Saregama India Limited (NSE: SAREGAMA) Q2 2025 Earnings Call dated Nov. 06, 2024
Corporate Participants:
Vikram Mehra — Managing Director
Pankaj Chaturvedi — Chief Financial Officer
Analysts:
Pulkit Chawla — Analyst
Abneesh Roy — Analyst
Priyankar Sarkar — Analyst
Harssh K Shah — Analyst
Jyoti Singh — Analyst
Jayesh Jain — Analyst
Govindarajan Chellappa — Analyst
Rolin Bharatnandu — Analyst
Lokesh Manik — Analyst
Ravi Naredi — Analyst
Presentation:
Operator
Ladies and gentlemen, welcome to the Q2 FY ’25 Results Conference Call of Saregama India Limited, hosted by Emkay Global Financial Services. [Operator Instructions] Please note that this conference is being recorded.
I would now like to hand the conference over to Mr. Pulkit Chawla from Emkay Global Financial Services. Thank you, and over to you, sir.
Pulkit Chawla — Analyst
Thank you, Riddhi. Good afternoon, everyone, and welcome to the Q2 FY ’25 earnings call for Saregama India Limited. From the management, we have with us today, Mr. Vikram Mehra, Managing Director; Mr Pankaj Chaturvedi, CFO; Mr. Saket Sah, Group Head, Investor Relations and ESG Reporting; and Mr. Pankaj Kedia, Vice President, Investor Relations.
Without any further delay, I shall now hand over the call to the management for their opening remarks. Over to you, Vikram.
Vikram Mehra — Managing Director
Thank you and a very good afternoon to everyone. Welcome to the earnings call of quarter two FY ’25 for Saregama. This quarter saw operating revenue of INR242 crores and a PBT of around INR59 crores. Our revenue is 40% higher than for the same quarter last year. Our H1 revenue of INR447 crores is in sync with our guidance of 30% revenue increase in FY ’25. Our adjusted EBITDA increased by 17% and is at 35% of revenue, which again is in sync with our guidance of 32% to 33% adjusted EBITDA. May I once again request all of you guys to please evaluate us on a rolling 12-month basis and not on quarterly basis. You can take last 12 months or you can take — evaluate us for the full financial year. On a full year basis right now, we are confident on meeting all the guidance that we people have given in the past.
Let me start by first telling you the reasons behind this massive increase in revenue, which has come keep in mind in spite of the retail business, which is Carvaan business coming down by 40%. So you have Carvaan business, which is a conscious call from our side being scaled down has gone down by 40%. In spite of that, the overall revenues have gone up by 40%. This growth has primarily come on the back of a very successful quarter for the video segment. The revenues grew from INR15 crores to INR72 crores in this quarter. Remember, video is a high IRR — strategically important, high IRR, low margin business.
The great news about this increase in video segment revenue is that this has come along with the total amount of assets which are sitting out there on the video segment coming down. So you have less capital of ours getting blocked in video while the revenues have gone up even better. We are very, very confident of our — one, our capital allocation policy, but more important than that our financial management policy, which will be allowing us to drive better IRR from our video business than majority of other competitors. The second source of growth in revenue is because of music business. Music business which primarily means music, licensing and artist management business, this at INR148 crores in this quarter is a 22% increase over the last year, again in sync with our annual guidance.
It may also address the other issue which a question that may be coming in the minds of a lot of you people on the issue of PBT coming down on year-on-year basis. This is purely on account of one factor, which is investment in newer content. The total charge-off on account of new content which includes both marketing and the charge-off of content is higher by INR18 crores in this quarter compared to the last quarter. If you suddenly add that INR18 crores back, the numbers all start looking great again. This cost is getting reflected primarily in the advertisement and sales promotion ahead and depreciation and amortization expenses ahead.
As you know, the entire cost of marketing is taken off in the same quarter. That is not amortized over the full four quarters. So that’s why you keep on seeing these bumps and lows coming in. Our belief in new content investment and future proofing the company remains steady. I have been sharing this over multiple quarters. What we are seeing is just now rollout of that strategy. The positive impact of that is going to be felt not just for a couple of quarters, going to be felt for next 60 to 80 years. As committed in quarter four financial ’24 call and quarter one financial ’25 call that on a 12-month basis, FY ’25 will be showing a modest growth in PBT.
Let me get into individual segments at this juncture, let me start with music licensing. This quarter saw us becoming number one in Hindi music for the first time with two of our albums right now being the top two albums of the country. First came Bad News whose song Tauba Tauba topped every possible chart in the country, including Spotify, Instagram, Billboard, Wink, radio, even on YouTube it was the number one song globally right now for over 25 days. The total number of YouTube views of this song have crossed 300 million. The other song of Bad News like Janam and Mere Mehboob are also part of this Spotify top 50 charts for weeks.
Following this in this quarter was the biggest album of the recent time launched by Any Label called Stree 2. It’s absolute rarity in today’s world for all songs of an album hitting Spotify Ke Top 15 within the top 15 of the country. Aaj Ki Raat alone has been there. If you today also see the top three songs in India on YouTube, we have been controlling the number — the top three positions now. I’m talking about more of October, November, but we have been controlling that position now for weeks. Aaj Ki Raat was Spotify global number one for I think 2.5 week. Today as I talk to you, Aaj Ki Raat has already crossed on YouTube 500 million views, while Aai Nai, the second song has crossed 300 million views.
Overall at an album level on YouTube alone on our own channel, we would have crossed 1 billion views. Yes, majority of them would have come right now, a large portion of them has come in quarter three, but it just tells you that our ability to pick good quality music and market it is now being proved to be unparalleled in the market. Our hit rates are far higher than any of our direct competitors. The other big albums this quarter were Ram Charan’s Game Changer whose song got released in Telegu and Surya’s Magnum Opus Kanguva in Tamil whose song also got released. The company continued to maintain its leadership position in Gujarati and Bhojpuri languages.
Let me once again reiterate the success that you are seeing is all coming out of our management belief that data-driven approach to music’s acquisition, use of predictive models is a fast superior way to select music than relying on an individual’s ability to predict which song is going to work or not work. Overall company released 400 plus originals and premium recreations across Hindi, Bhojpuri, Gujarati, Punjabi, Tamil, Telegu, Malayalam, Marathi and Bengali languages. Our lineup for the next 12 months is all in place. I’ve shared these names with you in the past too. Music with some of the biggest films of the year will continue coming to us.
This includes what has recently been quarter three being released is Singham Again which is Rohit Shetty’s film, Maddock who are the guys who were the producers of Stree and Stree 2 and Munjya. Their two films are sitting with us, Thama and Sky Force. Mammootty’s Malayalam film Bazooka is with us. Sivakarthikeyan’s super hit Tamil film which got released in quarter three a week back Amaran and whose songs are doing very well. That’s also there, which is a quarter three release with us. Kannada Superstar Kichcha Sudeep’s next film is also sitting there with us. As we have been saying from the time we people did a QIP and raised funds, the endeavor of our company is to future proof this company to keep on investing in high-quality content so that the company retains leadership position not just today, but in decades to come and we keep on making money from this content right now, not just today, but for many, many years to come.
This quarter, the charge-off on account of new content has almost doubled because of all the new content that we people have purchased. We are today in a transitional state where our new content expenses are going up in a steep fashion because it is a step jump. We are growing — for a company which did not invest in new content for close to two decades has now started investing and we want to do a quick catch-up and reach the number one position, which means very high investments of content are going on there. When you increase the expenses in a step function jump, when 20% to 25% of the expenses are going towards marketing, there is a kind of unbalance that starts happening.
I said it at the last call that will take us six quarters. For the next six quarters, of which the first quarter is over now, you will see revenue going up in a substantial fashion, EBITDA growing slower than that and PBT will grow at the lowest — between the three at the slowest pace. After the end of six quarters, you will have profitability, which is being driven out of music outpacing the rate at which revenue is going to go back and grow, because our step jump in content investment is only for these three years. After that, we are comfortable at the level at which ESG investments are going to happen. So content expenses are not going to go up, but the profitability which is going to come out of our investments that we’re making today will all start showing up.
With all this new investment, we maintain our guidance of a five year payback period with additional 55 to 75 years of profits that we can make from this music. The second music vertical is artist management where artists are made popular through our IP releases and then we monetize these artists by booking them for live events, weddings and brand endorsements from which Saregama gets a share. During this first half year of the year, 60 plus artists/influencers have been added making the total count of artists that we are managing to 180 plus, which is a 50% growth over the last year. Between these artists right now, they have gone close to 120 million followers and subscribers on Instagram and YouTube.
As our investment in new content keeps on going up and most of the investment we are putting these artists as part of the investment, many of these artists are actually singing the songs of the newer movies that we are making or we are releasing non-film songs which are all centered around these artists. We believe the money that we end up making right now from artist management as artist become bigger and digital advertising keeps on growing at a 15%, this part of music business is also going to become substantial. Net-net, with our stated goal of acquiring 25% to 30% of all music released in India, the music vertical should double its — music vertical meaning licensing and artist management should double its revenue over next three to 3.5 years. The new content is going to be funded all through internal accruals and the QIP money.
Now let me shift to the video vertical where we make films under the brand Yoodlee, digital series under the brand Dice or Pocket Aces, short videos under Filter Copy, Nutshell and some TV serials for Sun TV. The explosion and smartphone ownership and cheap data are the biggest drivers of this vertical. We are still at the early stages of building this vertical, but we strategically very strongly believe in the video vertical. First, on its own, we believe in the days to come, video will also become the primary source on which entertainment is or the discretionary money is going to be get spent on both through subscription and then advertising is also going to go back and follow it. So people who are owning video IP will be in a very strong position in the days to come.
Secondly, video business is also strategically important for us to maintain our stronghold on the music business. As shared with you people earlier, majority of the music consumed in India is film music and we want to control the source also from which the music is coming in so that we are never in a position that source is being controlled by a competitor and we don’t have a stronghold there. Q2 saw the release of our Malayalam series Manorathangal on ZEE5 with the stellar cast of Kamal Haasan, Mohanlal, Mammootty, the series became very popular on the digital platform. We also released GP Joseph’s Malayalam film Nunakuzhi in theatre during the quarter.
Q2 also saw a release of Unravel Australia, a branded web series with Australia Tourism. It was released on our channel Gobble on Instagram. Half Love Half Arranged Season 2 and Karate Girls, our Dice creations, delivered to Amazon mini TV. We — because of the mergers which are on the cards, there is some pressure on the digital series licensing business. We believe this pressure to continue for maybe another couple of quarters. By that time, the merger of some of the leading platforms will go through and we believe there will be a fresh requirement for content coming in. Our Pocket Aces with its unique position of being recognized as the number one content creator for youth in the country will be in a very good position to cater to this massive demand that will be coming in for content targeted at the younger segment.
Video vertical revenue grew from INR15 crores same quarter last year to INR72 crores in this quarter. If you see the operational cost line item, the increase in the operational cost is primarily on account of the cost which is connected to the increase in the video revenue. As you see, video revenue has gone by some INR57 crore or odd so and the rise in operational cost is all directly linked to that. On live events business side, we launched a new IP called Yeh Shaam Mastani With Zeenat Aman. It was — event was done right now in Delhi and Bombay. The next quarter will also see Diljit Dosanjh’s Dil-Luminati Tour in India, which is our Q3 business, which has got completely sold out.
As shared, events business is a very high revenue, low margin, but a high IRR business. Our capital allocation unlocking happens right now for a very brief span of time, typically — and you can see this from a segmental results also if you see the segment assets and liability. Most of the work that we people do is on the basis of the advances we received from our partners. The third quarter will see the same SKU flowing up. The tour has been that big a success that the revenue numbers will be substantial. We are very happy with the margins we will end-up showing out here, but on a margin percentage basis, it will be lower number. But on the IRR basis, which is very high IRR business, most importantly is further strengthening our relationship with the artist. He was very kind enough to go out there and because of the relationship give us a song for one of our movies Jigra which came out in quarter two.
Let me go to the third part of — I’ve completed music, which is licensing and artist management, completed video, live events and so the fourth part, which is the music retail business where we have rolled out the new retail strategy under which we will be selling Carvaan and Carvaan related products only from e-commerce and modern trade stores. Over the next remaining six months, we will completely get-out of individual mom and pop shops. While the volumes and the top line which will come from Carvaan will keep shrinking, the profitability margins are going to be improved as we will go forward because we are controlling all the costs which are connected to physical distribution.
From the last quarter onwards, we have started sharing the Carvaan revenue numbers separately as part of our presentation. This quarter saw the retail revenue of INR21 crores, which was a drop over the last year, but this isn’t very planned and expected stuff, which is happening because we are out of the retail business. Over the next three years, we will be investing over INR1,000 crores in new music content. This will contribute not only to the immediate growth, but also put the company on a long-term growth path. Overall, at the consolidated company level, we expect revenue excluding Carvaan to grow at a CAGR of minimum 30% and PBT to double over the next three to four years.
Both music and video verticals are going to contribute to this. We maintain our annual adjusted EBITDA guidance of 32% to 33%. There may be quarters where numbers may go here and there if certainly a big live event revenue is coming in. But on an overall basis, we expect margins to remain at 32%, 33% and music margins to hold steady. On annual basis, our PBT will show modest growth compared to last year. This is there only for the next five quarters, after which PBT should start growing right now at a rate hopefully faster than the revenue growth.
Saregama’s growth narrative will continue to be steady in the medium to long-term, thanks to the increase in digital consumption, both in terms of new customers joining the market and existing customers consuming that much more content both in audio and video. With over 294 million Internet footprint, our cash reserves, the manageable debts that we have in the company and access to some of the biggest soundtrack and an ability to create content at the most financially — to a most financial type process at the lowest per minute pricing in the market, we believe that the earnings are going to be guaranteed not just for next two to three years, for many, many decades to come.
Thank you and happy to take questions now.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Abneesh Roy from Nuvama. Please go ahead.
Abneesh Roy
Yeah. Thanks and congrats on good revenue growth. My first question is on the overall competition and the ecosystem. So Warner Music has said that India along with China will be their two most important focus markets and they want to become much bigger. So wanted to understand how worried are you because you clearly are ramping-up significantly for the next three years. Is Warner’s higher focus on India one of the reasons? So that’s one part of the competition question. Second, Dharma Production’s 50% got sold to Adar Poonawalla. How does this impact because your company’s name was also coming as one of the bidders. Eventually that did not happen. So what was the thought process? Why we did not go till the final acquisition? You could share your thought process on that and how this impacts the buying from Karan Johar’s Dharma Productions in terms of music rights?
Vikram Mehra
See, the Warner statement is a statement we also have been given and we are very happy to see the statement coming from Warner Chairman. India is going to be the next biggest growth market. Anybody who is tracking music industry globally understands that subscription service is eventually going to take off in India in a very big fashion. I have been saying this for multiple quarters and I continue maintaining that position that give it another 12 to 15 months. Hopefully, most importantly, once the merger of two of the biggest video platforms takeover, we believe the next focus is going to be on the music streaming side.
There are only two platforms today which are still offering free service, Spotify and JioSaavn and we hope that India also is going to be moving with the help of these two people also fully behind the paid side. Once that happens, you are looking at a massive growth coming out of the Indian market, primarily led by subscription. Worried, see, competition is always great out there, always puts a lot of attention. I think what has helped us a lot over the years is the fact that we understand Indian music better than anybody else. This is a company which has been doing this space — in this space right now for what over 123 years now.
Our relationships in every particular language right now are very, very deep with the local production houses, which chances are very high that if we are going to someone and picking up music from them that we may if they — and most of them are second or third generation film producers, 99.99% that their father or grandfather or grandmother’s production houses, films from music is also sitting there with us. So we are leveraging on that fact a lot. Second, the fact that we are investing on data unlike any other person, any of the competitors here, I think is going to hold us in a very, very good position. But yes, I think Warner Chairman’s statement has very positively shown light right now on the Indian market and how everybody globally believes that Indian subscription business is going to go out there and take off.
Second, you were asking me about — let me not comment about an individual production house. As I stated in my opening statement and I’m saying in the past too, we believe video is a strategically important business for an IP company like Saregama, both video on its own, which I believe has got a very strong feature as we people go forward. Remember when disposable incomes go up, all of us have got more discretionary money at our disposal an average middle — upper middle class in this country has very limited sources in which they can go out and entertain our families. Movies, going out to shopping malls, movies and hopefully live events are all going to get a massive benefit out of that.
Regarding our relationships out here, our relationships are very, very strong. Since you spoke about Dharma, what I can share with you is that we have picked up music on multiple films from them and even in future, we have multiple film school music is coming across to us. We share a great relationship with Dharma and with multiple other leading production houses in the country. Thank you.
Abneesh Roy
No, sir. Two follow-ups there. One, are you seeing initial signs of Warner Music bidding aggressively? And second, you don’t see any change to your ability to bid for Dharma’s future music rights, right?
Vikram Mehra
Sir, let me not get into anything — an individual. The great part is each of these production houses, we share a very, very old deep relationship going on. So we don’t see any impact of that happening. I don’t want to comment on an individual production house at this moment. But all — so since you were talking about Dharma, we have a pass plate, a Jigra movie of theirs right now just been released by us. Our biggest musical release of this year — second-biggest is Bad News, which was Dharma. Last year, Rocky Rani was Dharma. There’s just on the cards right now next movie coming out there with these people. So we have a deeper relationship and it’s great that the video industry is getting more organized money.
The quality of movies will go up and the quality of music going in that movie will also go up. Regarding Warner, see, competition is always there. Warner is looking at India now. Sony and Universal have been there in the market. It’s good the more number of international people coming in, more focus starts going out there on the Indian music industry. But we very strongly bet on our understanding of the Indian music market and the fact that relationships are far, far deeper. That’s why we are not focusing on any one or two languages. We are focusing on every major language of the country.
Abneesh Roy
Understood. Last question is essentially on your strategy of upfront three years, very aggressive spending on content. So one is, could you look at option B also where you remain aggressive, but because PBT growth rate will be much lower than the revenue growth, is there an option B available to — in terms of strategy where you do it a bit more gradually? Second is on data point. So last six months where you have increased aggression, if you could tell us incremental market share in music? T-Series, Sony, Zee, Warner and you, how is it now in terms of the last six months, some data points in terms of market share?
Vikram Mehra
That I will rely — I’m very sure right now you can go to — start tracking the YouTube channels for everyone in the market that will give you a decent enough idea. But if you look at the presentation that we have shared, there is a slide which is talking about how the numbers in terms of views have changed on YouTube, how the growth rate has been of ours versus all the major competitors in the market. That will give you a flavor that we are growing at a rate which is faster than anybody else and it’s not that difficult right now. If you start tracking out all the recent hits of any of the labels, just check out which movies guys are releasing, it will become very obvious to you. I have already stated right now for the year, we people in Hindi for the first time have taken the leadership position. We have been leaders in Bhojpuri, Gujarati for a very long time and we people were on a full year basis last year were also leaders in Malayalam and Telegu and I’m confident we will end this year also around those same positions. The languages in which we need more work at this juncture is Tamil where more work needs to happen and Punjabi.
Abneesh Roy
And who will be the leaders there, Tamil and Punjabi?
Vikram Mehra
Sir, again, different people. We are either sitting in a second position or the third position. We are not number one and we will not be happy unless we reach the number one position.
Abneesh Roy
Understood. And on the strategy part, if you could comment, gradual versus very aggressive?
Vikram Mehra
Future, I think we have a stated position of INR1,000 crores that we people want to go back and invest. Remember, you are talking to a company which for close to a two decades did not have any new music coming in there. The people have coiled and come to the stage after experimenting with newer content now for five years or so. We have refined our selection process. We have refined our ability to market it more effectively than anybody else. And hence, the monetization is going to be there better than anybody else. So we are betting on that ability of ours.
Abneesh Roy
Understood. That’s all from my side. Thank you.
Vikram Mehra
Thank you.
Operator
Thank you very much. The next question is from the line of Priyankar Sarkar from Square 64 Capital Advisors. Please go ahead.
Priyankar Sarkar
Hi, sir, good afternoon.
Vikram Mehra
Hi.
Priyankar Sarkar
Sir, one quick question, why has the other current liabilities moved up to close to INR250 crores versus INR65 crores in March ’24? And what does this exactly pertain to?
Pankaj Chaturvedi
Yeah. So Priyankar, it’s part of our various contract negotiations. We received cash for the upcoming deals. So under various contracts, we received cash for which the income is going to accrue in future. This is accounted for as other current liabilities or income received in advance. You can see a corresponding increase in the unallocated assets, which is basically the increase in the cash balances. So the two will correspond to each other. As we move [Speech Overlap] and this will get unwind.
Priyankar Sarkar
Got it. But the — I mean, it was a sharp move right from INR65 crores to INR250 crores. So it does happen, I guess, in your industry.
Pankaj Chaturvedi
We’re under negotiation and hence this is the result of that.
Vikram Mehra
Yes, Pankaj, [Indecipherable] we have been able to negotiate to get large advances out of people, which makes our position again — which makes our position that much better because there is additional money right now. We are not investing our own money then in your content.
Priyankar Sarkar
Fair enough. Thank you. That’s the only question I had.
Vikram Mehra
Thank you.
Operator
Thank you very much. The next question is from the line of Pulkit Chawla from Emkay Global Financial Services. Please go ahead.
Pulkit Chawla
Thank you for taking my question. Sir, my first question is on the music licensing side. If you look at the last couple of quarters, I think revenue growth has been slightly sub par. This quarter again, let’s say, high-single-digits only. So if you could dwell slightly deeper into this trajectory. Just trying to understand where the weakness is coming from in terms of platforms, so whether it’s YouTube or any of the OTTs, which is sort of pulling out this growth? And second, also the margin side for the overall music segment that seems to have declined Y-o-Y even when there is a sharp decline in Carvaan where margins are obviously negligible. So is this decline in margins solely attributable to the higher content investment or is there something more here?
Vikram Mehra
So let me answer the first one. Listen, you need to look at music always as licensing plus artist management. Just because we are splitting the segment, you can’t look in two different ways because the — at times our investments of the artist is sitting in the music, while the revenue which is coming from the same artist is sitting in artist management, that’s a wrong way to do it. On a music basis right now which are licensing and artist management, we are on a 22% growth. And by the time we end the year right now, we will be closer to this 23% to 24% growth minimum on the music segment. So I’m actually not that overtly concerned at this juncture on the music revenue part. Yes, in the past, as stated till Q1, not in Q2, till Q1 of the year, we had the problem of three of the platforms going from free to pay.
So their free revenues were sitting in the denominator, but not sitting in the numerator, but that impact has completely gone out. We are happy at the rate at which numbers are going up for us on all the major platforms. Yes, obviously, the day subscription takes off which is a matter of few quarters, the revenue growth is going to be far, far significant, means you’re talking about times right now doubling of the revenue that you’re doing here. Second big factor is that day the short format apps in India open themselves up to advertising, they will end up sharing close to 50% of that revenue with the IP owners. So whomsoever is controlling the more popular IP will also end up getting a significant bump in their revenues flowing directly to the bottom line. These are two big things which are on the cards.
Pulkit Chawla
And on the margin point?
Vikram Mehra
Margin point, the impact is only on the new additional cost, there’s a INR18 crore increase right now in the content charge, which is also primarily you can see out of advertising and revenues part.
Pulkit Chawla
Got it. Sir, secondly on the event segment, clearly, there is obviously great response for Diljit’s concerts that we held in Q3. If you could just explain what are the different sources of revenue that you have here and how much revenue, let’s say, that you typically would make on a per event basis? You had also alluded to some, let’s say, change in strategy last quarter.
Vikram Mehra
So what I can tell you is there are two sources of revenue primarily that comes in live events, ticketing revenue and sponsorship revenue, which is the way the brands come in. These are the two primary sources of revenue. In the quarter, you will be seeing 13 concerts happening in India and — sorry, 12 concerts happening in India and one concept happening in Middle East, that’s what the plan is. These are obviously very high revenue numbers because the entire ticketing revenue comes across TU, but it — even the business by its very nature is very high top line, very relatively lower single-digit margin bottom lines, but a very high IRR. And that’s what you’re going to — you should expect to see in the quarter three.
Pulkit Chawla
Got it. Thanks. That’s it from me.
Operator
Thank you very much. The next question is from the line of Harssh K Shah from Dalal & Broacha Stock Broking Private Limited. Please go ahead.
Harssh K Shah
Yeah. Thanks for the opportunity. Few questions from my side. So firstly, on the content, the music content that gets released in the industry on a yearly basis. So is it the case that the number of songs are kind of going down, but the cost for each song is going up and especially in the South Indian languages?
Vikram Mehra
There is no such indication at this juncture. So the cost of the songs are typically linked to what kind of the revenue labels keep on making. So if there is a producer who has a track record of giving film albums, which are massive hits, the value of the songs for these feature movies always ends up going up. If there are languages which have got massive popularity, you will find the music of those languages being a little more expensive. Equally, if a production house gets into a track record of giving albums which just don’t work, the price of its future album start falling down and so is the case with languages. It’s a dynamic market.
Harssh K Shah
Correct. Sir, why I ask this question is because certain labels in the southern part of this country have kind of said that the cost of acquisition of the song kind of since say 2020 to right now where we are, the cost is going up. So meaning, will that impact the payback period for at least that language or you don’t see that thing happening?
Vikram Mehra
Thankfully, my answer is your question only. If you go back and check out my transcripts from 2018 onwards, when we started acquiring newer content, we have been maintaining the five-year payback period guidance and we hold on to that.
Harssh K Shah
Okay. Secondly, on the video segment, so how should one kind of look at the video vertical in terms of the contribution to my overall revenues? I understand that this segment is kind of lumpy in nature, wherein one quarter it could be high, another quarter could be low. But on an annual basis, how should one look at this segment in terms of contribution?
Vikram Mehra
Video segment is still a very, very new segment out there for us. We are also trying to get our strategy that much more precise and clear here. Give me another couple of quarters and that’s the time I’ll go back and tell you. What the two factors I can throw at you at this juncture which are our guidance that we have shared in the past is one that we are expecting broadly 30% growth coming out there in the video vertical of our annual growth. Second, the total capital which is going to be allocated to video and live events vertical at any particular time will not exceed more than 18% of the total capital allocation done by the company. So there are checks and balances that we have put right now on the video business. Unlike the music business which we people have been doing for over 120 years, video business is a relatively newer business. That’s why we have put enough checks here. Give us another few quarters and we should be able to share with you much more precise three-year plan moving for the video segment.
Harssh K Shah
Got it. And lastly, on the short format video platform, so here I’m talking specifically about YouTube Shorts. So basically they are kind of generating massive volumes in terms of views, but the monetization is kind of not to that extent. And considering how YouTube has changed the guidelines in terms of the definition of what a short video is, what sort of indicative timeline do you all have in terms of when the monetization can start? I mean, if you could give some color on that?
Vikram Mehra
Yes. That on YouTube shots, our contracts protect us from the new guidelines that have been shared. That’s all I’m at liberty to go out there and say. So we are protected. So you are not going to be finding my music on this long form content which is going on YouTube shots. Yes, just like you, we are also very keenly following both the leading short format apps of the country, YouTube Shorts and Instagram working closely with them and trying to do this transition from being just a content viewing platform to also one which is getting enough advertising to justify the number of eyeballs that are going in.
See, like in every other part of the world, slowly these guys once they have formed up their position as a clear cut market leader and are not threatened by the imminent entry of a third platform who is currently not there in India, I think they will start opening up themselves to advertising that much more and that will be a huge jump that we’ll end up getting. On YouTube Shorts specifically, we are — on the non-music side, they have started opening themselves to advertising and the video part of my business has started growing up. Remember under the company called Pocket Aces, we are also creating content which is a short format content. So along with Instagram, we are also putting on YouTube Shorts and we are seeing the green shoots there of revenue building up.
Harssh K Shah
Correct. So then can we expect that in the next three years, maybe within three years, we could see the monetization happening?
Vikram Mehra
So I’ll — the thing is I can tell you things which are in my control. It’s a little wrong on my part to comment on — give assurance on behalf of the outsiders, but I think my guess is as good as yours that in this time frame you will see short format apps realizing here that getting eyeballs for the sake of eyeballs means nothing. Eyeballs have to be converted into advertising revenues and all of us are going to benefit. I am actually — my bets are higher on subscription on streaming apps taking off even faster than advertising on short format apps, but both are bound to happen. We have natural things happening in every other part of the world.
Harssh K Shah
Great. Okay. Thanks. That’s it from my side.
Operator
[Operator Instructions] The next question is from the line of Jyoti Singh from Arihant Capital Markets Limited. Please go ahead.
Jyoti Singh
Yeah. Thank you for the opportunity. Sir, just wanted to focus on the language side. Sir, what is your view on the Bhojpuri song side which you mentioned we are getting high traction which is still 2% for us as per last annual report.
Vikram Mehra
So your question is if it’s on languages, yes, we as a company for the longest time have been saying both on the music and the video side are equally bullish on the major regional languages of the country, whether it’s Tamil, Telegu, Kannada, Malayalam or a Bhojpuri, Gujarati, Marathi. We’ve just got ourselves into Odia, Bengali. We don’t want to be only a Hindi music or a Punjabi music company. In the past also, if you look at our history 120 years odd, we have always had — we have the biggest catalogs in each of these languages and we want to continue building that up. Various languages have different monetization contributions. Some of the languages are heavier on YouTube. Some languages get lot of views from outside India. Some are bigger on streaming platforms. We always keep that in mind while we do the capital allocation across the languages. But the language you spoke about Bhojpuri or a Tamil, Telegu, Kannada, Malayalam or a Gujarati, you will continue seeing investments coming from our side.
Jyoti Singh
And we are on like number one something on the Bhojpuri side or…
Vikram Mehra
Ma’am, let the year get over, but as of last year, we were number one in Telegu, Malayalam, Bhojpuri, Gujarati.
Jyoti Singh
Okay. Thank you, sir. And sir, any focus on working with the brand for the background music and like our competitor working on that side, if you can shed some light on that?
Vikram Mehra
What do you mean by that? I’m not clear…
Jyoti Singh
Like a lot of label company — like the label company, they are working with the brand to sometime it use from the existing library like Bajaj and Marico, they use the music.
Vikram Mehra
See our presentations over the last, I don’t know, 12, 16, 20 quarters. We always share of the multiple brands that we people are working with. Please connect with her, I’ll send you the ads of the people. In the brand side, we are the number one in the country today. Whether it’s a Mahindra or its Pepsi or its Coke which is sitting in, these guys are just showing me — if I look at this particular quarter, Mahindra Thar had Inteha Ho Gayi Intezar Ki. Mahindra Thar has got the biggest opening of the recent times we’ve ever done in terms of booking and there generally is one ad and that ad has got our song in it. Dabur Babool ended up using, this is quarter two I’m talking about. Lux ended up using us, Ponds ended up using us. Reliance Trend has used us. Enamor has used us and this is some of the brands. So we have a very strong vertical wherein we license our music to brand for their advertising in not just Hindi. Hindi, Tamil, Telegu are very strong, even in Malayalam.
Jyoti Singh
And sir, if you can guide us on the margin side, how much we make on the brand front?
Vikram Mehra
Ma’am, those are getting to very specifics. We have in — the most premium catalog of the older songs on the audio side are controlled by us. We have got good realization that’s all I can state here. But where I’m completely with you that in the days to come, you will see our brand was not just happening on music. We are getting more active on getting the brands as part of a live events and brands also becoming part of the video content that we are creating for short format apps.
Jyoti Singh
Great. And sir, just a last question like anything we are doing within Netflix on the movie side?
Vikram Mehra
If I remember my numbers correctly, we have close to two-dozen movies of ours which have been licensed to Netflix. In fact, Netflix is our biggest partner. We have some of our content which has gone on Amazon, ZEE5 and Hotstar too, but Netflix is our biggest partner in terms of the destination where our movies end up getting licensed to.
Jyoti Singh
Okay. Thank you so much, sir.
Vikram Mehra
Thank you.
Operator
Thank you very much. The next question is from the line of Jayesh Jain from DSP MF. Please go ahead.
Jayesh Jain
Hello, hi. Thanks for the opportunity. I wanted to understand that if you adjust for the artist revenue, your music licensing revenue has grown by roughly double-digits. And given the spend you have done in last one, two years about roughly INR100 crores, so a lot of this revenue growth has come from the addition of new songs. Has the monetization per song has not increased as far as we would have expected? And following to that question, does your five period payback calculation account for the anticipated rise in monetization per stream due to the known factors we all know? Could you just throw light on that? How should we think about this?
Vikram Mehra
The first one, I’m going to repeat myself. You have to look at music revenue as licensing plus artist management. Artist management is not something which is separate. Some of the big songs that we people have invested in are connected to the artist who is sitting at artist management. So I’m creating the songs because I want to make the artist big. So please look at music revenue as a combination of licensing and artist management, which has grown by 22%. Your second part was our five-year payback period guidance is done. Basis the revenues that we people are making today, any lift that we will end up getting could see subscription taking off in a big fashion or short format apps getting additional advertising revenue and hence, we getting a share for it has not been factored in.
Jayesh Jain
So the five-year payback period is on the current revenue per stream.
Vikram Mehra
Yes.
Jayesh Jain
Or broadly.
Vikram Mehra
Yeah.
Jayesh Jain
Okay. Cool. And what is — do you guys have an idea, let’s say, what is the acquisitive cost per song should be around so that our IRR doesn’t fall below 26%?
Vikram Mehra
Sir, typically, there is no per song part. It’s like is there…
Jayesh Jain
No. It’s a fact…
Vikram Mehra
Word creativity, if a song is being picturized on Ranbir Kapoor, sung by Arijit Singh, music is given by Pritam or Sachin Jigar and you have a leading heroine like an Alia or Kriti working on it, the scene is going to be very different versus a smaller artist and a smaller singer. So what we typically do, our approach is not very different from the approach you may be making, which is a portfolio management approach.
Jayesh Jain
Exactly, yeah.
Vikram Mehra
We end-up taking bets in multiple languages in multiple category of films, also on the non-film side so that we also know if we are releasing 100 songs, we cannot have 90% hit age going in. The hit rates are going to be lower than that. But our hit rate has to be higher than anybody else’s in the market and those songs should be large-enough to not only to recover the cost of the song that have not worked well, but also generate the returns that you’re talking about.
Jayesh Jain
Understood. As you understand, there is lot of factor in the business and — but you would have still some color on, let’s say, high end Hindi songs versus vis-a-vis normal regional song.
Vikram Mehra
So this seems — the equations are very, very different. What we people do, hence, one, along with portfolio management, our entire content selection is done using predictive AI. I said this in my opening statement. We are not betting on the ears of Managing Director or the senior management of the company to take calls on which album is going to work or which song is going to work. We rely a lot on our predictive AI and then work with people under the age of 30 in each of the regional language local teams to take a call as to what to go for and what not to go for. Secondly, everybody who is on the music team, everybody from a content acquisition, marketing, monetization from an executive to the vertical edge, all of them KRAs are completely linked to one factor, which is five-year payback period. That’s one principle with which the entire company lives by.
Jayesh Jain
Understood.
Vikram Mehra
You wanted to get a color, see, different languages are — behave in a different fashion. So a language like a Hindi may have a relatively longer payback period, but the songs have a much longer shelf life compared to say a Bhojpuri, which has got a much shorter payback period, but the shelf life of those songs is also relatively short-term. So we keep on — when we are doing our capital allocation, which is done at the beginning of the year and then we look at it right on every quarter basis, it’s done keeping in mind that on an overall level, we manage our goals of a five-year payback period while also ensuring that we manage our market share and there is a revenue growth number coming in.
Jayesh Jain
Understood. So there is an implication of weighted average of songs and weighted averages IRR of regions.
Vikram Mehra
You’re right, sir. That’s why you will find at times we people think twice getting into a particular language and not investing in that language. So as an outsider, you may think that a lot of people are listening to that language unless we are convinced that it will fit into the overall weighted average [Foreign Speech]. It should not go back and push my payback period over five years and we are not going to get into it. We are in the business of making money from IP. We are not in the business of just making IP.
Jayesh Jain
Okay. Understood. That was very helpful. Thank you.
Operator
Thank you very much. The next question is from the line of Govindarajan Chellappa from CSIM. Please go ahead.
Govindarajan Chellappa
Yeah, hi. I have just one question. You’ve in the past mentioned and you reiterated today that you will limit the capital employed to film series and events to 18% of the total capital employed. I mean, this more or less implies that you were never keen to buy a large production house that was being speculated and you don’t have the intention to do that in the future. Is that a correct interpretation?
Vikram Mehra
At this juncture, if there is any change in this, we will come back to you and share what the plans are. But at the same time, I’m going to repeat to you, we believe video is strategically extremely important to us. We don’t want to be in a situation where all my competitors who are in the space of music also have a video arm in their company. We don’t want to be in a situation where it becomes difficult for to source music. In the same breadth, we also understand that what is in our DNA, what Saregama is very, very good at is financial management, to understand how to make the last penny work harder and not just spend money for the sake of spending money. That’s our strength. But making massive large budgeted films is not in the DNA. So if we ever have the intent to go out there and create that kind of a content, at that time, we will look at potential partnerships all around. Whichever way we do right now, we will chat with you guys first.
Govindarajan Chellappa
Okay. So just to understand you right, I mean, this is another point you made in the past that you’re not interested in big budget big star movies.
Vikram Mehra
In the fold of Saregama, we creating ourselves, no. We don’t think — we don’t have the wherewithal to do it.
Govindarajan Chellappa
Okay.
Vikram Mehra
But that doesn’t stop us from partnering with somebody. If all the other guidances and guidelines are met, we may look at those possibilities in the days to come. Are we interested in video? Yes, we are very keen on video segment.
Govindarajan Chellappa
Okay. Okay. I mean,, it semantics here whether what part — whether partnership means investments.
Vikram Mehra
At this juncture, there is nothing happening. So I don’t know what do I share with you.
Govindarajan Chellappa
Okay. No, I just wanted to leave it a thought. If you’ve seen your competitor Tips Films and Music, you would see how Tips Music has gotten pay rated once they split the company between Tips and Tips Films and Music and there is a message in that. That’s all I wanted to let you know. Thank you.
Vikram Mehra
Thank you, sir.
Operator
Thank you very much. The next question is from the line of Rolin Bharatnandu [Phonetic] from Edelweiss Public Alternate. Please go ahead.
Rolin Bharatnandu
Yeah. Hi, Vikram. Thank you for sharing these insights. You have answered my question, but slightly more color on your comment on data driven, AI driven model to buy the content. So can you tell me as to from that reliance on the model, when we started, how has that model developed over the period of time? What is the way in which you marry the model with human intelligence? And if a competitor were to decide to follow a similar kind of an approach, how easy or difficult it would be? Is data the only differentiator or the key mode that, that model has? Can you just give some more color because everything hinges in a way on that and you are going to spend INR1,000 crores over the next three years. So can you help me better understand this part of your business?
Vikram Mehra
Sure. See, everything that you do your competitor can go out and repeat. So at the end of the day, majority of the spaces that majority of the companies are, unless it’s a trademark stuff, things can get replicated. But what you can’t replicate is the mindset or the DNA of a company. We as a creative house, one, we believe that we are not in the creativity of entertainment, we are in the business of entertainment. That’s a very big difference. We don’t get happy right now if we are getting a big hit movie or critics like it. We become happy if there is a return which is coming on the investment that we are doing on an IP production, that’s a mindset part.
The modeling part has also come out of that saying as a human being even if I am the most gifted singer, composer, music expert, which I’m not by a mile also, had I been blessed, then also I would have been blessed in one or two languages. Humanly, it’s difficult right now for somebody to be completely be on top of the more than dozen languages in which Saregama is investing in today. So we said we need to have a more signed approach, which is more data driven, so that it’s not just a gut call driven part. So what data does for us and it keeps on getting the model is now at an accuracy level that gives us pretty confidence.
What the model tells? Models doesn’t say that you don’t buy something. Model just goes back and tell that if this is the set of artists who are connected to this particular song based on that track record of the last rolling 36 months, what is the amount of money you can expect to make over the next five years? [Foreign Speech] That gives me an outer time right now that this is the money that we should be ready to go out there and pay. Every song makes money. The question at what cost did you acquire the song so that you don’t end up losing money. Model tells us that. Then the songs are heard by the local language young — or everybody who hears the songs and takes — gives their views are all under the age of 30, that’s the company guideline.
Again, this is part of my — the DNA and mindset of Saregama where we believe just because we are sitting on very senior level positions that does not give us the right — automatic right to become the judges of what the younger people in this country want to hear. We leave it to people who are closer to that particular age group. We think it’s very difficult to replicate. Everything can be replicated in that sense. If that team goes back and says, no, [Foreign Speech]. If they go back and say, yes, we like the song and we know the pricing at which model has gone back and thrown as long as the final deal can happen within plus/minus 10% of these deals get done. If there is a valuation which is asked for which is far higher that’s the only time senior management starts getting involved and say, is there a bigger strategic benefit of doing that particular deal?
If yes, we explore it. If not, the dealer said no right there. Do exceptions happen, sir? Exceptions — model does go wrong because in this business, there is a possibility that a top — a combination of a top hero and a top composer and a top singer and a top choreographer which has given only hits over the last three years may give a flop or somebody has only given flops over the three years may give us sudden hit. We believe right now I’m better off leaving that kind of a content here rather than taking a high risk, because at the end of the day, our success is linked to the returns that we make from our IP.
Rolin Bharatnandu
Thank you. That’s very clear. Thanks a lot. I want to probably drive your attention back. I mean, you shared a part of your model back at the analyst meet, right, I mean, as to how you arrive at a particular pricing based on the artist and so on and so forth. So in the same presentation, you also had a projection in terms of FY ’28 where do you want to reach. And you said that the — in the call, you said that for five more quarters, the investment on content will continue to be high, probably higher than the quarterly run rate or half yearly run rate that you have probably — we have seen in the H1 of FY ’25. But is it fair to say that this gap between the revenue growth and adjusted EBITDA growth that with the PBT growth that will narrow much sooner than the five quarters? Is that a fair assumption to make?
Vikram Mehra
It will start narrowing, but will still be growing at a rate. So you are at this juncture as a part where big investment has happened is the — literally the first quarter where big investment has happened, but the revenue — some impact to the revenue you’re going to see in Q3. So as we go — keep on going ahead that gap of the growth rate between adjusted EBITDA and PBT will start narrowing down. As we go even closer to the end of five quarters, they will start growing at a rate which will be similar to the top line growth or exceeding that.
Rolin Bharatnandu
I understand. Thanks a lot and all the very best, Vikram.
Vikram Mehra
Thank you.
Operator
Thank you very much. The next question is from the line of Lokesh Manik from Vallum Capital. Please go ahead.
Lokesh Manik
Am I audible? Hello.
Vikram Mehra
Haji, we can hear you.
Lokesh Manik
Yes, sir. Firstly, wishing Vikram you and your team a very Happy Diwali and a New Year. Secondly, I had one question on the film vertical and I know you addressed it by asking for some time for the next two quarters to gain some clarity. But just a little more detail on how I see it is it’s in two components. One is the TV series vertical, which was historically there with Saregama and then you introduced web series and movies in 2019, ’18 onwards. So just to get a sense of our deal out there was that we would do a cost plus model with the free platforms and license it for a period of three years, post which the IP would be exclusively ours. So is that now maturing? Is that model now maturing and coming back and adding to the profitability that is reported in that vertical this quarter? And can this be the margin side at least? I know the revenue is lumpy. The margin, the 10% margin can be sustainable and whatever revenue comes in the following quarters because this is the first quarter that we reported a good profitability in that vertical. So has that model now matured where these movies are now going back to other platforms and there’s very little cost in one?
Vikram Mehra
Our video business hasn’t matured yet. Remember, there is a new video segment that we have taken with us, which is the short format content, which is setting in the market and that’s a substantially enough — that’s also a substantial number. The models will mature with time. That’s why we have put this constraint on the total amount of capital that we are allocating to the video business here so that there is enough amount of checks and balances which are sitting here. The model, the way we people function any newer content today on films is before we go out and start spending money on the films, we need to get a soft agreement on at least 70% of the cost of the film will get recovered through digital television and whatever music team believes is the right valuation for the music, primarily on TV and digital so that the risk that we are taking on theater is limited only to 30% of the cost of the film.
On series, if you are making something, we do it only if we have a pre-licensing commitment coming out there for any of the platforms. Otherwise, we don’t go out there and do it. The same philosophy we have started now putting in Pocket Aces team. And as and when we work with any other partner also outside in whichever fashion on the video side, we will ensure that the financial discipline that we are bringing to the table does not get wavered. Please understand video business is a good business provided you can maintain the financial discipline. We have been able to demonstrate on the music side.
We are now — hopefully we’ll be demonstrating on the live event side that we are good at doing a very tight financial discipline, which ensures that even irrespective of whether the movie becomes a hit or flop because that’s never in our hand, those things will keep on happening. There also the same portfolio approach works right now. If you’re making 10 films, three, four and best are going to become hit, some will be average and others will be flopped. But the discipline should be that strong that you don’t take too much of a risk on a single film and majority of the money is spent on the film and not spent on frivolous stuff. Wherever we believe that nature of the deal is not happening, we just walk off the deal. We don’t do deals for the sake of deals.
Lokesh Manik
No, fair enough, Vikram. Just to understand a little more on the success of the model. So are you seeing takers for the series that we have developed pre-licensing in 2019 and ’24? Are other platforms interested in taking these up…
Vikram Mehra
The kind of movies that we are making at that time are the film vertical has or the video vertical has meta morphed. The kind of content we were making from 2017 to 2019, 2020 pre-COVID versus small budgeted films which were not planned for theater, which were planned only for digital, some of them have completed their first cycle and only moved to the second platform and have started generating revenues. The model that we are working today on the — it’s completely changed. There is a smaller market going in for these very tight budgeted films. That’s why for last 2.5 years or so, our focus has been more on movies which will first go to theater, but just because they’re going to theater doesn’t mean that you can’t — going to take massive amount of risk. So we need to pre-license rights and at least secure 70% of the cost.
Lokesh Manik
Got it. Got it. And this pre-licensing period would be the same three years, roughly?
Vikram Mehra
Sir, it depends right now. There are three-year deals. There are five-year deals. There are 11-year deals also.
Lokesh Manik
Okay. Understood. That’s it from my side. Thank you so much.
Operator
Thank you very much. The next question is from the line of Ravi Naredi from Naredi Investments. Please go ahead.
Ravi Naredi
Sir, I was waiting in queue and keep thinking now time is over, but still you have took my question. Sir, whatever song Sharmajee Ki Beti or other we have sold, can you tell how much amount Saregama is earning in quarterly basis?
Vikram Mehra
Sir, [Foreign Speech] I can’t share here.
Ravi Naredi
No, total. I’m not asking individual.
Vikram Mehra
So total amount of money that we are making from which part from selling a right?
Ravi Naredi
These advertisement clips and whatever you had wrote, the Sharmajee Ki Beti other like Khel Khel Mein, Mr. Bachchan…
Vikram Mehra
As I mentioned, I can’t give you a number out here. All I can say right now, if you ask in the market, you will hear there’s very strong part coming in that on the sync deals as we call it where our music gets embedded in ads or other production houses content, we are the clear market leaders there.
Ravi Naredi
Okay. And just…
Vikram Mehra
[Foreign Speech].
Ravi Naredi
[Foreign Speech]. That I know. I’m shareholder since last 15 years. So I knew each and everything. Sir, from Diljit Dosanjh, can you give the margin in percentage from 1%, 2% or less than 1%.
Vikram Mehra
Even dhanda [Phonetic] is at best a single-digit margin percentage. But as I said, the capital gets locked there for a very short span of time and that also very little capital. So live events have done well, will have a massive IRR, though a lower margin business. And we believe that you have already seen the excitement with Diljit Dosanjh and there is an international British band called Coldplay their tickets. That India as we people go forward, as discretionary income goes up in the hands of people, people have money with them, they will like to go out there and spend it, spend some of the money, all of us spend on physical product, better car, better watch, better house and then people start spending money in giving better experiences to their families, which once in a year can be an international trip, but on a regular basis ends up being taking a family to a movie or taking a family out there to a concert. So we believe live events may have a very bright future. And the fact that we people are the only live events player who are also into music and only music player who is also into live event gives us a massive edge in the days to come.
Ravi Naredi
Okay, sir. And in last 18 months, how much music is goes on a paid basis? Can you give some idea about this?
Vikram Mehra
Sir, not hear about your question.
Ravi Naredi
In last 18 months, how much music goes on live the paid basis.
Vikram Mehra
Subscription?
Ravi Naredi
Subscription basis.
Vikram Mehra
Per subscription, it’s growing at a pretty fast pace, but that is because the base is very, very small. We are seeing a good amount of push coming on the subscription side, especially from partners like YouTube or an Apple, now even Spotify is pushing for it. I maintain my bullish nature out here and a bullish position out here that give it another few quarters. I had said 15 to 18 months, I’ll maintain my 15 months part now. You will see the only two free guys also moving towards the paid side, which is Spotify and JioSaavn hopefully. All the other people have gone behind the paid wall today and subscription will take off. That’s also the reason why there is so much of international labels focusing on this country because everybody understands India — we are — Indians used to spend more money on cassettes and CDs series 25 years ago than they are paying for subscription. So intention to pay is there. Disposable income is there. It’s only that these two platforms have to stop giving free content. And I believe we are moving in that direction.
Ravi Naredi
Right, sir. Really thank you very much to give me the opportunity to ask the question. Vikram, listening to you is always good and we wish all the best.
Vikram Mehra
[Foreign Speech].
Ravi Naredi
[Foreign Speech. It is a really very honor to talk to you, sir. Yes, sir. Thank you very much, sir.
Operator
Thank you very much. Due to time constraint, that was the last question. I now hand the conference over to the management for closing comments. Thank you and over to you.
Vikram Mehra
Thank you everyone for the very, very patient listening. We people are on a strong growth path. We believe that we now have the wherewithal to invest in music in a wiser fashion giving us a higher rate than any of our competitors. We believe that’s the right thing to do to invest in newer music to future proof this company. We will continue being on that path. It’s a matter of another five quarters after which the results of all this investment that we people are making will start showing fruits in terms of profitability growing at a rate, which will be in sync with what we people — how the revenue growth is going to be happening. That’s one.
Second, video is a strategically important vertical for the company, both video on its own and the importance of video to safeguard our music business. And we will keep on making all the necessary moves in that space. What I assure you is whatever we do and if we do something, it will always be keeping in mind the financial discipline by which we people swear by in our company. Live events is starting in a very big fashion. It will be a low margin, high IRR business in the days to come. Hopefully that will also start contributing significantly both to the top line and in the bottom line of the company. Overall, we maintain that in the next three, 3.5 years, you will see the profitability of the company doubling. We need all your support. A very, very Happy Diwali to all of you guys and a Happy New Year. Thank you.
Operator
[Operator Closing Remarks]