Saregama India Limited (SAREGAMA) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Saragama India Ltd. Q1 FY27 Earnings Conference Call, hosted by MK Global Financial Services Ltd. As a reminder, all participant lines will be in the listen only more, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aryan Tripathi from MK Global Financial Services Limited. Thank you and over to you, sir.

Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today, Vikram Mehra, Managing Director, Abhishek Kapoor, CFO, and Pankaj Kedia, Executive Director, Investor Relations. I shall now hand over the call to the management for the opening remarks. Over to you, gentlemen.

Thank you, and a very, very good afternoon to all of you. Let me start the call by introducing a new CFO Abhishek Kapoor. Abhishek brings in over 25 years of hardcore finance experience across Sula, Vinyarge, PepsiCo, HT Media, etc. Earlier CFO Pankaj did a fabulous job and we heartfully thank him for that. And I am very, very sure that Abhishek will take the thoroughness and the transparency of our financial processes and accounting to the next level. Thank you. Thank you. The numbers of the quarter look healthy, but I would again reiterate, or I would reiterate, like I've been doing right now for over 60 quarters. Please evaluate our performance on a rolling 12-month basis. Whether it's a good quarter or a bad quarter, don't judge us only on the basis of one quarter. In our industry, the stability comes in only on a rolling 12-month basis. In 2005, the global recorded music at US$31.7 billion saw new heights, but India got only a percent of that. In spite of housing, 18% of the world population. We today are operating in the most under-penetrated large music market on earth, and our entire strategy at Saregama. It's built around harnessing this 20-year opportunity in front of us. Let me jump on to the music vertical first. On a quarterly basis, the overall music vertical comprising of licensing, artist management and retail recorded revenue of 230.6 crore, which was a 39% year on year growth. A quarterly EBITDA of 139.8 crore. which was a 36% year-on-year growth and a quarterly net margin or 99.6 crore which was a 30% year-on-year growth for us. Olympic vertical had a low base in Q1 last year, which has also helped us in posting such as strong growth numbers this year. To look at on a full year basis, we maintain our guidance of the music vertical growing between 20 to 23 percent year on year. On the profitability front, we have stated in FY24 that it would take us two to three years before the growth in EBITDA and profit began to follow the revenue growth trajectory. We are entering that cycle now, where content bought two to three years ago has started to contribute towards positive margins. Like Iftri 2, Amaran, Rocky Rani Ki Prem Kahani, Code, Sarkaru Vari Pata, etc. are hit albums which are now contributing positive margins. There's another data point which is worth sharing. In financial year 26, 60% of all music revenue at Shari Gama came from music released post-2000. I'm repeating, 60% of the revenue in last financial year came from music of the 21st century. So while at Shari Gama we proudly steward the musical and heritage of India, We take care of it, we cherish it, we try to monetize it, but the fact is that we are now a new age IP company with a large part of our revenue coming from brand new IP, which has 60 to 80 years of life left in front of us. The company released 750-odd original and premium recreations across Hindi, Bhoshpuri, Punjabi, Tamil, Telugu, Marathi, Bengali, and Haryanmi songs. Just like Krishnavataram, which was a Hindi album, or a Marathi song Vedlabla, these were able to hit top charts, music charts, during the quarter. on new music content this year is expected to be anything between 300-350 crore. Most of that is already committed. Big albums lined up include Love and War, which is coming out in January, Rajni Khan's Dharman, which is a Kamala Hassan's company's production. The most awaited film, Paradise. And another Banshali production film with Tiger Shaw are some of the albums which are expected to release in this financial year. We also entered into a multi-language, multi-year deal with a partner for Indian pop content. and Malayalam languages. We are successfully holding on to a leadership position in Haryanvi in partnership with the erstwhile NAV promoters. Finally saw us release new Punjabi songs after a long gap, and we want to follow this up with a very big Arjun Dylan album later this quarter, that is Q2. Continue with the guidance of a five-year payback period followed by 55 to 75 years of returns. Catalog globally is increasingly treated as an infrastructure-like inflation-linked asset class, which is why institutional capital is now flowing into this space through either JVs or direct catalog purchases. A 180,000-odd song catalog, growing at close to 5,000-6,000 new releases every year, is exactly the kind of asset that compounds value over decades. Thank you. 54% of free music customers in India are ready to shift to a reasonably priced paid service if the free content stops. What we always knew faces the success of the video streaming apps in the country or the paid television services like digital cable and DTH that Indian customer is ready to pay, can afford to pay and is ready to pay provided they see value in it. And one of the biggest way of showing value is top supply of free content. At Saregama, we maintain a bullish position on subscription growth happening in the country. Just to put these things in perspective, paid streaming penetration is 67% in Sweden, or 57% in the U.S., even of Brazil and China are closer to 18%, while we are just 3%. When I say percentage of the total internet users in the market, this is based on Goldman Sachs estimates. This percentage point of penetration is growing over 10 million paying subscribers. The Indian market, if the subscription is priced correctly, which means closer to 100 bucks, and if the supply of free is somewhere curtailed, we should not have a problem touching a 100 million page subscription mark pretty soon. And this is a consensus that majority of the labels actually hold. Saragama's position on AI-based music remains that we support licensed innovation but will continue our fight against unlicensed exploitation of our music. All our new digital licensing agreements are building protection against dilution of our rights and any potential frauds. Also, as shared earlier, we have created two AI-dedicated teams in Saragama to optimize both cost and speed of delivery. The first is a content team that's using third-party Gen AI tools to create neighboring audio content like podcast using Saragama's songs and also building new-age music videos around our older songs. The second team is looking at every process within the company with the objective to optimize the process using AI tools. We should be in a position to see the impact of these initiatives by the end of the year. The global music majors are now talking about expanding the artist branch beyond streaming. We have been doing our part quietly over the last few years in this space. And today, it's already becoming a meaningful revenue contributor through our work done on artist management side, live event side, and the brand partnership vertical. Thank you. Thank you. This quarter saw the video vertical revenue declining by 53% to around 17 crore. Ladies and gentlemen, please keep in mind, this is by design and not by chance. We have shared with you after our Bansali acquisition that we are taking a conscious call to wind down our business Thank you. is eventually going to come down. But we continue to grow our Gen Z targeted short form and content under filter copy as well as keep on focusing on TV and web shows. FI27 started with us expanding a live vertical into multiple formats, helping us diversify our risk. We extended the Carva brand into smaller concerts under the Carva Live banner, targeting middle-aged and older audiences that enjoy sit-down, premium music listening experience. 23 such shows were produced in quarter one. We further built up our devotional format with 22 shows featuring Manoj Munteshir, Backstage Siblink and Jayakishwari during the quarter. We also staged 40 years stand-up acts during this quarter. This year, we are increasing our focus on the American market. I did a U.S. tour with Saudi Arabia. India Raja is currently underway, and in September, we plan to tour with the Punjabi superstar Arjan Dhillam, by the way, with whom we are also releasing an album. This is a combined deal that we have done with Arjan. Thank you. All this is going to help us further cement our position, both in terms of being the revenue leader and help us improve our profitability. Our long-term belief in the potential live events keeps getting the info every quarter, and we continue increasing our investment here. We have put in a place a new vertical around brand partnerships, building an additional high-margin revenue stream alongside a licensing business by maximizing revenue from brands across music, live events, and short format video. This quarter, we partnered with leading brands such as Hindustan Levers, Godrej, Laksh, etc. Partner companies, Pocket Aces reached breakeven in financial year 26 and is now moving towards profitability. This year, we should be seeing further building on the profitability of Pocket Aces. Bansali Productions had no releases during the quarter. The next set of releases are planned in quarter 4 of this financial year. Over the next few years, we will continue investing in new music content. This will contribute not only to immediate growth, but also set the company on a long-term growth path. For the music vertical, we maintain a medium-term guidance of 20-23% revenue growth and an annual music EBITDA margin guidance of 60-65%. That will be our opening statement, ladies and gentlemen. We will be very happy to take your questions now.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, may please press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Avneesh Roy from Noobama. Please proceed with your question.

Yeah, congrats. Two questions. First is on slide number 11. So, here you have given the YouTube views. For four quarters, that YouTube views was fairly stable, around 280 billion views. But suddenly, quarter on quarter in Q1, we have seen a very sharp scale-up. Any one-off here which is driving this? And related question on this slide is almost, I think, 14% of revenue comes from brand, 19% comes from brand tie-ups, and very strong brands, frankly speaking, you are given the names also. So I just wanted to understand, is this a systemic improvement wherein brands are taking your legacy songs, and that is giving you a lot of revenue? So if you could tell us on the team size which is targeting these kind of tie-ups with the brands, and what is the outlook on this?

I'll be happy to share some, give you answers, which are not task-specific. I can't put all our competitive advantages out in the public domain. Yes, in building up, the brand vertical is a very conscious call that has been taken within the company. In fact, both we passed, the brand vertical as well as direct from customer vertical. Traditionally, Saragama used to be only dependent on licensing from. We are now, if you see our corporate presentation, and I think we have put it in a quarterly also, we are now building these two verticals in a significant, in a fashion. On the brand side, the earlier way we people used to function in Saragama, brands were always there, but the way we approached brands were very, very different. Each of the verticals was managing revenue from brands within the vertical. So live events was managing its own show. Music was managing its own show. Filter copy was completely separate. All that we have done is now built it as a joint team, which is managing all brand-related selling within the company. And this is an independent team with a network across the country. When they go to a brand, they are able to fulfill majority of the requirements of the brand, especially if they want to go back and talk to Gen Z. You were talking about catalog. Again, I'm reiterating. Please remember, 60% of Saregama's revenue comes from brand new music, of which 45% actually comes from music released after 2020. So some of the biggest hits that have happened right around the recent times all belong to Saregama, and that music is also very much in demand as far as the brands are concerned. You had a question on YouTube. Listen, those kind of fluctuations do keep on happening depending on which album is doing well at any particular time. When you're looking at this data right now, please once again look at it on a 12-month rolling basis. When the numbers go up, we don't get very excited about it in a quarter. When the numbers go down a bit, we don't get very depressed about it. What we are seeing right now internally is that on a 12-month rolling basis, both the streams on audio platforms and the views on the video platforms should keep on going steadily up, and thankfully that's happening.

Sure. Last question. Firstly, last three quarters, we have seen very good growth coming back for the company, and congrats on that, and good consistency, strong numbers. Q2 also, again, music revenue, the base is soft. So, one is, are you expecting good growth continue in Q2? But more important question is, what happens from Q3? Because then, generally, your music revenue base becomes higher because of the last three quarters of strong numbers. If you could tell us, in terms of growth numbers, how you would expect from Q3. You have given out the specific content library, etc., but more from a numbers perspective.

I hold, I feel a little wrong, on our part to give guidance on a quarterly basis, we hold on to our short to medium term guidance that the music vertical comprising our licensing, artist management, and retail is going to grow between 20 to 23% year on year.

Okay. So, thanks. That's all for me. Thank you.

Thank you, sir. The next question is on the line of Kavish Parekh from 361 Capital. Please proceed with your question.

Hi, Dean. Thanks for the opportunity, and congratulations on a solid set of numbers. Vikram, you highlighted a few AI-led initiatives, such as podcasts and video creation. Could you also elaborate on the strategy behind these initiatives? What is the monetization roadmap? How should we think about the revenue model? What is the potential scale? What is the timeline to probably get to a stage where this becomes a meaningful contribution?

See, hopefully another couple of quarters later we'll be in a better position to answer this question. Right now we are all experimenting with the AI technology to see that can we create really good quality content at a very, very low incremental cost and at a speed that makes sense. To give you flavor of what we are trying to do. One, on the music video side, as you may be aware, that the older catalog that Saregama owns, we own all rights connected to the song, except the rights of the original music video. It was a movie of 60s and 70s. At that time, original music videos were not sold to the music labels because there was no market for it. They were not contractually, not part of the deal that happened with the labels, and hence they remain as a part of the movie negative and is controlled by whom server is controlling the movie negative. So, that's... One of the weaknesses, if I may say, we have in the older catalog, so if you want to do a recreation, if you want to sing, all those rights are sitting with Saragama, but not the original music video. So we are, have been now working, and we try to create brand new music videos, but the incremental cost of actually shooting a music video is not making sense. With AI, we are now reaching a position that a very... True to real, kind of a video can now be created at a very, very low cost, which may start making financial sense. If that experiment works, you literally can do both these things. Create brand new videos with the original audio to talk to Gen X. Giving them more contemporary looking videos and then you can also modify the audio a bit to make it sound more modern. That means change in the instrumentation while you are maintaining the composition and attach brand new videos to Dr. Genji. So suddenly we may have been in a very, very strong position taking care of the weakness that we only uniquely had. Nobody else has this kind of weakness. Because everybody else is a more modern-time music label. We literally have all the music of the yesterday's year sitting only uniquely with Sare Gama. On the podcasting part, we are realizing that there are models that we have seen across in the market, which gives us the confidence that the market is building up this traction for spoken word. Our attempt is that how do we do spoken word in a unique fashion? And by unique, I mean we need to attach some of the biggest songs that we people own to this podcasting content, something nobody else can go back into. So if you are talking of a story of a 50-year-old man or a woman who's thinking of days gone by, Can I, while you are reminiscing those days, can I in your story also build in some of the biggest music connected to romance or separation or friendship into those podcasts and make it uniquely Sare Gamas and then work out models right now licensing it to third-party podcast companies too. Early stages, we are experimenting a lot at Sarigama. I think one of the clear directions we have from our board is do a lot of experiments, do them small, fail fast, learn from it, and then only go back and scale it. That's how we have attacked every product launch till now. That's how we are attaining our initiative right now on AI-based ancillary content.

Pretty interesting. Would you want to call out the kind of investments that you would be making here? Where would it be expensed off, capitalized? And I think we've been also highlighting the use of AI in content acquisition processes. It's been a while since we have been doing that, I believe. So any notable changes that you've seen in your content acquisition processes that you would like to call out?

See, that's the predictive AI part of it, which we people have been doing now four years have gone by. So the real game changer in the room right now is generative AI. Predictive AI has been there for some time in the system. All I can say on predictive AI, our hit-to-flop ratio is better than any competitor in the market, and I don't think we give credit to anybody but our predictive AI models for that.

And any quantum of investments that you would like to call out?

These investments are, whatever people are going to be doing, if it's audio, if it's related to music, will be within this 300 to 350 crore. So there's no additional investment one is asking for, but... To be honest here, the numbers that are needed out here are far, far, far, far small. They're that small right now that at this juncture, there's no point even talking about it. The cost of a music video, if it's done through AI, can be 70,000 rupees also. So, the numbers are that small at this moment. We want to test it out and see at scale that what kind of a music works, in which languages do AI, there's a higher adoption going in. We operate in 11 different languages. We have catalogs sitting right now of 18 different languages. We're experimenting across both pop music. Filmy music as a devotional music. You will start, as the results start coming out, and gives us more confidence to scale it up in a very big fashion. That's the time I'll be happy to call out if you need it.

Fair enough. Secondly, on the live events piece, could you walk us through the event pipeline for the rest of the year? I was under the impression that Diljeet's North America tour was scheduled this quarter. Anything on that? And what's more is plated for next year? And lastly, one question on accounting. What explains the sharp decline in other income this quarter?

So, Abhishek will be in a better position to answer this, but the fact of life is that the investment, the cash that we people have right now has been diverted towards business. Specific investments of ours, namely Banshali Productions, and that's why you see a reduction in the other income. You asked me about the pipeline of the events that are happening here. What I can tell you is completely which is things that are there in public domain. We have a big Krishna show going on with Manoj Monteshir. We plan to do some 25 to 30 more of those. These are currently happening right now in Bombay, Delhi. We are moving to Indore. We have done successfully in Lucknow, Ahmedabad, Surat. We want to expand it. We also want to take it to U.S. We are currently, as we talk to you, we have just completed the first three shows of Elia Raja tour in the U.S. We have already announced an Urgent Dhildenka tour that we will be doing later in September. The Karwa Live is a large enough property which does, in every city that we are in, we are doing minimum of four shows every month. So Bombay itself is going to be seeing 48 such shows. On a calendar basis, we are the next season of UN40, a music festival has already been announced and is being done on 13th and 14th of February in Bangalore. Some of the larger artist base shows the moment we people form it up and with artists we have a confirmation that we can announce it. That's the time we'll make an announcement in the press.

So, Diljeet tour didn't happen this quarter, is it?

No, so, Diljeet, India tour is planned sometime in quarter three, it's still tentative. We were involved with Diljeet in the America tour also in a limited enough fashion. That's all I can mention. But we were, the US tour was all under Sarigamalai.

Understood. Maybe I'll take this offline in more detail. Yeah. Thank you so much. All the very best. Thank you.

Thank you, sir. The next question is from the line of Disha from Preenetra Asset Managers. Please proceed with your question.

Good afternoon, sir. Am I audible?

Yes, sir.

My question was, could you provide an update on the integration of pocket assets and, like, what is the revenue contribution and cost synergies that we have already seen on the consolidated earnings? And over the next two to three years, how is this going to span out?

Master, Pocket Aces, we have always been very, very clear. We made this acquisition of Pocket Aces because we believe that in the days to come, the biggest differentiator we can get as a music label is to build a reputation as the most efficient marketing machine to talk to Gen Z. The biggest consumer of music is Gen Z. When a film producer or a big artist has to decide whether they should work with Charegama or somebody else. The real decision doesn't happen only in terms of money. The bigger decision happens is that the producer wants the album to become hit so that the film becomes hit and every artist wants the album to become hit so that they can sing more and more in the live events or the wedding circuit. So, for them, the marketing ability of the label is very, very important. And what Pocket Aces brings to the table for us is a unique thing. They are the biggest brand today among Gen Z in the country. They, between their, the entire social media presence, are controlling anything between 400 to 450 million follower and subscriber footprint across Instagram, Facebook, and YouTube. Now, that's something that none of our competitors can, at this juncture, are able to compete on, which places us quite uniquely across languages in the country. But that does not mean that pocket ASIS is ever going to become a loss leader. Pocket ASIS were able to turn, were able to achieve breakeven last year. And this year, we people are fairly confident right now that we will start seeing some amount of profit coming out of pocket ASIS.

You got it, sir. And another question was, like, our company owns one of the India's largest major factories, and beyond this traditional screening, where do you see the greatest untaxed opportunity lies?

Deesha, ma'am, there is a lot of background noise. Can you please use your handset? Sure, just a second, ma'am. So, is it better, ma'am? Yeah, please proceed.

Yes, sir. So, the company, like, Sarajama company owns, like, India's largest music library, correct? And beyond this traditional screening, where do you see the greatest untapped opportunity live? I mean, in the sense of international licensing and AA is the amazing license that you said.

And, I'm not able to understand anything. I'm so sorry. Disha, is it me only?

Sir, I can hear her. Disha, ma'am, can you please use your handset? I guess you're on speaker. That's why. Thank you very much.

You're sounding better.

Yeah, please proceed. Yes, sir. So, I wanted to understand beyond the traditional streaming, where is the greatest untapped opportunity for Saragama company life? In the sense, is it international licensing that you said that you wanted to tap into international businesses or AI-related licenses and gaming or short-form content that you see? Could be monetization opportunity for us?

Ma'am, the biggest... Revenue increased opportunities that people see in front of us within music. Streaming is going to be the biggest one. If you look at some of our competing international labels, they end up getting anything between 50 to 70 percent of their revenues coming from paid subscription. India is just at the beginning of the start of that cycle. Just imagine the amount of headroom that all of us have in the industry. And the Sarigama in a leadership position in India should be able to capitalize on it, hopefully better than anybody else in the market today. Then we also see a great revenue maximization opportunity sitting in the short format content. Today, most of the short format apps are on a fixed fee model with the music labels, with an assurance that with time, they are going to move on to a share of advertising opportunity, which means their revenue can really go up in the days to come. Third, models like video streaming companies like YouTube, if the GDP of the country keeps on steadily growing at the rate that it's growing, more advertising is going to flow in, and we people end up getting a straight share of the advertising revenue that these platforms end up making. These are some of the biggest levers that we people have on the music side. One more on the music side is public performance. It is a relatively untapped opportunity in India. By public performance, I mean whenever music is played in a commercial place, the entity needs to go out there and take a separate license, and that license money is distributed amongst the people whose music is played. We believe that's a large opportunity which is not fully tapped in the market. That is also going to open up. In developed countries, this is a big enough. Revenue line. We believe that should be able to give us another very, very big gig. The moment I go out of music, a short format on its own, what we people are doing is filter copy. I think that should become even larger. In the days to come, for any brand to talk to Gen Z, it's going to become increasingly difficult because Gen Z is not reading that much on newspaper or is listening to radio or is going on a conventional television. The video content that they are watching are all through paid subscriptions where no ads are being thrown. So if you want to talk to Gen Z, chances are you will have to catch these guys more and more on a short format app. And what Pocket Aces is uniquely bringing our friends to us is this footprint on the short format app, either directly controlled by us or by some of the artists that we people are managing today. That also has the potential to become very, very big. And the third part of our business, which is live events part of our business. As a society, more and more we are glued onto our mobile phones. The more we start getting disconnected with people around, greater is the need for an affluent middle class or upper middle class to go out and spend some time enjoying themselves with other like-minded people, which makes live events a huge opportunity in front of us. With all the right moves being made by the central and the state governments who are also looking at live events in a very aggressive fashion, we believe in the days to come infrastructure is going to improve a lot and live events will become a substantial opportunity the way it is there in other parts of the world. I hope I have answered your question.

Yes, sir. I have totally understood you. Thank you so much, sir.

Thank you.

Thank you, ma'am. The next question is from the line of Akshay Kalukir from Dalal and Brocha. Please proceed with your question.

Thank you for taking my question. So, I have only one question. So, the question is, when I analyze your question...

Sorry to interrupt, Akshay, sir. Can you speak a little louder?

Okay. So, now it's audible? Okay. Yes, sir. So, when I analyze your segment-wise revenue, so the core in Ujig segment has grew by around 32% year-on-year, which has appeared to be the highest growth in the last eight quarters, and at the same time, your peers have reported only 21% growth. So, could you just help us to understand what is the key driver behind this outperformance? In the core music segment?

For all, I can say when you're looking at the core music, please keep in mind the way we report our music is licensing plus artist management plus retail. I started my opening statement by saying that our numbers are pretty healthy, but please judge us only on a rolling 12-month basis. And as I look... If I have to make a projection for the entire financial year or for the next few years, I maintain that the music will grow between 20 to 23% only.

Okay, I understand. Yeah, that's it.

Thank you, sir. The next question is from the line of Lokish from Balam Capital. Please proceed with your question.

Hi, good afternoon, Vikram.

Yes, it's a little muffled. I can hear you.

Okay, is this better now?

Yes, please, go ahead.

Yeah. But my question was just continuing on the AI piece in terms of how it is helping us revise, you know, get the whole catalog on the video format. Now, if I look at the revenue from revenues from songs B2020, annually, the last three years have been sub-beaut. So do you see this AI initiative of yours getting those growth rates back at least to the industry or beating the industry levels? Once you are completed with your experiment out there.

So, I'm sorry, I have a disagreement on your analysis and what you derive from it. Catalog revenue on an apple-to-apple basis every year has been growing at very high single digits or very low double digits. Percentage of what it hides is, percentage of the share of new content is gone up because new content is growing at a substantial pace. You cannot, catalog cannot compete with it. Performance of a Rocky Rani ke Premkarni or a Istri 2 or a Durinder. But on its own, catalog is constantly growing. The only issue we people had faced, which was an industry-level issue we had all faced, is that in financial year 25 onwards, a lot of platforms in the country had shut down. So, but the platform continues to be there right now. That's why I'm saying Apple to Apple. So, the platform that was there, whether it was a Spotify or a Ghana or a YouTube or a Saabon, if I look at our catalog content, it's steadily been growing here after we have never seen the catalog side. But the bigger question that you had asked, will this reap? That's the entire attempt, that can we grow our catalog at an even faster pace? We are realizing in India and globally, there is this complete resurgence of anything which is connected to nostalgia. If you check out the western music also, many of the artists who are very big in the 60s and 70s and 80s are making a very big comeback. Something similar is happening here. If you see the number of older songs that end up on Instagram, it surprises us also. So, there is a constant work happening both in terms of marketing as well in terms of getting newer derivatives of the older content. The end objective being, can we further improve the amount of money that we can make from these assets that have been fully charged off?

Understood. My second question was, you know, in this time's presentation, you were given a breakup of revenue from different distribution networks, which is, you know, the platform revenue, the brands, and the direct-to-customer. So for brands and direct-to-customer, can you share your own growth rates? Can you call them out if possible? So, I should get a sense how, yeah, how they're doing.

So, we're sharing this data right now and we're updating it on an annual basis just to give, I think the whole objective of sharing this data was that as a company, we are very conscious of the fact that at no juncture should we ever become over-dependent on any one way of making money or one technology or one partner. So we are very well diversified. If for whatever reason, there is a short-term hiccup that happens in any new technology or a business model, it will, I'm sure it will affect us also, but it will affect us far lower than any of our competitors. That's the whole objective. We have been trying to move the company in a more balanced portfolio approach over the last few years, and we thought we are now in a position that we are somewhere comfortable. We want to further improve our numbers that are coming, which are from branch and direct to customer, without at all compromising on the numbers that we're doing from platforms, because that's our core business. You will see this data getting updated on an annual basis. That should give you some comfort.

Great.

Remember, if I have to grow my revenue between 20% to 23%, you cannot have any verticals lagging down.

Correct. It is to get a sense of how the revenue from different distribution networks are moving.

Thank you, sir. The next question is from the line of Yash Bajaj from Lucky Investments. Please proceed with your question.

Yes. Good afternoon, sir. And thanks for the opportunity and congratulations on a great set of numbers. Thank you. My first question is, sir, on the music EBITDA for this quarter, it has come off by 1% on a year-on-year basis. It's a small number, but I just want to understand the factors behind the music EBITDA, taking into consideration that music as a segment has grown 40-43% on a year-on-year basis. That's my first question.

So, when you are looking at it year-on-year, also please just see the mix of the music segment. If you see the segmental results that people have declared, you will see artist management piece is also growing. And artist management is always a lower margin. It takes zero investment. Artist management part of the revenue is always the lower margin part. So, it's just as a mix change that is happening. On the core music licensing business, we don't see any change happening right now at the EBITDA level. Obviously, at the margin level, there will be impacts on the short runs coming in as the people keep on increasing our content investment. But there also, let me give you the comfort that the FY25, FY26, FY27, we had announced a thousand crore investment on the New Year music. We were doing a step function increase in the amount of investments that we are making. Say from 28 onwards, you will see us now tempering the rate of growth in terms of the music investment. We will still fight for a 25 to 30% market share, but we are almost reached there, and we are comfortable holding on to that position for some time. So in the long run, you will see the EBITDA growth and the bottom line growth starting to catch up with the revenue growth that you are seeing on the music segment.

And my second question is specifically, again, on the music net margins. Again, from the point of view of that, the segment has grown at a much higher clip versus if you would have compared Q126 numbers. So, is the content charge slightly more aggressive this quarter compared to Q126?

I've told you, please evaluate us on a 12-month basis. Quarterly, if you're trying to find trends in quarterly, there aren't any. All depends which release got pushed to which particular quarter. So that's right. Please go back and evaluate us on a 12-month basis. When our numbers look good, also, I tell you 12 months. When our numbers are not looking good, then also, I tell you 12 months.

Understood, sir. Okay, I'll just rephrase my question. So, if we had to compare FY26 net margins of the music business, and if we kind of extrapolate that for FY27, will it be fair to assume that we will incrementally be better in FY27 in terms of net margin versus FY26, even though we are spending 300, 350 crores this year on marketing and new content?

See, I think we have already gone out there and shared with you. I'm not going to see. I'm not answering your question directly. We have shared with you that our annual music EBITDA guidance is 60-65% and I'm holding on to that.

Okay, sir. Okay.

Thank you, sir.

That's all from my side. Thank you. Thank you.

Thank you, sir. The next question is on the line of Sanya Jain from Care PMS. Please proceed with your question.

Sir, thank you for the opportunity, and congratulations on the good set of numbers. I just had one question regarding the artist management business. So, for the past three quarters, we have followed the revenue run rate of 40 crores per quarter. Could you please help me understand what would be the key road driver for this business and how do we see the revenue going forward for this? And so, regarding the EBITDA margins on this business, it is currently at 10%. Is there a scope for expansion in this margins?

So, the growth rate that you're seeing in artist management, because we were at the stage of still building this entire vertical up, has been very, very rapid over the last few quarters. This is going to temper down. Though I'm maintaining my bigger number, music vertical, which is licensing plus artist management plus retail, will grow between 20 to 23 percent. And we are not changing that guidance of ours at all on a short to medium term basis. That's the overall vertical path. Since you asked on specific on artist management, the jumps have been more rapid because the vertical was getting built. It's reaching that kind of a stage where there will be some stability that will be coming in as we move to another couple of quarters. Artist management margins, yes, there is a lot of work happening there to see how can we go back and improve the margin percentages out here even further. Remember, what often happens here is that you go back and create a lot of content for the artist, the revenue that you are making from the content from the artist is sitting out there in the respective, say, music vertical, while Since you are investing that much on the artist, you also tell the artist that whatever revenue Mr. Artist you make, through brand endorsements or anything else, that revenue will flow through us and we will keep our margins through that. That's the artist management business vertical as such. We are now trying various ways in which we can help the artist even further to become bigger and stronger and charge greater amount of money from the market. As that happens, we should be able to go back and improve. That improves our negotiation position also, and we should be able to improve by another few percent. At this juncture, I'm not giving any guidance on what percentage will we be able to go back and improve it. Currently, the focus is just get the full juice out of the artist management vertical in terms of it firing in its full capacity.

Okay. And just one question, could you please spell out what would be the revenue contribution in the music licensing segment for the subscription part?

Ma'am, we don't share that specific data. It's competition-sensitive data.

Okay.

Thank you. Thank you, ma'am. The next question is from the line of Pallavi from Samikshar Capital. Please proceed with your question.

Yes, sir. Thank you for taking my question. I just wanted to get back on this revenue growth, right, 43%. Would that include the Haryanee catalog, so that's an acquisition growth, and so what would be the organic number there, if any, Tesh?

No, ma'am. Obviously, we are investing also in both organic, picking up newer organic content as well as picking up the inorganic catalogs. So, both the numbers are combined in this. We are not declaring the numbers separately. But, yeah, that's a conscious call at any particular time when the team has got... Thank you.

Right, but the organic has this tailwind to it, right? It's already being listened to. My second question would be the video segment, right? It's still running the losses. So when do we see a wind down of that segment completely?

So we had announced it in February and then again in May that it's a conscious call taken by the company that we will go ahead and start winding down our films business. Whatever films which are there in the pipeline, they're all going to get cleared up. Going forward, all of our, we were in film business, finally acquired the music of those films. That requirement of ours is going to be met through our investment in Banshali Studios. So you will see, the numbers are going to remain in this space only. You will see over the year, we completely come, releasing all the films that are sitting right now on our balance sheet, maybe over the next three to four quarters.

And lastly, it would be on the content cost. I know you've given us a guidance of 65% to 65% on the EBITDA margin, but anything that you can share with us on content cost, directionally, is it going up to fear?

I have told you the amount of monies that we'll be spending on new music content, it will be between 300 to 350 crore.

Right. Got that. Thank you so much.

Thank you, ma'am. The next question is from the line of Rohan Nagpal from Pilius Capital. Please proceed with your question.

Hi, thanks for taking my question. So, on the cash flow statement that you've published, Q4 presentation has a content spend of 186 crores, and the Q1, the latest presentation, has a content spend of 265 crores. Could you just help me reconcile the difference in the two numbers?

I request Abhishek or Kuldeep to please take this.

Rohan, can you repeat your query one? So the presentation published this quarter has, in the cash flow statement, has a 265 crore line item on the new content. And the Q4 fiscal 26 presentation, the cash flow statement, has a content spend line item of 186 crores. Why is there a difference between those two? Q4. Are you talking about Q4? Yeah, Q4. Q4 26 and Q1 26.

So, this 265 crore is for full year of last year, which we have made payment for the content acquisition.

Right. So, the same, I mean, the same line item in FY26 in the Q4 presentation has 186 dollars charge against it, right?

Ron, I don't have the presentation ready available with me. We'll take this offline.

Sure.

Thank you.

Thank you, sir. The next question is from the line of Ravi Naredi from Naredi Investments. Please proceed with your question.

Sir, Vikram, Vikram, good afternoon. Good afternoon, sir. How do you say it? Do you, sir? Sir, how much earning, bifurcation, old and new songs, revenue, can you tell us how much revenue from new songs, how much revenue from...

If you see the part, in our corporate presentation, I think we released it around a week ago. We people have given by decade our composition, how many songs have been released, of the 180,000 songs? So, the rough numbers are 60% of all the revenue that we made in music site came from the content released after 2000, of which 45% was after 2020. So, your Chaiti Catalog company is also becoming the biggest New Age IP company.

And sir, this quarter, how much advertisement songs we have sold and revenue earned?

Sir, we don't get into those specifics. This is all very, very competition sensitive information. All of us compete in the same market, go to similar brands. But all I can say is we are the only company, today first we are the only company which has got a full flywheel going on. We have a music business, we have an artist management business, we have a live events business also going on at the same time and we have a short format content business. So when we go to the branch, we tell them that if you have to talk with people from 25 to 30 years, you can also give a license for your songs, you can make songs for your short format content, which will go on Instagram, you can do it. If you have connected to Gen V, whether it's Unforti, whether it's Backstage Shibling concert, you can also give sponsorship. Which places are very uniquely for any brand in the market that wants to talk to the younger people.

Right, right, right. And, sir, when this free song is dropped, how much is subscription we can raise in our company, according to your view?

Sir, this is a personal view of mine. I believe Indian market can easily turn into 100 million subscribers at 100 rupees per month if the free supply is done. And this can happen in a period of 12 to 18 months. We have studied this in all countries a few years ago, that do the younger people, are they comfortable with the idea of not listening to music, and we got a very solid feedback, that if you want to become music, you can't be able to become music. Now, ENY and IMI have had 15,000 people, which is available in the public domain if you go back and search it, which is under 64% of people have gone back and said that if you want to make music free, Then we will go out there and pay. So, I think this is a large opportunity sitting here. Video companies have taught us that Indian consumer is ready to pay. And we believe now all the right moves are happening, all the big international labels are also talking about this, the streaming platforms are talking about this, because for everybody, India is now the last peak market which is yet to be tapped.

And you are saying wrong, sir, that you cannot live without listening without listening. I am in 60. I cannot live without music. You are saying wrong, sir, that you cannot live without listening. Thank you very much, sir.

Thank you, sir. The next question is from the line of Kumar Saurabh from Scientific Investing. Please proceed with your question.

Congress on good side of numbers, sir. My question is on the event and artist map. Like in the, you know, subscription business, you told 3% penetration and you have a data to compare globally. Ismit, do you have any analysis, sir, how big this industry can be? That is my one question. And the second question is, we are managing so many artists and some of them can really become very, very big. But from a business model strength perspective, what is it which will hook these artists to us so that they don't go to competition or they don't do on their own? These are the two questions I have.

The question is a very solid and a fair question. That's why I don't tell me about artist management, artist management is connected to the content business that we are in. So, if you are competing artist management agencies, if you keep on seeing in the country, all of them are standalone artist management companies. Their job is to represent the artist, get them some work. Whatever money comes in, they keep a percentage. We are uniquely placed as the only company that also is investing in its own content. Hence, every artist that we are managing, we are also ensuring they get a chance to either appear in our music videos or sing new songs right now for some of our brand new songs or even appear in the music videos or filter copy, which ensures that we not only make a help artist, Artists make more money, but we are also helping artists become bigger. That's why if you see the churn which is happening from our catalogue and the artist's name, I don't declare it, but you will get the name of the big artist's name in the public, we are not going to find churn because we are uniquely helping artists to become that much bigger. Now, I'll give you an example. One artist is Viraj Gilani. We're also doing music with Viraj. We're also doing all stand-up comedy live events. We've also done a movie with Viraj. We're also doing a movie with Viraj. We're also doing a young artist called Mahi. Mahi appears in our music videos. Mahi appears in a filter copy series. We are managing live events in Mahi. And when there was a big concert like Himesh Reshamiya Ji's concert, the opening of Mahi was done. So this is a unique flywheel ecosystem that we are able to offer to the artists which in the country, honestly, nobody else has been in a position to do it. Hence, we consider artist management as not a separate vertical but an integral part of our core content business.

Very interesting, sir. Glad to hear. The other question was on the opportunity size. If you can give any color on how big this opportunity can be and where is India and where are we standing?

So, artist management piece is... The extent to which we are managing it is bigger, but artist management is a normal part of majority or of our international peers also. So, as much as our music industry will be, it will be more of an artist management industry. Actually, the real money comes in right now from singing and weddings. As far as live events is concerned, see still an industry which is for all practical purposes has opened up in India only post-COVID. In pre-COVID time, there was no focus on our country in life. Now, with the Gen Z and the Millennials, with this very clear-cut spirit that they want to spend less on product, more on experiences, FOMO is becoming a very important part. People want to be seen at the right places and put the photographs of their presence in those places on various social media. All that is driving the live event space in a very, very substantial fashion. Jury is still out, but we believe live events may be the fastest growing vertical. That real challenge in the live events business is going to be as we go forward, not growing the top line, but improving the margin profile of the live events business. That's why at Saregama, we are keeping a tight balancing act between working with artists It's based on artist-based concepts. They drive revenue, but they are relatively lower margin products. We balance it with our own IPs that we people are generating. IPs in the short run have a pressure on the bottom line, because you have to establish the IPs in the short run. But in the long run, they become very heavy margin products. That's why launch of a music festival called Unforti, launch of this show called Krishna with Manoj Muntashir, launch of Karwa Life Property, in all these places, artist becomes... Incidental is the show and the concept which is the primary thing which allows us to go back and improve our margins. Have I answered your question, sir?

I forgot you, sir. Yes, sir. Yes, sir. Surely. The last question is on the demographics of the audience which pays the subscription fee. I know we don't directly connect Spotify and all, but do you get this kind of demographic data in terms of age band because you are stressing on Gen Z and the EY survey and all? Because if it is the Gen Z audience, then there are chances that it will get converted very, very soon. So do you have any demographics back up?

I'll tell you right now, we don't get the data, but because we were getting the research done, we all seen the research data coming in. It's not that Spotify is sharing the data with us. From the research data is coming out very, very distinctly clear that these people who are 50-year-olds don't pay me because the whole generation is growing, that we are digital-free. The entire growth is coming from Gen Z and Millennium. That generation is born with knowing that digital has to be paid for. The older people always found digital to be the free way of consuming stuff. Changing them is going to take much longer. The younger generation is very comfortable to pay. As long as it's making financial sense, it's affordable.

Great. Thanks, sir. That's all I have. And it's very admiring to see how you're building each of the new business pieces. My best wishes, sir. Thank you, sir.

Thank you, sir. Very kind of you.

Thank you, sir. The next question is from the line of Kavish Parekh from 361 Capital. Please proceed with your question.

Hi, Dean. Thanks for the call. The scale-up in artist management business has been impressive, also evident by the kind of discussions we've had in the call earlier today, with the segment today contributing about 17% revenues this quarter. Now, as we look ahead, of course, from a growth rate point of view, you've mentioned that broadly music retail licensing and artists will go at 22-23%. But we have a few levers to drive this growth. We onboard more artists. That's, of course, happening. But two more levels where you could give some more color, which is increasing monetization or wallet share from the existing roster or by underlying growth in the artist's earnings. How did we think about these two drivers? And you also highlighted that at some point, of course, still now growth was pretty strong due to a low base as the segment was being set up. But at what scale, what level do you see the segment sort of saturating?

So, again, I don't see the wedding and the corporate market saturating. I'm sure many of you guys are also tracking the size of the wedding market. And one of the biggest things that happen in each of these weddings in India is that artists are called out there to go out there and perform. Pehle that used to happen for one function, now it's typically happening in two to three functions. So, I see a very long road ahead. Please, when you look at artist management vertical, see it as a byproduct of the main content business that we are in. If we were not into content business, we wouldn't have been there in artist management vertical on its own. It does not make sense because there is no clear moat that we have in artist management if we are a standalone company. Our moat is single fact that we are able to give opportunities to these artists to become big by appearing in our music or videos or live videos. That's what is drawing some of the biggest artists to go back and work with us. Yes, we have taken a conscious call that we are going to stay completely away from Hollywood. We are very comfortable working with non-filmy actors while apart because we are not into films. We are not going to add any value to their lives. That's why we are staying away from it. Everywhere else, we add serious value to their lives, which is going to ensure a lower churn and, in the long run, improvement in margin.

Understood. And any comments? Of course, we have to look at this in tandem with the algorithm. Any comments on these two drivers that I spoke about? Increasing wallet share from existing artists and or underlying growth in artist earnings? And lastly, on the competition bit, my understanding is that the space remains highly fragmented with several emerging companies sort of competing for the same pool of talent. Beyond these emerging or relatively small-scale players, do you also see competition from any larger players?

No, actually, there isn't any. There is serious competition which is sitting there, people representing film actors, but that's a space we are very, very clear we are not getting ourselves into. Because anything where we don't have a moat, we will not get into. Films, we don't make films. So why should we go back and represent artists there? We will not be able to help them become big. Answer to your question, the first question I thought I gave, the more we will be in a position to help artists to become bigger, better will become a negotiation power from the artist to take a higher percentage of his commissions. At the end of the day, unless the artist grows, I don't think we have the moral right also to go back and ask for more money. Thank you. The philosophy in the company is, it's the artist first, help artists become bigger, then you can go out there and charge a higher commission, because in that case, artist is not going out of his earning. He is also making more money, and he or she will be very willing to go back and share a larger commission with us.

Got it. Very helpful. Thanks, Adan. Thank you.

Thank you, sir. The next question is from the line of Pallavi from Samiksha Capital. Please proceed with your question. Ms. Pallavi, your line has been unmuted. Please proceed with your question. Ms. Pallavi, as there is no response, ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to management for closing comments.

Thank you. Thank you for your faith and confidence in the board and the management team of Saragama. Saragama's growth narrative will remain steady over the medium to long term, driven by rising digital consumption. Both new customers entering the market and existing customers consuming more. With over 680 million internet footprint in India, our cash reserves, professional managerial depth and access to the soundtracks of the best films, we can drive earnings not just for the next 2-3 years but for next 20-30. India is at an early stage of global streaming curve. It's fortunately a feature and not a bug. It means our growth is going to be driven for a very, very long term. We are not at the end of it like the Western market. Our growth is going to be driven by subscriber expansion as well as ARCO expansion. And more importantly, the format diversification will also start happening. We are seeing in the more developed markets, there is a saturation in terms of subscriber expansion. There is limited upside available on ARKU expansion. They are working more on format diversification. We have all three opportunities open in front of us. To summarize, we operate in world's most underpenetrated large music market with a high margin structure and own IP catalog growing at 4,000 to 5,000 releases a year. An unmatched in-house entertainment flywheel. An extremely supportive and forward-looking promoter. And a strong balance sheet. Every global trend, subscription growth, R2 expansion, superfan monetization, catalog M&A, and beyond streaming diversification has a long runway in India than anywhere else in the world. And Sarigama is the cleanest way to own these trends in the country. We look forward to your continued support. Thank you, and good evening.

Thank you, sir. On behalf of MK Global Financial Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your line. Thank you.