Saregama India Ltd (SAREGAMA) Q2 FY22 Earnings Call Transcript

Saregama India Ltd  (NSE:SAREGAMA) Q2 FY22 earnings call dated Oct. 12, 2021.

Corporate Participants:

Bhupendra Tiwary — Analyst, ICICI Securities

Vikram Mehra — Managing Director

Analysts:

Aditya Nahar — Alpna Enterprises — Analyst

Saket Mehrotra — Tusk Investments — Analyst

Ankush Agrawal — Halifax Capital — Analyst

Jaideep Merchant — Janak Merchant Securities — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Suraj Fatehchandani — Compound Everyday Capital — Analyst

Rahul Ramakrishnan — Vista Investment Group — Analyst

Kashyap Javeri — Emkay Investment Managers — Analyst

Ravi Naredi — Naredi Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to Saregama India Limited Q2 FY’22 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.

And I’ll hand the conference over to Mr. Bhupendra Tiwary from ICICI Securities. Thank you, and over to you, Mr. Tiwary.

Bhupendra Tiwary — Analyst, ICICI Securities

Thank you, Nirav. On behalf of ICICI Securities, we welcome you to Q2 FY’22 results conference call of Saregama India. From the management we have Mr. Vikram Mehra, who is Managing Director; Mr. B L Chandak, who is Executive Director; and Mr. Pankaj Kedia, who is Vice President, Investor Relations.

I’ll just hand over the call to Vikram for the opening comments. Over to you, Vikram.

Vikram Mehra — Managing Director

Thank you. Good afternoon, everyone. Last 18 months, the COVID time, has had two big implications on Saregama’ business. First one was a positive one. Because of the lockdown more and more middle age and older people were locked at their homes, stuck with their children and grandchildren, they used this time to get comfortable with their digital technology. I personally know many families, they’re 15, 16 and 17-year-old people for the first time operated a bank account digitally, similarly downloaded a Gana or a Saavn, or a Spotify, or Hungama for the first-time or started consuming content on Netflix or Amazon’s. This is the crowd that used to be scared of technology now started adopting that technology. This is great news because more — the key fact about this is that this is an irreversible change. Once people get used to digital technology, they will continue using that technology to consume content long after COVID has gone. Hence, we’ve got a very big new customer base because of COVID. India has leapfrog four to five years easily in terms of the digital adoption because of the home — forced home lockdowns.

Second impact of COVID on us was a negative ones. Because of COVID over the last few months, retail network were shut. Shoots of films and televisions went for a tough because they could not go ahead and there were large times, weeks and months, there are no shoots were possible. Thankfully this is a reversible change. As the impact of lockdown has started going away and life is coming back to normalcy, all our shoots are back to — in full swing. Similarly, the retail network, as I talked to you, are getting back to normalcy. In most places, the retail network that are open and people, hopefully, from this Diwali onwards will also start feeling comfortable walking into the retail outlets. So, COVID has been a difficult time, but like with every dark cloud there is always a silver lining. In the end, as people come out of COVID and we’ve done with the negative impact, for us in the long run, the big positive impact is going to stay, which is a larger digital consuming audience, which means a larger potential market for IP owning company like Saregama.

After a solid financial year 2021 performance, we have started this year also with a bang, our first six months have been pretty solid. Our revenue from operations during the half year touched INR250 crore, which is around 35% growth over the last year. Understandable because I — last year the denominator was a COVID-based denominator. Even better news for me is that the PBT of ours in the half-year basis grew up to INR82 crore, which is up 36% growth over the last year. If I talk about specifically quarter two, our revenue from operations grew by 34% while the PBT has grown by 19%. Now, this 34% growth that I’m talking about, yes, obviously, it’s back to a very great extent by great solid performance across all the verticals of the Company. So to a some extent it also gets a benefit of a lower denominator. Last year quarter two retail network were still shut for Carvaan was taking a hit and the films and production and TV shoots started sometime in early August, mid-August, so we had one month of Q2 that was lost, all that has helped us. The base was smaller and this year, the performance have been even better. So we ended manage, showing a 34% growth in our quarter two.

Our operating income before content charge, interest and depreciation for the quarter was INR53 crore. Now, this grew by 38% compared to last year and this gives me a lot of comfort because this shows right now the basic potential of the growth that we can expect in the IP economy.

The biggest profitably driver for us for the last many years have been music licensing and this quarter was no different. I’ve always been giving projections of over 20% growth in music licensing year-after-year and this quarter lived up to that number.

Over the last two quarters, as some normalcy has started coming back into the market, we people have been releasing multiple forms across all languages. Our biggest focus, obviously, remains Hindi. After a big success of a song, Paani Paani, which are the Badshah song in quarter one, which is, by incidentally, is the biggest song of the calendar year 2021, by YouTube views, by OTT streams, by user generated content, it is the number one some of the year. So after delivering that song in quarter one, one would have thought quarter two will be difficult to match up to it. But no, we have bettered in quarter two. Our combination of Akshay Kumar’ Bell Bottom movie got released in theaters in quarter two. The music of that has done very, very well for us. It has done great numbers both on YouTube, as well as on OTT platforms.

This quarter also saw us launching many other original numbers. Sounds like Do Ghoont or Dil Kisi Se, these are songs that have been doing very, very well and have been giving — showing us great potential even within a month, month and a half of the launch. And you can see those — that impact on our numbers. We also released multiple songs across Bhojpuri, Tamil, Telugu and Gujarati in this quarter. We are maintaining our leadership position in Gujarati and Bhojpuri. Bhojpuri, we’re number two. This quarter also marked our entry in Haryanvi language, with our first song launch there. Overall, we launched 74 songs with a big focus on the regional language side. We have been maintaining this over the last four to six quarters that as we people go ahead we will be investing heavy in new content to get into the market leadership position and our strategy of new content will be, not only be limited to Hindi and Punjabi, but we will also have a very big play on the other regional languages of India.

This quarter, because of the large number of songs that we released, the total content charge that we have taken for the quarter is INR11.3 crores, which actually is INR9 crore higher than a corresponding charge we have taken in the same quarter last year. So you are seeing an increase in our PBT in spite of a bigger content charge that we’ve taken in this quarter, which for me is a very encouraging sign that means we are — while we are investing, we are building on that investment and improving our profitability on the back of that investment. By the way this INR11.3 crore, includes both the content charge — the new content that we have taken charge of that and the marketing cost connected to that content.

Our focus on cash management continues even after we take care of all the fact that the dividend payout, content advances have been given, marketing spends have been there to push the new content, we still end the quarter with a cash balance of INR152 crore. For us, the monetization biggest pillar has been the licensing business, which is growing steadily as the digital consumption in our country goes up. And now with this middle age and older people also jumping on to the digital bandwagon, we see our licensing business growing faster than that of the industry because industry earlier was managed only by the younger audience, which are listening to new song. Now, we, not only have a huge play in the new music, but because we are the clear leaders of the catalog retro music and older people are jumping into the bandwagon of digital, we believe our share is going to go up substantially in the music business.

The highlight of this quarter for us was the huge spike Apple of a super popular from Dum Maro Dum in their latest iPhone 13 ad, it’s a global ad in which they ended up using this 50-year-old song called Dum Maro Dum and that’s where we bow down to the genius of R.D. Burman. And it’s a reflection of the power of the catalog that Saregama owns. Lots of other brands, Colgate, Asian Paints, Vedanta, ended up using our music. Once again platforms like Netflix and Zee5 ended up licensing our music for many of their original shows. That story is sustainable.

The increase in our licensing revenue is coming partially on the back of the industry growth. Industry is growing at 11% to 12% steadily and the remaining jump and we are saying, we are growing more than 20% is primarily now started coming on the back of the new content investments that we’re making.

Coming to Carvaan. After a literally a washout in the earlier part, which is financial year 2021 and Q1 was also a washout because networks were all shut during the month of April and May, and we could just manage 45,000 units sale in quarter one. Quarter 2 was far better. As lockdown shifted retail opened up and e-commerce opened up practically in every part of the country. Net result, we ended up selling 103,000 units of Carvaan. This is when marketing hasn’t started on Carvaan yet, this is natural customer pull through which we people are selling Carvaan in this moment. While we are happy about it, we maintain our stand. There is the sixth quarterly call, I think, in which I’m repeating this that till the time COVID issue is not fully resolved, till that time, we are 100% sure that customers are going to have no hesitation walking into the retail outlets without any restriction being imposed on them about showing COVID certificates, vaccination certificates. Till time light does not come back to full normalcy. We will continue with our policy of controlling our costs on Carvaan, both on the marketing side, as well as on the manpower side. We are bullish on the product. We want to develop this product into a platform with recurring subscription and advertising revenue. There is work happening internally on taking the product to the next level. But no investments are going to be made in terms of marketing and manpower till the time everything was back to normalcy in India. At the end of the year, I assure you guys, we will have at least a breakeven, if not, a very marginal profit. Breakeven is something right now, we will ensure that Carvaan gets.

We released Yoodlee films in this quarter. Amol Palekar starter 200: Halla Ho. The movie got great positive feedback both from the audiences and critics. The movie was released on Zee5. Once again just solidified our image of a company that comes out with content very frequently and wins accolades.

This quarter, we also announced our first digital web series called Invisible Woman, staring Suniel Shetty and Esha Gupta. The series is under production and we will be announcing its release date pretty soon.

On the south television side, our serial Roja, continues to be the number one Tamil serial in terms of TRPs. This has been a great story for us to have a program of ours a number one position and that also for this long. We also recently marked another big milestone for our South television, a serial Chandralekha crossed 2,000 episodes. This is the first Tamil serial in the history of Tamil television content, which has achieved this milestone of 2,000 episodes. Once again shows that we people are strength in content creation and content presentation. So, overall, it has been a very, very good quarter for us. We believe it’s — the revenue and profitability that we’re talking about right now will continue growing for us in the days ahead.

That will be all guys. Thank you. We’ll be happy to take questions now.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Aditya Nahar from Alpna Enterprises. Please go ahead.

Aditya Nahar — Alpna Enterprises — Analyst

Yeah. Hi, Vikram. Can hear you?

Vikram Mehra — Managing Director

Hey. I can hear you now.

Aditya Nahar — Alpna Enterprises — Analyst

Okay. Hey, Vikram. So, just two broad questions. If you could just comment on the cover songs by Spotify Singles and how the economics would work? Because exactly a year back you had pretty clearly said that most likely platform companies won’t be investing in their own content. And I think Spotify has come out with a Raatan Lambiyan cover. So just wanted your thoughts on that. That was my first question.

And the second question is, could you give a breakup in terms of cost for your TV series which is Invisible Woman? Because you were very clear that our budgets for movies, at least, would be below a certain threshold. So if you can just talk about these two in detail? Thanks.

Vikram Mehra — Managing Director

Sure. Let me attack the second one first. We maintain our position out here that in TV and series part is, we are producing on our own, which we are increasingly not doing. We pre-licensed up a film or a series and then produce it and that’s a situation with Invisible Woman also. The movie already has been licensed to our platform. I mean, the series are really been licensed to our platform. So net-net basis right now, it will be a profitable thing for us from the word go. I hope that gives you some comfort.

Aditya Nahar — Alpna Enterprises — Analyst

Got it.

Vikram Mehra — Managing Director

On the first one on Spotify, it will be wrong on my part to comment, because it is not a song, which belongs to us, but my understanding is that the IP of that still remains there with the music label.

Aditya Nahar — Alpna Enterprises — Analyst

Okay. Because I was given to told that covers nowadays legally are a gray area.

Vikram Mehra — Managing Director

No, they’re not. Covers are completely belong, whomsoever has told you has misinformed. Covers are can be done only with the permission of the publishing rights owner. By publishing rights, I mean, rights of the lyrics and rights of the composition.

Aditya Nahar — Alpna Enterprises — Analyst

Understood.

Vikram Mehra — Managing Director

I recommend you don’t tell anybody to create covers of Saregama song because we will pull it down.

Aditya Nahar — Alpna Enterprises — Analyst

No, no, no. Thank you so much. And as always, I always learn something talking to you. I’ll get back in the queue, Vikram. Thank you.

Vikram Mehra — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Saket Mehrotra from Tusk Investments. Please go ahead.

Saket Mehrotra — Tusk Investments — Analyst

Hi, Vikram. Just a small question on the strategy side with respect to Carvaan. Every video that I see on your YouTube channel, it starts with a plug on Saregama Carvaan and yet I don’t see there is any click to action to buy that product. So, is there any gap there or are we wanting the products to be sold through retail?

Vikram Mehra — Managing Director

So in a 5-second part, it’s always very difficult to push multiple messages. So the only message that we people — because we can’t do even more than 5 seconds there, according to our understanding with YouTube. Remember, this is not an ad served by YouTube. This is a part which is pre-fixed in our videos. And we are allowed only 5 seconds.

Coming to the other party, yes at times we do want to keep it open and not call everybody to saregama.com because it unnecessarily upsets the other distribution channels that we have. And all said and done, please do remember, Carvaan is still a brick and mortar sales product. But if you’re going to be seeing a lot of the promotion that we will carry out at times on social media, at times we’ve give retail networks name, at times we give our partner e-commerce platform names and sometimes we use saregama.com.

Saket Mehrotra — Tusk Investments — Analyst

Okay. No. I ask this question because recently I saw you had this collaboration with another channel on YouTube. And there was a link there in their description. So just wanted to have that clarified because anyway we are sort of promoting that product called hired on our own channel and just thought if there is a disconnect there.

Vikram Mehra — Managing Director

No. So all I can tell you right now, I can have this conversation with you off-line, but it’s a thought out part, keeping in mind the restrictions that we people have on that platform. I’ll explain to you more detail off-line, please.

Saket Mehrotra — Tusk Investments — Analyst

Okay. And, Vikram, any — would you like to like throw some light on the recently announced fundraise what would that be used for? And was the whole rationale behind it?

Vikram Mehra — Managing Director

We will talk about it. The — still debating and discussing it internally. And at the appropriate time, we will come back and talk to you.

Saket Mehrotra — Tusk Investments — Analyst

Okay. Thanks.

Operator

Thank you. The next question is from the line of Ankush Agrawal from Halifax Capital [Phonetic]. Please go ahead.

Ankush Agrawal — Halifax Capital — Analyst

Hi, Vikram. Thank you for taking my question. Vikram, can you give some qualitative…

Operator

Ankush, sorry to interrupt you. You’re voice is not coming clear.

Ankush Agrawal — Halifax Capital — Analyst

Is it better now?

Operator

Yes. Thank you.

Ankush Agrawal — Halifax Capital — Analyst

Yeah. Vikram, firstly, can you give some qualitative understanding in terms of the growth rates between different drivers of music revenues, like streaming, YouTube, social media, apps and traditional? Like what kind of growth are you seeing relative to each other between these areas?

Vikram Mehra — Managing Director

So see broadly, we don’t get into specific verticals. Our — the way we people are looking at our own revenues, we are growing our — in overall music licensing business at over 20%. And we expect growth to be between 22% to 25% in short- to medium-term basis. It’s primarily coming out of digital platforms only, whether it’s digital streaming or it’s platforms like YouTube or short-format video sharing apps like Instagram Reels and in Triller and Josh and Moj’s of the world or a licensing being given across to Netflix and Hotstar’s and Amazon’s and Refive [Phonetic] for use of on their original content. So digital is what is propelling the growth in a very big fashion. The other medias that we people had right now — the other biggest television channel, which is growing at a slower rate than that digital part. And third was public performance, which is completely taken a beat in over the last 18 months.

Ankush Agrawal — Halifax Capital — Analyst

Right. But between the digital side, I assume streaming would be the highest revenue contributor YouTube and then the social media. Could that be a right understand?

Vikram Mehra — Managing Director

Yes. Broadly, yes.

Ankush Agrawal — Halifax Capital — Analyst

Right. Right. Okay. And just a bookkeeping question. So in case of our views, which revenue share and some minimum guarantee. So in that case, how do we book our revenues, like do we book only to our minimum guarantee like every quarter and then at the end of the COB [Phonetic] if there an overflow and then equal [Phonetic] the revenue share?

Vikram Mehra — Managing Director

Actually, completely goes deal by deal, but in principle, you are right. We book only the minimum guarantee part and we recognize the overflows as and when the overflows come across to our system. In some cases, the overflows are calculated at the end of the deal, somewhere overflows are calculated in the middle of the deal. It goes deal by deal.

Ankush Agrawal — Halifax Capital — Analyst

Right. Right. But the streaming revenue like the paise that we get percent, that doesn’t get booked, right, overtime, only gets done at the time of the overflow?

Vikram Mehra — Managing Director

Actually, I’m not just couldn’t understand your question. Can you go through it?

Ankush Agrawal — Halifax Capital — Analyst

Yeah. Right, So in a deal, what we have a minimum guarantee, right, we get per stream revenue, right? Or say a share of revenue share of advertising revenue, right? Well, in that case, can you book…

Vikram Mehra — Managing Director

What we do, if it’s a minimum guarantee deal we people start invoicing it a period in advance. So these are all in advanced billing that happens and the money comes to us in advance and then the consumption happens right now for the period whichever way that period is defined. Ad all overflows which are connected to that period, they come to us at a specific frequency, which may be equal to the period or which may be longer, it maybe three or four periods combined together and the overflows are finally and then disbursed across to us, that’s the time we recognize overflows.

Ankush Agrawal — Halifax Capital — Analyst

But the part of overflows would be the advertisement revenue share, per stream share now like, right?

Vikram Mehra — Managing Director

Yes, please. Yeah. That’s how — see, the revenues calculated for a free customer. It’s a combination of a flat rate per stream plus advertising — share of advertising revenue. For a paid customer, it’s a share of the subscription revenue. So these are the ways in which revenue gets calculated and on top of this right now and our deals is a minimum guarantee.

Ankush Agrawal — Halifax Capital — Analyst

Right. Broadly, we just book the minimum guarantee upfront like over time and then at the time of whatever the overflow time that is, in last quarter you said it’s primarily in the Q3, right, for most deals? So that is when a largest part of revenue would be…

Vikram Mehra — Managing Director

Yeah. So what we are seeing right now at this time some of the money came in Q1 also. So I’m saying, deal by deal if there is a different situation that’s happening. In some of the deals what happens — in principle what you said is correct. But suppose we people after the third quarter itself are in a overflow situation then for quarter four we are booking at MG level, we are booking the actuals then, because we already crossing the levels. Completely every deal is different and every time the deal is going through a renewal right now these terms change.

Ankush Agrawal — Halifax Capital — Analyst

Right. Got it. Mostly at the time once you get above and you start booking the overflow, even though you’re not getting approval, but still you’re recognizing it.

Vikram Mehra — Managing Director

Yes, I hope you have understood.

Ankush Agrawal — Halifax Capital — Analyst

Yeah. I understood. Got it. Got it. Got it. That was very helpful. Thank you.

Vikram Mehra — Managing Director

Yeah, thanks.

Operator

Thank you. [Operator Instructions] The next question is from the line of Jaideep Merchant from Janak Merchant Securities. Please go ahead.

Vikram Mehra — Managing Director

Hey, Jaideep.

Jaideep Merchant — Janak Merchant Securities — Analyst

Good afternoon, sir. Thank you for taking the call. Sir, I have two questions. The first being related to your fund raise. We are a little just nervous with the size of the fund raise. I know you’ve told the previous speaker that you will come to the market later to answer any questions. But the size of the fund raise is quite large. And as shareholders, we believe that, as a management, you will do the right thing as far as the capital allocation is concerned. So I would just like you to reassure us of that. That’s my first question.

Vikram Mehra — Managing Director

We assure that. See, all I can add is that, we people are bullish on the overall music market scenario with the digitization growing at this rapid pace and consumption of content going up so substantially. We just want to have a more aggressive play going in on the music side. So we will come to you guys with more details at the appropriate time, but…

Jaideep Merchant — Janak Merchant Securities — Analyst

No. Just we wanted a reassurance that [Foreign Speech] it’s a music because a music [Foreign Speech] music [Foreign Speech], we are sitting on the side and just we don’t understand your business as well as you do. We just hope that money goes into a related — I mean, just what Saregama does and I hope we are diversifying into any other kinds of video games, entertainment or sports entertainment or any of the other entertainment fields in the larger entertainment market.

Vikram Mehra — Managing Director

We give you that comfort.

Jaideep Merchant — Janak Merchant Securities — Analyst

Great, sir. Second question, sir is, if you can help share with us the average selling price of Carvaan in the first half if you have it with you? And whether it was breakeven in the first half?

Vikram Mehra — Managing Director

I will be able to — see, our specific prices we don’t share. So I can’t get into that space with you. What I’m assuring you is that, by the end of the year Carvaan will be in a breakeven situation.

Jaideep Merchant — Janak Merchant Securities — Analyst

Great, sir. Thank you very much. And all the best.

Vikram Mehra — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Pritesh Chheda from Lucky Investments. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir, I just have one question. In the deals which you had renewed on the music OTT side, what is a usual escalations or the increase in pie that you see with a pool of OTTs?

Vikram Mehra — Managing Director

Our usual part does not apply because industry usual is 11% when we are growing at greater than 20% and that’s primarily coming because we are the only player whose market share exchanging so rapidly, which is putting pressure on us also to ensure that our deals renewals happen at a higher rate than what typical industry renewals are happening. Are you with me?

Pritesh Chheda — Lucky Investment Managers — Analyst

Yeah, yeah. I’m listening.

Vikram Mehra — Managing Director

So, indirectly I have giving you the answer right now. We are growing our music business right now by over 20% and majority of our music business deals are the minimum guarantee deals or fixed fee deals that gives you an idea.

Pritesh Chheda — Lucky Investment Managers — Analyst

So for those guys the content cost increase is at 11%, right?

Vikram Mehra — Managing Director

The industry — music industry is growing at 11%, which means somewhere the other guys who are there in the market may be growing their revenues around that percentage. If the industry average of 11% and we are upwards of 20%. And we are all primarily dealing right now, at least the big boys are dealing in a fixed fee and a minimum guarantee model. So that gives you an idea rate at which our revenues from each of the platforms are growing.

Pritesh Chheda — Lucky Investment Managers — Analyst

And in our case and for the industry, or let’s say, for our case is music OTT is a bigger chunk of the licensing revenues? Is there any skewness or amongst all the areas of revenue which we mentioned which was music OTTs or YouTube’s or short film apps or advertising or exhibition business? Is it fairly spread or there is any skewness on any side of the business?

Vikram Mehra — Managing Director

In terms of the growth rate or in terms of contribution to our revenues?

Pritesh Chheda — Lucky Investment Managers — Analyst

In terms of contribution to revenues?

Vikram Mehra — Managing Director

Contribution, music streaming is the biggest, not just for us, globally for every music label.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vikram Mehra — Managing Director

Music streaming is a single largest contributor to our revenues, only difference in India, the revenues from music streaming apps are coming more out of free users, while everywhere else people are migrating from free to paid and people — music labels earn a share of that paid subscription revenue. So if you ask me the good story is yet to unravel in India.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Just a follow-up here. When you mention that industry is growing 11% and we are growing faster than the industry. I’m just trying to correlate with the music OTT content cost. So music OTT guys, for them the content cost must be growing at 11%, right?

Vikram Mehra — Managing Director

Yeah. If we say that the average of the industry — music industry growth 11% should be the rate at which the — one part of the music industry, which is music streaming cost structure should be there. You can make that kind of a jump.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay.

Vikram Mehra — Managing Director

Directionally you maybe okay. But it can’t be accurate. I can’t say right now that you’ve got the number accurate here.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And lastly for us the margin that we report on the music side of the business where we have mentioning that the Carvaan side of the business will be breakeven, right? So these margins that we see in the, let’s say, on the licensing side, bulk of the margin obviously is coming from the licensing side. What in your opinion are the risk if any to those margins?

Vikram Mehra — Managing Director

Bad choices of content, if I may go back and say, we try to mitigate it by taking the individual gut call out of a content selection. All our content selection is done basis predictive models that have been built using millions of data points that come across to us on a daily basis about how every songs released in India by every label over the last three years performance in each of the platforms, which gives us a little better idea that which artist is performing, how well in the market allows us to pick our content with little more quantitative feel to it and not just a gut call to minimize the risk of poor content selection.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. So content selection is the only risk which you run on your margin?

Vikram Mehra — Managing Director

Yeah. Because a poor content selection means that you will not get the returns that you expect.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. And lastly, sir, what is our market share now in the incremental content purchase, and what our market share on the existing…

Vikram Mehra — Managing Director

I’ll not be able to share that detail.

Pritesh Chheda — Lucky Investment Managers — Analyst

Market share on the industry side historic?

Vikram Mehra — Managing Director

All you can find out right now you know our licensing revenue. You can check out IMI which is the apex body of the music industry. They publish the size of the music industry. So that’s one data point you have our revenues from music licensing. That will give you a good idea about our market share.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Thank you very much. And all the best, sir. Thank you.

Operator

Thank you. The next question is from the line of Suraj Fatehchandani from Compound Everyday Capital. Please go ahead.

Suraj Fatehchandani — Compound Everyday Capital — Analyst

Hi, sir. How are you?

Vikram Mehra — Managing Director

Very good, Suraj.

Suraj Fatehchandani — Compound Everyday Capital — Analyst

Sir, I just had one bookkeeping question. So when I see this content charge, which I can see in the investor presentation. So how do I look at this thing and the statement of P&L? I cannot see a different line item for this thing.

Vikram Mehra — Managing Director

So when you see the content charge it now spread between three different places in our P&L. It is part of depreciation and amortization expense. It’s part of advertising and sales promotion and royalty expense.

Suraj Fatehchandani — Compound Everyday Capital — Analyst

Perfect. Understood, understood.

Vikram Mehra — Managing Director

Parts right now whenever we people are releasing a song there is a content cost and there is marketing cost, marketing cost getting all booked under advertising and sales promotion, the content cost is getting divided between depreciation, amortization expense.

Suraj Fatehchandani — Compound Everyday Capital — Analyst

And royalty. Perfect. Thanks a lot, sir.

Vikram Mehra — Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Rahul Ramakrishnan from Vista Investment Group. Please go ahead.

Rahul Ramakrishnan — Vista Investment Group — Analyst

Yeah. Hello. Can you hear me?

Vikram Mehra — Managing Director

Yes, Rahul.

Rahul Ramakrishnan — Vista Investment Group — Analyst

Yeah. Vikram, first of all, just amazing work over the last five years, totally what you have done over there. So I just have one question. As we continue to gain market share, it’s natural that we do face resistance from the incumbent, right? So how do you see that affecting our content cost over the next three, four years?

Vikram Mehra — Managing Director

Wish I had a crystal ball in my hat. But good part about the music industry is size of [Technical Issues] larger company more number of songs it releases [Technical Issues] in edge in having lower cost of marketing and higher [Technical Issues] per song when negotiation. So the fight for premium content is limited only [Technical Issues]. There may be hundreds of smaller companies but because difficult for them to pick up a big budget Bollywood film. They don’t have ability to monetize that content as [Technical Issues] level. So the relative competitive intensity in our industry, which is there, but it’s not that intense. There are only three, four of us playing out there in this Hindi space. Three levels [Technical Issues] only — Saregama is only national level playing in Gujarati or a [Technical Issues] space or a Bengali space or [Technical Issues]. So, [Technical Issues] look from outside as the entry barriers are very low actually [Technical Issues]

Operator

Vikram, sir, can you hear us?

Rahul Ramakrishnan — Vista Investment Group — Analyst

Hello? Hello? Yeah. Yeah. Yeah. I got that. Thank you so much for your answer.

Operator

Thank you. The next question is from the line of Kashyap Javeri from Emkay Investment Managers. Please go ahead.

Kashyap Javeri — Emkay Investment Managers — Analyst

Hello, sir. Am I audible?

Vikram Mehra — Managing Director

Yes, please.

Kashyap Javeri — Emkay Investment Managers — Analyst

Two questions from my side, sir. One, in terms of Q3, I — you said part of it was [Technical Issues] revenue [Technical Issues] years. But [Technical Issues]

Vikram Mehra — Managing Director

We’re losing you. We can’t hear you.

Kashyap Javeri — Emkay Investment Managers — Analyst

Hello?

Vikram Mehra — Managing Director

Yeah, clearer.

Kashyap Javeri — Emkay Investment Managers — Analyst

Yeah. Sir, my question is on Yoodlee. The first question is that, we were expecting to reach three-digit revenues in three years. But looking at the quarterly run rate, I understand it can’t be probably a quarterly business because content creation might not be same across. But could this target be pre-pond for us now?

Vikram Mehra — Managing Director

I’ll still maintain that direction. I’ll not going to change.

Kashyap Javeri — Emkay Investment Managers — Analyst

Okay. Sure. And second question is on, again, musical content side increasingly what we are saying is that, a lot of single are being produced by the artist themselves like for example, the recent Tony Kakkar song was done by a company, which was — which is something that I haven’t heard of actually, to be very frank. Even we did this one music with B Praak but if you look at the first time that they released Filhall was on by some music company which was sort of unknown type. Are you seeing increasing trends that the popular artists are going on their own — creating their own content releasing on YouTube or some of the streaming apps?

Vikram Mehra — Managing Director

So it’s — again, I’ll continue from where I left in the last answer. It look from outside very, very attempting to — for any individual today to go out and a launch of song. Please understand the mathematics and a typical artist on their own if they’re releasing the song will be able to release three, four, five, six, 10, 12 songs in a year. Artist — A category artist releases 12 songs in a year assuming this guy has gone crazy. It will take him five to have a catalog of 60 songs. With a catalog of 60 songs if you are going to go to a leading OTT streaming platform or a short format app, it is difficult to get a deal. So, what happens is that model that many of this individual artist follows a bit different. They don’t make too much of money right now from music, they got out and use music as a marketing tool for themselves because then they get invited in various shows and they make money through shows. One of these individual artist that you’re talking about, it may look right now that the IP is getting released under their own YouTube channel. Without taking names and specifically of the guys you’re talking about right now, chances are very higher that they have gone out there and given the monetization rights of their own content to one of the big label. And the names that you took I can tell you off-line there are being managed by somebody else.

Kashyap Javeri — Emkay Investment Managers — Analyst

[Foreign Speech] Okay. Okay. And so, when we look at content creation on — within the same business would we also be tempted to do this kind of business or we would just create on our own and do it on our own?

Vikram Mehra — Managing Director

Right now, our focus is more on IP ownership and then monetization. Completely close to the idea that IP must stay with an individual artist and then we do a long-term monetization on that we are open — see, in this market, you have to be open to all possibilities. But currently, see the need for us to go there the phenomenon you’re talking about is limited only and only to one language, which is Punjabi.

Kashyap Javeri — Emkay Investment Managers — Analyst

Right.

Vikram Mehra — Managing Director

This phenomena is not happening anywhere else and let’s see Pujabi also how long can this phenomena continue. But for whatever reason, suppose my entire market changes, are we going to adapt? Yes, we have to adapt.

Kashyap Javeri — Emkay Investment Managers — Analyst

Okay, okay. And in music, would you be able to disclose your market share in, let’s say, Gujarati and Bhojpuri this first half?

Vikram Mehra — Managing Director

See, again, no. It all depends, right now — I’ll have to put hundreds of riders there, how do you define market share?

Kashyap Javeri — Emkay Investment Managers — Analyst

Okay.

Vikram Mehra — Managing Director

The easiest way to define market share is that the content that got released in the first half, what is bound to views that that content generated on say YouTube. Out of the views how many are paid views or also question are going to come in. So I don’t want to make an absolute number statement in front of you, but our internal data says that in terms of new content, we are number one in Gujarati and we’re number two in Bhojpuri.

Kashyap Javeri — Emkay Investment Managers — Analyst

Okay. Okay. Got this, sir. Thank you so much.

Operator

Thank you. The next question is from the line of Ravi Naredi from Naredi Investments. Please go ahead.

Ravi Naredi — Naredi Investments — Analyst

Hello, Vikram. How are you?

Vikram Mehra — Managing Director

Very good. [Foreign Speech]

Ravi Naredi — Naredi Investments — Analyst

[Foreign Speech]. See, Vikram, again, you make century as you are making in last winning, really fantastic result. My question is, how much music right and film making expenses done in quarter two so our margin came down?

Vikram Mehra — Managing Director

[Foreign Speech] I didn’t get it.

Ravi Naredi — Naredi Investments — Analyst

How much music right and film making expense we have incurred in quarter two [Speech Overlap]

Vikram Mehra — Managing Director

INR11.3 crore is the charge that we have taken for new content in quarter two. This number last year in quarter two was INR2.4 crore.

Ravi Naredi — Naredi Investments — Analyst

Okay. That is the reason. Second is, how many — how much is licensing revenue we earn in this six-month period? Financial year 2021 you had given, 2,839 million.

Vikram Mehra — Managing Director

We will declare that at the end of the financial year.

Ravi Naredi — Naredi Investments — Analyst

[Foreign Speech] financial year. Okay. Okay. Sir…

Vikram Mehra — Managing Director

I’m giving a comfort is that it’s growing at a rate of 20%.

Ravi Naredi — Naredi Investments — Analyst

20% as we are growing in last two years. Sir, YouTube viewer increases this quarter-by-quarter, what is the main reason behind this?

Vikram Mehra — Managing Director

New content, sir.

Ravi Naredi — Naredi Investments — Analyst

Yeah. YouTube viewers?

Vikram Mehra — Managing Director

All new content. YouTube numbers are — the views are going up because we are releasing more and more new content.

Ravi Naredi — Naredi Investments — Analyst

Okay. Okay.

Vikram Mehra — Managing Director

Grow for us.

Ravi Naredi — Naredi Investments — Analyst

Okay. All the best, sir. And carry on the century again in next quarter. Yes, sir.

Vikram Mehra — Managing Director

Thank you.

Ravi Naredi — Naredi Investments — Analyst

Welcome.

Operator

Thank you very much. Ladies and gentlemen, that will be the last question for today. I will now hand the conference over to the management for closing comments.

Vikram Mehra — Managing Director

Thank you, everyone, for your patient listening. Saregama, as a Company is in a — at a right place at the right time. Digitization is taking over the world. COVID has further accelerated this digital transition and we, as an IP owning company, IP of music, IP of long format movies, IP of short format digital series and TV series, are in a very, very sweet position to take advantage of this digital transition. We maintain a bullish stand on music licensing, we should be growing between 22% to 25% over the next three to five years. We’ll continue investing very, very heavy on new music content, both on the film side and the non-film side. We’ll continue differentiating ourselves vis-a-vis every other music label in terms of our focus on various regional languages of India and not limit ourselves only to Hindi.

With theaters opening up now, we expect more films to starting getting released from the quarter four of the year. Some will come in Q3, majority may start coming from Q4 and the big movies that we people have acquired like Sanjay Leela Bhansali’s next three projects are with us. Shanker directed next movie of Ranveer Singh produced by Pen Studios sitting with us and many such large budget movies, they all will start coming out.

We continue our cautious approach on Carvaan. We’ll wait and watch to see which way the market moves and only when the retail networks fully open. Are we going to start once again focusing on the product?

On the film side, our stated strategy remains as it is. We will — on Hindi side, we will make our films and series only on a pre-licensed basis. Even on the regional side, series will be made only on a pre-licensed basis so that our exposure is not there. We will take some amount of risk only on regional languages films, which we will first make and then license out but there also our endeavor will continue with a 70% cost of the film should get presold and pre-recovered through TV and cable and satellite deals. So overall, we expect this year to be pretty decent, both from the top line and the bottom line perspective.

Thank you, ladies and gentlemen. I hope to talk to each of you guys right now after the end of the quarter three. Thank you.

Operator

Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.