mohammed Rafi, Jagjit Singh, M. S. Subbulakshmi, Chamkila, the list just doesn't end across all languages. But we are also now investing very heavily on newer content. With the combination of the 2, hopefully, will put us in a very formidable position when we keep on negotiating with these streaming platforms.
We have the next question from the line of Mr. Vivek Gautam from GS Investments. .
Congratulations on once again great set of numbers. Very consistent performance. My question is regarding this derating that we are seeing in the western world of Netflix and Spotify. What impact can it have in terms of us also suffering some sort of derating in terms of price earning valuation and the currency so far, which our company has been enjoying.
I can only answer this right now on a hard data-wise. Hard data-wise, you are seeing the numbers going up. I see no reason to -- see, that's the advantage we people have as a content provider and not being a platform person. We are not directly, right, indirectly, we are. We are not directly get affected by the ups and downs that you see right now of a subscriber base of the platform. Most of our deals, almost all our deals, are either protected by a minimum guarantee or have a fixed-fee component in it.
So we don't see any reason why our profitability is going to get affected just because some of the platforms may be losing some numbers either on the video side or the audio side. At this juncture, I will put my neck out and say, I don't think we'll be affected really in the short run.
Okay. And then second phenomenon, which is happening nowadays in India, is that the pan-India presence, especially of the South Indian feels like KGF Part 1, 2 and RRR, so that -- does Telugu focus for us seems to be a very sensible step. But is there a risk of overpaying for these music right or that sort of a bonanza coming up for us because of this -- those are -- we were focusing only with Telugu movie was only in Andhra, but now it is all over India, thanks to the good report and response all over India.
That's what you're asking me is a very subjective question. I'd like to believe that we will end up paying the right price. But this is always a supply-demand negotiation that happens. The only part that I can give you comfort is that at Saregama, we use data a lot to decide that how much should we be paying at the peak. There have been deals where people have just walked out because we thought it's overpriced. 8 out of 10 times, we prove to be correct; 2 out of 10 times we end up leaving projects, which would have been great projects. But I think we are okay with that. We want to minimize. So 80% of the time is I'm getting right in terms of leaving a project with over price, I think we'll take it.
But the first part of your question, you are right. There is a large market of the multilingual films and their music there. We people had a Telugu movie called Shyam Singha Roy and then we had a Malayalam movie called Kurup. These are -- they not be INR 1,000 crores movies, but they are very big movies for their markets. And the music of those for multilingual. They were not limited only to Malayalam or Telugu, and both these films have done very, very well for us.
Okay, sir. And how is the society for artists, headed by Mr. Javed Akhtar performing and sort of -- we are also getting the benefit accruing from it or not basically?
That's society, at Saregama, we have a Board member seat on IPRS. In fact, I only sit on the Board of IPRS. I think that society will run very, very effectively. And you are already seeing signs of growth coming in.
Globally, publishing revenue contributes anything around 15% to 17% to the music label's overall revenue. And I see, as we go forward, all of us enjoying that benefit. All you need to do is just Google for IPRS, and you realize that this is the biggest year IPRS has ever seen in terms of a collection. They're just going from strength to strength.
Mutually beneficial for us and the artist, also.
It is. It is overall beneficial for the industry. So I love it when artists are also benefiting because, at the end of the day, we have to all acknowledge that these music labels or the entertainment companies are because there are artists. It's always great right now that artists also makes money and we also make money.
We have the next question from the line of Ankush Agrawal from Surge Capital.
I would like to ask, firstly, can you clarify a few things on the restructuring that you're going for? And what exactly is going to be demerged from the current entity?
So see the demerger is the -- this read out -- let me start 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 in our company right now and that's what is demerged. That new company will become a nonexclusive distributor of Saregama Carvaan for digital business for us. They are within the rights to take businesses non-Saregama, non-RPSG businesses also.
Along with that, we have also put all our noncore investments in the group companies, RPSG group companies and other things, also have gone as part of this demerged company. But which to clarify, means our investments, we have some shareholdings of a company like CSC, we had a [indiscernible] business of Open Media, everything is [ high-doc ] into that company.
Great. And I believe the current physical distribution is already outsourced for the Carvaan, the offline distribution.
Distribution for us is always an outsourced part, how does Carvaan work? Carvaan works with the help of distributors. Carvaan has begun to -- sell Carvaan to distributor who in turn sells it to retailer, who sells it to the customer. So now this company will become 1 more distributor of Saregama.
Right. So, Vikram, 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?
We have had maintained that, and we continue maintaining that, that Carvaan is core to our business. People have taken the last 2 years [Foreign Language] loss on Carvaan because of this COVID issue. But as we go forward, we believe there's potential to make money out of Carvaan, like it did in the first 2.5 years of it's beginning. But any -- so let me complete this, till that time, we don't feel that the supply and demand issues of Carvaan are not fully sorted, we will not be doing any spends on marketing or manpower enhancement. The worst that we'll deliver is a breakeven.
Yes, that is well taken. You've highlighted that multiple times. So secondly, this recent Mango label acquisition, so in the current quarter, have we seen any benefits out of that liability? Or do you expect it to accrue to us in the future negotiation that will come in FY '23?
The way it functions on YouTube, you see the revenue enhancement immediately while launched on such short format apps, where we get into these 1-year or 2-year deals, it will take some time for benefits to start accruing. But more importantly is it gives us a solid ground now in Telugu. Suppose I have to go to Telugu TV channel. If go to them only with my 4 new movies, I may not be -- have been in a position to cut a deal. Now since we have a larger catalog, also that goes and there are music videos that have come with it. We are in a better position to negotiate in that market. So you will start seeing benefits getting accrued to us as we go forward.
Right. So would it be a fair understanding that at the time of label accruing, you had mentioned that with this inorganic acquisitions, you will accelerate our growth rate from about 20%, 25% to upward of 30%. So do you see that coming in FY'23 or it will take some time here?
So you are playing around with words. I never said that. What I've been saying is that because of the investments we are making in the newer content and investments in inorganic, the growth rates will move from a 20% to 25%. The 30% number that you're referring to was our ambition that of the newer content that comes out in the market, we want to garner 30% of that, which will result into music revenue -- licensing revenue growing between 23% to 25%. And I'm holding on to that number.
Okay. Okay. Lastly, 1 more thing. We raised about INR 700 crores in QIP. And out of that, INR 60 crores was paid out as recurring immediately. And this quarter, I believe you have invested out INR 30 crores in group companies as well. So this thing don't add up that but you dilute equity and then a good chunk of that...
We have not invested in any group company. There are only 2 investments that have been made right now out of that money, and we have declared that out. The expenses of QIP plus the money that we have spent right now on the acquisition of Mango Music catalog. That's it. There is no money flowing to a group company.
I'm not sure about it, because if we see the quarterly shareholding pattern, there have been some increase in Saregama as a shareholder in the group company. So the cash flow shows some INR 27-odd crores of investment in listed subsidiaries. Okay. I'll take that offline...
Let me explain this right now. Let me take this opportunity. I know what you're talking about. We people have a company called Kolkata Metro Networks. This is our own company, which is a 100% subsidiary of Saregama, which were holding shares of CSC, RPSG Ventures and Spencer Retail in there. This company is eventually going to be merged right now into Saregama. So before that, we needed to first get the shares held by our 100% subsidiary. We had to buy it within Saregama. Those shares are going to be moved out when we -- that demerger is happening. And then Kolkata Metro Network is going to be fully merged into Saregama and the cash is going to come in.
Basically you have taken the share subsidiaries. Got it. That was very helpful.
Well, they can go to the [indiscernible]
Got it. Got it.
So the cash flow of [ INR 700 ] crores that you are seeing right now is sitting as part of a 100% subsidiary, and that as the subsidiary gets merged into Saregama, that cash has moved from 100% subsidiary back into Saregama. There's no other activity happening in here.
We have the next question from the line of Ishmohit Arora from SOIC LLC.
Congratulations for a hearty set of numbers. So what's the growth guidance for FY '23? Are we -- like, are we basically remaining with the 23%, 25% type guidance?
Yes, we are maintaining the 23%, 25% guidance there and an operating income before content interest and depreciation number of 32% to 33%.
Right. Right. And also, second question was when it comes to the QIP proceeds, what is the utilization status? Are we seeing any good opportunities for acquisitions?
We are in advanced conversations with a couple of smaller labels. But until now, the funds have been used only for 2 things. One of the issue expenses itself, and second is picking up the catalog of Mango Music.
Because I think we have been hearing that the 5 market valuation in this space has been actually reaching to a very high level. So how do you think about that?
So that's what's also taking time. We need to pick up, but somebody has to be willing to sell at a price that makes sense to us and the catalog should be something that is relevant and is robust enough. So that's why we are taking our time. We are not going to jump into it. Till that time, the money is fully secured and sitting right now in debt or fixed deposits. And that's something you can see right now from our balance sheet easily. As and when the opportunities come in, that's the time we're going to go in.
We have the next question from the line of Devanshu Sampat from Yes Securities.
Just 2 questions from my side. So one is can you talk a bit about the economics and the expected investment and plan that we have for the artist management or the [ A&R ] division? How big do you expect this to be to 3 or 5 years from now?
Listen, it's too early for me to start talking about the artist management. It is not something which requires a large amount of investments from our side. It's strategically a very important part. Financially, does not take too much investment. As and when we are in a position to talk about it, I will share. Too early at this stage.
Okay, sure. So even if I look at this from the chart that you have, which is the enormous size of the Indian media entertainment sector, the live events is a sector that [indiscernible].
Yes, I can talk about...
So nearly 3x the size of the Indian music industry and growing much faster. So -- and you have also mentioned that live events is something that we're looking at also. So can you talk a little about that.
Yes. Events, I can talk about. Live events, we started live event actually in the financial year '23 in the month of April. Our first 2 concerts were 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 U.S. and Canada later this quarter.
Overall, in the initial years, our projections or guidance on the live business is between 5% to 7% margin. It will take us some time to stabilize that. And that after that, we can look at a 10% plus margin on the live event side. Remember, live event does not take any capital investments ever. So that's a good thing about it is it's more about rotating your capital.
Okay. So does this -- I mean, I'm guessing this would also probably help us get endorsed with these artists and probably get better connected with them.
You are bang on. So one of the biggest benefits of doing live events is the benefit that lead music in the part of the business ends up getting. Because when you are spending that much amount of time with the -- with an artist doing his live events, there are all the other things you can work with the artists, which includes convincing the artist to do some songs for you, which with some of the artist is impossible to get otherwise or you get it at a subsidized rate because you're doing a bundled deal.
So can you give us a sense of some of the -- how big are the -- some of the players who are managing this, how big is their revenue on that side of the business for the live?
Early days. We are very, very clear. We are not getting into all [ Carvaan ] live events. Our live events are 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 artist show or a musical play that we can go out and put up. If there is music, then only Saregama will get involved in it.
Got it. And sir, just last question from my side. You've been maintaining that we will not be upping our investment in Carvaan unless and until something opens up. It seems to have been the case now. So what are the expectations from this business in the coming year?
From which business? Carvaan?
Yes.
So Carvaan is funding for itself right now. In the current year also, honestly, looking at the supply situation on the chip side, we people are gunning for a breakeven. No fresh investments are going to be happening. We did 4 lakh units in the year gone by. We should be able to show some amount of growth this year. But that's all I can project. All investments in the true sense, to start going deeper in the market on the distribution side or building further consumer demand, which require marketing, all that is deferred until that time. We are not 100% secure on the supply side. And I don't see that happening over the next 5, 6 months.
We have the next question from the line of Aditya Nahar from Alpna Enterprise.
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's 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. Thanks so much.
Very sweet of you. Thank you.
We have the next question from the line of Mr. Jatin from [ In-list Savvy ].
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, is the publication business being [ high proffed ] to the new firm? Or is it going to continue with the digital part of the business? And finally, there is a -- on the balance sheet, there is a fair amount of difference quarter-on-quarter on the unallocable expense net of income which has actually making quite a significant difference in the net figures to show good quarter-on-quarter growth. Is that something which is sustainably -- is this a sustainable reduction? Or is it something which is only for this quarter? 3 questions, actually.
Yes. To answer your second question first, yes. As part of the demerger, the new company that has been created who's primary job is to [ add ] digital distributor of goods. Also in that company, we have hived off all our noncore investments, including the publication business. So Saregama, the parent company, will not have the publication business with them any longer. Your first question was not very clear to me. You were talking about aggregators?
No, I was talking about like something like Gaana. So other platforms, which would actually allow international users to use your -- to [ sample ] your music and pay you a fee for that.
Remember, we people are today, if I remember my numbers correctly, available on some 42 different global streaming platforms. So the [ 9 ] in the ones that were there in India, we are licensing directly. There are a few which are in the -- which are the smaller ones at a global level, we are licensing them through an aggregator. So you have a very wide presence going on right now of our content.
Is that coming up well? How is that shaping up?
Is it coming? Are you asking is the revenue going up?
Yes.
So remember, a large share of our music licensing revenue comes out of OTT streaming. And if we are showing 26% growth this year on a music licensing business, obviously, the music streaming has also grown pretty significantly, and that comes both from the domestic guys as well as the international market guys. It's more from the domestic guys, obviously, but as a percentage, even international is growing.
Okay. And lastly, the unallocable expense net of unallocable income.
Deepak, can you explain this?
Yes. So if you see for Q4, generally, we receive dividend from our group companies in the fourth quarter of the year. So if you see this year, we'll be having a dividend of around [ INR 70 crores ] which is the only reason why our unallocable expenditure is showing the negative numbers.
Okay. So that means this quarter is more or less comparable to last quarter, if we adjust for the dividends received?
Yes, yes, yes.
And the same thing you saw in the last -- same quarter last year, similar phenomenon. Now those shares have been moved out there to the demerged entity. You may not have the same phenomenon happening from next year onwards.
Mr. Jatin, I hope your question was answered, sir. Okay. We'll take the next question from the line of Mr. [ Ravishi Khan ]. He is a private investor.
I basically have 2 questions related to the premium services that these streaming companies offer. So I think you mentioned that there is a move towards customers paying for the premium services. So for the premium services, I know YouTube Premium but I am not sure of the other streaming services. There is an option to download these songs. So how does that affect the revenue for the [ common ] companies like yours? And secondly, if you look at the pricing for these premium services, say, for example, YouTube. I mean, in the U.S. and Europe, there are roughly, I think, 5 or 6x 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 5 or 6x if a view comes from India?
Okay. So let me try to answer both the questions. Let me answer the second question. Yes, a view that comes from outside India, especially which is coming from Europe or U.S. ends up having a higher yield. Our YouTube model is -- whatever advertising money YouTube makes because of any IP owned by Saregama, YouTube keeps 45%, we get 55%. Since the ad rates are far higher in European countries or U.S./Canada, we do end up getting a higher amount of money per view. The yield is better if the view is coming from outside markets. And that's also the reason why some of the language selection that we have done, when we're saying we're getting into -- we are not focusing only on Hindi. We are focusing on multiple languages. Some of the languages that we have selected have been selected keeping in mind of fact, there's a large amount of views end are coming from outside India. So that was the second part. You're asking your first part was?
On the -- if the customer downloads the song onto their device, whether you get paid for it.
Yes. So first, let me clarify this. If you're a paid subscriber, what you do -- not actually a download, it's called off-lining. But the day you end up turning off your subscription, all that content that -- your offline will go away. So it's not download. You don't get a permanent copy with you. Now the way our technology helps the model to work here, suppose you're a paid subscriber of any of these apps, and you downloaded or off-lined the song Paani Paani. And you heard it 7x in an off-line state where you are not connected to the data. You were in a flight, you heard that song 7x. You get off the flight and the phone gets data back, the information will be passed from the music streaming application front end, which is your phone to their back end that this specific song was heard 7x. So we end up getting money for every time you end up consuming something that you're offline.
So basically, it makes no difference from an earnings point of view?
And not just video, even YouTube video offline it works on the same [ issue ].
Sure. I just had 1 question on the valuations. I mean, so if you look at the global markets, I believe there are 2 listed ones which are into the songs royalty business. They have mentioned that they typically acquire new content at around 15 to 16x the publisher's share of income, historical publisher share of income. So what would be this sort of valuation metric in India?
One, in India, the publisher share and the sound recording share, which is a master recording shares, they're 2 rights. You buy a song, you get -- you basically are buying into 2 rights. The master recording and the publishing rights. Typically, in India, it's the same entity that ends up owning all those rights. So there is not that much amount of a difference that's going in. Also, remember, when you are talking about these global funds, what they are buying is not the right that or royalty that's a label like Saregama will get, but the right that is sitting with the artist.
So clarifying it further for you. When I buy a song, there's master recording, 100% of that ownership of master recording. And the money that we make from master recording, 100% comes to say, Saregama. The second right is publishing right. Ownership is with Saregama, but 50% of that money goes to the person who wrote the song and the person who composed the song. If as a fund -- maybe you don't want to buy my 50% because I'm refusing to sell, but you can go to an artist and buy that artist's 50%. Are you with me?
I'm getting it, yes.
In India, no such move is happening at this juncture where artist's key rights are getting bought. Somebody had asked the question earlier that how do we believe this publishing right society is going to develop over time. I think they're doing a fabulous job under Javed Akhtar, and you will see that right becoming more and more valuable as we go forward. It will benefit us also a lot because we own the right and 50% right to royalty, and it will benefit authors also a lot in that way ahead.
Okay. Because if I understand correctly, I think one of the funds which I think some, I think, some song royalty board or something had sort of given a notice that this sort of share for these songwriters is going up. I think YouTube and Spotify, et cetera, I think they have filed a countersuit against it stating that these -- it should not go up. I believe YouTube has to pay from their pocket.
These are legal issues. I can't discuss that on this call. But as I summarized to you, in India, the publishing rights valuation is going up. That right used to make practically nothing for us 3 years ago. Now that right is becoming more and more valuable. We own the right and we own 50% royalty right also when that right is exploited. So as the valuation of that side goes up, both the owner, which is Saregama as well as the person who wrote that song and composed the song, all the parties are going to benefit.
We have the next question from the line of [ Raghav Akar ]. He's an individual investor. As there is no response, we take the next question from the line of Ishmohit Arora from SOIC LLP.
Sir, once again, just had a very basic [ assumption ] revenue from YouTube. So the entire revenue from YouTube, is it variable? Or do we also have a licensing deal [ agreement ]?
No, I can't get into that specific detail. But as I said, any IP which is owned by us, which may be a song that we have uploaded on the official Saregama YouTube channel or it may be a song that you have recorded in your voice. Suppose you like Sanjay Leela Bhansali's latest Meri Jaan. And you sing that song and put it up on your own YouTube channel, our back-end technology will be able to track it immediately that you're 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. Beyond that, our specific deal with YouTube and other financials, I'm not at a liberty to share here.
We have the next question from the line of Ravi Naredi from Naredi Investments.
Vikram, again, very fantastic results.
[Foreign Language]
Sir, to decide for web series selection, how our internal system works?
To which? Web series to make?
Yes, yes, yes.
We have this core team that has been developed, that's the only team that remains on our payroll. Their job is to constantly read multiple scripts that keep on coming across to us. If I...
Is it -- and is a film a similar way in web series?
In web series, there's a slight difference. We read those scripts. After that, if we believe there is potential in that, then we go out there and have the initial dialogue with some of the digital platforms to see the interest level in that. And that's how we take it forward. But we start shooting a series only and only if we have a firm interest coming right now from a digital platform to license it.
Right, right. And really Vikram, you are doing a very hard work and very fantastic. We are proud of you and very much success.
We have the next question from the line of [ Ashray Jigani ] from Exponent Capital.
I wanted to understand a little bit more on YouTube, essentially, how are CPM fill rates evolving? Are there specific trends that you are seeing with the backdrop of [Indiscernible]
Your voice is not clear. I'm not able to hear you properly.
Can you hear me now?
Slightly better.
Is it better?
It is better now.
Excellent. I wanted to understand the YouTube piece a little better. How are CPMs evolving? Because I see, at least this quarter, we see a good jump in the number of YouTube views. Not sure the CPMs are also holding up. [ Accelerate ] how are they doing? Would be able to hear that.
I think I'll leave it to YouTube to comment on this because that's very detailed and competitively sensitive stuff. But overall, remember, quarter 3 is the best quarter for everybody in that. Anybody who's dependent on advertising revenue, quarter 3 is the best quarter. But we people had a very good quarter 4 also, primarily because there were some very big movie releases happening in that quarter. Mahesh Babu's movie SVP as well as Sanjay Leela Bhansali's Gangubai. We had some 2, 3 very big hits in Bhojpuri and Gujarati language, too. All that helped in the views going up substantially in YouTube and hence, also the money that we made from YouTube.
Sure. A follow-up on this. Maybe not last quarter, but to take a 3-year view. And I mean how has YouTube as a view -- on a per unit involved as we generally hear digital advertising growing at a much faster pace than video [Indiscernible] test of it, right? Is pricing also improving? Or is it just more consumption leading to more ads?
Sir, it's a combination, pricing is actually quite seasonal also in nature, but by and large, pricing of everything is going up. But you -- it's a reality that during the [ haydays ] of COVID lockdown and now after that, a lot more advertising monies are flowing from television business into digital business. Because the eyeballs -- consumers have moved in a very big fashion from a preprogrammed television we experience to on-demand digital experience and YouTube is one of the big beneficiaries of that. So we people get a benefit on both sides. We have a higher amount of views going on for each of our content. And since there's more money coming in. So either the fill rate goes up at times or rate per ad, which is even the higher side. By and large [Foreign Language] For us overall, the revenue is going up and that's some story that we people love.
No, no, of course. I mean, with you -- I would understanding the quality of that growth for very comes from [Indiscernible]
The comfort I can give you without sharing competitively sensitive information is this is sustainable. We don't see this is something that which is happening right now, the one-off case. On quarter-on-quarter-on-quarter, we are seeing sustained increase both on the view side, but more importantly, on the revenue side from YouTube.
So 1 last follow-up. So when you say over a longer run, the industry grew at 11%, 12% to grow at 20%, 25%. What we see is digital advising that grows at 20%, 25%. Given the large chunk of our business comes from there, why is it that industry -- the streaming part of it is growing at 10%, 11%?
The large growth of the industry is actually coming from streaming. Streaming business is a free business which does not get too much of audio. Audio does not attract too much of advertising in our country. I am talking about only the world of YouTube and Facebook, new advertising is also on which is a large chunk of our revenues. There is very little advertising chasing that. And hence, the growth rates on the revenue growth rates there are relatively more muted compared to advertising-driven video-driven advertising. There the numbers of far more bullish. On the audio side, the projection that we people keep on making here is based on the fact that the status quo is maintained on music streaming. That base subscription takes off. You will see both the industry in general and Saregama in particular, growing at a rate far higher than the rates that we are projecting today. I am personally very bullish on subscription taking off in the next 18 months to 24 months. But the projection we are making are assuming subscription will not take off. When we say that our music licensing will grow between 23% to 25% [ per year, anyhow ].
We have the next question from the line of Yash [ Mundayvalla ].
Am I audible?
Yes, Yash.
Just a couple of questions from my side. Vikram, if you see the revenue growth from the retro catalog 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 catalog? And how would we expect the revenues here to grow over the next 3 to 5 years?
Sorry, how have you arrived at that conclusion?
So the numbers are disclosed in the investor presentation.
But which number has given you that number? Where have you got that impression? So can you just tell me which table, which slide so that I know where you're coming from, then I can answer.
So you disclosed the share of revenue by decades. So 1960s to 1980s.
I'll be very clear right now is just because if I make a line, which is bigger than your line, that doesn't mean that the other line has become smaller.
The numbers are there, Vikram. It's not based on the [ decade ]
Whether it's '81 to 2000 or '61 to '80 have not come down. It's the newer content, which is disproportionately high. We have invested -- we never invested in new content in the early stages. Newer content always gives you the biggest kick. Catalog content cannot survive at that level. Our catalog content, what I'll request you to do is to look at the corporate presentation where -- is it there in this year's slide?
Just go to the last corporate presentation, which is there on our website. It will give you a very good idea where we have shared information about how music of various decades, what kind of a growth rate is it showing. Our number is range of about 30% year-on-year.
If we just look at the absolute, so you've been disclosing the licensing revenue and on slide -- I don't know what slide this is Saregama music IP, you also disclosed a percentage of revenue from each of the decades.
So at the end of the day, even if the licensing revenue you're saying is growing at X, if the new content starts growing at 2.5, 3x, obviously, the share is going to become that much bigger. So because newer content gives the massive push in the year 1 itself, it generally explains to you, if I take my song an 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 I look at Mahesh Babu's film, Gangubai, combined they have grown -- contributed 1 billion YouTube views in less than 3 months. So newer content grows at a different pace altogether. It's an older content, which is still showing above 30% growth year-on-year, and it's there in one of the other presentations of -- well, you can have a look at it. So if something is going at 60% and the other thing is doing at 30%, obviously, the 60% will have a higher contribution.
Is the revenue from the old catalog still growing at 30%?
Yes. That's what the data we people are sharing with you are OTT streaming. So there is -- YouTube [Foreign Language] possible that a view has come in and no ad has come. OTT, every stream is worth money. There's a substantial growth in catalog and launch of Saregama's. You check out global companies, any of the big 3, and look at their disclosures, they all go back and tell you that the music of 60s and 70s and 80s is doing very, very well because discoverability has become that much easier.
Maybe there's an error in my calculations, maybe I can take it offline.
Please, we'll be happy to help you right now.
We have the next question from the line of Nitin Sharma from Macro Research.
Am I audible?
Yes, Nitin.
First of all, congratulations on a great set of numbers. Yes. So I have a question -- a fundamental question. Just so I understand that for a song, a new song, what is the typical number of streams that you guys see for, let's just say, first set of months and how it pans out in over a year? If you can throw some light on this.
I can't share that information because then my negotiation power with the film producer goes away immediately.
A general understanding would be fine.
As Saregama India, what general understanding I'll give you. I will use Saregama benchmarks. This is confidential information. You'll understand that part. I can't put this information in public domain. What I can tell you is something we have told in the past, that for all the music that we acquired in a financial year, in a financial year, the entire music across all the languages, film, non-film, our internal guidelines are very clear commitment to our Board is that the payback period is going to be 5 years.
We have the last question from the line of Devanshu Sampat from Yes Securities.
Just 2 more question. So can you please give us the revenue numbers for the performance revenue in FY '22 versus '21? And if you can also let me know what was it in the pre-COVID era?
No, no, so I'll not be able to share our revenues right now from any specific 1 vertical. It's all -- you'll understand it's all competitively sensitive information. The company -- same market like everybody else. I can't do-- go into that. 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 only during the COVID era -- pre-COVID era. And now as we people want -- get out of it slowly, we believe this year, PPL should start contributing significantly.
Sure, sure. And this is just 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 what are the -- I mean, how are the industry bodies or companies involved basically tackling this? And whether there are -- and if not, what are the challenges that you are facing, whether it's to do with particular apps or particular P2P sharing apps? Something of that sort of thing, if you can just give some sense on that?
Sure enough. I apart from being the Managing Director of Saregama also happened to be the Chairman of the Music Industry [ records ] for the IMI. And in that capacity, we also have worked very closely with government on controlling music piracy. I'm telling you my -- this is my 8th year going on, and I've seen a massive difference in the country on the piracy front, both on music as well as films and it is a combination of carrot and stick policy. One, the very easy access of legitimate music through digital app and short-format apps and things like YouTube have ensured that more and more people now want to listen to music legitimately rather than going and taking a pirated route. And it's so easily available. Who is going to go hunting for a pirated version of Meri Jaan when you can get the legal version at the press of a button so easy?
Second, we have seen on the stick side, we have seen a massive change in the overall mindset where people have started acknowledging now that the piracy of the song is -- as seen as a crime as maybe going and stealing somebody's car. Earlier times, people didn't understand how can digital piracy be actual piracy? Or how can IP piracy be stealing? Now we are getting more and more courts coming out there very, very strongly against IP piracy, which is helping a lot in India. And third, if you ask me one of the biggest changes that has happened is from 2014, '15 onwards, people like you and me that typically used to listen to music or watch videos by going to a laptop or a desktop and typing www.something.com, and going there and consuming our content. In those days, it was very difficult to control the pirates because the servers used to be based in countries where we had no jurisdiction and no control. From '14, '15, '16 onwards, many of us have started consuming content through our mobile phones. On a smartphone, you consume content through an app store, which will be either a Google App store or an Apple App store. And I think both the companies are very, very helpful when it comes to controlling piracy. Every time our investments that we people have made on the technology side, we are able to track any app using our content very, very fast. The moment we come to know of it right now, it's relatively easy now to reach out to Google and Apple and seek their help to throw the app from the app store. Combination of all this, of easy access of content and both judiciary and Google, Apple as the custodian of the app stores using the stick policy is ensuring that the piracy is falling very steeply in our country. Is it 0? No, it's not 0. In the smaller towns, it still exists. In smaller towns, we are hitting the piracy a lot through Carvaan because the easy access of that content makes us that much easier for parents not to go for illegal site loading. So it's falling steeply. I'd like to believe, give it another few years even in smaller towns, it will start vanishing.
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.
Thank you, everyone. A great year. We needed your support and everybody has been backing us throughout. And it's -- what's very heartening for me here is, in the year before that was a COVID year, last year was partial COVID, we're out of it. And in both the years, we have been able to go out there and start taking the company to newer heights. The sustaining of these numbers, both during COVID and after COVID is also a testament that the fundamentals of the company are now strong. Environmental changes, which are temporary in nature, are not going to impact the top line or bottom line 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 3 to 5 years. We will continue aggressively with our investments in newer content, both on the film side and the nonfilm side. We will also be on a lookout for any inorganic purchases that we can make in either Hindi or other regional languages. We are again, continuous in our approach on Carvaan aside, it's a cautious approach. The objective is to ensure that we control our cost. And we'll not be making any major investments here until the time the market has fully stabilized. We commit to at least a breakeven during the year. The films and series TV vertical is expected to grow around 20% to 22% as we people go forward. That's a range we people are looking at. And we are looking at a 15% margin in that vertical. We will be entering or we already entered in this financial year into live events. In the initial years, we are holding to a margin of 5% to 7%. As we stabilize our vertical we may look at a double-digit margin as we go forward. Overall, we are looking at 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 financial year '23. Thank you, and look forward to talking to you guys for the quarter 1 call of FY '23. Bye-bye.
Thank you. On behalf of ICICI Security, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.