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Edited Transcript of ENIL.NSE earnings conference call or presentation 7-Aug-19 10:30am GMT

Q1 2020 Entertainment Network (India) Ltd Earnings Call

Aug 17, 2019 (Thomson StreetEvents) -- Edited Transcript of Entertainment Network (India) Ltd earnings conference call or presentation Wednesday, August 7, 2019 at 10:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Narayanan Subramanian

Entertainment Network (India) Limited - Executive Director & Group CFO

* Prashant Babulal Panday

Entertainment Network (India) Limited - CEO, MD & Director

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Conference Call Participants

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* Ashish Kumar;Infinity Alternatives;Analyst

* Bhupendra Tiwary

ICICIdirect.com, Research Division - Analyst of Telecom and Media

* Jinesh Joshi

Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst

* Manoj Dua

Geometric Securities And Advisory Private Limited - CEO

* Pavneet Singh;Skyline Equity;Analyst

* Prateek Barsagade

Edelweiss Securities Ltd., Research Division - Research Analyst

* Rohit Dokania

IDFC Securities Limited, Research Division - SVP of Research

* Srinivas Seshadri;Mirabilis; Analyst

* Yogesh Kirve

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to Entertainment Network (India) Limited Q1 FY '20 Earnings Conference Call. We have with us today from the management of Entertainment Network (India) Limited Mr. Prashant Panday, MD and CEO; and Mr. N. Subramanian, Executive Director and Group CFO. (Operator Instructions) Please note that this conference is being recorded.

I would now like to hand the conference over to Mr. Prashant Panday. Thank you, and over to you, sir.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [2]

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Thank you, and welcome to the conference call. Ladies and gentlemen, as always, I'll give you an -- some opening statements on the company's performance for the quarter and then open up the floor for questions. First, my apologies for sending the investor presentation so late. I'm sure -- I understand you must be just going through all of it, but I will take you through some of the highlights and then we can have an engaging chat on this.

Okay. So the first part I would like to talk -- and I'm going to present to you the data in the basic strategic form that the company is transforming into so that it is one piece with what we have been speaking in the past. Okay. Overall operating revenues are up 10% at INR 129.7 crores for quarter 1. If I were to break it up into its 2 products, which is basically radio and the solutions business, the radio business has grown by 1.4%, while the solutions business has grown by 42.4%.

Now the 1.4% certainly looks like a low number, and one reason for that obviously is the very strong sluggishness in the market. Everybody knows about it. You have seen that in the operating results of print companies, in most television companies on the entertainment side, and you -- and it's the same thing that has been seen on the radio side as well. So 1.4% is a low number. One reason for that is the sluggishness in the market. But there is a very important second reason for that, and that is the fact that we have a -- on a very high base of growth last year. The growth that Mirchi recorded last year in first quarter was 21.6%. I think a meaningful look at the growth number for the radio business should be done over 2 years, because different radio broadcasters had different bases last year. So I've done that exercise, and I'll just read out some numbers for you.

Firstly, over 2 years, which is quarter 1 FY '20 over quarter 1 FY '18, in our estimation, the overall radio business in the country has grown by 9.2%. So 9.2% is the industry growth. I will now tell you the growth that have been announced by various players over a 2-year period of time.

First is Radio Mirchi. Over a 2-year period of time, the total radio revenues, and I'm talking pure radio, is 23.3%. MY FM, which is the Dainik Bhaskar Group, has announced results. And over 2 years, their radio revenue growth is 21.4%. Then there is HT Media, which announced its result, and Fever plus Nasha, their 2 brands, they have announced a 21.6% increase over 2 years. There is Radio One, which has announced depressing results, and over 2 years, their business has degrown by 22.0%, which is minus 22.0%. Radio City has announced its results, and their numbers over 2 years are minus 0.8%, approximately minus 1%. And it is our estimate from market sources that BIG FM may have degrown by about 15% approximately, this is an estimate, over the last 2 years.

What is happening in the radio business is that there are a couple of strong players emerging in the market, and one of them, of course, is Radio Mirchi. And to repeat, we grew by 23.3% on our core radio business over 2 years.

Now let me come to the solutions business. As I mentioned earlier, the solutions business grew by 42.4% this year in quarter 1. Last year, it was already on a high base. So last year, solutions business had grown at 14.0%. So this is the thing that is very heartening for Mirchi that this solutions business, which we have been cultivating for the last decade and very emphatically for the last 5 years, has now achieved a certain momentum of its own. And I expect this momentum to continue into future. To repeat, in quarter 1 last year, the solutions business grew by 14%, and in the quarter 1 this year, it has further grown by 42.4%. So it's a very strong performance. So this is the first cut I was offering on the 10% operating revenue growth: one was the radio; and two, by solutions.

Now let me offer you the same operating growth cut by the different types of radio stations we have. So we have the 35 core radio stations or the heritage stations. The total revenue growth, and when I say total revenue growth, I'm now talking radio plus solutions, because I'm giving you cuts by the heritage of the station, 35 stations have reported a growth of 6.6%. Batch 1 stations have reported a growth of 5.7%. And batch 2 stations, which are new, don't have a base of last year's. So instead of reporting a percentage number, I will just mention that they have done an additional INR 4.05 crores. All of this put together adds up to the 10% growth on an operating level that I mentioned to you much earlier.

In terms of eR, the broad story is that we have managed to hold up rights. It is plus 0.7% on our heritage stations. And on our batch 1 stations, on a like-for-like basis, it is about plus 5%. But nothing -- no basic story to talk about over here. In the industry, we believe the pricing has come under serious pressure, and we know that many broadcasters have lost pricing by anywhere between 5% and 20% during quarter 1 compared to last year. But being a strong brand, Mirchi has been able to hold its pricing.

In terms of capacity utilizations, we lost capacity utilizations in the top 8 markets because the biggest brunt of the economic slowdown has been felt in the top 8 markets. But in the other markets, there has been a growth in capacity utilization in batch 1 stations, in batch 2 stations, et cetera.

In terms of EBITDA, our reported EBITDA is of course positive, but that Subbu will talk to you about the impact of the Section 116 of IND AS. But on an underlying basis, our EBITDA has fallen by 13.8% compared to last year. We reported INR 24.4 crores this year. And it is not very difficult to understand why the EBITDA has fallen. The EBITDA has fallen, because the core radio has grown by only 1.4%, but the costs in the business have grown by about 5.5%. So that is the reason why the EBITDA at the company level has fallen.

However, the good news is that the gross margin of the solutions business is actually pretty strong at 39%. So the solutions business has done reasonably well. At a company level, radio EBITDA is about 19% and the non-radio EBITDA, which is solutions and other operating incomes put together, is 18.5%. So now the 2 halves have more or less balanced in terms of EBITDA margins overall. And we expect that this will improve going forward, of course. First quarter, it tends to be relatively smaller. Overall EBITDA margin last year, if you remember, was 22.5%.

In terms of categories which have performed well, for the radio business, surprisingly, the auto category has done very well. But come to think about, it is not so surprising, because auto sector has been under a lot of stress in the country and dealerships are interested in liquidating stocks, and there is no better medium than radio to do consumer promotions and liquidation exercises especially at a city level. And we expect that the buoyancy in the auto sector for the radio business will continue in the quarters to come this financial year.

Interestingly, the radio industry did very well in organized retail as well, again, I think because of a lot of consumer offers that were being offered. You walk into any store today, you find offers everywhere. Many of these offers get advertised and which is why the radio industry has done well. But overall, most other categories have done poorly. IT has done -- IT, which is basically the payment apps, have done well on television, but they have been bad on radio and print everywhere. Education has generally been bad. Government and political overall for the radio industry has been pretty much flat, even though political was strong in April, May. But then government advertising got cut because of the code of conduct. So overall, government and political is a no net gain business for radio. And similarly, media and entertainment has been slow, because not too many show launches happened, and also the new tariff order has impacted advertising spends on core programming of television channels.

But the good news is several that first is on the radio side. Whatever worries people had that digital was impacting radio has been proven to be unfounded. The latest IRS, which came out 1.5 months back, has shown that in the last about 1 year or so, 1 year and a few months or so compared to the previous IRS, weekly radio listenership is up 8.3%, which is remarkable, because 8.3% has happened in the last 12 to 15 months of data really. Of course, a lot of it is to do with the expansion of the radio network, but that's all right, because overall, we have been big players in the expansion as well. So we have benefited as well.

If you look at Radio Mirchi, our weekly listenership number was 32.1 million, which is an expansion of 14%. This is what I explained to you that Radio Mirchi's participation and expansion has been extensive. And therefore, our listenership has grown by 14% in about 15 months' time compared to the previous IRS. As I mentioned, overall industry has grown by 8%, which means Mirchi's listenership growth is almost 75% higher than the industry's growth.

If I take the top 8 markets where there has not been much expansion in number of stations, even there, in about 15%, Radio Mirchi's listenership has increased by 7%. 7%, remember, in just a year and a few months. I think that's really strong radio growth. I think radio remains a very strong medium in the country, and we are bullish that it will continue to remain so. One of the reasons why radio has grown so strongly is that radio consumption in cars has gone up very strongly by 28% in the last 1 year and 3 months. When we see floods happening, when we see traffic jams happening, when we see the number of roads being constructed and the cities being so very less, trust me, we feel very happy in one way, because it is a big boost for the radio business.

Okay. But the exciting part about Radio Mirchi is not just the radio business. The radio business, of course, is -- we are the strongest in the country. But we have developed a very strong solutions business, as I mentioned. On the programming side, we are already a very big player on the digital side. While my Radio Mirchi listenership is approximately 32 million on a weekly basis, we believe on a monthly basis, it might be 45 million people. On YouTube alone, we get more than 16 million people on a monthly basis. That's remarkable, because YouTube viewership does not overlap very much with FM radio listenership, which means my Mirchi footprint is more than 100 million people today. While it had been mostly a radio player, then I would have been only 45 million-odd listenership.

So digital has helped us double our footprint. We are going out to clients with a whole different outlook now. We tell our clients that we can give you a solution, which includes radio, which includes YouTube, which includes original content, which includes podcast, which can include live events, which can include concerts, which can include activations. There are so many things that we do and all of this we bring to the client, and actually clients like solutions very much. And that is the reason that our solutions business has been growing.

Just some more data before I close. YouTube, we did 725 million views last year. That's a remarkable number. This year, we will definitely cross 1 billion views on YouTube. Just our subscribers on our various channels are upwards of 6.5 million subscribers. Now these are no mean numbers. And these numbers are slated to grow in a very big way this year as well. You will realize that we're putting a huge trust on YouTube, because YouTube continues to be the biggest video platform and it is starting to monetize and it is starting to give us -- it provides us a very good platform for our original content business, which is original video content business.

Now very recently in original content, we sold 3 shows to MX Player. We have, in that sense, become like a film -- like a content producer, because we are making video content and retaining the IPs and giving limited IPs for limited duration to platforms like MX Player at a profit. This is a very exciting part of our business, and I'd be happy to talk about it if you have interest in that area.

So I'd like to end with that and basically by summarizing that in line with our long-term strategy, we have 2 businesses, which are growing strongly and independently. One is the radio business, and like I mentioned, we expect it to grow strongly in the years to come. And then is the solutions business, which is entirely a very strong strength of ours. We dominate that in the radio business. We are also dominating it amongst other businesses. Not too many other businesses in print or television do solutions, for instance. So we are emerging as a larger player. And the best part about solutions business, of course, is that it unshackles the boundaries of the radio business. The 4%, 5% constraint that radio impose, that constraint does not apply to ENIL longer -- any longer.

With that, I would like to open the floor up and take your questions. And we have Subbu here to answer the questions as well.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is from the line of Ashish Kumar from Infinity Alternatives.

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Ashish Kumar;Infinity Alternatives;Analyst, [2]

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A couple of questions. One is that on the EBITDA margins for the radio business, they seem to be in the mid-20s. And some of our -- even for the mature stations, some of our competitors have reported, at least for the mature stations, EBITDA margins in excess of 35%. Any reason -- and even we have done that in the past. So any reason why we are seeing this and what can be the trajectory going forward?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [3]

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Our reported EBITDA -- Ashish, our reported EBITDA margin for the quarter for the heritage stations, the 35 stations that we migrated, was 32% for the quarter.

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Ashish Kumar;Infinity Alternatives;Analyst, [4]

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Yes, sorry, 32%. But some of the competition has reported in excess of 40%.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [5]

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Yes. But those might be full year numbers, because this number is on the back of a degrowth in the calendar quarter. So we will have to see -- you will certainly see an uptick in the margins. I mean there is a growth in the revenue from the top 8 and the migrated 35 stations. I don't think anybody could have had 40% margin in this quarter, because all the legacy stations or the migrated stations have -- it was degrowth for everybody during the quarter.

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Ashish Kumar;Infinity Alternatives;Analyst, [6]

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Okay. We can connect offline on that one, because one of the competitors has done that. Coming back to the second question in terms of the use of cash. We have INR 150 crores of cash. And clearly, we are moving into a strong free cash flow generation. Any thoughts around that? Because in the last quarter, we saw that the Board was going to look at utilization of cash in the meeting in this quarter. So any thoughts around that? Because eventually, this is a business, which is required for the free cash flow generation.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [7]

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Yes. So as we said last time also, there is one large acquisition that is pending, which you all are aware about, so that is still not complete. The money that is kept aside is only for that. Other than that, we don't see any major investment. Our maintenance CapEx would be in the region of about INR 10 crores. We may additionally do INR 10 crores to INR 20 crores on other investments, including international. So I don't see the total crossing INR 25 crores in any year. So once this acquisition is complete, I think we -- the Board will relook at the policy and [count the] distribution. There are no plans to utilize this cash other than for the stated purposes.

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Ashish Kumar;Infinity Alternatives;Analyst, [8]

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But in terms of the -- that acquisition has been pending for a long time, so -- and you can always -- as a group, given the sponsorship you have access to short-term liquidity in terms of even if you were to borrow for 3, 6 months is not a problem. So wouldn't it be more prudent for you to start distributing the cash already? And as and when that acquisition happens, you can probably kind of...

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [9]

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So the government is looking at the proposal. So we will hear from them soon. But if we don't hear anything in the next 3 to 4 months, we'll come back on the dividend policy. We still have 6 more months before we announce our annual results, right? So we'll look at it. This question of now or whether we do it in January, we'll come back to you after the development.

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Ashish Kumar;Infinity Alternatives;Analyst, [10]

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Okay. We would appreciate it, because if there's a very stronger use in terms of distribution of cash to the shareholders, given the fact that the business growth in terms of revenues has been muted now for some period of time. I understand the issues in relation to economic conditions, but -- and the efforts being put by the team in terms of developing the non-radio business, but would appreciate that.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [11]

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Ashish, if I [got] again, I don't know if you [got it] when I opened my remarks. But in 2 years, just to reiterate, Radio Mirchi's radio business has grown 23% and overall operating business has grown 32%. So I would not call it muted results. The EBITDA margin performance has been less because of the investments we have made in Phase 3. And like Subbu said, the EBITDA margin on mature stations is 32%. It is definitely in line with what our expectations were. But Ashish, we'll be happy to take more questions if you can join the queue later, because I think they're restricted to 1 or 2 questions only.

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Operator [12]

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(Operator Instructions) We have the next question from the line of Manoj Dua from Geometric Securities.

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Manoj Dua, Geometric Securities And Advisory Private Limited - CEO [13]

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My first question is regarding the trend that listenership is increasing in cars. In the Music Broadcast, they told that car listenership is around 6% of the total listenership. Can you tell -- throw color more on that?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [14]

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No. The listenership in cars has definitely gone up much more. I don't have the number readily right now but the -- how much?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [15]

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21 million to 28 million.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [16]

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No. Total -- as a percentage of total? Yes, it's approximately 27%. You see, 28 million is the car listenership on a total base of 116-odd million. So it's approximately about 25% to 26% is the listenership amongst cars. And like I mentioned, this has grown very rapidly. But let me give you a little more dimension on this. If you look at the bigger cities and especially cities in the north, like for instance, if you look at Delhi or Gurgaon or Noida, these are reported separately, the listenership of radio in cars is even more than the listenership of radio on mobile phones. Earlier, mobile phones were the main place for listening to radio. Today, in some of these cities, cars have become the main place to listen to radio. And I think we're very excited of this, because 2 things: one is the profile is very, very rich of these people; and two is that they are spending long time listening to radio. And that's why we are very excited about this.

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Manoj Dua, Geometric Securities And Advisory Private Limited - CEO [17]

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Okay. Okay. I was confused, because in -- that competitor said that total listenership is 6% and you are telling, I think, last con call also, more than 20%, but okay. Second question is the same question as the first participant. We would expect that any dividend policy to come sooner, because as [you know that]...

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [18]

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That question has been asked and answered, yes, we will do that. Yes, thank you.

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Operator [19]

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Our next question is from the line of [Nikhil Vaishnav] of VD Investments.

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Unidentified Analyst, [20]

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Sir, my first question is like as far as batch 2 stations are set up, so how much revenue and capacity utilization can we expect for next 2 years from current? And can you tell me about the batch 1 stations also for the same?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [21]

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I think in the first quarter, our batch 1 stations, if you take like-to-like basis, the -- or other 15 stations, which have been around out of 17 stations, our capacity utilization for radio alone was 33%, approximately 1/3, of our total capacity available. And in batch 2 stations, if I remember it, it's about 16% in first quarter.

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Unidentified Analyst, [22]

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So how much we can see the growth -- how much growth we can see in the next 2 years in terms of revenue and capacity utilization?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [23]

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I think in terms of batch 1 stations, assuming that the economy starts taking off in another few months, I would expect that the capacity utilization on batch 1 stations should climb upwards of 75%. And I would expect that in batch 2 stations, the capacity utilization should climb upwards of 60%, 65%. That would be what my expectation would be.

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Unidentified Analyst, [24]

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In terms of revenue, sir?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [25]

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In terms of revenue, you should assume pretty much a small growth in eR. I would assume anywhere between 0% and a 5% increase in eR on a yearly basis. And like I mentioned, the capacity utilization will go from 33% to maybe about 75% in batch 1 stations and from 16 stations to maybe about 50%, 60% in batch 2 stations.

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Unidentified Analyst, [26]

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Okay. And the second question is like in this quarter, the interest cost has increased to INR 4 crores. What is the reason? And what is our current debt?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [27]

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No we don't have any borrowing. You would be aware that a new standard was introduced during the quarter, which requires all leases to be capitalized and the lease liability to be reflected in the books. So it is the effect of that standard. We don't have any borrowing. Our borrowings are 0.

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Operator [28]

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Our next question is from the line of [Manish Gandhi], an individual investor.

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Unidentified Participant, [29]

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So first question is, Prashant, what is our share in the radio? So in 2017, '18, we had lost some market share, and of course, last year we gained and this first quarter also. So are we back to what we had in 2015 or 2016?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [30]

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Yes. So we are now back to where we were in -- 2 years back. And in the markets in which Radio Mirchi operates, I think which are about 73 stations in 63 markets, I think our market share is 27%, 28%?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [31]

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28.7%.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [32]

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28.7%. Approximately 29% is our market share. And it used to be lesser 2 years back, but because of new stations coming in and all that, our market share is approximately 29%.

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Unidentified Participant, [33]

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Okay. And as you mentioned about 3 shows, so one is Kalyanam part 2 and 2 others. So we are going to stream on MX Player and also our radio station Gaana. So when can we have our digital and even radio on other platforms other than the group company and even some digital, say, Amazon and Netflix? Are we planning or do you have any talks about it?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [34]

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Okay. So a good question. In fact, our online radio stations, they are already talking to another platform. Actually, we -- here is the real honest answer. We should have launched on another platform about a year or so back, but that platform went into a bit of internal issues. And so our launch on that platform got delayed. Now we're hoping -- now the talks have restarted. They're very keen on hosting 3 online radio stations from Mirchi. They're talking to them about it, and that should happen hopefully soon.

With respect to the original content, we don't have any particular preference for in-house platforms necessarily. So MX Player happened to be the best offer we got and we took that. But we're talking to other platforms, and there are several platforms who are interested in talking not only within India, but for some content internationally as well. Because remember, here it's a question what rights you give to the OTT platform, right? So like in the MX Player deal, they had exclusive rights for the India territory for a period of time. But internationally, they don't have exclusive rights. So we can look for partners internationally, additional partners. So we are in the process of doing that. But like I mentioned, we are also talking to all the other partners, but some of them may not be interested in the format that we do. We typically do short-format episodes, and many of these platforms are not interested in short-format episodes. So we have a handful of them with whom we are talking.

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Unidentified Participant, [35]

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Yes. Because eventually, when you want to take this business from INR 10 crores to INR 75 crores, like you mentioned in annual report, so you will require many platforms?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [36]

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Yes. And that number that I mentioned, [Manish], was on digital revenues. Original component -- original content is a part of that digital revenue. The very exciting part in digital, of course, is what we call multimedia solutions, where we offer digital solutions to our clients. So today, when my sales team goes to meet a client, the sales team does not say how much radio can I sell to you? The sales team says, "Tell me your marketing challenge, and I'll come back to you with a solution," and that solution includes digital, it may include live events on ground, it may include a concert, it may include activation, it may include multiple other things that we have in the solutions portfolio. So digital is getting a big boost even from the whole solutions selling business.

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Unidentified Participant, [37]

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Great. Can I squeeze in one, Prashant?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [38]

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Yes. Okay. Sure, sure, [Manish].

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Unidentified Participant, [39]

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Yes. So you mentioned about the podcast and we have done 50 podcasts last year. And you have mentioned in annual report that China is $1 billion and podcasts. So can you just share your thoughts on podcast? I know it's too early, but...

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [40]

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Yes. It's a really early stage in India right now, because one crucial thing about India is that we are a very video country. Even music in our country is consumed on video actually, as you know, right? YouTube is the biggest music platform. It is not any of the music OTT platform. So that is that. Also globally, a lot of the podcast listening happens while traveling, either while you're walking on the streets or you're sitting in a train. In India, many of these things, especially train journeys and all that have converted to video. So podcast is a nascent business in India. It -- people have hopes on it, and we are there early in the game. But right now, it's not a very big business opportunity.

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Unidentified Participant, [41]

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Congratulations on solutions business.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [42]

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Thank you, [Manish]. Thank you very much.

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Operator [43]

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Our next question is from the line of Jinesh Joshi from Prabhudas Lilladher.

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Jinesh Joshi, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [44]

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Am I audible now?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [45]

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Yes.

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Jinesh Joshi, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [46]

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Yes. So a couple of questions. First is on the advertising front. Now with the local advertisers being more sensitive to the slowdown, are you witnessing any delay in ad spends from their side? And also, what is the current national and local mix, if you can share?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [47]

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On the contrary, we've seen that retail advertising has actually been stronger, and it always happens actually, because the retail business of radio becomes stronger, because more consumer offers are advertised, and therefore, radio picks up good growth over there. At this time, I think if I remember right, 50%-50% was our mix between national clients and retail clients, which is 5% more on the retail side. It was 55% corporate last time. It is 50% corporate this time.

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Jinesh Joshi, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [48]

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Okay. And secondly, if my understanding is correct, the majority of our solutions business is concentrated in the top 8 to 12 markets. So if the slowdown concerns aggravate and radio volumes continue to dwindle, do we kind of plan to penetrate deeper with our nonequity offerings in Tier 2 and Tier 3 markets? And also, if you can help me understand whether these markets have appetite for such kind of offerings?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [49]

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That's a really good question, Jinesh, and that allows me to tell you about our strategy a little more. You are very right that the top 8 or top 12 markets are where the solutions business has a much more ready market, because the clients are bigger, the agencies are more open-minded, the opportunities to do solutions is a lot more. And clearly, our thrust is in the top 12 markets. So that is a point well taken. But remember, when you go to the growth markets, so the smaller markets, there is a different opportunity which exists, which also is in the solutions business that we do. And that different opportunity is about doing activations in those markets.

Now let me give you an example. In many, many markets across the country, we organize what is known as the shopping festival, right? Now a shopping festival basically means that a retailer can enter the shopping festival with a relatively small amount of spend and can also convert that spend into generating revenues out of that shopping festival. So it's not really a big investment on advertising or anything of that type. It ends up becoming a transaction and the brand building and the footfall increase happens on the back of a shopping festival. Now this is very popular. Like this, we have several different IPs that we are creating in the activation space, we call it, in the growth markets. And that is, again, a big growth area for us. So it's not the conventional multimedia solutions like in the top 12 markets, it is actually more activations in the growth markets.

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Jinesh Joshi, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [50]

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Okay. So in nutshell, the opportunity also exists in these markets if the need be and we can penetrate deeper into these geographies as well?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [51]

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That is not only if need be. That is a big strategy of the company. In fact, a big organizational structuring exercise is being undertaken where we are able to devote more senior management focus to our growth markets with the intention of tapping into a lot of opportunities which exist beyond radio. So that's something which is a conscious strategic effort of the company.

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Jinesh Joshi, Prabhudas Lilladher Pvt Ltd., Research Division - Research Analyst [52]

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Okay. Sir, one last question. I just want to know what is the annual cost line for the non-FCT business.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [53]

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Jinesh, it was INR 24 crores last year. So this year, I presume you're talking about the cost items below [DVC]. So it was INR 24 crores last year. This year, I expect it to be around INR 32 crores.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [54]

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Did you mean overall whatever solutions business costs are [DVCs]?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [55]

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Below [DVC]. He is talking about below -- fixed cost below DVC . So the fixed cost below DVC , because DVC gets accounted in gross margin, as you are aware. The fixed cost below DVC was -- last year was about INR 24 crores. We should be about INR 32 crores, INR 33 crores this year.

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Operator [56]

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(Operator Instructions) We'll take our next question from the line of Pavneet Singh of Skyline Equity.

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Pavneet Singh;Skyline Equity;Analyst, [57]

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My question is regarding the kind of revenue expectations over the next few quarters seeing the current slowdown. Presuming there's like-to-like almost negligible or zilch growth, what kind of EBITDA margins do we see going forward in the FCT and as well as non-FCT business? And the second question is regarding the government ads. After this [segment] of June and July, do you feel that the government ad has come on track as it was last year? And what kind of base did we have last year like-to-like, which is when you compare something?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [58]

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Yes, of course. So what was the first question?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [59]

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On EBITDA margin.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [60]

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Yes. So right. Your first question about how the rest of the year looks like in terms of EBITDA margins, so I answered earlier that the -- sorry, let me answer that. So basically on the core radio product, the headwinds that are there will continue. The current situation trend is pretty bad. June was very bad. April, May were very good because of political advertising. June was bad. July onwards also, we are seeing that the slowdown is continuing. Advertisers are being very conservative in their spends right now. And that is understandable, because big advertisers have spent a lot on cricket and also slowed down a bit.

But generally, the word we're getting from advertisers is that in the second half, the advertising spend should pick up. Everybody is expecting for the business to pick up as well. So if that happens, then overall at the end of the year, our EBITDA projections will remain. And also remember what Subbu mentioned earlier, the solutions business is becoming profitable every -- more profitable every year. And therefore, there will be a build-up of EBITDA happening from the solutions side as well. So at this point in time, when we look at our annual goal for EBITDA, we are on track, even though the composition of that EBITDA may come from different businesses.

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Pavneet Singh;Skyline Equity;Analyst, [61]

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If I recall correctly, Subbu last time mentioned there will be an EBITDA growth of close to like 12% to 15%.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [62]

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Yes. So that's the number, I think, we would still maintain. We will certainly be better than that unless the second half turns out to be much worse than what everybody is expecting it to be.

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Pavneet Singh;Skyline Equity;Analyst, [63]

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Do you have some premonitions regarding that?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [64]

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No, no, no. I'm just saying that, because on a quarter-on-quarter, it's always very difficult to forecast, but not that we have any worries. Based on the current forecast, we expect certainly those numbers to be better.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [65]

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See, a lot of the...

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Pavneet Singh;Skyline Equity;Analyst, [66]

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When it comes to group solutions altogether, be it FCT or non-FCT, as just Prashant mentioned a while back, the number of queries might have increased, as you see that the budgets are pretty late in like the national advertiser as well as the local ones, they're pretty late in discussing their budgets with you. So as the queries increase, are you seeing more activity by our salespeople on the ground? And second question regarding the government ads.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [67]

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Okay. Yes, sorry. So let me first answer your -- this first part again. The number of inquiries for core media has reduced, right? However, the number of inquiries for solutions has increased. Like I was mentioning, advertise -- see, think of it as, advertisers are not interested in buying secondages or radio or TV or square centimeters on print. That doesn't serve their purpose. Their objective is not to buy media. Their objective is to get desired traction in the market. So they're demanding solutions, and there is a huge market for solutions. So inquiries for solutions has gone up. Inquiries for just plain vanilla advertising, whether it is print or outer form or radio or television, that is the one that is under pressure because of the slowdown.

Actually because of the slowdown, the solution business is even more in demand, because everybody wants solutions to increase the throughput of their own sales. Now with respect to your government advertising question, the government advertising should have started in June after the government is formed. But June and July, the government advertising has been very slow. They haven't released budgets yet. But again, I'm sure that they will start spending, because they have a lot of public programs to announce.

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Pavneet Singh;Skyline Equity;Analyst, [68]

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So typically, startling like this quarter, what kind of cash generation can we see year-on-year basis for the next -- like next 2 or 3 years or 4 years maybe?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [69]

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So last year, we had an operating cash flow of more than INR 100 crores, about INR 120 crores if I recall it right. I think we should be at that run rate. First quarter is typically very low, because there are some spends that we have to do in the first quarter to -- which are employee payments and also the payments that we need to do to the governments, which is all advance. But these tend to sort of pick up. That's the sort of trend that you'd have noticed in all the years. So to come back to your number, it will be upwards of INR 100 crores.

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Operator [70]

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(Operator Instructions) Our next question is from the line of Prateek Barsagade from Edelweiss.

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [71]

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It's 2 questions. The first question is on the overall advertising environment. You pointed out that overall ad environment is currently experiencing a slowdown. But in the rest of the year, do you see any trigger or do you have any plans to counter this kind of a slowdown through price hike or anything like that?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [72]

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Okay. Prateek, wait, let's take one question at a time. Yes, I mentioned earlier that there is general expectation that in season, the market will -- advertising market will lift. So that hope is there. But in terms of a trigger, I think the trigger has started to come. Basically, a lot of the advertising business depends on retail purchase of things like durables, automobile, personal loans, real estate, all of that, as you know, all of that was pretty badly dented because of the NBFC liquidity crisis. As things are gradually starting to lift over there and as lending in that sector is starting to happen, there is optimism that in a few months' time, that business will start to lift. Subbu, you want to add to that? Yes, that is what our expectation -- the trigger will be. And your second question?

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [73]

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Okay. And second question is regarding the licensing of the original content. So you mentioned that you've now partnered with MX Player. But in the future, do you also have plans to tie up with other OTTs? I also want to know about how the monetization, is it a fixed fee kind of a deal or a perk like kind of deal? Just wanted some...

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [74]

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Well absolutely, Prateek. We have, like I mentioned earlier, no preference for any particular OTT player. MX Player happened to make the best deals, and that is why we signed up with them. But we are talking to many others. And there is a, like I mentioned earlier, a fair degree of interest in buying content from us, because the reason is the following, that our original content shows have done exceedingly well in terms of performance. So we were having a chat with MX Player the other day, and they are so excited with the content that they are spending a whole lot of advertising monies on that content in cities like Pune and Mumbai and in cities like Chennai and others depending on -- and in Ahmedabad because of the languages over there. So they are very excited. And therefore, we believe that there is a big market for our content over there.

In terms of licensing, well, there are many models which exist over there. And remember, the main thing about the original content business is that the IP is ours and there are several rights, which emanate from this IP. For instance, there is India right and then there is global right. Now global right can be carved out into different geographies. Then there is a concept of period. So we can give the -- then there is exclusive rights, nonexclusive rights. Then there is period. You can give it for 3 months or 1 year or 3 years. So there are a lot of possible combinations over there. And basically, licensing as an option has opened up and it is an exciting period, because as you know, all these OTT players are hungry for content. And while OTT players connect with consumers, we connect with the OTT players. So that's a very strong business opportunity. And in addition to that, remember what is our older model, which is brands coming inside of our content, content integration of brands is also a business, which is growing. Clients are more interested in that. And so both the revenue streams exist.

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Prateek Barsagade, Edelweiss Securities Ltd., Research Division - Research Analyst [75]

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Yes. I understood. And just wondered -- so given the encouraging response, is it possible that maybe sometime in the near future, you will be producing content specifically for OTTs?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [76]

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Yes, we are producing content for OTTs, like I mentioned to you. And like -- the only thing is that we are not exclusively producing for OTT. We have both the revenue models, client integration as well as selling to OTT.

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Operator [77]

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Our next question is from the line of Sameer Pardikar of ICICI Securities.

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Bhupendra Tiwary, ICICIdirect.com, Research Division - Analyst of Telecom and Media [78]

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Yes. Sir, Bhupendra. First of all, some numbers from Subbu. If you can get the amount for the [RTU] assets and liability, if you can share with us, the number that will come in the balance sheet as on April if works for a...

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [79]

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Yes. So 31st of March. So basically, of all the -- there are 2 sets of assets that we had leases, that is one was office and the other was CTI. Both of them, we have now capitalized and to the newer standard. So that number for RoU for ENIL on a stand-alone basis is around INR 202 crores. And the lease liability on the -- in the stand-alone balance sheet is about INR 228 crores.

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Bhupendra Tiwary, ICICIdirect.com, Research Division - Analyst of Telecom and Media [80]

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That's great. And I presume the revenue breakup of radio and non-radio was around, say, 79-21 is what I -- I did the back calculation and got it. Am I close to that?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [81]

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Yes. It is about 72-28. Radio was 72 and...

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Bhupendra Tiwary, ICICIdirect.com, Research Division - Analyst of Telecom and Media [82]

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72-28, sorry. Got it.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [83]

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Yes. 72-28, yes.

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Bhupendra Tiwary, ICICIdirect.com, Research Division - Analyst of Telecom and Media [84]

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Okay. And just wanted, Prashant, to talk about this digital thing. I remember we were talking about that we have an ambition of growing this pie to up to 10% of the revenue over the next 2, 3 years. So how -- I mean what is the kind of revenue that we see over the next, I mean, near term that is? I understand 3 to 5 years, it might be big. But what is the kind of revenues we're seeing and what is the kind of cost that we intend to build into this kind of a business?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [85]

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We've seen very strong growth over here in the digital segment. And digital -- let me just explain what we mean by digital. There are 3, 4 things in digital, Bhupendra. One is, of course, original content, which I talked about some time back. Two is online radio. Online radio is also becoming very interesting, because now we are putting our FM radio streams also online. And soon, we will be taking out the ads and putting it online. So we can now feed in new ads. And that ecosystem has started to develop, courtesy of players like Hotstar on the video side. More advertisers are comfortable with listening to traditional linear formats, but on the online platform. So that ecosystem is opening up.

Then there is, of course, client radios that we do. But more exciting is digital solutions that we provide to clients, like I was mentioning earlier. So a lot of advertisers, for instance, who want to target media dark targets, are using us to do mobile phone-based content solutions for, let's say, UP or Bihar or something. So -- and here, we have a solid expertise. We have done this for the last 6, 7 years. We have worked with clients like AdWords and Asian Paints and we have worked with insurance companies. And we are now working with GSK. And so a lot of these clients were interested in the hinterland, are using digital solutions that we are creating. And these work very well, because this involves content, it involves technology, it involves personalities and influencers, and it involves putting it all together as a solution. So that's something that we are building on. So to answer your question specifically, we expect that the radio -- the digital business should grow very fast in probably between 50% and 100% every year for the next 2 or 3 years, for sure. And like I mentioned, over 5 years, we see -- we expect this INR 10 crore number that we have done to grow to INR 75 crores or thereabouts.

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Bhupendra Tiwary, ICICIdirect.com, Research Division - Analyst of Telecom and Media [86]

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Okay. And INR 10 crores is an annual number, right?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [87]

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INR 10 crores was the FY '19 number.

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Operator [88]

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(Operator Instructions) Our next question is from the line of Srinivas Seshadri from Mirabilis.

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Srinivas Seshadri;Mirabilis; Analyst, [89]

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Prashant, just following up on the previous question. Broadly on the digital side, how -- what kind of money would we have kind of spent last year to -- how do we kind of budgeted over a 2-, 3-year period?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [90]

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So let me just -- okay. So the biggest cost so far on the online business was the music royalty cost that accompanied the online radio streaming, right? And so basically -- like right now -- so we are working with our OTT partners and that's the issue that we are talking to them about and resolving. And that will take most of the cost out of our P&L, right? And therefore, it will reduce the -- it will take the digital business into profitability. That is the -- one thing I can't talk more specifics at this point in time, but maybe when we meet up one-on-one, we can chat about that in detail. That's one thing.

The other cost is the cost of production and all, which is really not that much, because on the digital video piece, the good news is that the cost of production is very much under -- is not very expensive, and these are very ordinary equipment and ordinary editing facilities. The cost of production is really in terms of manpower or human capital or creative capital, which fortunately we have an abundance of, and that is fully absorbed by the radio business. So we don't have incremental -- or we don't have high incremental creative cost on our digital business. So digital business, I expect it to be very profitable in the years to come.

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Srinivas Seshadri;Mirabilis; Analyst, [91]

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Okay. Okay. Sure. And then the second and final question was on the kind of measurement we get from IRS survey periodically and also the top 4 cities being surveyed separately on the diary basis. So basically, we haven't seen too much talks and movement on a larger kind of a survey like [embarking].

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [92]

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Srinivas, let me -- I understood the question. Let me respond to that. The IRS is going to be the main currency for the radio industry. There's a simple reason for that. The simple reason for that is that radio is available in more than 100 cities. There is no dedicated radio research possible in such a wide spectrum across the country. The only research, which happens across the country, is IRS. And therefore, that research is going to be the main research for the radio industry going forward. Also remember, IRS is not only a readership survey, IRS covers all media. Did you know that IRS also gives television penetration data, it gives digital penetration data, it gives radio penetration data and also covers hundred -- thousands of different brands and the return all that. So it what is called a 1-point or a one source -- it's called a single source research, and it is going to be the currency in the future. All the researches, which are done over 4 cities are so underfunded, they are so poor in their technology that we laugh at them, we don't even consider them to be important. So there is no talk, because IRS is doing the job very well right now.

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Srinivas Seshadri;Mirabilis; Analyst, [93]

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Okay. Prashant, can you give some context on what is the depth of the survey that IRS has done?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [94]

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IRS, as you know, does -- is a huge sample side. I think they do 3.2 lakh surveys across the country. It is a rolling sample. They go quarter-by-quarter. They give you results on the last 4 trailing quarters. So it's a very, very robust research. There are audit protocols, which have been established. They are conducted by large consultancy firms. There are design consultants who work on it. It is conducted by a neutral body called MRUC. So it's just a -- it's a terrific piece of research.

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Operator [95]

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Our next question is from the line of Yogesh Kirve from B&K Securities.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [96]

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So Prashant, did you -- in your opening remarks, you put the EBITDA margins in radio and non-radio business being around 19%, 19.5%?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [97]

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Yes. For this quarter, yes. For the radio business, it was about 19%. And the non-radio business, which includes other operating income, was also approximately about 18%, 19%, yes.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [98]

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Okay. So this is based on the numbers adjusting for the IND AS impact, right, because...

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [99]

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This is without IND AS. This is the underlying, underlying...

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [100]

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So basically, if you look at -- including IND AS, the margin would be better. It'll be boosted to 28%.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [101]

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Right. Right. And sir, going ahead, in the radio business, what sort of a cost increase should we look at, I mean, both the established as well as new stations? Is it going to be sort of a 5%, 6% sort of an increase or the -- are investments happening in the radio side as well?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [102]

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Yogesh, can you repeat your question? I...

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [103]

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I'll answer it. Okay. Yogesh, let me attempt answering that question. So there are costs, which are directly related to revenues, right, like in our solutions business. Those will follow the solutions revenues, but with improving margins going forward. So that is one cost. Then there are the overheads, which are there in the company, which would go at a slow pace, maybe 4% or 5% per annum. And then there are costs associated with the expanded radio business, batch 1 and batch 2. I think batch 1 is now fully...

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [104]

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Yes, it's steady state.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [105]

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It's steady-state mode. And batch 2 will -- there is an annualization impact of batch 2 stations. But once that happens, the next year, it should be again back to normal 5%, 7% -- 5%, 6% growth.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [106]

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Right. Right. Finally, just a bookkeeping. On this -- the IND AS impact, so that should be -- going ahead, it should be flat, right?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [107]

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Yes. So the interest -- there are 3 things there. One is the rental expenditure. That will be more or less flat, except when there is an addition to a lease or a termination of lease. Interest costs should come down, because it's a reducing balance, right? Third is depreciation should be flat.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [108]

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And after 4 quarters, the base effect will kick in.

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Yogesh Kirve, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [109]

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And when we talked about the revenue -- or the EBITDA growth of the 12% to 15% guidance, so this is -- we are referring to on an underlying basis, right?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [110]

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Yes. Underlying, yes. So not just -- basically, if you look at post-IND AS, we have both the number -- the guidance is based on underlying, yes.

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Operator [111]

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Ladies and gentlemen, we have time for one last question now. It's from the line of Deep Shah from Ambit Capital.

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Unidentified Analyst, [112]

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This is [Rahul] here. I just wanted an update on the U.S. business, including the investment made there hence?

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [113]

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We hardly have any investment in the U.S. business. It should be in the region of, at best, INR 3.5 crores. The results of operations -- we have a loss there because of -- again, there is some IND AS impact. And also, while we launched this station in January -- late January, we have also incurred some extra costs on account of visas and we've some delays in updating visa approvals. So that has led to some cost. But I think they are more in the nature of preliminary pre-operating expense.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [114]

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And just to give an update on our operations there, if you remember, we had launched with frequency New York City. Now I think about 1.5 months back, we've added an FM -- 1 month back, we have added an FM frequency in New Jersey Proper, which is where the biggest congregation of South Asian and Indians in particular is. So now we are covering the tristate area really in a deep way, and we see a lot of unseen revenues in the months to come.

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Narayanan Subramanian, Entertainment Network (India) Limited - Executive Director & Group CFO [115]

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And also in the U.S. operations, you -- the first year will be a lot about the marketing investment, developing the listenership there, building clients. So we don't expect it to be EBITDA profitable in the first year. We've guided earlier also when we launched the stations, we expect it to become -- achieve breakeven in about 12 to 15 months.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [116]

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Okay. Imba, we can maybe take one more call, because we have 5 more minutes.

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Operator [117]

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Okay. Sir, in that case, we'll move to the next question. It's from the line of [Rohit Verma] from RV Investments. We'll take the next question from Rohit Dokania of IDFC.

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Rohit Dokania, IDFC Securities Limited, Research Division - SVP of Research [118]

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I just had sort of one question. Can you talk about what is the competitive advantage that we have in the solutions business? And also who are the key competitors out there? I know it's pretty fragmented, but if you can sort of name a few.

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [119]

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In a way we envisage the solutions business, there is no definitive entity which exists, okay? But everybody is making small efforts at it. So let me tell you who the players are. For instance, if you take the television side of the business, then some of the financial channels, stock market, the CNBC, the [FOX] of the world do a certain amount of live activation kind of business, right? If you take GECs and other entertainment channels, they do nothing at all. If you take newspaper groups, then some of them like my parent company, Times of India, does a fair amount of IPs. But again, that's purely mostly live entertainment -- or it's mostly activation, and it's fairly limited in that sense. If you look at event companies, they don't do anything, because they just produce events for others. They don't build any IPs.

So really if you look at the landscape -- then there are digital companies, which do mostly digital work. So if you look at the landscape, and that is what the opportunity really is, there is nobody who actually goes to meet a client and says, "Tell me your problem, and I will get you the right mix." Now remember, this is also not the job of a creative agency, because a creative ad agency creates the brand positioning and the brand concept, right? But typically, they don't execute, they are not good in execution. They don't execute. So what happens is the client has creative idea from the agency, but it has to then go about identifying individual partners and event company here, a print company there or something there, which does -- which actually fructifies the larger creative strategy. That's where we step in. We work hand-in-hand with the creative agency, and we extend the creative idea down the line. And we help the client achieve brand reach across the country, and also of course, do stuff, which gets that tail moving. There is nobody who does that in a big way in this -- in the country. And on the digital side in particular, there is probably nobody at all. I was talking about media dark markets. And the combination of technology and content, I don't think that there's anybody who does it at all.

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Rohit Dokania, IDFC Securities Limited, Research Division - SVP of Research [120]

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Okay. And on the competitive advantage, would it be the fact that sort of you cut across -- as you said, it's not only restricted to radio, you can use any medium?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [121]

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Well, here are the competitive advantages? First and foremost, this is a very difficult business to do. It is a tough business on ground. It's very difficult. Creating digital ideas is very difficult. You need to hire a lot of people. They are costly. It's difficult to retain them. And it is very difficult to lead them. Fortunately, for us, because we are radio and we have 350 people already fully absorbed in radio working for us, so we're able to leverage that strength in our solutions business. That's one.

The second thing is that there are -- there is a huge operating advantage that comes in because of the fact that we are present in 63 cities. And a lot of these ideas that need to be executed -- see, a client sitting in Delhi or Bombay can handle Delhi or Bombay very easily. But what about Jodhpur and what about Kolhapur and what about Shillong? It becomes very difficult for them to find solutions partners in those markets. So whether it's activations or concerts or whatever, that network of ours really helps us in a very big way.

Third is very important is that we have a whole lot of local celebrities. If you remember, Radio Mirchi does not have any national celebrity, with the exception of maybe 1 or 2 RJs. But otherwise, we have a -- but we have a lot of local celebrities. We have the best RJ in Nashik. We have the best RJ in Kolhapur. We have the best radio jockeys in Ahmedabad. So we have a lot of regional celebrities. These are big influencers of social media. And that is something that we can build into our solutions business. So the -- and then, of course, the other thing is that the whole execution and all requires a lot of skills. And over the last 10 years, we have kind of mastered that game, cost negotiation, the execution, finding the partners on the ground, learning the technology piece. These are all things that we have learned over the last 10 years, which is the biggest competitive advantage.

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Rohit Dokania, IDFC Securities Limited, Research Division - SVP of Research [122]

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So just to add to that -- so scale -- your scale would also be a competitive advantage in that sense?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [123]

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Yes, exactly. Like I said, 63 cities, that is a big advantage. Thank you, Rohit. And Imba, can we now call the conference call to a close?

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Operator [124]

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Sure, sir. Do you want to add any closing comments?

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Prashant Babulal Panday, Entertainment Network (India) Limited - CEO, MD & Director [125]

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No, that's it. If we haven't answered any questions, please feel to -- free to contact us. The email ID is there in the investor presentation, and we'll be happy to take your call. Thank you.

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Operator [126]

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Thank you. Ladies and gentlemen, with that, we conclude this conference for Entertainment Network (India) Limited. Thank you for joining us, and you may now disconnect your lines.