Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Saregama India Limited (NSE: SAREGAMA) Q4 2026 Earnings Call dated May. 14, 2026
Corporate Participants:
Vikram Mehra — Managing Director & Executive Director
Pankaj Mahesh Chaturvedi — Chief Financial Officer
Analysts:
Pranav Kshatriya — Analyst
Unidentified Participant
Kavish Parikh — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Saregama India Limited Q4FY26 earnings conference call hosted by MK Global Financial Services Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr.
Pranav Kshatriya from Mtech Global Financial Services Ltd. Thank you. And over to you sir.
Pranav Kshatriya — Analyst
Good afternoon everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Vikram Mehra, Managing Director and Mr. Pankaj Kedia, Executive Director Investor Relations. Now I shall hand over the call to the management for their opening remark. Over to you gentlemen.
Vikram Mehra — Managing Director & Executive Director
Thank you and a very good afternoon to all of you. The quarter four of the financial year saw revenue from operations at 287 crore with an year on year growth of 19%. Our highest ever adjusted EBITDA at 133 crore with year on year growth of 31% and operational PBT at 105 crore which is an year on year growth of 36. Let me start with music. Global recorded music grew to close to $32 billion in 2025 according to ISPI. With India still under 2% of that despite housing 18% of the world’s population, we in India are operating in the most under penetrated large music market on earth.
And Saregama’s entire strategy is built around that 20 year opportunity that is sitting in front of us. If I look at financial year 26, the overall music vertical and for the sake of simplicity, now onward when we talk about music vertical we’ll combine everything in it. Music, licensing, artist management and the retail business. All the three core elements from music are going to be there under the music vertical. Together it recorded revenue of 814 crore which was 17% year on year growth and annual EBITDA stood at 517 crore with a 22% year on year growth and an annual net margin of 377 crore which was a 27% year on year margin growth.
This is music vertical, overall licensing, artist management and retail. There was some concern that was expressed at the end of quarter two from multiple partners and investors about a music vertical growth trajectory and at that time the management team had attributed it solely to the phasing of the music content releases post quarter two as the content started getting released in quarter three and quarter four. Saregama is back on the growth track. The other factor that really helped US in this quarter 4 growth rate is moving out of Airtel Winks revenue In the denominator in 25q4 did not have Wink revenue which helped us a lot.
So we are completely out of the cycle of free platform shutting down and that has started showing in the growth numbers of our music vertical. In fact, H1 had seen a growth of 7% while H2 has seen a growth of 26%. What I’m proud of sharing is that H2 also became a big testament to our music business guiding principles. When Dhrinder one song started picking up in the month of December, we went all out building them further using our digital marketing muscle. The Pocket Aces digital footprint played a massive role here.
This ensured that the success of the album was extended over a much longer duration. Today, even after close to five months of the release of the album, we are still daily Japan generating 6 million streams on the audio OTT and 11 million views on YouTube. The song Sharara stays at the number one global position. I’m repeating number one global position on YouTube. Even today we very strongly believe within the company that hit songs don’t come every day but when you get one in this case we got a full hit album.
You have to really make it count by pushing it every aggressively in terms of marketing and promotions. The second principle within the music vertical that I think I reiterated multiple times in front of all of you that we very strongly at Saregama believe in is that the music purchase has to be done only with a financial lens in front of us and never that of vanity. After the massive success of Durinder 1, it was very tempting for us as a company to also go for Dhrinda 2 Music. In fact, there was a lot of peer and partner pressure around it.
Everybody expected Saragama to go and bag Durinda 2 music, but I’m very proud that the acquisition team stood its ground and refused to buy the album because of the pricing. The expectations of the producer just did not fit into a five year payback guideline and we said no. And I’m proud to share our stand. Our position actually stands vindicated today. We did the right thing by not going out there and picking it up. So we as we continue growing the music vertical, we are steadfastly maintaining that we will grow it, keeping in mind strong economic principles and never do things which are coming out of V.
Overall, the company released close to 1200 original and premium recreations across Hindi, Bhojpuri, Punjabi, Tamil, Telugu, Malayalam, Marathi and Bengali languages. Our spend this year on new music content was close to 235 crore and another 104 crore was spent on doing inorganic purchases of various small and mid sized catalogs. A spend of 235 crore on new content was lower than what we had planned and this specifically happened because some of the bigger movies that we had planned to release in Q4 actually got pushed.
I think the biggest name will be Sanjay Leela, Bhanshari, Love and War and Telugu superstar Nani film Paradise. During this quarter the company completed its strategic investment in Bansali Productions through a significant minority ownership with the valuation linked to the financial performance of the Banchali Productions Company over the next three years. This arrangement provides Saragama with an exclusive access to marquee Hindi film music at a predictable cost based on a predefined formula.
There is a terrific lineup of films planned by Bansali Productions. This in turn ensures that Saregama secures our A and B Hindi film music album requirement for next 24 to 30 months. We won’t have to go hunting in the market for it. Our overall lineup for financial year 27 includes the delayed and now scheduled album of Love and War of Mr. Bansali Dharma’s production starring Karthikarian called Nagzila Rajinikanth next Tamil film Shiva Karthikenj, Tamil films, Fion Nani’s Telugu expected blockbuster paradise amongst others.
During the year we also want to further consolidate a leadership position that we got with the acquisition of Navharianvi and this year we plan to go back and build that one weakness that we had. We want to fill in that gap which is Punjabi music and we have done our homework over the last six months debating on what strategy to adopt. We are confident we have something good coming our way now and hopefully the results will start showing within the next two to three quarters. Overall we continue with our guidance of a five year payback period followed by anything between 55 to 75 years of returns.
Music catalog globally is increasingly being treated as an infrastructure like inflation linked asset. It’s long term, it’s predictable and its value keeps on going up as platforms keep on increasing their own subscription prices and that’s a reason why institutional capital from the likes of Bain or Apollo KKR is now flowing into this space through various kinds of JVS and direct catalog purchases. All of this is happening at this juncture globally. We at Chegama with 180,000 songs catalog growing at 5,500 new releases per year is exactly the kind of asset that compounds value over decades.
Let me touch the subscription part of the audio business. This year saw a focused effort by platforms like Spotify, YouTube and Javan to build paid subscription revenue. The net result was an improvement in our revenue. Saregama’s revenue despite revenue from the free remaining flat. If we have been able to go back and show growth, subscription has already started playing a role there. A recent Indian customer study that was conducted and shared by Eny and Imi stated that 64% of free music customers in India are ready to shift to a reasonably priced paid service if all free services in the market share.
Now this is a very this is data right now which has been shared in the latest Ficci report. Also it just revalidates what we all believe in. Indian customer is not stingy. Indian customer values music and is ready to pay. But if the free option is available, people always prefer the free option. But the moment free option goes away, Indian customer is ready to pay. We maintain our bullish position on the subscription growth in the country. Just to put it in perspective, the paid streaming penetration is 67% in Sweden, 57% in US, 50% in UK, 13% odd in Brazil and China versus less than 3% in India.
This is according to the Goldman Sachs estimate and this is a percentage of the Internet users in any country with every percentage point of penetration translating to 14 million paying subscribers. The Runway in India is structurally larger than any other larger market in the world and Saragama plays in this market. The other part that everybody wants to talk about is AI While at Sarigama we are watching this space carefully and have not committed any significant capital to an at this moment our position in the company is that owned music which is artist driven premium music is going to become far more valuable and not less valuable in this AI driven world where a lot of AI slop is coming in, authenticated human created music with clear provenance becomes your premium asset because customer at the end of the day is not just relating to a song.
Customers also relate to the artist behind the song. That artist might be the actor on whom the song is picturized or the singer who has gone out there and sung the song. This is something that this mass generated AI slop which is flooding the ecosystem can never provide. So in the long run companies like Sarigama with having the most premium catalog of the country across multiple languages is going to become even more sought after from the song value perspective. At the same time we are realizing that AI is creating new licensing opportunity as can be witnessed by the deal signed by various global music labels with various generative AI platforms.
At the right time we will also engage commercially with many of these people so it may become one more way in which our revenues can our IP can be monetized. I’d also like to share that we have recently launched a dedicated AI efficiency team headed by a very very senior tech person from the company. This team is analyzing every people heavy process in the company, every area right now, whether it’s infringement tracking or any other operations path, and is finding smarter AI based solutions that can improve the overall efficiency and effectiveness of all these processors.
As promised, Pocket Aces has reached breakeven this year. We were committed to it, Pocket Aces team was committed to it and I’m very proud that we finally went out there and delivered to what we had promised. The company has started making money and we believe that as we will go forward the profitability of the company will start going up. This is over and above the benefits Pocket Aces ends up offering to the music business and the live event business of Saragama. All those benefits are accruing actually more on the Surigama side.
While global majors are today talking about expanding artist brands beyond streaming, we have been quietly building it over last three to four years and today it’s already a meaningful EBITDA contributor through our artist management, live events and brand partnerships vertical Artist Management, the newer vertical under music works by making artists popular through our IP releases and then monetizing them via booking for live events, weddings and more importantly brand endorsements and Saregama gets her share of it.
During the quarter we added another 30 odd artists taking the total artists managed by the company to 300 plus and these artists combined have over 400 million follower and subscriber based on digital world as content, our investment in content goes up, so does the investment in the artist. In that case, the artists ends up making money for us not just from the music but also from their presence in various live events brand partnerships. So that becomes a second vertical through which you can go back and monetize the artist.
Live events. The other verticals that people are using to extend our relationship with the artist ended up launching its first music festival IP called Unforti in this quarter. Instead of competing with other festivals that are there in the market, we position our festival uniquely as a destination for only people under the age of 40 and hence the name Unforti also Instead of bringing an international artist to perform at this music festival, we took a conscious call that we will work only with the Indian artist and rather than treating it as a weakness, we built it as a unique positioning of the Unforti festival and that positioning helped also.
Every other festival in the country has a particular format in which artists come out there and perform during festivals. We turn it on his head and said that apart from the artist performing, we will also have stand up comedy acts in it and we will have physical interactive games along the lines of what Takashi Castle used to do on television earlier. So there were games where multiple people were participating with each other in a funny enough fashion. And I’m proud to say all these gambles that we people had taken for Unforti actually was worked.
We generated 12,000 footfalls along with eight sponsor branch coming on board. And remember, this is season one of this festival. We plan to nurture this festival further and make it even bigger in financial year 27. We expect this IP to break even by FY28. Overall live events vertical during the year saw a revenue of 60%. I accept that this revenue number is far lower than FY25 but please keep in mind FY25 had a one off event which was Dilji Dosanj India tour. These kind of tours don’t happen at that frequency, so if I remove that one off revenue out Even the live vertical has seen growth this year FY27 will see us launching a series of small concerts under the CARVAA Live branding targeting middle aged and older audiences that enjoy sit down premium music listening experience.
We are also increasing our focus on the American market. Tours with Ilya Raja, Sudesh Posley and Anoom Cholota have already been announced. Globally, music labels are increasingly focused on monetizing super fans. In fact luminaid research shows superfans spend 105% more than the average listener and 73% of them buy physical merchandise. Carvaa Live and our diaspora focused tools in America target exactly this audience segment within the Indian context. Older, financially comfortable and willing to pay a premium for curated experience with artists they grew up listening.
Our long term belief in the potential of live events keeps getting reinforced every quarter and we will continue upping our focus in this area. Brand Partnerships as mentioned last time we had created a new vertical called Brand Partnership in order to maximize revenue from the brand across the various businesses that we have which is music, live events and short format videos. In this last quarter we partnered with brands such as Koda Lakme Hero, OpenAI, Coca Cola, Ajio and more. Let me talk about the last vertical which is video.
On an annual basis the video vertical has declined by 43% to 108 crore. Let me very clearly state this. This decline is by design and is not happened by ch. We have shared this with many of you guys in the past that early in the year last year we took a conscious call that we will wind down our own in house film production business that we were doing under the Yudli brand name and instead will invest in a production house during the year. We zeroed down on a potential partnership with Bansalis and went ahead with that.
That’s the only reason why you are seeing a serious decline in the video vertical and we are happy with this. We don’t expect video vertical to go up substantially. Within the company, the focus will stay primarily on TV serials and the digital content only, primarily short format. All our film ambitions and hence our need to secure music of big films, that ambition is going to be fulfilled only through our partnership with Bankari Productions. As I come to the close of my address, what I’d like to share with you is that India is at an early stage of global streaming curve.
And keep in mind this is a feature and not a bug. It means our growth is driven by subscriber expansion, ARPU expansion and also format diversification simultaneously. While the mature western market primarily depends only on price hike, today we have three ways in which we know our revenue is going to go up. With that in mind, over the next few years, Saragama will continue investing in new music content. This will contribute not only to the immediate growth but also put the company on a long term growth path for the music vertical which is licensed music, artist management and retail all combined.
We continue with a medium term guidance of 21 to 23% revenue growth 2021, 3% CAGR in terms of revenue, with our annual EBITDA guidance for this vertical being anything within 60 to 65%. Tari Gama’s growth narrative will continue to be steady in the medium to long term thanks to the ever increasing digital consumption both in terms of new customers joining the market and existing customers consuming more. With over 650 million plus Internet users in India, our cash deserves professional managerial depth and access to the soundtracks of the best film.
We will be able to drive earning not just for the next two to three years, but for the next 20 to 30 years. Thank you ladies and gentlemen. Happy to take questions.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and Answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue you may press star and two Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will now wait for a moment while the question queue assembles. Our first question comes from the line of Avnish Roy from Nirvama. Please go ahead.
Unidentified Participant
Congrats on very good numbers. My first question is on the two things that you highlighted. First was weakness in Punjabi so I wanted to understand why this segment has been a bit on the lower side. You is it because it’s niche market or more competitive or more expensive and how much allocation you plan over the next two years in this and second is on AI IP monetization. How how big can this be? Any examples from the developed market and if you can talk more about this that is my first question.
Vikram Mehra
Okay on the Punjabi side we have experimented getting to this market twice over the last six years and I’ll be honest and confess that our strategy never worked out. Any market that we get into we need to keep a very tight balance between market share and the return on investment which is a five year payback principle. The market is a very expensive market but we also understand that if you get it right the monetization happens not just from Punjabi’s living income in India but from us, Canada and UK also.
Now we have been able to crack a model whereby we are working with more and more artists in a fashion that we do a combined deal with them both for the recorded music as well as doing live events with the same artist. This is where Saregama starts getting uniquely placed compared to all of the players in the market because we are the only guys who are playing across both recorded music and live and I am fairly confident, hopefully not overconfident, I’m fairly confident that we will be able to crack it this time.
Maybe by the end of the year or end of quarter three will be in a better position to share our performance with you. Anyway if you start following us on any of the social media you will have the answers faster than even I can share with you. You were asking about AI See what we are very clearly seeing that all this AI slop which means purely AI generated content which is from engines which have not been trained on any of the international music catalogs, that kind of content has come in a very big fashion.
It’s there, it’s there across all platforms but the fact of life is it’s seeing no Traction and all the music labels globally and in India are working very closely with the leading three global streaming platforms, making it very clear that when the content pool is going to get distributed across the labels, no value should get assigned to content which is getting generated purely or through AI. So there is no revenue leakage today, There is no market share loss happening today. And we are hopeful that platforms and IP owners will come to a reasonable.
Agreement whereby the royalty monies or the content pool monies will get distributed only to genuine IP and not the AI slot. Hopefully. I’ve answered your question.
Unidentified Participant
Yeah. Thank you. My second and last question will be you spent 235 crores on new content. Given some of the movies which you said have been pushed to FY27, what will be the budget for FY20? 27? Yeah. What will be the budget for FY27? And in terms of Airtel Wink, that service ending essentially where would that customer for you would have gone if any idea on that?
Vikram Mehra
So let me answer the first question. It’s also part of the presentation that we are expecting our new content budget to be anything between 300 to 350 crore this year. That’s your range. It will be in. As for Airtel Wink, is Airtel wink shut in November 24? The customers have already got distributed across the other platforms. What I can tell you which are the other platforms, it will be wrong on my part to tell you exactly. Move. That’s a platform prerogative. There’s Spotify, there’s Starvan, there’s Amazon, there’s Ghana, there’s Apple and then there’s YouTube.
Unidentified Participant
Understood. Thank you. That’s all from my side.
Vikram Mehra
Thank you.
Operator
Thank you. Our next question is from the line of Kavish Parikh from 361 Capital. Please go ahead.
Kavish Parikh
Hi Dean. Thanks for the opportunity and congratulations on a great set of numbers for two quarters in a row. My first question pertains to one of the notes. For accounts you put. You seem to have written back provisions worth 99 million during the quarter. Could you share what do these provisions pertain to and where exactly is the impact reflected?
Vikram Mehra
This is something that happens every year. What we do is during the year we build up a position on the provision side and when the actual consumption data comes out, that’s the time we are in a better position to decide how much royalty has to be paid or not paid. Remember I’ve shared this in the past. Royalties. Today, when all the new content is being bought, royalties are to be paid only on the Hindi Film music, all the South Indian content and Hindi non film content is a royal is one time payment content and there’s no royalty overflow that happens.
But actual consumption reports from the platforms come at a much later stage and that’s why this is a natural process that happens every year. So whenever the reports come we go back and clear it.
Kavish Parikh
So does this in any way back your revenue items or is this entirely on the royalty line item, the cost side of it?
Vikram Mehra
So see what you need to do is also the other part right now forgot to mention is you congratulated us on a quarter three quarter four. You need to congratulate us on quarter one to quarter four because it very often happens is that some of the stuff right now which we had taken a provision in quarter one actually got unwinded down in quarter four. So please every time when you are looking at our numbers please Sarikama’s numbers always have to be looked at on a rolling 12 month basis so that all these kind of factors start going out of the window.
Even advances is a pretty good decent. Another example I can throw in on a 12 month basis is when you want to look at a cash position there are times right now when the advances come in and then finally that advances position is getting winded down. If we are going to be looking at a quarter on quarter basis you will see a serious amount of ups and downs there. So it’s best always evaluate our numbers right now on a 12 month basis.
Kavish Parikh
No sir, I understand that. What I’m trying to understand is is this one of the reasons for this provision? Write back does this sit in your revenue or is it does does Is that the reason for the 42 or odd percent EBITDA margin that you’ve reported? Is this in any way aiding your growth or is it only on the margin front?
Vikram Mehra
It’s all sitting part of your cost structures only
Kavish Parikh
Nothing in the revenue.
Vikram Mehra
These are all cost structures which are getting winded down.
Kavish Parikh
Understood, understood. Pretty helpful. Second, on your disclosures on page 20 of your deck. Thanks for the clarification at the start of the call that music now includes licensing, retail as well as artist management Here could you please explain the movement in margins? What explains the sustained up move in margins here from about sub 60% few quarters ago to 60% and then the sharp jump to 68% today. Would you be able to attribute this to any particular vertical here say licensing or artist or retail or is this broad based across the three
Vikram Mehra
The individual? If you see right now the segmental results you will Realize we have also shared the individual results there at all times. So you know exactly out of this how the margins have changed right now on the artist management part also when you are looking at my margins it’s always better. Once again please look at on a four month Q4 looks like that much better than a Q2 or a Q1. But the fact of life is it’s about when the content got released in some quarter the cost of the content is being recognized but the revenue is going to be flowing in in the next quarter onwards.
But overall we had mentioned this that we were at a stage whereby we were really scaling up our content investments as our new music is concerned. As we people go forward as we look at FY28 to FY30 we believe that our content investment should go up only at closer to the rate of inflation because we will be in a good position of a 25 to 30% market share of the newer content. As the new content investments start going up in a linear fashion and not a step function fashion, you will see that slow first EBITDA and then PBT will start flowing the growth trajectory of the revenue growth.
Kavish Parikh
Understood. Thanks for that Vikram. Last question from my side. Organic content spend this year stood at about 235 crores with the cash flow in the PPD states about 186 crores. I understand this difference here pertains to the marketing spend but your nine month PPT mentioned about 228 crores in the PPT’s cash flow. So that 228 seems to have come down to 186. Could you explain this movement,
Vikram Mehra
This specific one? Can I take offline with you right now? Because I’ll have to go through all the numbers when you think nine months part. But broadly speaking is what we are sharing with you is the investment. When and when we say the investment it is in terms of the music that got released during the financial year. The charge off that we are taking right now will be connected not just to the music that got released this year but also the charge off of the music that got released over the last few years.
Because we write off our music charges on the content side over a period of 10 years while marketing gets written off in the same year.
Kavish Parikh
Understood? Sure. Let’s take this offline. Thank you. Thank you.
Operator
Thank you. Our next question comes from the line of Achal Jalan with Lotus Wealth Family Office. Please go ahead.
Unidentified Participant
Hello. Thank you for taking my question and congratulations on a good set of numbers. So sir, in the last con call Also you had discussed that there is a potential of around 100 million page subscribers in India. And. And now also you said that 64% of free music users are ready to switch to paid subscription. So say hypothetically, if there are around 10 million paid subscribers in India, what would be our share in IT in percentage terms?
Vikram Mehra
Ma’, am, I can’t go out there and share my market share in the market today. But remember, we are not getting the subscribers, Spotify is getting the subscriber. When a Spotify subscribers is listening to music during the month, we get paid basis our market share of what subscriber heard during the month. Are you with me?
Unidentified Participant
Yes sir.
Vikram Mehra
I don’t own the. I don’t own the subscriber. I partially own the consumption of that subscriber on that platform.
Unidentified Participant
Yes. So can you give me some context like what would be our share in it as in our consumption share in it?
Vikram Mehra
Ma’, am, this juncture, the other data point, I can go back and share with you that in terms of revenue which is coming from the music side, we are the second largest company in the country after T series. As for new music is concerned new music being defined as the music that was released over the last 12 months. We have number one position across multiple languages in the country.
Unidentified Participant
Okay, sir, thank you.
Operator
Thank you. Our next question comes from the line of Avnish Sharma with GM Financial. Please go ahead.
Pankaj Mahesh Chaturvedi
Yeah, can you hear me?
Pranav Kshatriya
Yes, please.
Pankaj Mahesh Chaturvedi
Yeah. So congratulations on the good set of numbers. I have a few questions. So if you see a bit of history, the revenue for fourth quarter 24, that the growth was around 40% at the time, but after that the growth has remained subdued in terms of revenue, but it has improved over the last two quarters. So my question is, should we expect the current trends that we have in revenue to continue in the coming quarters or should we look at the numbers? Like how should we look at the numbers?
Vikram Mehra
I’m assuming you’re talking about the music vertical.
Pankaj Mahesh Chaturvedi
Yeah, yeah, music vertical. Yeah.
Vikram Mehra
For music vertical. I had stated this in the past also that our growth was getting subdued. In fact, I’ll say over the last two years primarily on account of the fact that a lot of free streaming platforms had shut down and their revenue numbers were sitting as part of the denominator while those things were not available in numerator at all. So you had four different platforms changing shape and form, some shutting down, some going fully behind the paywall. That effect is completely over. Which is the reason that it gives us the confidence to give you a guidance or 20 to 23% growth coming as overall music vertical which is licensing, artist management.
I’m also including the karma business in this. So we are fairly confident you will again have a quarter here and a quarter there. But on a full year basis we, we will live up to these kind of numbers.
Pankaj Mahesh Chaturvedi
Understood. That’s great. The second question is on the margins in the music segment. So there’s a significant uptick in the margins this quarter. So just wanted to understand the reason for the same
Vikram Mehra
For this quarter.
Pankaj Mahesh Chaturvedi
Yeah.
Vikram Mehra
So again please don’t look at from the quarter perspective because like a very good example will be Dhrinder. Durinder got released in the month of December. So the entire marketing cost of Dhrinder is sitting in the in Q3 while the major but it got released in the end part of December. Lot of revenue up on quarter four while the marketing got written in quarter three. So whenever you’re looking at us please look at us on a four month four quarter basis. That gives some kind of uniformity otherwise.
Pankaj Mahesh Chaturvedi
Yeah, understood. My last question is in terms of the competition we see the non digital revenue has increased significantly for the competition. Just wanted to know our split of digital and non digital and trends over the past three four quarters.
Vikram Mehra
Yes. So we don’t disclose a digital non digital. But I am all I can go back and tell you and you can check this from non music labels. So don’t ask me or any of my competitors. Go to the normal industry people and check out the largest absolute number of non digital revenue in the country still comes to Saragama. In fact on digital I’m number two. I’m not number one on non digital. I’m one number. Number one.
Pankaj Mahesh Chaturvedi
Understood? Yes. Thanks. Thanks. Thanks for the opportunity. Thanks. All the best.
Operator
Thank you. Our next question comes from the line of Pratik Podar with Bandhan amc. Please go ahead.
Unidentified Participant
Yeah, hi. Am I audible?
Vikram Mehra
Yeah.
Unidentified Participant
Hi. Just could you confirm Vikram that you know we had this headwind of discontinued platforms in space that is now over with. Is that a fair understanding?
Vikram Mehra
It’s over with. There’s no platform sitting out there now in a denominator.
Unidentified Participant
Okay. The second question just on events business. While I understand and appreciate that this is a lumpy business from a revenue perspective this quarter I saw a loss in the events business. That was something which I couldn’t understand. Was it that
Vikram Mehra
I added as part of my opening commentary. We people launched our first festival IP this year. Typically festival IPs take anything between three to four years to do a break even that Loss is all primarily going out of. Because of. Unfortunately I expect it to be having some up to this trend to continue. Only in FY28 do we expect the festival to do a break even. But every time you have any bit of a debate on a festival, just look at a Coachella number. And then you start realizing that festivals take five, seven years to build, but after that they become massive profit machines.
Because the biggest beauty of festival is you’re not dependent on any one individual artist. You can keep on changing artists because the festival is bigger than the artist.
Unidentified Participant
Understood. And this would be a quarterly phenomena, Right. It’s not for the year. The festive, I mean the unfortunate festival, which I heard
Vikram Mehra
40 will be an annual phenomena. This festival we may have. We may end up launching another one or two festivals if we believe there’s a decent amount of opportunity there. But unfortunately is an annual thing. We already announced unfortunately for February 27th.
Unidentified Participant
Okay. Once in a year, right?
Vikram Mehra
Yeah.
Unidentified Participant
Okay. And is there a budget of amount of losses you would want to keep aside or let’s say the investment. It’s not losses, it’s actually investments for the future. How much would you want to keep aside?
Vikram Mehra
Let’s put it this way. You’re seeing the numbers now and this is year one. And year one takes the largest amount of losses because you’re trying to establish now there are already expectations. We know brand revenues are going to go up further. We know the number of tickets we’ll be able to sell are going to go up further. So the losses are going to come down. They’re not going to go up on a festival by festival basis. So typically, if one is running the festival business in a financially prudent fashion after year one, you need to take a call.
Is that is it working or not? If not, shut it down. If it’s working year two, you make it bigger, but you get insured. Right now your losses come down
Unidentified Participant
And last question, Sorry, just on the video segment, given that you have already called out that we would be going through a production house and you will be winding down the video business, how should I think about capital employed and then overall margins? Right. I think you called out segmental margins and you did give a guidance. But the revenue mix change is right. Essentially a lot of our revenue now comes from music plus artist plus retail and a bit of events and video sits with the production house.
So how should I think about company levels, the
Vikram Mehra
Guidance that I’ve given right now for the EBITDA margins only of the music vertical and nothing else. Video part. Listen, we are still going through this churn state it will take us in here or something to stabilize the Bansali Productions numbers are going to get enter our books right now in terms of what is the exact name right now share a net profit of associate accounted for the using the equity method. That’s a line under which we are going to be putting the numbers of our partner company our own video vertical which time we are not green lighting any major new projects.
Whatever was there in the pipeline. That’s the only thing we want to complete in financial year 27. Our focus will continue on the shorter format and TV series and digital series business that business typically is are saying the if run well should be always be a profitable business. And in the past we have always been profitable in that part of the business. You’re looking at margins that are anything between 8 to 15. Net margins of 8 to 15, 8 to 18% but very little capital actually gets allocated to series business.
You take advantage from most of the times you take advantage from the platforms of the TV channels and make content using that. The only place where we end up taking some of our own bets which is numbers which are running into lakhs not even crore is what we do on the short format side from the capital allocation perspective. To answer your question we earlier indicated to you guys that between our video vertical and the live vertical the total capital that will get allocated will be 18% of the total capital deployed.
That number is going to go down dramatically will be in the mid single digits now.
Kavish Parikh
Fantastic. Fantastic. Thanks, thanks, thanks. This was helpful. Best wishes.
Operator
Thank you. Our next question comes on the line of Yash Bajaj with lucky investments. Please go ahead.
Kavish Parikh
Good afternoon team and thanks for the opportunity and congratulations for a great set of numbers. My first question is on our plans of the thousand cr spend on new content acquisition. So should we consider FY27 as I mean one of the. I mean the fag end years for this kind of investment. If we take a FY25, FY26 and FY27 cumulative numbers.
Vikram Mehra
Yep, you’re absolutely right. FY25, 2627 was 1000 crore odd and we will be in that ballpark in that space only. Our intent is from 28 onwards increase it only in a linear fashion and no more step jumps in new content investment. We are happy with the current 25 to 30% market share that we have of the new music coming out in the market.
Kavish Parikh
Got it. Understood. And my second question is and thank you for actually kind of Giving a detailed explanation of how the music business and the EBITDA margins and profit margins look like. My only question here is that what is the difference between music EBITDA percentage and music net margin percentage? Is it that the music EBITDA percentage have as marketing and production?
Vikram Mehra
If you see that specific slide in the presentation we have made, we have written about it. So music net margin is EBITDA less content charge. So the newer content people are so marketing and everything we have to considering then you the content chart that we are taking for the newer content has not been deducted. When we calculate ebitda, you deduct that you get the net margins.
Kavish Parikh
Okay, Understood, understood. And just a question around this as well that now that if like you mentioned that we have to look at the P and L on a rolling four quarter basis. If we take financial year 25 music net margin percentage compared to financial year 26 music net margin percentage, there is an increase from a 42% to I think 47, 48%. So what explains that 600bps improvement? If you can help us understand that.
Vikram Mehra
So all verticals and the biggest vertical remains the licensing vertical. What you are seeing is that initial years content investment that we had done the heavy lifting of the the charge that we are taking had taken had happened in 25. So all the content that we people did in 25 and there are massive hits like IFTRI 2 which is sitting there or an Amran which is sitting out there in FY25. The bigger charge of that has been taken in 25. While the Revenue benefits of that will keep on accruing to us over the years.
26 is a good example of it. So last year when our number numbers were going on the flatter side, I had stated this that the numbers in 25 were on the flatter side compared to 24. Just jumped into new content investment in a meaningful fashion. So though the revenues were going up, the charge off was also very, very big. And hence the overall profitability was going on the flattish side. This year onwards, while a content investment is there, but the benefit of 20, 24 and 25 is also coming to 26.
You with me?
Kavish Parikh
Okay, Understood. Yes, yes. Got it, got it. See,
Vikram Mehra
The beauty of music business is that once you have done the heavy charge off in the beginning and if you do your music selection in a correct in a fashion and you keep on doing that some amount of drip marketing throughout behind a hit song, the song has got a very long life and will keep on generating revenues for you.
Kavish Parikh
No Very clear. And just one final question is just on the subscription part of the business, if you can help us understand what proportion of a business would be subscription today or if you’re not comfortable sharing that, if you can understand the growth rates between suppose subscription versus freebie.
Vikram Mehra
No. So the Saregama directly have no subscription, Spotify has subscription, YouTube.
Kavish Parikh
I mean paid. Paid. I mean paid.
Vikram Mehra
Let me not go back and share that data. Just two competitor sensitive data. But the fact of life is that the monies that we are making from the free side of audio streaming platforms are flattish and I’m acknowledging it.
Kavish Parikh
Understood.
Vikram Mehra
Both that you are seeing in the numbers that is coming in and numbers are there in front of you is all coming paid subscription side. And remember right at the beginning we have the massive play left in terms of new subscribers coming in, ARPU expansion and various other monetization mechanisms coming in. We have a unfortunate part is that even the Latin American countries are far ahead of us in penetration. But the positive part is there’s a massive road in front of us.
Kavish Parikh
Understood. Thank you and all the best.
Operator
Thank you. Our next question is from the line of Govinda Rajan Chellappa from csim. Please go ahead.
Unidentified Participant
Yeah. Hi. Hi. Thanks for taking my question. I had three of them. First, just a clarification. In your presentation you mentioned that you explained expect music net margins to improve by 300 to 500 basis points in three to five years. So in essence you’re expecting the EBIT margins to move from 46 odd to a sustainable 50%. Is that understanding correct?
Vikram Mehra
Yeah. So in fact if I’m looking at the EBIT margins currently also I’m using that hovering on the are hovering around 60% odd. If you look at my slide, not talking about net
Unidentified Participant
Margins, what what you are talking about margin for the business.
Vikram Mehra
If you are talking about the net percentages which are somewhere hovering between 46 to 50%. Yes. Over next three to five years you should have 300 to 500 bits increase coming on our music business, everything else remaining as it is.
Unidentified Participant
Okay. And this would be a linear increase or you think this will be back ended.
Vikram Mehra
So it may take us another year or two for the build up to start happening. But what we are realizing is that as our digital footprint is becoming stronger and bigger, big advantage is coming in that the incremental marketing cost that I have to incur to promote a song, a decent chunk of that I’m able to go out there and do it because of the pocket Aces digital footprint. And that is the kind of saving we end up accruing in the system. That process has started. You will see it in a linear. It will not be a single step jump that will happen but it will be linear.
But linear where the angle is a little lower in the beginning and becomes steeper as we go ahead.
Unidentified Participant
Okay, understood. My second question is on short format videos. Right now. I think you get paid a fixed fee per annum per by each of the platforms. Is this an annual contract or is it renewed annually and what is the basis for renewal? And you’ve mentioned that there could be conversations around sharing ad spins on short format. If you could give an update on that.
Vikram Mehra
Yeah, so actually nothing has changed over the last one year. This is one of the areas which bothers us. Short format content in all our deals have one year deals and the renewal typically happens basis the usage of our content during the year. So yes, we are able to get some kind of a step jump but it is not as ideal as an advertising driven model is. Because an advertising driven model you straight away see benefit accruing right now to your bottom line. What Happens happens with YouTube free service short format content.
All the licensing to short format services is still a fixed fee deal renewed on an annual basis.
Unidentified Participant
My last question is on this line item, unallocable expenditure. It’s moved from 7 odd crores in FY23 to 74 crores in FY26. What are the components of the this? Has there been any reclassification and how do we think about growth in this expenditure over the next few years?
Vikram Mehra
So I think my thing is unfortunately I don’t have a CFO at this moment. Can I ensure right now somebody calls you up and takes you through these numbers in detail because you’re putting 3 to 26 movement now.
Unidentified Participant
Yeah. I mean every year it is doubled. So
Vikram Mehra
We will go back and sit with you. See the core part. I can go back and say that the core management team is all sitting in there. So there is some amount of manpower cost also that is sitting in. Kuldeep, do you have an answer to this? If you can help. From the moment.
Pankaj Mahesh Chaturvedi
Can you repeat your query? We just logged in between.
Unidentified Participant
Yeah. The analytical expenditure which comes below the segmental results, it moved from 7 crores in FY23 to 16 and 24 to 36 and 25 and 74 in FY26. Right. There’s a 10 10x increase in that expenditure. So
Vikram Mehra
If we have to look, if we see a comparison between 25 and 26. So in FY23 it was 37 crores and it is now 73 crores. The major. Because this unrelocable expenses net of other income which is the income which we do in investment in mutual funds. And now when we are investing in the content we are realizing that those investment and that is where the interest income has dropped. And as a result of same you are seeing that delta in
Operator
This expense. This is one of the major reasons the expense which you see here.
Unidentified Participant
Okay. Okay. Sorry. Maybe I can. As the QIP
Vikram Mehra
Funds are getting utilized either in terms of purchases of earlier pocket aces then happen Bansali and our newer music content that we are doing the interest income on that capital is coming down which means the netting off effect is coming down. So in reality the unallocable expenses are not going up in any alarming fashion. It’s just the netting off portion which is giving this illusion as if they are going up.
Unidentified Participant
Okay. I mean I think I need to take this offline because between FY23 and FY20 other income has dropped only 10 crores. Whereas this is. Yeah. Yeah. Okay. I’ll take this offline. Thank you. Sure.
Operator
Thank you. Our next question is from the line of Sanmat Jain from Kamayakia wealth management. Please go ahead.
Kavish Parikh
Yeah. Hi. Am I audible?
Vikram Mehra
Yes please.
Kavish Parikh
So I had a couple of questions. So I wanted to know about the revenue from social media platforms. So suppose an influencer post study using our music. So what’s the deal structure and how much do we make from that one? Really what’s the revenue model there?
Vikram Mehra
I. I had answered this. I think. I think last question only. All our social media platform deals are flat fee deals. That means we get paid a flat fee by this platform for utilization of our music across reels or post during the year. So you’re not getting paid right now on a per reel basis. But this license is restricted only for for individual consumption and usage. A brand cannot take advantage of this and post any real of theirs. Brands have to take negotiate a license from us directly.
Kavish Parikh
Okay. Okay. Understood. Understood. Okay. My other question was related to the investment part. Suppose we do 350 crores in FY27 to recharge stated target of thousand crores. But from FY28 what investment budget are we planning?
Vikram Mehra
So we are looking at a linear increase as we people go forward from FY after post FY27 because principally we are comfortable the 25 to 30% market share that we will get with the 300 to 350 crore content investment. So as you go forward but you can look at anything in terms of very high single digit to a very low double digit percentage increase on year on year basis.
Kavish Parikh
Okay, so considering the base of 350 crores for FY27, so incremental to that you are saying, right, so suppose 400 crores kind of number.
Vikram Mehra
Yes. So for me at this juncture of 12 months away, it’s more of a philosophical question and our philosophy is clear that we started from zero investment in this company on new music. We have ramped it up in a very rapid fashion over the last three years to give ourselves clear leadership position in multiple languages to get ourselves for 25 to 30% chance market share on a pan India basis in terms of new music. We are comfortable. We want to consolidate our position here. We don’t want to go back and do another massive step function jump here.
Kavish Parikh
Okay. Okay. Thank you. That’s it from my side.
Vikram Mehra
Thank you.
Operator
Thank you. Our next question is on the line of Rohan Nagpal with Helios Capital Management. Please go ahead.
Kavish Parikh
Great. Thanks for taking my question. Am I audible?
Vikram Mehra
Yes please.
Kavish Parikh
Yeah. I just want to understand the seasonality that we see in the music revenues that we’re booking. Even after taking out artist management, there seems to be a fairly audience to the year. So what is the underlying driver of that increasing streaming or licensing revenue Q1 to Q4?
Vikram Mehra
I’m so sorry, you will have to repeat your question. Could not hear you.
Operator
Rohan, please go ahead with your question. Once again your audio wasn’t clear earlier.
Kavish Parikh
Okay. There’s a clear sort of increasing trend between Q1 and Q4 on the music revenue that we generate. Excel and X management. So increasing licensing revenue. I want to understand what is the driver of this increasing revenue in licensing between Q1 and Q4 through the years.
Vikram Mehra
So between Q1 Q4 actually the biggest factor is when which a big album is getting released. A lot of this revenue that you are seeing right now is also governed by the new music releases typically in our country. Q1 being the IPL time, you will have less new big movies getting released during the year. Q3 being the Diwali time ends up seeing a massive release in terms of new music. And then the December January time frame is very very big. One being Christmas, second being around Onam. Why am I saying Oman?
Around 14th of January. 14th January becomes a very big release date in South India and then the 14th of February becomes a very big release date across the country as far romantic movies are concerned. So you typically in our country have bigger releases coming in Q3 Q4 the only date that’s stands out is around Onamwala date which is from the 15th of August to end of the August where you do have big Malayalam and sometimes patriotism driven Hindi films also coming out. So that’s a level of seasonality.
You may have seen sometime that Q2 may become bigger than Q3 also and we have seen that in the past happening with us. But Q1 typically is the most muted one because there are very few releases. The other factor which need to keep in mind for Q4 is that there are some of the commercial relationships where the money hits us only at the end of the year. This typically happens with various relationships we have with various societies. They are able to go out there and finish the reconciliation for the entire year and release the money monies only.
Typically they do two or three tranches my payment. But if they’re getting delayed primarily all the payments end up hitting you in Q4. That’s why like a stuck record I agree to be please look at us on a rolling 12 month basis.
Kavish Parikh
Understood. That’s really helpful. Thank you. And then the other question I had was the sharp decrease in the advertisement and sales promotion expenses here. Is that on account of events not being events not being there this year or not in the same, not with the same intensity or is there some other factor driving that?
Vikram Mehra
Two big factors start coming in here. One, you have nailed it last year. This also included all the advertising that we people had done for the Dilji Dosan show. Also we have scaled down the video vertical this year. So very few new films were released by us this year while 25 also had film advertising expenses sitting in. So this is not just music. Music there isn’t that much about a change. There is some amount of reduction because if you see the content investment that we have done during the year which is a combination of content plus marketing or new music has come down compared to the previous year.
These movies like paradise and Love and War. Had they got released as earlier planned in February March time frame these expenses would have been a little higher.
Kavish Parikh
Last question, there’s a sharp decrease in the content charging cost this quarter. Is that because there was the Rundar marketing spend that was incurred in Q3 which is not there in Q4 or is please
Vikram Mehra
Quarter on quarter becomes very tricky when it goes up. We don’t take when the numbers move in our favor. Also we don’t take the credit on a quarter on quarter basis. Evaluate us on an on a 12 month basis becomes that much easier. 27th of December. Now it will get the marketing spread. Is it front loaded? Is it back loaded? And everything changes. So. And if the movie is getting released in December, was the last song also released in December? If the last song was also released, we will consider the entire content charge.
Otherwise the content chart moves to January. That’s why it’s always better to evaluate this thing on a 12 month basis.
Kavish Parikh
Fair enough. Wonderful. Thank you very much. Thank you.
Operator
Thank you. Our next question comes from the line of Manish Gupta from Equinox Investment Advisors. Please go ahead.
Unidentified Participant
Thank you for taking that question. Is feebly IPRS movement a threat to the revenues Especially after Calcutta High Court ruling in that Vodafone case.
Vikram Mehra
It does not have any implication on us. I’ll just leave it there.
Unidentified Participant
Okay? Okay. And secondly sir, I understand that market price of the stock is neither your focus and it should not be and nor under your control. However, markets are said to be voting machines in the short run and weighing machines in the long term. Saregama has been on a downtrend for several quarters now. Notwithstanding today which we are grateful for, is there anything fundamentally altered or disrupted in the music industry or Saregama’s business which is causing this downtrend in your opinion?
Vikram Mehra
Sir, I’ll not comment. As you rightly said, I am not going to be commenting on the pricing. The PE part of it I am and the management team is fully accountable on the EPF part of it. All I can go back and say is saregama. Three years back when we decided to get into new music. We had made a statement at that particular time that we are preparing this company for 2050. This company had made a mistake in year 2000 by deciding not to invest in new music content. It’s easy for us today if we sit and say that the only thing we want to drive is profitability.
All that board has to go back and decide is that from now onwards we will not invest in new content. If we do that and it is a very conscious part that we want to drive only profitability from music today. Growth and long term sustainability is not something that we want to drive. This company can become a 75% march in business tomorrow. Because there is in music business such a beauty. There is very limited cost. Once you have already paid for the content that you have taken and the music keeps on making money for you on a long term basis.
We took a conscious call and that time also we had prepared the market saying the going has been great but the going has been great only on the back of the catalog. We don’t want a situation 20 years down the line that the kids of that time are that who was Kishore Kumar or who was Adi Burman? Because the Kishore Kumar, what Kishore Kumar is For us today, 20th of Arijit will have. So we are just investing in newer content in an aggressive enough fashion. And when you invest so heavily in your content, especially in a step function job, in the short run the increase in revenue will get matched completely by the charges off on content that you are taking.
We are slowly getting out of that cycle now. So if, if you are congratulating us for the quarter four results, believe you me, right now, the real game of this started three years ago. We are now slowly getting into a position where the benefits will start accruing to us.
Unidentified Participant
Fantastic. And the last question is that the new generation is now watching reels all the time.
Vikram Mehra
Does
Unidentified Participant
It or can it affect music revenues in coming times?
Vikram Mehra
Sirigama has owned 91% of pocket aces which owns the biggest gen Z channel. So Saragama also owns through Pocket Aces Filter Copy, which is the ultimate reels place for people under the age of 30. So I have a play there. Second, any anybody else who is using a reel at any particular time, you realize majority of the reels, I don’t know the percentage. But bulk of the reels you will see on any of the social media will have music attached to it. So there is a monetization that ends up happening right now on the music side too.
So for us, presence on social media, whether it presence of social media, presence on a TV channel, presence on a digital series or a film, anytime a video is seen, there is a high probability our music will get attached to it, which becomes another touch point for us to monetize. So we look at it this expansion of reels with a lot of positivity.
Unidentified Participant
Okay. Okay. Thank you very much. Thank you.
Operator
Thank you. Our next question is from the line of Resham Jain from VVD Asset Managers. Please go ahead.
Kavish Parikh
Yeah. Hi sir, just one question. If you can share the revenue from the content which has been bought over the last five years, if that number can be shared, because there is hardly any way you have this payback period in mind of five years. But for us it’s very difficult to assess how profitable it is. So. So if you can share at least the last 5 year cumulative revenue in this year FY26 of the content bot, that will at least be helpful for us to evaluate.
Vikram Mehra
So I’ll tell you how you can arrive at this. If you check my last corporate presentation there. We have shared data with you that how much revenue is what percentage of the total revenue on the music side is coming actually from the music Music release after 2020. That data is as of FY25 does not include the 26 data and we will be releasing that part also shortly. But till 25 you will get that information. If I remember my numbers correctly, 40% of the total revenue that we people had is music released between 21 to 24.
This is as of May 25 data.
Kavish Parikh
Okay, okay. So if I then look at the overall revenue because now you have artist management and other things also. Obviously music revenue also is separate. But then the catalog of the old music as you mentioned in your comments also that it is inflation driven. How should then one look at that part? Because that seems to be growing much slower than maybe some of the other competitors.
Vikram Mehra
So I disagree with that part. I am not going to talk about competitors, please. I am talking about our absolute numbers here. The catalog growth that we people have seen for us on an apple to apple basis. What does mean that I’m going to be comparing my catalog growth on Spotify in over the last three years or a favon over the last three years or a YouTube over the last three years. We are growing at this juncture higher than inflation also and we have fairly confident this growth is going to get further accelerated as we go ahead.
Let me take this opportunity to also share with you that we are now creating a newer experiment within the company whereby we are saying that how can we use the capability of the generative AI to create enhanced content and properties around older music that free people have, which may be generative AI driven music videos for a Hemant Kumar song or an SD Berman song or it may be podcast which will be connected to the older songs that we people have, which gives us not only an opportunity to promote the older music but also find a fresher way to monetize the older music.
The problem is when you are going to be looking at my numbers do keep in mind the moment you do absolute catalog to absolute catalog, there’s a decline because music had a decline because we had platforms like Reso shutting down, we had platform like Vinc shutting down, we had Ghana going from a free to pay completely, we had Hungama shutting down. So overall numbers fell down in a dramatic enough fashion which is the reason why you see music revenue growth over except the last two quarters were going on a more muted basis but on an average apple to apple comparison basis.
Right now the Catalog is growing.
Kavish Parikh
Okay. Understood. Perfect. All the best and really admirable the way you communicate and show the passion about your business. Thanks for that. Thank you sir.
Operator
Thank you. Our next question is from the line of Sandeep Agarwal from Naredi Investment. Please go ahead.
Kavish Parikh
Yeah. Thank you for the opportunity. I just don’t. My question is this. Our performance regarding the last three years just our competitor company also have a market cap of 8,000 approximately similar to us and we have same P37. There is a Roc is our company. Our competitor company ROC is 122 while
Unidentified Participant
Our our ROC is 17%. They said 1990 music music revive their top line and bottom line. While we have a very. We have more good library of music song. But we can’t perform. Will you tell where we are weak? They have. They have 59cr content cost last year and we have approximately 235 crores. The right of content cost 100 on release itself. We are also good. They are also a good property to monetize in Dumnam area. It’s still we have paths away from them. So just comment
Vikram Mehra
So I can talk only about myself. So if you have any question directly connected to Saram I’m happy to discuss. I’ll not like to pass any comments on my competitor on my competitor’s business.
Unidentified Participant
So this is. Hello. Hello
Operator
Sandeep.
Kavish Parikh
Hello. Yeah. Yes. Yes. So just. I just want to know that where we are. My question. My question is regarding the performance of our company. Why they are not performing.
Vikram Mehra
Sir, I don’t know how you calling it not performing. The Indian music industry growth numbers have been published. This is a neutral study. None of us are involved in that part. ENVI has gone out there and done it as part of Ficci report. IMI which is the music industry’s apex body has gone back and published this. Both of them are saying music industry during the year grew up between 7 to 8. Somebody saying 6 other is saying 8%. That’s the industry growth rate in that industry growth rate. The only reason Shariga has been able to grow faster because we aggressively bought newer content.
And the fact that newer content has worked can be checked on YouTube, can be checked on Instagram, can be checked on Spotify. You can go to various charts of Spotify. See that when I am saying my content has worked there are third party which is saying that the content has gone out there and worked. So I know there’s far better work few people can do. And. And we will try our very best to Improve our numbers even further. But seeing that our revenue is not growing or our strategy is not working will be a little unfair.
Sir, I don’t know about competition. I know absolute numbers that are there in the market. And I also promise you and coming to you right now that the numbers in terms of profitability as we go forward with the strategic approach we took three years back as we continue, continue on that path are going to become even better.
Unidentified Participant
Just, just, just just one more. The company has been an aggressive content investment cycle. 1000 crore across financial year 25 to 27 which is very exciting from the shareholder perspective. The ROE has been around 13 for the last three years. This talk has some correction. So could you management help us in the front
Vikram Mehra
View? Will the. The. When we people raised the qip it was with a very big specific thing in mind that we want to go out there and invest in content that will get us ready for future. The first strategic call we take right now that the music has to be invested in. You are already seeing the results. We are growing far faster than the publicly acknowledged and published growth rate of the industry. Second, we took a call to go back and buy Pocket Aces. The fact that in last or two years we have been able to go out there and turn around Pocket Aces and make it a huge marketing machine and it’s growing at a very fast pace.
Third, we have taken a conscious call to go out there and invest in Bansali Productions. This will ensure that in the days to come the most valuable film album that will be coming out in the market will automatically go to Saregama at a pre agreed and negotiated price so that I have some kind of a control on the cost escalation that may happen in a very, very competitive market. So the results of all these will start coming out. So the equity that was raised has been invested in these areas and we are on the path finally to go back and increase the ROE.
Are we happy with a 3 1/2% ROE? We are not so but we know that journey has to be traversed through and we are traveling on that journey and hopefully we are taking care of the guardrails. We may make mistakes here and there but the intent is very very clear that in the end the ROE has to go up because eventually shareholder value improvement is the final goal for everybody.
Kavish Parikh
Thank you.
Operator
Thank you. Our next question comes from the line of Akshay Jugani with Exponent Tribe. Please go ahead.
Unidentified Participant
Hi Vikram. Thank you for the opportunity and congratulations on a good set of numbers. Am I audible?
Operator
Yes please.
Unidentified Participant
Perfect thank you. Vikram, A couple of, couple of questions. Like you mentioned that the headwind on the platforms shutting down or switching off free is sort of behind you. So over the next one to two years as platforms sort of start pushing and they have already started pushing premium, do you expect the growth rates to now sort of kind of mirror their growth rates or do you think there are more changes within the industry structure that kind of expected?
Vikram Mehra
So one part is what I’m expecting. Second is the guidance I’m happy to give at this juncture knowing the current situation. So in the current scenario, looking at the subscription growth rate that is happening for the music vertical of us which now added retail also to it, we are projecting a 20 to 23% CAGR over next three to five years. But can this change dramatically into a hockey stick effect? It can. If anything is to go by the look at the subscription data in other parts of the world. Even a
Kavish Parikh
Latin
Vikram Mehra
American country is sitting out there in 13 and 15% which only five times of what we people are today. And those numbers are not very difficult to achieve. All that one or two of the leading platforms have to go back and do is that they just shut the tap of the free content. They are all making the right noises. The subscription when it’s going to take off. What I can promise you is the day subscription generally take off. We are not talking of double digit growth there. You will see numbers going out and literally doubling if needed be on a year on year basis.
For a first few years it will be hockey stick effect. But till the time it doesn’t happen I can’t go back and and give you a guidance on that.
Unidentified Participant
Absolutely.
Vikram Mehra
We believe in that very strongly. We believe subscription story has played out in every part of the world. In India it’s playing out on the video side now. The T watch story is playing out on the gaming side in India now. So we understand that the younger generation is comfortable with the idea of paying for digital content. I am 50 plus, my age group has a serious problem paying for anything on digital. Even I start thinking. But the younger people don’t think that way. They are not grown in the world of digital always being free and they are comfortable paying for better experiences and not necessarily trying to find an easy way out.
But the fact of life is somebody has to shut the free supply and make pay on an affordable basis. India is not a $5 market. Any company that will try that is going to burn themselves here. India is a dollar, dollar and a half kind of a market. But you can easily generate numbers of 100 million.
Unidentified Participant
Sure. One of the things you spoke in this conversation earlier was that at a directional level your free part of the revenue within music has remained flattish while a large part of growth has come from the paid part. I mean right now I understand that over the last one and a half years there have been CPM pressures, there has been I think YouTube algorithm changes and YouTube has sort of not grown as much as they would have probably thought. At least our understanding is that. Is that something that you expect to change over the next year as well?
Vikram Mehra
So when I gave you that number right here of free being flat, this is more for audio OTT than the video OTT. YouTube for us has seen a growth if that’s the direct question on free and pay both. Remember video OTT had its every other some other or new pressure that starts coming up. I think the ban of real money games ended up taking a large revenue stream out of YouTube. But the good part for us is because the kind of content we are putting out is more film music which is more, more family content that’s going in.
We as a category got affected less by the going out of RMG advertising money and hence on YouTube we were able to show a healthy growth both on the free and the pay side. Actually I have heard this story of people saying that the numbers from video OTD are going down. Actually I am. That doesn’t apply to us.
Unidentified Participant
Ah, okay. Interesting. Sure. Thank you and best of luck for the for the coming, coming years. Thank you.
Operator
Thank you ladies and gentlemen. We will take that as a last question for today. I would now like to hand the conference over to the management for closing comments.
Vikram Mehra
Thank you everyone. Many of you guys have complimented us on our quarter four results. Please remember, remember you’re finally seeing the fruits of what was started by us as a company three years ago. And this trend hopefully is going to become even more pronounced as we people go forward. Always keep in mind, we in India are operating in world’s most under penetrated large music market with the most dominant catalog which is growing at by 5,500 songs every year, a net debt free balance sheet and a 650 million digital footprint.
Every global trend, subscription growth, ARPU expansion, super fan monetization, catalog purchases and diversification that goes beyond streaming which includes live events has a much longer Runway in India than anywhere else. And Sarigama is the cleanest way for anybody to own this thesis. Thank you and look forward to talking to you guys again next quarter.
Operator
Thank you. On behalf of MK Global Financial Services limited That concludes this conference. Thank you all for joining us. You may now disconnect your lines.