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Edited Transcript of HTMEDIA.NSE earnings conference call or presentation 23-Jan-20 11:00am GMT

Q3 2020 HT Media Ltd Earnings Call

Jan 30, 2020 (Thomson StreetEvents) -- Edited Transcript of HT Media Ltd earnings conference call or presentation Thursday, January 23, 2020 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

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Conference Call Participants

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* Amit Mehendale;RoboCapital;Analyst

* Ayaz Motiwala;Nivalis Partners Ltd.;Senior Fund Manager

* Deepak Poddar

Sapphire Capital Management LLC - Portfolio Manager

* Nirmal Bari

Sameeksha Capital Private Limited - Equity Research Analyst

* Vaibhav Badjatya

Honesty and Integrity Investment - Founder

* Rohit Talwalkar

* Shailendra Mundra

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to HT Media Group Q3 FY 2019/'20 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.

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

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Thank you. Hello, everyone. Good evening, and welcome to our webcast and conference call for the quarter ended 31st December, 2019. This is the first call of the calendar year, so a very happy new year to all of you.

Joining me today on the call is Mr. Piyush Gupta, our group CFO; Mr. Sandeep Gulati, CFO of Hindustan Media Ventures Limited; Mr. Pervez Bajan, Group Controller; and my colleagues from the Investor Relations team.

All of you would have had an opportunity to go through the financial results for Hindustan Media Ventures Limited and HT Media Limited. 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 of the presentation, I would like to draw your attention to the disclaimer regarding forward-looking statements, which is included in the presentation, kindly keep this in mind.

Moving on to Slide 3. The Slide 3 gives the Chairperson's comments on the performance of the company, which mentions impact on ad spends due to a broad-based slowdown in the economy. As you would be aware, GDP growth for quarter 2 '19/'20 was at 4.5%, which is the slowest growth in the last 6 years.

The IIP witnessed a decline of 4% in October and a mild growth of 1.8% in November. Advertisers have reacted to the slowdown in demand by keeping the discretionary spends in check, which has put pressure on our revenue.

On the plus side, softer commodity rates and our continuous focus on cost control have given us a good growth on operating profit and margins. We continue to be hopeful of recovery in ad spends as and when the broader economy revives.

Moving on to the next slide. I will now hand over the call to Mr. Piyush Gupta to take you through the details of the financial performance for the quarter. After the remarks, the call will open for Q&A. Over to you, Piyush.

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

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Thank you, Anna. Good afternoon, everyone, and a very happy new year to all the investors and the analysts.

I'll just quickly go over to the charts now. On the consolidated performance on Chart 6, if you were to -- just to see, our total revenue came at INR 636 crores, which is a 5% decline. EBITDA, however, on the other hand, as my colleague just referred to, has shown a sharpish increase. The better-than-last year commodity rates have a big role to play in that. And of course, as she had pointed out, there are tight cost control measures in the company which are also yielding fruit.

As a consequence, our margin jumps up by 6 points to 19%, PBT at INR 42 crores and PAT at INR 14 crores, with a PAT margin of 2%. Net cash remains at INR 999 crores as of third quarter end.

If we move forward to our business unit performance, and let's look at the Print business unit first. So on the Print business unit, our revenues are down by INR 52 crores, which is 12% decline coming in at INR 379 crores. Circulation revenue at INR 69 crores are flat, so there's some commendable work which has happened on realization per copy and better realizations have kicked in. Operating revenue, as a consequence comes, to INR 495 crores and operating EBITDA at INR 82 crores at a 17% margin.

There are some key drivers given there. Margin expansion is on the back of softer raw material costs and very tight cost controls. There is a sequential growth in circulation revenue, which continues into this quarter. And we are hopeful that the direction will be maintained in quarters going forward.

On the not-so-good side, the ad volumes have been muted even as we are trying to hold on to the deals, and decline is visible across both national and local advertising.

Moving forward into a little bit of detail on Slide #11. If you were to just analyze our English business, the revenues are down -- ad revenues are down 15% and circulation revenues are down 3%. Some of the big drivers of revenue have been sequential circulation revenue growth, which I just highlighted earlier. And in terms of various categories, government and BFSI witnessed double-digit growth in this particular quarter.

Some of the negatives have been the ad volumes have struggled during the quarter. And [generally,] most categories which we track have been soft and have been declining. Softness in categories like e-commerce, auto, real estate, telecom, durable and retail still continues. And the decline in national advertising is more pronounced than local advertising.

Moving forward to the Hindi business. We witnessed a 7% decline in our ad revenues coming in at INR 153 crores, whereas circulation revenues remained flat. Growth in circulation revenues on a sequential basis has been driven by improvements in realization per copy to the point that I had alluded earlier, and government and medical and health and fitness categories have witnessed growth.

The ad spend softness in key categories have been auto, retail, durable, real estate and e-commerce.

Moving forward to Radio. We've had a decline of about -- we've had growth of 9% on Radio, but the growth is primarily driven by the consolidation of Radio One, the acquisition that we had done and started consolidating from 1st of April. Operating EBITDA showed a decline of 35% and operating EBITDA margin at 24%.

Again, the muted industry has been one of the big issues. And some of the sectors which have not performed are FMCG, auto, travel and tourism. Growth in BFSI, real estate and education categories has been witnessed in this quarter. And we have managed to continue our good work on yields in this quarter and our yields across all stations have improved.

With this, I come to the end of the presentation, and we go into the Q&A section.

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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 Nirmal Bari from Sameeksha Capital.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [2]

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My first question is on the newsprint cost. So we have seen the newsprint cost is down 33% this quarter, and it has been coming down for the past 3 quarters. So what was the average newsprint cost this quarter?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [3]

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About INR 36,700.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [4]

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INR 36,700. And do you expect this trend to continue? Or what is the outlook that you have for the next 2, 3 quarters on newsprint cost?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [5]

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We expect the newsprint rates to remain soft. There may not be a substantial decline from the current numbers.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [6]

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Okay. If you are not expecting a substantial decline, then are we trying to lock in this kind of prices for a longer time period, say, 1 year or so?

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Piyush Gupta, HT Media Limited - Group CFO [7]

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We will do whatever is in the best interest given the forward view of the newsprint rate. But obviously, we -- you wouldn't want us to lay out our strategy on procurement on an open call. But I -- there'll be slight softness. But they have softened quite a lot, as you said, over the last 3 quarters, and based with that, whatever is the best procurement strategy, we're trying to deploy that strategy.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [8]

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Okay. And this decline of 33% that has happened in the raw material newsprint cost, is that entirely due to a reduction in prices? Or is it also due to a reduction in the copies and circulation?

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Piyush Gupta, HT Media Limited - Group CFO [9]

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Both.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [10]

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So can you give a breakup of it?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [11]

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So there is also a pagination impact because as we mentioned on the call, since a lot of the decline has been led by volume, there is a decline in volume led by...

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

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So there is an impact of both consumption action, where the consumption has come down, as you rightly said. That might be print order, pagination, et cetera, and various other rationalization efforts, which we are doing. But the substantial part is on account of rate (inaudible).

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [13]

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Okay. Okay. And my second question is, would it be possible to -- for you to quantify the revenue that you are getting from real estate advertisements at the group level? And what it was for the previous -- as in for the same quarter previous year, as in how has it been trending for...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [14]

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We won't be able to give you a category-wise number, but we -- the category has been declining for us.

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

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Yes.

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Nirmal Bari, Sameeksha Capital Private Limited - Equity Research Analyst [16]

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Compared to last year, same quarter, it has been declining in the current quarters or?

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

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Yes. Yes.

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Operator [18]

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We'll take our next question from the line of Vaibhav Badjatya from HNI Investment.

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Vaibhav Badjatya, Honesty and Integrity Investment - Founder [19]

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So just wanted to understand the trend on the government advertising better. So in terms of both central government advertising and the state government, can you share that -- what is the Q-on-Q trend in terms of growth and basically, the same -- and the year-on-year trend for the current quarter?

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Piyush Gupta, HT Media Limited - Group CFO [20]

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So look, let me -- while we'll try to answer that question a little bit more specifically, but let me tell you, the government had, sometime back, given a price increase to us which was at 25%. But suffice to say that most of the volumes from the government advertising agency, which is DAVP, have crashed since then. So in this quarter's result, there is a slight growth as far as the government revenue is concerned. So there's an offset of volume, but pricing -- at pricing. But some of those things are led by the political revenue, which is also seen in some of the state elections, which just happened; or some, which are going to polls right now. But overall, the government volumes are pretty soft.

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Vaibhav Badjatya, Honesty and Integrity Investment - Founder [21]

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So that's both on Q-on-Q and year-on-year basis, or you are just talking about Q-on-Q?

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

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Both on quarter-on-quarter and on year-on-year basis there is growth in government revenues.

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Vaibhav Badjatya, Honesty and Integrity Investment - Founder [23]

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Central government revenues?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [24]

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It is overall government. We don't have a breakup of central and state.

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Vaibhav Badjatya, Honesty and Integrity Investment - Founder [25]

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Okay. Can you provide the trend in the central government revenue on Q-on-Q and year-on-year?

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

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We don't have the breakup separately. So overall, there has been a growth.

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Vaibhav Badjatya, Honesty and Integrity Investment - Founder [27]

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Okay. And secondly, we -- the firm has gone through a lot of restructuring in terms of [raising] of Digicontent business and everything. Earlier in the last quarter, there has been some news as to the department sending out notices to firms regarding the goodwill, amortization, et cetera. So I just wanted to confirm that are we in receipt of any such notice or there is nothing from that?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [28]

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We are not in receipt of any such notice.

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Operator [29]

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We will take our next question from the line of Deepak Poddar from Sapphire Capital.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [30]

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Now, sir, on the Radio business, we are seeing like EBITDA -- EBIT loss at the EBIT level. So when we are expecting it to turn green?

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

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I think on the Radio business, we ourselves have been surprised for the last 2 quarters. If you see, our results or, indeed, the entire Radio sector result, there is quite a sharp slowdown, which from the second quarter onwards (inaudible) is visible, of course. We are trying to take a lot of actions in kickstarting new stream of revenue going much more hyperlocal and shooting up the revenues. But it's very tough to say as we analyze because we have and, indeed, the entire industry has been quite a bit unaware of this thing. And we will see what goes, but there are a lot of actions that we are trying to do in-house on that.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [32]

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Okay. Okay. Understood. And on your EBITDA margin front, like if you see last 2 years, our EBITDA margin had seen a substantial decline, right? So if you compare it with some of the peers, I think the decline has been more steeper for us. So just wanted to understand what was the -- what is the reason of that? And when can we come back to those kind of level, which we used to do in FY '18?

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Piyush Gupta, HT Media Limited - Group CFO [33]

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Are you talking about Radio now?

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [34]

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No, overall. Overall business, I'm talking about.

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Piyush Gupta, HT Media Limited - Group CFO [35]

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Well, overall, there is a margin improvement in this quarter also. I think if you compare it to the same period last year, of course, there's a margin improvement which has happened. But 2 things which obviously hurt us last year, one of them still continues, is the revenue softness, but the input prices have started to soften out. What's helping us definitely is a tighter cost control that we are doing and trying to drive much more productivity and efficiency within the company. So we believe, going forward, the margins should at least be here, if not go further from hereon. From 13%, we've come down to a -- we've come up to a 19%. And we hope to maintain it in this same, give or take a few points.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [36]

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Understood. But in FY '18, we used to get about 28% kind of a margin.

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Piyush Gupta, HT Media Limited - Group CFO [37]

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Yes. Look, I mean, FY '18, we used to have a growth coming on the top line, which was a big margin driver, so to say. And now with this 6 to 8 quarters of perpetual revenue decline, there's a bit of a loss of operating leverage in the P&L, which is coming on to the margin. And if you also remember, that year, we had just come out of a big cost project, whereby we had improved our margins -- or the price margin realization had improved substantially. Newsprint prices at that point in time were benign. If my memory serves me right, we were in the zone of about $500 to $525 a metric tonne, where dollar was also not as sharply appreciated, which had happened last year.

So those things were contributing to the margin. Now, I really can't comment about revenue. We've been hoping that the revenue will show some green shoots. Though we see in a few categories, but those are not sustainable enough for us to call victory on those respectable -- respective categories. We are doing a lot of work. But I think for some time, we will be in this margin range of 19%, give or take.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [38]

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Okay. Okay. And if at all our volume improves, let's say, going into FY '21 as you expect, I think, the volume should improve next year. So how will that have a bearing?

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Piyush Gupta, HT Media Limited - Group CFO [39]

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Well, that will directly have a flip impact on the margins because, as I said, that will be the return of operating leverage, slowly but gradually. Volume has to, obviously, translate into revenue, and we don't want to be in a situation whereby, by doing a price degradation, we drive up the volumes. But the volumes have to improve at steady prices. That'll definitely help us on margin improvement.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [40]

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From the current level onwards, right?

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Piyush Gupta, HT Media Limited - Group CFO [41]

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Absolutely, from the current level onwards.

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Operator [42]

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We'll take our next question from the line of Shailendra Mundra, an individual investor.

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Shailendra Mundra, [43]

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Congratulations for a big Q-on-Q improvement in the operations. I have a question. You have significant investments in property as well as financial investments at the stand-alone level at HT Media and you also have a huge borrowing. Could you please give some -- throw some light on what you are trying to do and how much money you earn by borrowing and investing this way? It's more of an investment company kind of operation. So how much contribution do they make after the long-term strategy?

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Piyush Gupta, HT Media Limited - Group CFO [44]

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Yes. So let me give you a long-term strategy because this question has been debated on the quarterly calls even in the past. Two things that you are seeing right now is a lot of real estate which is sitting on the balance sheet. Most of this is in our AFE business, which is a separate line of business that we've been in for quite some time, whereby all the real estate players who are looking for advertising, but because of a certain liquidity condition cannot afford to do that, we basically take a risk and reward on the asset after doing a due diligence. And for part cash and part real estate, we kind of give them access to advertising revenue.

We believe and it has proved in the past that, of course, there might be some volatility here and there, but this is a good business because it gives us, one, access to incremental advertisers who, because of the liquidity situation, might not be able to advertise and market their new projects; and we also get a strategic real estate play at a -- we would like to call it, at a very favorable price from a long-term perspective. The idea for most of this real estate is liquidation. And if you analyze our annual reports, which will come out in the 3, 3.5 months' time, we are looking to monetize these assets and drive a decent IRR.

The second point that you brought was about debt, which is a classical treasury operation. Treasury is a very big profit sector. And though we don't give the numbers because we're not publishing treasury as a separate category here, but treasury is driving a lot of positive EVA, economic value-add, onto our PAT level. So whatever borrowing you are seeing either is for working capital or for CapEx purposes, where we try to access the cheapest source of borrowings, onshore or offshore, and not liquidating our liquid assets, which are yielding us good returns in a risk-free debt capital market environment where we invest through various mutual funds, only on the debt products and not -- never on the equity products. So those are the 2 things that I wanted to tell you.

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Shailendra Mundra, [45]

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Sir, for me, it is difficult to understand. If I see the last year's balance sheet, your -- if I am not wrong, your interest expense was something like INR 95 crores and your earnings off interest was INR 79 crores. So it's difficult to understand whether you are making profits on this strategy or not.

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Piyush Gupta, HT Media Limited - Group CFO [46]

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I can only tell you that you are missing something because these numbers I am not able to relate to these numbers.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [47]

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So Shailendra, I suggest that we take this offline because we don't have the March 31 results right now.

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Piyush Gupta, HT Media Limited - Group CFO [48]

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Right now. But I can tell you, these are hugely profitable and [this is like] classical audited...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [49]

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We can take this offline. You can get in touch with the Investor Relations team.

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Shailendra Mundra, [50]

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Yes. Okay. Who should I contact, please?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [51]

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The IR at HT. You can e-mail us on IR at HT, and we will come back to you on this.

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Operator [52]

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(Operator Instructions) We'll take our next question from the line of Rohit Talwalkar, an individual investor.

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Rohit Talwalkar, [53]

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I wanted to check what is the amount of debt capital -- debt mutual fund investment in HMVL as on 31st December?

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

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The balance sheet, but...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [55]

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One second. The exact -- we won't have the exact figures. Can we get back to you on this?

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Rohit Talwalkar, [56]

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Okay. I just wanted a ballpark. Because I am seeing that this company seems to be having roughly INR 1,100 crores of debt mutual fund investment and its market cap is INR 600 crores. So I'm just wondering what is going wrong here. What is the plan? What do we plan to do with so much of cash investment? Why is it not being distributed to the shareholders?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [57]

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So the surplus cash is invested in mutual fund. So therefore, that's the first part of the answer. It will be about INR 1,000-odd crores. We don't have an exact number here. Now with regard to the strategy, I'll just hand over to Piyush.

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Piyush Gupta, HT Media Limited - Group CFO [58]

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Yes. Look, there is definitely on -- if you're talking about HMVL, there is a net cash in excess of INR 1,000 crores, but it is not our stated strategy to either dividend out the money. But we would like to widely invest into long-term, revenue-generating and profit-generating businesses. So we have been looking at various opportunities to augment the business by getting into other profitable businesses. And that's what this cash is reserved for.

Of course, not all the cash is reserved for that because there is some amount of comfort cash that we'd like to keep given the volatility in net input costs and given the volatility in the revenue that we've been witnessing for the last 2 years. But we are perpetually looking for opportunities to deploy our cash to generate a long-term sustainable value for all the shareholders, majority and minority.

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Rohit Talwalkar, [59]

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Yes. I understand that. But my challenge is that almost for past 2 years, the market capital -- market capitalization of the company is lower than the cash balance.

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

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You know what, that's -- yes.

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Rohit Talwalkar, [61]

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The [market cap does] indicate that it's high time that you either buy in such opportunities or return the cash to shareholders.

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Piyush Gupta, HT Media Limited - Group CFO [62]

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Look, I think I really won't be able to comment on the market cap, and I totally see your point. I know the market cap has been depressed for quite some time now. And the market cap for the entire sector actually started coming down 2 years ago. But what do we do with this cash is a strategic decision that gets debated at the Board. I will pass on your sentiment to the Board. But as I said in the past, whenever we go to kind of distribute that back to the shareholders, that's not been our stated strategy and nothing's changed so far. We are in hope of finding businesses where we can invest this cash in.

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Operator [63]

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Our next question is from the line of Amit Mehendale from RoboCapital.

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Amit Mehendale;RoboCapital;Analyst, [64]

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On your presentation, I see that the cash balance has dipped from INR 1,100 crores to about INR 1,000 crores, and there is a dip of about INR 118 crores. Could you explain what that is on account of?

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

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There is money on acquisition, and that's what's largely caused the debt. The acquisition money for Radio.

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Amit Mehendale;RoboCapital;Analyst, [66]

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I see. Okay. But that Radio numbers are consolidated. I mean, the acquisition is consolidated in the Radio business?

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

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Yes.

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Amit Mehendale;RoboCapital;Analyst, [68]

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Okay. So despite consolidation, it's like a 9% growth?

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Piyush Gupta, HT Media Limited - Group CFO [69]

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Yes.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [70]

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Yes.

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Operator [71]

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Our next question is from the line of Shailendra Mundra, an individual investor.

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Shailendra Mundra, [72]

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I just wanted to point out regarding the market cap. The share price is on a 7-year low. It's lowest in the 7 years. And I would say that the management is not entirely helpless about the market condition. Just the 10%, which will cost about INR 60 crores, a buyback would correct the share price. And it's not a good idea to have a very low share price against the bad impression about the management and the company. A small buyback every year can correct the situation. So I would -- the dividend distribution is another good idea, but I would strongly recommend, please discuss this in the Board.

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Piyush Gupta, HT Media Limited - Group CFO [73]

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Absolutely. Your point is well taken. And thank you, we will definitely take it to the Board. And I totally appreciate that a small buyback can go a long way towards escalating the -- of the stock price. We'll definitely take it to the Board.

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Operator [74]

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Our next question is from the line of Ayaz Motiwala from Nivalis Partners.

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Ayaz Motiwala;Nivalis Partners Ltd.;Senior Fund Manager, [75]

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A few years back, you had separated the content creation company from the media company in which HMVL had a stake. And then subsequently, that stake has been sold. So I wanted to understand now the policy of people cost and sharing. Was this what it articulated before, where it appeared that this would be an opportunity to actually monetize the content in multiple avenues and that has subsequently been changed after the sale? So can you please explain your strategic position here?

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Piyush Gupta, HT Media Limited - Group CFO [76]

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Okay. So I think there are 2 questions, one is from an HMVL's perspective and one is from a group company's perspective. From a group company perspective, nothing has changed. Monetization of the digital content, because we see a lot of more advertising dollar going into the digital side. More growths are coming in there, so we wanted to have a larger play and up the game there. And that's the reason the Digicontent Limited as a company was incorporated, and subsequently got listed last year.

Nothing has changed in this company. If you look at the various sub-businesses on the digital platform that, that company does, there is a growth of at least 20% in the segment and going up to as high as 30%, 40%. But of course, the revenues are not substantial enough to cover off the print shortfall.

Now what we did last year when we sold off the HMVL stake was because it was just getting too complicated having 2 parent companies, HMVL and HTML, and that is the reason it was done and HMVL shareholders were compensated by cash at that point in time. But the digital company, the DCL, is definitely growing much more healthier, and it's a double-digit growth, which we also forecast going forward in the future here as far as the digital content businesses are concerned.

Of course, there are some other business -- some other areas whereby their revenues on the content that they produce. So the print companies is concerned, which is the transfer pricing thing, and because the print revenues themselves are not growing, it is not helping. But all the pure-play digital content businesses are growing in double digits and likely to grow even faster. So if print does indeed pick up, that company will grow even more faster. But their pure-play digital businesses are growing very handsomely and very attractively at this point in time.

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Ayaz Motiwala;Nivalis Partners Ltd.;Senior Fund Manager, [77]

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Right. So as you rightly pointed out, sir, that the print advertising has been very tepid, in fact declining for the last 6 to 8 quarters. As one -- in the statement recently also you just made this point that the print revenues have been declining, and thus, as a percentage, it's been affecting them. Now with the core content creation out of the -- of HMVL and the stake being sold, how do we understand this in the light of costs and transfer pricing and cost sharing? Because the whole idea of taking it out was to build cost efficiencies. Now you've got the core content out of this company, so how will this happen when times get tougher than this or get better?

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Piyush Gupta, HT Media Limited - Group CFO [78]

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Look, I'm just trying to -- and help me understand you better. This company is created to monetize the content that it creates agnostic of the platform, agnostic of the avenues. One of the ready-made platforms that we have in a sister concern, which is a print company, it's supplying content to that and monetizing that.

However, that vertical is going down is the point that I made. So therefore, we are developing other monetizable opportunities which I'm just calling the pure-play digital content. Now can you have your proprietary places, destinations and content curation sites, whereby this content can be used, can you sell it to the third-party content and so on and so forth. Those businesses are growing very handsomely.

Now when you come down to the cost thing, when we transfer price the entire product, I think the whole idea was to define the cost in the most frugal manner, so there's no duplication of cost. And that principle continues. So I...

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [79]

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And from HMVL perspective, just to add on that and since it's linked to revenue, there's an autocorrection of cost as and when there is a revenue decline. So therefore, the cost efficiencies will then automatically kick in.

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Operator [80]

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Our next question is from the line of [Deepak Kumar Tapadia], an individual investor.

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Unidentified Participant, [81]

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I want to know, every quarter, we get so much of other income. Can you explain from where we get so much other income, please?

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [82]

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That's from the treasury operations.

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Piyush Gupta, HT Media Limited - Group CFO [83]

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So that's what one of the other gentleman asked. As I said, we run a very profitable treasury operations. So that other income, which is classified in the Schedule VI of the government SEBI accounts is all treasury income.

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Unidentified Participant, [84]

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So if I calculate the whole year EBITDA, if I remove the other income, so it's still very difficult for us to pay the -- even interest cost?

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

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But you cannot do that because the operations are entwined like that. Of course, that phenomena is playing out for the last 12 to 18 months, you're absolutely right, because the core business of print has been under pressure. But if you look 2, 3 years ago, that was not exactly the case. But treasury is a very profitable operation. And as you will analyze at the end of the year, it's turning in a quite handsome return, and therefore, it's EPS accretive in a very big way for the shareholders.

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Unidentified Participant, [86]

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And second question. Sir, can I request you for a buyback or a dividend because the cash balance we have in the balance sheet, market is not ready to believe that. That's why they are not giving the market cap.

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Piyush Gupta, HT Media Limited - Group CFO [87]

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So your point is absolutely a fair point. And we understand that, [Mr. Tapadia]. This is a conversation for the Board. I think we will, again, discuss that with the Board. But we will do whatever is in the best interest, what we believe, for all the shareholders, and we will keep on doing this thing. If buyback or dividend is the right way to do, we will absolutely do that as well.

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Operator [88]

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

I'm sorry, [Ms. Singh], we are not able to hear you clearly.

(technical difficulty)

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Unidentified Analyst, [89]

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Am I clear now? (inaudible)

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Operator [90]

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Ma'am, your voice is still not audible. I'm sorry. Could you please disconnect and rejoin.

We'll take our next question from the line of Deepak Poddar from Sapphire Capital.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [91]

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Sir, just wanted to get your outlook on the tax rate going forward?

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Piyush Gupta, HT Media Limited - Group CFO [92]

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You mean the effective tax rate?

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [93]

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Yes.

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Piyush Gupta, HT Media Limited - Group CFO [94]

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So the effective tax rate, as you know, if you look from the financials, they look like about 35% on a consolidated financial. One of the big reasons is if you pick up the last year's financial, we had taken the benefit of the merger scheme into the last year's financial and that had depressed the tax rate. So you'll have to read both the tax rates separately. But from a cash outflow point of view, because after the scheme we will have tax credits even in HMVL, that's likely to be under a MAT regime this year.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [95]

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Okay. So maybe 18% to 20%?

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Piyush Gupta, HT Media Limited - Group CFO [96]

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Yes. MAT, I think, is 21.2% or whatever that number is.

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Deepak Poddar, Sapphire Capital Management LLC - Portfolio Manager [97]

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Understood. Understood. And basically, for FY '21 next year, a rough calculation basically on the P&L side, maybe a 5% to 10% growth or 19% to 20% EBITDA margin, which you said, with a depreciation and interest of about INR 300 crores -- INR 300 crores, INR 310 crores, and still getting at a PBT of INR 150 crores. So is that what -- something which is very optimistic side or this is what...

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Piyush Gupta, HT Media Limited - Group CFO [98]

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Well, Deepak, I think margins in the ballpark of 19% sounds like a [two-thing], but we don't give a forward projection. But for building up a growth projection right now at about 5%, I think, is a very, very optimistic base case. Whatever industry reports that we are getting and whatever benefit of history for the last 6 to 8 quarters that we have, I think the tide's going to turn, but it will -- because advertising and media is a derived category, it's going to be a subset of the various sectors which publicized in newspapers. So if the tide turns there, I think it will take a couple of quarters for us to come into a 5% to 10% growth rate. But as we -- honestly, and this is my personal view, I'll be very happy to have a flat revenue line for the next 1 quarter, and we'll see after that how the economy functions.

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Operator [99]

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Our next question is from [Anita Singh] from [Inventus Capital].

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Unidentified Analyst, [100]

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So there has been improvement in print revenues from the previous quarters.

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Anna Abraham, Hindustan Media Ventures Limited - Head of IR [101]

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That's because we've had a festival quarter result in quarter 3.

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Unidentified Analyst, [102]

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Sorry?

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

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Quarter 3 is a quarter where there is festival-linked revenue, and therefore, it is always going to be higher than quarter 2 revenues.

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Unidentified Analyst, [104]

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All right. And what would be your consolidated net cash?

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

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We've given that in the presentation. It's around INR 999 crores.

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Piyush Gupta, HT Media Limited - Group CFO [106]

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It's about INR 1,000 crores.

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Operator [107]

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As there are no further questions from the participants, I now hand the floor back to the management for closing comments. Over to you, sir.

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Piyush Gupta, HT Media Limited - Group CFO [108]

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Thank you so much. Well, from our perspective, at least, the margins have improved this quarter. So that's, some as they call, the green shoots. We hope that the revenues now come back, which have been the big disappointment over the last many quarters now. While that starts happening, we will already see the impact of that come through the margins.

On the cash side, of course, your company carries a reasonably healthy balance sheet and is professionally looking out for more revenues to deploy the cash to generate sustainable returns for the shareholders. We hope the next quarter will be better than this quarter. And there is an improvement which kicks back into the Radio business in which we've done some investment as well.

With that, I wish you all a very happy new year, and look forward to speaking to you guys on the full year call sometime in May. Thank you so much.

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Operator [109]

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Thank you, members of the management. Ladies and gentlemen, on behalf of HT Media Group, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.