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Edited Transcript of HTMEDIA.NSE earnings conference call or presentation 23-Jul-19 11:00am GMT

Q1 2020 HT Media Ltd Earnings Call

Jul 26, 2019 (Thomson StreetEvents) -- Edited Transcript of HT Media Ltd earnings conference call or presentation Tuesday, July 23, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anna Abraham

Hindustan Media Ventures Limited - Head of IR

* Piyush Gupta

HT Media Limited - Group CFO

* Rajeev Beotra

Hindustan Media Ventures Limited - CEO

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Conference Call Participants

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* Aasim Bharde

IDFC Securities Limited, Research Division - Research Analyst

* Mahantesh Marilinga

Finquest Securities Private Limited, Research Division - Senior Research Analyst

* Neeta Khilnani

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 the HT Media and Hindustan Media Ventures Limited Q1 FY 2020 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Ms. Anna Abraham, Head of Investor Relations. Thank you. And over to you, ma'am.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [2]

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Thank you, Vel. Hello, everyone, and thank you for joining our earnings webcast and conference call for first quarter of financial year 2019-'20. Joining me today is Mr. Piyush Gupta, our Group CFO; Mr. Rajeev Beotra, CEO of Hindustan Media Ventures Limited; Mr. Sandeep Gulati, CFO of Hindustan Media Ventures Limited; Mr. Pervez Bajan, Group Controller and my colleagues from the Investor Relations team.

You would have gone through the financial results of Hindustan Media Ventures Limited and HT Media Limited. During the course of the call, we will take you through the highlights of the results and answer all the queries you would have on the same. Our remarks today will track with the presentation on webcast, which is also available on the Investor Relations section of our website.

Moving on to Slide 2, I would like to draw your attention to the disclaimer regarding forward-looking statements. I am now moving on to Slide 3, which gives a table of content and the matters that we are hoping to cover during the course of this call. After our remarks, the call will open for questions.

Moving on to Slide 4. This gives our Chairperson's message on the results for the year, and I would like to spend a minute to read it out. The results of the Indian Readership Survey, quarter 1 2019, have reinforced the leading position of Hindustan Times, Hindustan and Mint in their respective markets. Advertising revenue for the Print business continues to be under stress with a higher impact on our English papers. However, the company saw a positive impact due to the softening of newsprint prices, which led to growth in operating profits and improvement in profitability.

The Radio business continues to do well with good growth in the top line. It should report stronger numbers once synergies with the newly acquired business kicks in. The outlook for advertising revenue for the next few quarters is dependent on a resurgence in the economy and growth in corporate earnings. With the likelihood of revenue pressure continuing in the short term, our focus remains on costs, operating efficiencies and new initiatives to manage the challenging environment.

And I'm now moving to Slide 5, and I would like to hand over the call to Mr. Piyush Gupta.

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Piyush Gupta, HT Media Limited - Group CFO [3]

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Thank you, Anna, and good afternoon, everyone. So just going through the highlights of the performance. I'm on Slide #6. As you've already picked up our consolidated total revenue for the first quarter, came in at INR 588 crores, which is a 3% growth versus last year. EBITDA for the same period is at INR 89 crores, which is 42% higher, with a margin improvement of about 4 percentage points.

PAT for the first quarter has come at INR 28 crores versus INR 5 crores in the same period.

IRS information, which my colleague has already touched upon, but let me just put a few bullet points, as you can see on the webcast. Hindustan Times continues to be the #1 newspaper for the 16th time in a row in Delhi and NCR. And it is also #1 newspaper in Delhi, Delhi NCR, Mumbai, Punjab, including Chandigarh if you look at it from that perspective. And so far as Hindustan is concerned, it's the second largest newspaper in India with a total readership of 5.47 crores. And it is the #1 newspaper in Bihar, Uttarkhand and #2 in Uttar Pradesh and Jharkhand. Mint continues to be the second largest business daily in India.

On the other developments, we have since announcing the merger with Next Mediaworks, we have now integrated the operations, which -- with our Radio business. And newsprint prices, which again my college covered, have softened. But however, it's definitely impacting our operating performance, but however, you'll see the full force of these benefits coming from next quarter. Of course, the newly announced custom duty is a dampener on the other side, but for this quarter result the duty doesn't have any role to play.

Moving forward to Slide #7 is a synopsis of our consolidated financial summary. So our total revenue at INR 588 crores, which is a growth of 3%. EBITDA at INR 89 crores, which is a growth of 42%. EBITDA margin at 15%. PAT coming at INR 28 crores, which is 511% higher at a PAT margin of 5%. The PAT number is before the exceptional item, which I will spend a minute in the Q&A.

Going to the business unit performance on print which is Slide #10. And so far as Print is concerned, our ad revenues have been soft. And the decline has been 9% with total revenues for the first quarter coming at INR 362 crores as against INR 399 crores in the same period last year.

Circulation revenue has come down to INR 64 crores, which is a degrowth of 7%. However, the heartening thing is that the realization per copy still continues to be strong. But because of taking out unproductive copies, et cetera, print order has come down to that extent.

Operating revenues therefore comes in at INR 454 crores, which is a decline of 6%, with operating EBITDA at INR 55 crores, which is a decline of 15%. And the operating EBITDA margin at 12%.

So some of the key highlights, which I mentioned at the bottom of the slides that: We maintained our market share in key markets for both Hindi and English newspaper; sequential circulation revenue growth after 2 quarters of softness, despite competition intensity; and we've maintained operating margins amidst a soft advertising environment due to decline in newsprint rates. What has not worked is the ad revenue degrowth, which is driven by sluggish market volumes. Even when the yields have improved, we've seen losses on the ad revenue slide (sic) [side.]

Moving onto the next slide. I now move into English segment. So on Slide #12, as you can see our ad revenues is a decline of 14%. And so far as English is concerned, the circulation revenues are down 8% to INR 15 crores and ad revenues to INR 198 crores. Ad revenues, as you've all seen, continue to be very soft. Apart from very few categories, most categories have been under pressure so much so that the government, including political advertising in spite of the national election, have been also under pressure. And key categories, which are mentioned here auto, e-commerce, retail and education, and slowdown in government after the model code of conduct.

Moving on to the Hindi segment. So our Hindi ad revenues has come in as INR 164 crores as against INR 168 crores. There is a marginal decline of 3% here. Circulation revenue from INR 53 crores has come down to INR 50 crores, which is a 7% decline. So as I was saying earlier, strong revenue from election campaigns, partially offset by decline in government advertisement due to the code of conduct; continued focus on yield improvement despite slowdown in ad volumes; and circulation revenue has grown on a sequential basis through -- though it declined versus last year.

Moving on to Radio. As we also articulated in our Chairperson's address that Radio showed a healthy growth. So we can see that the growth is 37%, but that's after integrating the Next Mediaworks into this thing. Even for the base station without Next Mediaworks, the growth has been 9% and EBITDA margin at 34%. Revenue is primarily driven by yield growth on account of rate hike across the stations. And ad revenue growth in key categories such as FMCG and real estate. With this, the operating margins has been at 25% with operating EBITDA at INR 16 crores.

With this, I come to the end of the webcast, and we would now take any questions that you might have. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of [Gaurav Gupta from Nirav Group.]

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Unidentified Analyst, [2]

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I have 2 questions. One is with respect to the exceptional items that we have mentioned, on a stand-alone basis near about INR 147 crore and INR 176 crore on a consolidated basis. If you can just give some brief that how exactly the difference between stand-alone and consolidated? And to what exactly this pertains to? This is the first question.

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Piyush Gupta, HT Media Limited - Group CFO [3]

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Okay. I will request my colleague, Anna, to take this question. Although let me just tease this off and Anna can fill you on the details. As of 15th of April, this consolidated Next Mediaworks which we had acquired, this is the goodwill that we had created at a consolidated level, which you see in the consolidated results, which is a goodwill impairment of INR 176 crores. On a stand alone, it's a lesser number because that's the mark-to-market loss on the share price and I'd request Anna to fill you on the details.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [4]

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The consequent to the acquisition we did on -- there's on -- in the stand-alone, it's recorded as investment in the company and that's to the extent of 75%. We are, of course, on consolidated, consolidating line by line. So in stand-alone, it's an impairment of investments. In the consolidated, it's an impairment of goodwill. And the differential is really the fact that stand-alone is recording at about 75% of the value, while the consol will be doing line-by-line consolidation, so 100% of the value. So we had acquired the station at NMW at about INR 27 per share which was the open offer price. And currently, the market -- the price of that company is at about INR 13, so which required us to take certain impairment in the books on accounting for the same.

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Unidentified Analyst, [5]

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Okay. And second question is that on our books in HT Media as well as in HMVL, we have a significant portion to that of near about INR 1,000 crores or even more than that in terms of investment in the funds, right? So basically liquid funds and debt funds, fixed maturity plans. And nowadays in the market, there are a lot of news that those funds have been invested in the NBFCs, commercial paper and all those things. So is there any impact in the funds in which we have invested? And if yes, then what is the tune of hit that we have taken or we are expecting to be hit kind of, if you can give some idea on that?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [6]

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Yes. We have -- we don't have -- we haven't had any exposure to this because we don't -- and while we are investing in the debt mutual funds, we do not take the credit funds at all. And therefore, we have a very conservative approach in our debt fund. So we do not have any -- we haven't taken any credit exposure hits.

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Unidentified Analyst, [7]

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So none of the funds that we had invested in both of the entities, there is any problem in the redemption and in terms of value that we have invested in?

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Piyush Gupta, HT Media Limited - Group CFO [8]

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Yes. So let me just come in here just to accentuate what my colleague just highlighted. Our investment stance is conservative to slightly more conservative. So hence for the longest time now, these stayed away on our investments on taking aggressive credit calls. Therefore, on a downstream investments through the funds that we have invested, there is hardly any -- there is no -- not been any redemption pressure. There has been nothing. Even if I have to quantify and look for those names on NBFCs where these funds might have invested, on my entire portfolio it will be less than 0.001%, so -- and we'll not face any problem. So on our ex IRR basis, all our funds that -- and we've churned a bit of a portfolio because they had become long term in nature. So we have taken the advantage of long-term capital gain. We've not seen any of the credit issues coming into our investments at all.

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Unidentified Analyst, [9]

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We have significant portion in our balance sheet in terms of investment property as well, which constitute a major portion in terms of real estate investment that we have in couple of projects, and we have seen a significant written-off value in the last financial year as well. So if you can just give idea some, is there any investment written-off in this quarter as well because a couple of real estate companies have gone into IBC and the values have been eroded over there?

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Piyush Gupta, HT Media Limited - Group CFO [10]

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Yes. [Gaurav], I'm presuming now you're talking about the HT Media books and not HMVL, correct?

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Unidentified Analyst, [11]

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Absolutely, absolutely.

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Piyush Gupta, HT Media Limited - Group CFO [12]

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Okay. So this quarter, the answer is absolutely not, there's not been any provision which has been provided in the books. Also, just to give you a little color in the past that we have taken 2 big provisions: one was on this builder called Amrapali; and the second one was Lavasa, which is off Mumbai-Pune Expressway. We had taken those provisions because both those cases had been referred to the NCLT under the IBC process. And if you've been tracking the news flow today and Supreme Court has given a verdict on Amrapali, where they have strengthened the case of the homeowners, which is the category in which we qualify. Our claims have already been registered by the IRPs like 3, 4 months ago. So as soon as the resolution for both Amrapali and Lavasa happens, we will get our right to claim back. Just to refresh you, these properties had been acquired on our AFE platform, which is our investments that we do for advertisement. And since these companies have gone into IBC, which is about a year or 1.5 years back, we've not been obviously giving advertisings, but our claims have been recorded by the IRP. And as soon as the resolution happens, which now the courts are involved into it, we are very hopeful that we'll get all our monies back.

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Operator [13]

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(Operator Instructions) The next question is from the line of [Aditya Roy], who is an individual investor. There seems to be no response from the line of Aditya Roy . We'll move to the next question. The next question is from the line of Neeta Khilnani from B&K Securities.

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Neeta Khilnani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [14]

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I just wanted to understand the 22% decline in raw material costs in HMVL, can we sort of break that down into the decline in newsprint price and tonnage?

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Piyush Gupta, HT Media Limited - Group CFO [15]

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Yes. I can break it down. So primarily as we just maintained when I was just giving my opening remarks that in terms of the print order, in HMVL, we are down by about 8% to 10% on a print order and that's a consumption decline, which is reading itself into the newsprint cost. However, the rate decline, which will really impact from second quarter onwards and I'm just keeping custom duty on the side which is a new announcement in the budget, we will get the full impact of the soft price only from second quarter. So the primary softness that you see in the newsprint line is because of lower consumption, which is because of lower print order, value of cutting out waste, et cetera in the system.

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Neeta Khilnani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [16]

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Okay. And sir, the custom duty, so how have domestic prices moved after the imposition on the customs duty, so have this sort of also increased? Or any...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [17]

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So we're not seeing any increase and we are not expecting any impact in the quarter 2 results as well.

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Neeta Khilnani, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [18]

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Okay. And what would be our mix of imported and domestic newsprint this quarter?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [19]

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This quarter, at a consolidated level, it'll be about [74-26].

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Operator [20]

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(Operator Instructions) Next, we have a follow-up question from the line of [Gaurav Gupta from Nirav Group.]

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Unidentified Analyst, [21]

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In HT Media, we have reported that there is a circulation revenue of near about INR 15 crore for the entire quarter. So can you give just idea of what is a per-copy circulation revenue on an average we are able to get in HT Media?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [22]

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No, we don't disclose that detail, sorry. The decline is the combination of volume and pricing, as we spoke, but the pricing decline is more of the shift of subscription -- line copies to subscription, the mix change.

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Unidentified Analyst, [23]

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Okay, okay. Next question is we were talking about that ad-for-equity kind of a model that we run. So can we get some idea or the companies in which we have done this kind of a deal so as to get an idea that where exactly we have significant investments in ad-for-equity kind of a structure?

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Piyush Gupta, HT Media Limited - Group CFO [24]

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Look, we don't disclose the line item detail, but as you know that there are 2 asset classes: real estate and equity. And real estate the 2 vulnerable classes both are in IBC which were Amrapali and Lavasa. Now of course, if some more companies go into IBC, we can't really predict that. And equity again is a very vast, whereby we've got matured companies and some early start-ups that make this model available, too. So we don't give a line item-wise detail to answer to your question is that.

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Unidentified Analyst, [25]

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Sure. But on your website in the last couple of quarters, you were publishing one file where you were disclosing the couple of companies in which you have invested. Uber was one of that, and even you highlighted in last con call that you have invested in Uber by your Singapore entity. I think that kind of a file has been removed from your website, any reason for that? Any regulatory or any other competitive kind of a pressure because of which you are not disclosing those kind of a deal?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [26]

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No. So the -- it's 2 different questions. The context of disclosing Uber was in the line of funding being done to Singapore. And there was a question under as to why the funding is happening and that is the explanation. Yes, we would not like to disclose these details for competitive reasons.

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Operator [27]

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(Operator Instructions) The next question is from the line of [Aditya Roy], who is an individual investor.

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Unidentified Participant, [28]

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My question is that there is a steep reduction quarter-on-quarter in other expenses. So what exactly has led to this reduction? And what kind of IT costs do you foresee? And what is the structure out of the overall other expenses?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [29]

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Yes. In quarter 4 last year, we had spoken about a substantial MTM loss that we have taken, of which Lavasa was a big component. And therefore, the drop in that is actually causing the major shift. We have benefits coming in from other lines also. I mean, one important line is some events, which had happened last quarter. I mean, there is a savings in that line. So in advertising sales promotion, there is a bit of a saving. Apart from that, there are cross lines like bad debt, provision, et cetera. So the major number is on account of the MTM losses that we have taken in quarter 4 which we don't have.

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Unidentified Participant, [30]

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Okay. And what is the structure of the information and technology and other investments? Or are you investing in technology to improve your efficiencies?

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Piyush Gupta, HT Media Limited - Group CFO [31]

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Yes. Piyush, this side. We are definitely investing behind technology to improve our efficiencies. So across the basic enterprise systems, the basic CRMs, et cetera, which we have as BCB on one side, SAP on other side. We are now investing into various other technologies, which improve our efficiency. Having said that, suffice to say that Digicontent Limited, which is a new company, which is now become publicly listed company. The whole objective of that company is to follow a digital-first paradigm across all the media properties that we operate in. So major investments will go in that company. But as an organization, our trust to a technology investment to drive efficiencies and better revenue monetization opportunities is clearly the top of mind thing that we are doing and that's budgeted in our plan as such.

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Unidentified Participant, [32]

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Okay. So can I -- can you give me some understanding of how much of this is CapEx or OpEx?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [33]

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No. I mean, this is all OpEx. There is nothing CapEx come in this line. But there is no substantial number, which we can kind of highlight to you at this point.

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Piyush Gupta, HT Media Limited - Group CFO [34]

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Yes. So look generally right now, I think, people are not doing the CapEx model. So mostly, it's the OpEx model through the cloud that we are doing. There are license fees, et cetera, which are charged out to the P&L, but we don't give a line item detail, but we are embracing the technologies in various walks of businesses. And through Digicontent Limited, we are obviously doubling down on that effort.

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Operator [35]

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The next question is from the line of [Om Damani from Utkarsh Consultancy.]

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Unidentified Analyst, [36]

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You mentioned that the newsprint prices, this is because of the volume reduction and not so much for the price reduction the savings in raw material. So that saving will now -- it's a wastage reduction essentially in HMVL. So you should assume that -- sorry. Yes, please.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [37]

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No. So there's -- so in HMVL per se, it's a combination of price reduction and volume reduction. At a consolidated level, in last -- in quarter 1 last year itself we had some imported stock which we use for the English print, et cetera, so the impact is a little lower on account of rate. And what Piyush alluded to the fact is that the real benefit of the lower rate we will start seeing from quarter 2 onwards. And because last year it's from quarter 2 that the commodity prices started increasing.

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Unidentified Analyst, [38]

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But the volume reduction savings will continue, right, because that's...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [39]

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Volume reduction, savings will partially continue because we do have a copy build-up plan so to the extent of that happening, there will be some change as well.

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Unidentified Analyst, [40]

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And how would this reduction in price be offset by the increase in the custom duty?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [41]

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So the custom duty we are yet to -- we are hoping that there will be a review of the same. In any way, in quarter 2, given our existing commitment, we don't expect any impact. If the duty doesn't get rolled back then from quarter 3 onwards there could be an impact, but we'll have to wait and see what the final position is.

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Unidentified Analyst, [42]

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But is the price -- how is that -- so 10% duty will compare against the price reduction of how much for quarter 3, let's say?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [43]

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So overall at a blended level, there is 4% correction already, but quarter-on-quarter, it is more like a 12% correction. We are expecting another 5% correction in quarter 2 vis-à-vis quarter 1. So the 10% import duty will be over and above that.

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Unidentified Analyst, [44]

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Okay. And about the circulation revenue going down. So what does it, I mean, portend for, say, 5 years down the line, every quarter even 1% or 2 % reduction will add up over to significant amount over multi-years?

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Piyush Gupta, HT Media Limited - Group CFO [45]

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I request my colleague, Rajeev Beotra, to take this question.

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Rajeev Beotra, Hindustan Media Ventures Limited - CEO [46]

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Very difficult to predict 5 years down the line what will happen. However, needless to say, we are actually at this point in time -- circulation revenue is also a function of copies. Actually, sequentially you would have seen that our circulation revenue has grown over the prior quarter. So we are continuing to invest at this point in time, building copies as well. Yes, cover prices, last year, you would have seen a significant cover price increases across all geographies. So I think it's a mix of competitive intensity, the pressure in the industry. But yes, I guess, the entire industry will be very happy to see cover price increases sequentially.

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Unidentified Analyst, [47]

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Right. But the circulation numbers are -- so okay, I don't know what's the -- I mean the number of subscribers is going down, right? So even the cover price increase will compensate for rate, but if every...

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Rajeev Beotra, Hindustan Media Ventures Limited - CEO [48]

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No, it's not exactly it.

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Piyush Gupta, HT Media Limited - Group CFO [49]

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That's not entirely true because as I highlighted in the opening comments, if you look at the new IRS study and also if you look at the ABC numbers, the readership is going up...

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Rajeev Beotra, Hindustan Media Ventures Limited - CEO [50]

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Especially, the language...

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Piyush Gupta, HT Media Limited - Group CFO [51]

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Especially, the language paper, which is Hindustan in our case. But because it was a very high cover newsprint environment in the last 12 months, all the media houses were basically correcting and taking out wastages wherever possible because it was having a major impact on the margins. But now that the newsprint prices are softening, everyone is looking to build up copies. Like Rajeev Beotra was just saying, we are looking at our various footprints in languages in Hindi and English again to see where there are opportunities. So it's not going down sequentially, but in a hard cover price environment, we obviously look very closely at it and took out the wastages. And now when it is easing up, we are building up.

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Unidentified Analyst, [52]

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And so last year at consolidated level, we had a loss, but it's going -- I mean, do you give any guidance for this year, how do you see things?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [53]

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No, we cannot give you a guidance. But as you can see, given the softness in the newsprint price, there is a healthy shift in the operating margin, so -- which we hope to continue.

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Piyush Gupta, HT Media Limited - Group CFO [54]

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And look at losses by their exceptional item which we've called out in the results, which is at INR 176 crores in the consolidated results, if you look without that, the EBITDA margin itself has grown by 4 points and absolute EBITDA has grown from INR 63 crores to INR 89 crores. We hope with the efficiency drive that we are pulling in, we hope with the newsprint prices falling a certain trajectory that they do, we also hope that the custom duty will be rolled back by the government. If all these things come true by driving the efficiency, newsprint prices and trying to accelerate our revenue projects, et cetera, we hope that we'll be able to bring in much better performance quarter-after-quarter here on because now the newsprint prices for the last 5 quarters had really troubled the entire media sector.

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Unidentified Analyst, [55]

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Okay. And so you have a lot of liquid. Like as you discussed earlier, we have a lot of liquid fund investments and other thing, and we also have a comparable amount of loan. So is there a plan to reduce the loan by just, I mean, canceling of the investment and some of the loans that we have?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [56]

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So the debt and cash position has a legal entity implication also. So you're looking at a consolidated position, but amounts might be sitting in different entities, so that is one. And secondly, we are -- as and when there has to be cash deployed, we keep evaluating it from a commercial perspective. So if it makes sense to unwind our investments and deploy the cash, we do that. Other -- it makes otherwise sense to borrow. And for that cash investment, we do it accordingly.

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Unidentified Analyst, [57]

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Okay. And do you also give any guidance on the dividend policy?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [58]

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No, we don't give any future guidance actually.

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Unidentified Analyst, [59]

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But is there a stated dividend policy of the company?

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Piyush Gupta, HT Media Limited - Group CFO [60]

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No, as per the SEBI norms, dividend policies, et cetera, are all in the public domain. We also have adopted a certain dividend policy. Our past record on dividend can be seen. So unless and until the Board changes the stance, I would say we will continue, but it is squarely the prerogative of the Board to debate and discuss on the dividend policy. But our past, we'll continue on the financials stated otherwise.

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Operator [61]

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The next question is from the line of [Dharmesh Pandya from BP Investment.]

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Unidentified Analyst, [62]

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I have 2, 3 questions. One is why you're not disclosing net cash in your presentation?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [63]

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On a quarterly basis, we don't disclose the balance sheet. Whenever we disclose the balance sheet...

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Unidentified Analyst, [64]

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Sorry, on a quarterly basis, you don't show it, is it?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [65]

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See, the balance sheet is not published on a quarterly basis. Half yearly basis, the balance sheet we have prepared and published and that's when we disclose it as well.

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Unidentified Analyst, [66]

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Okay. So how much is the net cash available in the books of HMVL and HT Media? And does it include ad-for-equity and property investments?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [67]

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It doesn't include ad-for-equity and property investments. This is cash and cash equivalents only, and it is about INR 1,100 crores.

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Unidentified Analyst, [68]

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In the books of?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [69]

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Consolidated level.

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Unidentified Analyst, [70]

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Consolidated level. And HT Media -- sorry, HMVL, how much it is?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [71]

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It'll constitute about INR 1,000 crores of that.

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Unidentified Analyst, [72]

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One last question, ma'am, the subsidiary investment of the Next Media you mentioned. In that, what was the cost part for us? And what was the overall write-off we have done? And secondly, why it was necessary to write it off?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [73]

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So we have taken -- so the overall payout is close to about 284, to answer the first part of your question. Now it happens to be a listed company. And therefore for accounting purposes, the prevailing market price is what gets considered for valuing the company subsequently and for accounting in the book.

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Unidentified Analyst, [74]

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So you did a mark-to-market. Because of that, you had to write it off, is it?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [75]

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Yes, yes.

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Rajeev Beotra, Hindustan Media Ventures Limited - CEO [76]

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Which is within stand-alone and consol.

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Unidentified Analyst, [77]

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And why there is a difference between the stand-alone and consolidated level, both are showing some different numbers?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [78]

--------------------------------------------------------------------------------

Yes. I have addressed. I think that was the first question that was raised.

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Unidentified Analyst, [79]

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Sorry, I actually joined late, sorry.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [80]

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Yes. So the stand-alone, it's an impairment of investment. The stand-alone only records the investment of 75%. In consolidated, we have done 100% consolidation and then therefore a goodwill got created and therefore the differential of 25% is roughly what constitutes the difference.

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Unidentified Analyst, [81]

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Okay, okay. I have one more question, I'll join in the next queue.

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Operator [82]

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Next question is from the line of [Gaurav Gupta from Nirav Group.]

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Unidentified Analyst, [83]

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Yes. Question related to Radio business. If you exclude the growth that we have seen in our Radio business, which was in our HT Media, if you exclude that and compare the numbers of the Next Mediaworks FM business, there has been a decline in the revenue. Would you be able to give reason for the detail that why exactly the revenue has dipped in that?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [84]

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Yes. We are in the midst of an integration. So obviously, there is a little bit of -- because we could -- we owned the company only from April 15. We have to take charge of the operations, et cetera. So it's the operation is in a bit of a transition and integration, so of course, that has impacted our ability to sweat the assets in this quarter.

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Piyush Gupta, HT Media Limited - Group CFO [85]

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And also, [Gaurav], if I may just add in here, I think one of the basic premise if you recollect when we announced that we will be going ahead and acquiring a majority stake in Next Mediaworks, it was that there are a lot of operational synergies that we would like to harness together. The footprint for Next Mediaworks is also a metro-focused footprint like we have in our Fever FM. The big markets, as we've always maintained, have a higher revenue potential and that's why we first started in the first 4 metros and took UP for a different strategic reason.

Now that we have started the integration, all the synergies will take their time to classify. So we are rebooting our programming. We are rebooting our scheduling, the content in Chennai has been changed and various other things are happening. So till such time, the pricing we are now taking a much higher pricing than what Radio One was earlier selling. So all these things will take some time in stabilizing. There'll be some initial hiccups in volatility on the revenue line, but suffice to say that once it is stabilized, it will be a very big value generator for the entire Radio business of HT Media.

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Unidentified Analyst, [86]

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Sure, sure. And we have seen that there is some debt in the Next Mediaworks and its subsidiary as well. So what is the level of debt over there, if you have any idea?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [87]

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Broadly about INR 68-odd-crores, I think.

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Unidentified Analyst, [88]

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INR 68 crores. Okay, approximately INR 70 crores.

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Operator [89]

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The next question is from the line of Aasim Bharde from IDFC Securities.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [90]

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Sir, for HMVL alone, what has been our imported and domestic mix for Q1 and for last year, just for Hindustan?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [91]

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Yes. It's been close to a 90/10.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [92]

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90% domestic. Okay.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [93]

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Yes.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [94]

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So this customs duty of 10% that has come in the budget, I assume there shouldn't be much of an issue on raw mat cost for HMVL, right? Or would there be an impact?

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Piyush Gupta, HT Media Limited - Group CFO [95]

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Aasim, Piyush this side. Yes, what you're saying is right. But it all depends upon the -- how the domestic newsprint manufacturing sector also reacts to the imported pricing. So in the short run, what you're seeing is absolutely right, duty should only impact the imported newsprint. But also how will the domestic guys price their product, we have to wait and see.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [96]

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But is there is a like a one-to-one pricing impact...

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Piyush Gupta, HT Media Limited - Group CFO [97]

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There is no one-to-one correlation here, but because it is a eminently replaceable commodity and so far as the publishers are concerned of course, depending upon Grade A, Grade B, Grade C opacity and those qualitative parameters. So people actually look at these pricing. So there will be some correlation, which is in a positive direction, but it's not a perfect correlation, but, of course, there's a correlation.

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Aasim Bharde, IDFC Securities Limited, Research Division - Research Analyst [98]

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Okay. Understood. Sir, so in that case, in case the newsprint softening that is happening in the market if that is not enough, is the market ready to take cover price hikes to cover for this hike in the customs duty?

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Piyush Gupta, HT Media Limited - Group CFO [99]

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Well, I think we'll have to sort of...

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Rajeev Beotra, Hindustan Media Ventures Limited - CEO [100]

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Cover prices are also a function of the intensity of competition that exists in markets. So yes, there will be certain markets. So it will be a market-by-market scenario depending on the competitive intensity. And the current existing price vis-à-vis the potential because the cover prices are also very different in different cities. So there are cities where they are lower than some of the other cities. But -- so it will be a function of a lot of competitive intent and intensity as well.

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Operator [101]

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The next question is from the line of [Anand Daga from IFC Securities.]

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Unidentified Analyst, [102]

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We were supported to be doing the demerger of HT Radio, what is the current status of the demerger please?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [103]

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Actually, when we announced the acquisition way back in June, it was proposed as a demerger where all the Radio properties were supposed to come back, but we had come back in December saying that we are withdrawing that because we didn't get the adequate regulatory approval. So we had to do the acquisition via the open offer route.

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Unidentified Analyst, [104]

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Okay. So there is no demerger as such planned for the Radio division?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [105]

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No.

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Unidentified Analyst, [106]

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For which the shares will be given. Like, Digicontent was done. There is no demerger for the HT Media, the Radio division?

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Piyush Gupta, HT Media Limited - Group CFO [107]

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Anand, Piyush this side. Anand, in a perfect world, that is what we attempted and that is something that we would like to do at some point in time to unlock the value. We understand there is unlocking, which is sitting through that route. But all the regulatory approvals have to be secured, so we will see when -- when it's a regulatory environment, as a run-up to the elections, I mean, no one was getting any approvals from the Ministry. So once we get the approvals, we'll definitely attempt that. When we do that? I can't tell you, but to unlock value, we understand that's the step we have to follow.

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Operator [108]

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The next question is from the line of Mahantesh Marilinga from Finquest Securities.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [109]

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Sir, actually you mentioned during the call that you'll be building up copies going ahead. What do you mean by that, sir? Actually, you will be like pushing the newspapers? Or what is the scheme there?

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Piyush Gupta, HT Media Limited - Group CFO [110]

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Look, we have a market-by-market plan, city-by-city plan in terms of the revenue potential in the city, what should our competitive position be. So we do our annual budgeting exercise, decide on investments we made in market and then subsequent monetizations. So this is that, yes, there are geographies and markets that we will be investing in and building copies. Last year, there was a significant price increase across the Hindi geography specifically, which also resulted in some amount of copy draft for all the players. And now we are all -- we are looking at rebuilding and strategically deciding cities. So yes, we are looking at adding copies.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [111]

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Okay, sir. And just broadly tell me the newsprint prices in the last 2 quarters and last year same quarter, Q-on-Q and year-on-year?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [112]

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So we are, on a blended level, at about 40,000, which is about 4% Y-o-Y improvement and a 12%...

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [113]

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In Q1 FY '20?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [114]

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Q1 FY '20, the rate is -- the blended rate is about 40,000, which is an improvement of 4% vis-à-vis the previous year and 12% sequentially.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [115]

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Improvement, you mean declined?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [116]

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Improvement.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [117]

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Means the prices went up by 4%.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [118]

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Yes, prices have reduced.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [119]

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And year-on-year?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [120]

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Year-on-year, it's 4%. And for sequential, it's 12%.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [121]

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Okay. So again net-net, you have not lowered any impact from the decline in prices?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [122]

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That's -- in the earlier comment, it was alluded that the full benefit will come from quarter 4 last year because that is when the commodity prices started increasing.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [123]

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Okay. But currently, now like in the month of July, what's the pricing that's now running?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [124]

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I don't have a month's information.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [125]

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On an average in essence.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [126]

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No, I don't have a number. What I can -- we are expecting that over the next quarter, it will be 5% better than the current rate.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [127]

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Okay. In spite of the import duty or excluding it?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [128]

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Quarter 2, we are not expecting any impact to the customs duty even if it gets implemented given our existing commitments. If it gets implemented, the impact will come from quarter 3 onwards.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [129]

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Okay. But I heard, ma'am, that the newsprint prices have crashed much more than what you are mentioning, I think, 20% to 30% types?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [130]

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From the peak is what we are alluding to. Yes, you've asked me with reference to last year and from versus last quarter.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [131]

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That's what like this is in Q1 FY '20...

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Piyush Gupta, HT Media Limited - Group CFO [132]

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Let me try to attempt this question, prices have crashed quite radically, you're absolutely right. We were carrying some inventory. That's the reason we've said that in the first quarter, we are just consuming the inventory that we had already purchased. Therefore the impact will come from second quarter. Now second quarter also there will be some residual inventory, which will come forward. So has the prices crashed? Absolutely, yes. Have they crashed north of 15%, 20% on imported? Yes. We are -- whatever my colleague just told you is by keeping the custom duty on the side, so we don't know the custom duty impact. So custom duty direct impact will be on the imported, but the tactical prices on the domestic mill, we can't say which mill will take the prices up just now or later. So that's the whole point. So prices have crashed and they will flow into the P&L as and when the replacement inventory will be the cheaper inventory.

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [133]

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Okay. But it could be higher of 5%, much higher?

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Piyush Gupta, HT Media Limited - Group CFO [134]

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It can be 20% also depending upon what it comes, but we don't give forecast, so you don't...

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Mahantesh Marilinga, Finquest Securities Private Limited, Research Division - Senior Research Analyst [135]

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Okay, but you had broad idea.

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Piyush Gupta, HT Media Limited - Group CFO [136]

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Broadly you can take anywhere from 1 to 100.

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Operator [137]

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The next question is from the line of [Dharmesh Pandya from BP Investment.]

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Unidentified Analyst, [138]

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My question is regarding the -- how much investment we have done in the subsidiary this quarter?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [139]

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We haven't done any investment in subsidiary this quarter.

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Unidentified Analyst, [140]

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Haven't done any. Okay, fine. That's good. One more thing is the net cash last quarter and this quarter is the same for HMVL and HT Media. So whatever -- is it correct? Or is there any change in that?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [141]

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It's not correct. From March, on a consol level, we will be down about INR 200 crore.

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Unidentified Analyst, [142]

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INR 200 crore, is it? Where in HMVL or HT Media?

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Piyush Gupta, HT Media Limited - Group CFO [143]

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So on a consolidated level, we'll be down INR 200 crore, of which INR 100 crore have gone towards funding of the acquisition the part payment thereof, and the balance has gone into working capital, which will be -- which will start getting released from second quarter.

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Unidentified Analyst, [144]

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Okay, fine. One last thing, I saw the Q4 presentation, there also the net cash was not there. So request that subsequent quarter onwards if you can display that, that's really helpful to us.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [145]

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Okay.

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Operator [146]

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The next question is from the line of [Anita Singh] from Inventus Capital.

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Unidentified Analyst, [147]

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I had a question on Next Mediaworks, but I think that got answered. Another question I had was on newsprint prices, which you said have increased in the first quarter. So what those inventory holdings in this period?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [148]

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No, we haven't said this increased. We said the newsprint prices have declined. We have...

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Piyush Gupta, HT Media Limited - Group CFO [149]

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So Anita, let me just on the inventory holding like all other publishers, the imported inventory has a long lead time because that has to be imported from overseas either Europe or Canada sometimes from Russia or from Asia as well. So the holding that we maintain is always slightly higher than the domestic newsprint, which can be procured at a short notice. Those goes as per policy. We obviously don't reveal our policy on a open call because of competitive reasons. And that's the reason the replacement price does not flow into the P&L through the COGS line on a real-time basis because there is a carry forward inventory. So in Hindi, the replacement prices reflect much more quicker and real time because the replacement inventory comes in much sooner. In English, which is primarily imported newsprint, it takes a little bit longer.

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Operator [150]

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The next question is from the line of [Gaurav Gupta from Nirav Group.]

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Unidentified Analyst, [151]

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Yes. Coming back to Radio business, like Piyush just highlighted as well, INR 100 crore went into acquisition of Next Mediaworks, 51% -- my number was coming around INR 95 crore to INR 100 crore. But we have given an exceptional item in the range of INR 147 crore on a stand-alone basis. So I'm not able to calculate this math that we acquired for INR 100 crore, and we have written down value in terms of exceptional item as INR 147 crore on a stand-alone basis.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [152]

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So we have acquired the entire stake, but there is a deferment of payment. So it's only a deferment of payment. So the investment holding is not INR 105 crores, the cash outflow has been INR 105 crores. The investment will be at the full value of acquisition.

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Unidentified Analyst, [153]

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No. So we acquired 51% of the Next Mediaworks, right?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [154]

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We've acquired -- we've actually acquired 75% economic interest in NMW and NRL as a combination of direct acquisition of NMW and acquisition in NRL. So the entire Radio One acquisition is 2 entities, the combined which gives us 75% value.

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Unidentified Analyst, [155]

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Okay. So even though on a cash basis we have just spent INR 100 crore, but on an accrual basis, if you are saying that economic value of 75 -- near about 75%, we have written down value by INR 147 crores.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [156]

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Yes. Because I don't have a choice not to pay this money. There is -- since it's all -- it's an escrow arrangement, we have to make this payment. So the full value of the investment have been recorded. The cash payout has partially happened in April and the rest of the payments will happen in November.

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Unidentified Analyst, [157]

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Okay. But subsidiary of Next Mediaworks is not listed. So price of that is also not fluctuating like you have acquired on 27 of Next Mediaworks, it is sort of somewhere around at 50% of discount right now, but same is not happening with the subsidiary of Next Mediaworks. So was it really required to write down value or -- in terms of this exceptional...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [158]

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Yes, it was because NMW the only asset withholds is the investment in NRL. And therefore, the auditors had the view that the NRL valuation is what is reflected in the NMW share price. And therefore, I had to account for the entire valuation discount.

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Operator [159]

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The next question is from the line of [Om Damani from Utkarsh Consultancy.]

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Unidentified Analyst, [160]

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So you mentioned that the current quarter we consumed a part of the existing inventory. Now of course, it is accounted for in some way, but in real terms can part of the profit also be attributed to that fact? Or just -- I mean because of the -- I mean as per the accounting law, is there a net gain or loss because that it doesn't actually reflect the actual cost that we incurred this quarter?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [161]

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All Piyush was alluding to is that there is a purchase price, which is today, so what is that, that you are buying the inventory today and there is what is gets booked in the accounts, which is consumption-based. So today's price may not be what is hitting the consumption line.

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Piyush Gupta, HT Media Limited - Group CFO [162]

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This is Piyush this side. Look, I think you're missing 2 things, one is the procurement price to which a gentleman earlier asked if the procurement prices have crashed. And I said, yes, they have crashed and we are hopeful that they will keep on going down. And then there is the consumption price, which is recorded in the income statement, which is basically the bookkeeping on inventory, the LIFO, FIFO method, weighted average method and so on so forth. So whatever goes into consumption comes from the earlier inventory, which was secured at a particular price. So the replacement price, which is a procurement price does not read directly into that month's thing because you are sitting on carryforward inventory. And therefore, you don't see the impact coming real time. However, what I said for the domestic newsprint it comes much faster because we keep -- our inventory levels are much lower in domestic newsprint because you can replace them at a short distant. Because they are in India, imported newsprint takes long time, long lead time, therefore you keep higher level of imported newsprint. That was the point I was making.

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Operator [163]

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The next question is from the line of [Dharmesh Pandya from BP Investment.]

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Unidentified Analyst, [164]

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In this budget, they have announced that holding of promoters should go down to 65 and the public should hold around 35 of some numbers. So in -- HT Media owns in HTML about 70%.

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Piyush Gupta, HT Media Limited - Group CFO [165]

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75%.

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Unidentified Analyst, [166]

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75%. So what we're planning to do, I mean if that rule comes into effect?

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Piyush Gupta, HT Media Limited - Group CFO [167]

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Well, whatever rules come into effect, we will follow the law of the land. So if that rule comes into effect, we will obviously comply to that rule.

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Unidentified Analyst, [168]

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So is it possible that way that probably just request from our side just keep in mind to give directly to the shareholders of HT Media rather than selling in the market, at least you will have less equity floating in the market.

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Piyush Gupta, HT Media Limited - Group CFO [169]

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Okay, I'll definitely take that concern. I'll definitely take that comment at the right time whenever this discussion comes in. I'll definitely keep that in mind and give it to the right people...

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Unidentified Analyst, [170]

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Yes. And Digicontent results will be there and how the conference call will be taken place for that?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [171]

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It's a separate legal entity now, and they've not announced the results. So we will have to wait. A procedure...

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Piyush Gupta, HT Media Limited - Group CFO [172]

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We will let you know. Right now, we are still just figuring it out. So the first meeting will happen on 30th or 31st. As soon as that happens, we will come back to you and inform you about that.

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Operator [173]

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Thank you very much. That was the last question. I would now like to hand the conference back to the management team for any closing comments.

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Piyush Gupta, HT Media Limited - Group CFO [174]

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Well, I'd like to thank everyone who participated in the call. We -- in the pluses and minuses, we spoken about the newsprint rate. We've seen how well does the revenue situation is still tough, and we are still trying to navigate. The government announced a new tax. As a industry body, we are obviously advocating to the government that they should have a rethink about that. Having said that, we are very hopeful that not just in our Radio business and Digital business, which is now a separate company but also in our Print business we will have much better quarters to report, and we look forward to coming to you and giving you a report out in the next quarter. Till then thank you so much for joining the call. We wish you all the best.

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Operator [175]

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Thank you very much. On behalf of HT Media and Hindustan Media Ventures Limited, that concludes this conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.