TIPS Industries Limited (TIPSINDLTD) Q2 FY23 Earnings Concall Transcript

TIPS Industries Limited (NSE:TIPSINDLTD) Q2 FY23 Earnings Concall dated Oct. 22, 2022

Corporate Participants:

Kumar S. Taurani — Chairman and Managing Director

Sunil Chellani — Chief Financial Officer

Analysts:

Rajesh Agarwal — Orient Capital — Analyst

Akshay Sam — Sam Capital — Analyst

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

Ankush Agrawal — Surge Capital — Analyst

Garvit Goel — Invest Research — Analyst

Ravi Naredi — Naredi Investments — Analyst

Unidentified Participant — — Analyst

Rakesh Wadhwani — Monarch Networth — Analyst

Mayur Parkeria — Wealth Managers — Analyst

Ashok Saha — LFC Securities — Analyst

Presentation:

Operator

Ladies and, gentlemen. Good day and welcome to the Q2 FY ’23 Earnings Conference Call of Tips Industries Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Rajesh Agarwal from Orient Capital. Thank you, and over to you, sir.

Rajesh Agarwal — Orient Capital — Analyst

Thank you. Hello, everyone, and a very warm welcome to Q2 FY ’23 earnings call of Tips Industries Limited. Today on this call we have Mr. Kumar Taurani, Chairman and Managing Director, Tips Industries Limited, along with Mr. Sunil Chellani, CFO for Tips Industries Limited, and Mr. Girish Taurani, COO for Tips Industries Limited.

This conference call may contain forward-looking statements about the Company which are based on the beliefs, opinions and expectations as of today and actual results may differ materially. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. A detailed safe harbor statement is already given on Page 2 of the Company’s Investor Presentation which has been uploaded on the stock exchange and the Company’s website as well.

With this, I hand over the call to Mr. Kumar Taurani for his opening remarks. Over to you, sir.

Kumar S. Taurani — Chairman and Managing Director

Thank you, Rajesh. Thank you. Good morning, everyone, and welcome to the Q2 FY ’23 earnings calls of Tips Industries. Firstly, I would like to wish all the participants, a very Happy Diwali. Our team work is paying-off and we have been able to report a substantial increase in our revenue from operations for the quarter and half year ending September 30, 2022. We released 228 new songs, which is highest in any quarter so far. These includes, 140 new film songs and 88 non-film songs. This quarter has seen a substantial increase in our content cost, which reflects our investment in the music business. Our YouTube channel too has gained more subscribers and for Q2 FY ’23, our subscriber count was at over 74.84 million subscriber, followers and our views for Q2 FY ’23 were above 27.3 billion, which is an increase of almost 31% in our views over the previous quarter. We will continue to invest in quality music to achieve our vision of becoming the number three player in the industry.

Now, let me hand over the call to Mr. Sunil Chellani, our CFO to share the financial highlights of the quarter. Over to you, Sunil.

Sunil Chellani — Chief Financial Officer

Thank you, sir. Good morning, everyone, and wish you all a very Happy Diwali. As you know, at Tips Industries, our financial statements are very simple and transparent.

Let me take you through the financial highlights for the quarter gone by now. Our revenue from operations for Q2 FY ’23 stood at INR49.6 crores as compared to INR29.1 crore into Q2 FY ’22, an annual growth of 70%. Operating EBITDA stood at INR27.2 crore for Q2 FY ’23 versus INR17.8 crore in Q2 FY ’22. Y-to-Y growth is 52% and operating EBITDA margin was at 54.8% for this quarter. Our profit after tax for Q2 FY ’23 stood at INR20.8 crore versus INR11.2 crores in Q2 FY ’22, with a PAT margin of 41%. PAT has gone by 85% on Y-to-Y and 21% Q-to-Q basis.

With this, I open the floor for discussion. Thank you very much to everyone once again.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] The first question is from the line of Akshay from SAM Capital. Please go ahead.

Akshay Sam — Sam Capital — Analyst

Hi, Taurani-ji.

Kumar S. Taurani — Chairman and Managing Director

Hi, ji.

Akshay Sam — Sam Capital — Analyst

Hello. Happy Diwali, sir, to your entire team and congrats on a fantastic set of numbers.

Kumar S. Taurani — Chairman and Managing Director

Thank you.

Akshay Sam — Sam Capital — Analyst

Sir, generally the December quarter for us is the strongest quarter for us because of various reasons because of obviously the Warner contract signing also happened in December quarter. So, sir, majority of the revenue growth this quarter, obviously, it’s very heartening to see. So where did it mostly come from? Because, obviously, I know that we signed the regional deal with Spotify as well. So I was just trying to understand where did the majority of the growth — this fantastic growth this quarter come from, if you can explain a bit?

Kumar S. Taurani — Chairman and Managing Director

Yeah, we are doing well at across the platforms but YouTube is the key you can say, plus we have signed a deal with Resso. Resso was big for us. And overall, also our few deals likes TV deal and all that it’s from all the sectors you can see. But major is, I think, Resso and this YouTube.

Akshay Sam — Sam Capital — Analyst

The Spotify deal we’ve done it by ourself or by Warner.

Kumar S. Taurani — Chairman and Managing Director

The Spotify Hindi if at all we have through Warner, but Spotify and balance [Indecipherable] we have done through — there is a company called Meridian [Phonetic] we have done through them. But we have not got any money advanced — any money. We will have on a performance basis, whatever money we accrue if at all will earn, we will get money.

Akshay Sam — Sam Capital — Analyst

Okay. So also just wanted to get your opinion on this majority of the economy is slowing down or — so where do you see the ad rates going in this particular time? And economy is all across the world are slowing down. Where do you see the ad rates? Do you think that — they will also come down or where do you see that?

Kumar S. Taurani — Chairman and Managing Director

I don’t think it will come down. What we see — if you see this YouTube or every — it’s just seeing or maybe they are increasing, maybe the growth is not what they predicted 35%, 40% will be growth, maybe — one, two months or three months, maybe it will come down to 5%, 10% reduced, but I don’t think this will be a problem for us.

Akshay Sam — Sam Capital — Analyst

Okay. Sir, lastly a suggestion because I saw that our Tips official channel on YouTube I think hacked because the name was changed by some — I think cryptocurrency company or something. I hope we are taking some measures on the cyber security front to product our IP on YouTube because the name was changed and I think it was shut down for a while as well. So, I mean, suggestion if you can comment on that.

Kumar S. Taurani — Chairman and Managing Director

Yes, yes. I know that happened. We will all the precautions has been taken and you know we are in a technological world and these things sometimes happen. But I think we’ll make sure it won’t happen in future.

Akshay Sam — Sam Capital — Analyst

Thank you, sir. Thank you.

Operator

Thank you. The next question is from the line of Sagar from PhillipCapital. Please go ahead.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

Yeah. Hi, sir. Season’s greetings to the Tips family. Sir, my first question is what is your self-assessment on the response that PS-1 songs have got? If you look at your YouTube viewership as a sample so that is my first.

Secondly, you have released about 228 songs during the quarter and you write-off the content costs in the same quarter from the P&L as a policy. So if you see the content cost to make those 228 songs at just INR17.2 crores, am I missing something here? Probably there might be some overlapping in terms of the regional songs that you might produce. So what would be the unique number of songs that you might have during the quarter?

Kumar S. Taurani — Chairman and Managing Director

So just 228 songs we have released and whenever we start making our song, we just keep on spending money and we keep that as an advance and whenever we release, the same quarter we write-off in the report or the statement, audited or unaudited statement results. So this is whatever we release this quarter we have written off everything.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

And on the PS-1 songs, what is your…

Kumar S. Taurani — Chairman and Managing Director

PS-1 has really, really picked up very, very well. We are really doing well on PS-1, particularly the Tamil language film. And I feel now PS-2 is also coming. So this craze will be till then. So we — I expect in next June, July PS-1 and PS-2 will be alive and we will make a good money on that.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

And this INR25 crore the acquisition cost is for PS-1 and PS-2 put together?

Kumar S. Taurani — Chairman and Managing Director

Yes, yes. Actually it’s not so much. It’s — we are calculating including promotion, you can say, promotion costs also I am putting in this approximately that much will be the ultimate cost, maybe little less.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

Okay. So that includes in the content creation itself?

Kumar S. Taurani — Chairman and Managing Director

Yes, yes.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

And any update on renewing contract with JioSaavn?

Kumar S. Taurani — Chairman and Managing Director

Let’s hope for the best. We are trying. This quarter we can have some good news. Let’s see.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

And last question, sir, you mentioned that YouTube was one of the — YouTube channels was one of the platform from which the growth came in during the quarter. So if you see on the social, the September viewship were down for us and despite that we — it became a primary driver of the revenue. So your thoughts on that?

Kumar S. Taurani — Chairman and Managing Director

Actually, that small thing here and there it will keep on happening. So I’m not bothered. Some people have not seen YouTube, they must be busy in their festivals and all that. I think these things will happen, but that should be well. So I’m actually not concerned with.

Sagar Jethwani — PhillipCapital (India) Pvt. Ltd. — Analyst

Yeah. Thank you so much.

Kumar S. Taurani — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Ankush Agrawal from Surge Capital. Please go ahead.

Ankush Agrawal — Surge Capital — Analyst

Hi, Taurani ji. Congrats on a great set of numbers. Taurani ji, firstly, the Spotify deal [Foreign Speech] regional. I hope I missed hearing you said [Foreign Speech]?

Kumar S. Taurani — Chairman and Managing Director

Ji, yes.

Ankush Agrawal — Surge Capital — Analyst

Okay. So, sir, [Foreign Speech] I believe if we go through a third-party we would have to share some part of our revenues with incentives. So [Foreign Speech] directly approach [Foreign Speech].

Kumar S. Taurani — Chairman and Managing Director

I mean, directly we [Foreign Speech] 99% we do deals directly. But as a regional content, [Foreign Speech] so we were — and just [Foreign Speech]. So we will be a big pie of the deal. So what we calculated we will make lot better monies and we will have a lot of insight and this Company is actually doing many, many businesses, they must be supplying content to 100 companies. So we will have access to many, many other businesses as well. We have said we [Foreign Speech] then we will seek how benefit we got. And this is a — then we will see how benefit we got. So — and this is a temporary deal, one, two years [Foreign Speech]. So, again, we have — and you can go back those 45 directly as well, not a problem. We thought you — let us learn also this [Foreign Speech] we can approach and start our business.

Ankush Agrawal — Surge Capital — Analyst

So, sir, [Foreign Speech]

Kumar S. Taurani — Chairman and Managing Director

I don’t think so. [Foreign Speech] recently when we released PS-1, we have started the deal with that.

Ankush Agrawal — Surge Capital — Analyst

Secondly, sir, [Foreign Speech]?

Kumar S. Taurani — Chairman and Managing Director

Yes. [Foreign Speech]

Ankush Agrawal — Surge Capital — Analyst

[Foreign Speech] and we are spending entire content cost to P&L and internal accruals [Foreign Speech] obviously for — if some future opportunity comes up [Foreign Speech] try to distribute and all that stuff?

Kumar S. Taurani — Chairman and Managing Director

[Foreign Speech] we are a cash company, [Foreign Speech] you should do a buyback this year and [Foreign Speech] so I’m thinking of that. So next week [Foreign Speech] plus you are right, we should have at any given time, INR100 crores, INR150 crores [Foreign Speech] up to INR200 crores maximum [Foreign Speech] so we are ready to invest and do some good buy also.

Ankush Agrawal — Surge Capital — Analyst

[Foreign Speech] that if possible, I think that [Foreign Speech] so that our cost is better, right? If that is discussed internally that could be very helpful.

Kumar S. Taurani — Chairman and Managing Director

Okay. I’ll talk to my people. [Foreign Speech] we’ll do that. Okay.

Ankush Agrawal — Surge Capital — Analyst

That was very helpful, sir. Thank you, sir.

Kumar S. Taurani — Chairman and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Garvit Goel from Invest Research [Phonetic]. Please go ahead.

Garvit Goel — Invest Research — Analyst

Hello. Good morning, sir. Am I audible?

Kumar S. Taurani — Chairman and Managing Director

Yeah.

Garvit Goel — Invest Research — Analyst

Okay. Sir, firstly, what is the rationale behind keep the EBITDA percentage for the current quarter, sir?

Kumar S. Taurani — Chairman and Managing Director

What you’re saying, EBITDA profit as a percentage?

Garvit Goel — Invest Research — Analyst

EBITDA percentage.

Kumar S. Taurani — Chairman and Managing Director

Yeah.

Garvit Goel — Invest Research — Analyst

So there is a dip in current quarter. So I was asking for the rationale for that dip.

Kumar S. Taurani — Chairman and Managing Director

Yeah, yeah, yeah. So, please understand we have written-off a big number on content cost, so because of that there is a dip you can say. So that’s the only reason because of that. But [Speech Overlap] but if you — percentage-wise maybe it’s reduced. But if you see number-wise, after writing off so much — such a big amount, we — compared to last year’s Q2 ’22, we are much higher in all the criterias, plus if you compare even in this year’s quarter 1, we are much, much higher. So, I think these things will happen but as I explained earlier, you’ll see a bigger picture what I say 25%, 30% you must-see, we should maintain top line year-on year basis and plus 15%, 20% in the bottom line. So we are — I feel as of now we are heading for that. We will achieve that.

Garvit Goel — Invest Research — Analyst

And sir, is there any kind of headwind in the industry that you are looking at in the near-term or medium-term?

Kumar S. Taurani — Chairman and Managing Director

Headwind? What is headwind?

Garvit Goel — Invest Research — Analyst

Any kind of negative outlook for the industry.

Kumar S. Taurani — Chairman and Managing Director

Industry is doing well, worldwide music industry is doing well, music industry has very good future, I feel. So I’m okay with — nothing is concerned. No concerns at all.

Garvit Goel — Invest Research — Analyst

And sir, in the half year one we have released around 413 number of songs, then in the second half what is the outlook in terms of number of songs that we can release?

Kumar S. Taurani — Chairman and Managing Director

I think total target was this year was 550, 600 songs. I think we will do more than that, around 650, 700 we will cross.

Garvit Goel — Invest Research — Analyst

650, 700 and already you have done 413 songs, right?

Kumar S. Taurani — Chairman and Managing Director

Yeah, yeah, yeah.

Garvit Goel — Invest Research — Analyst

Understood. So what is the guidance for the top line in rest of financial year ’23?

Kumar S. Taurani — Chairman and Managing Director

Top line, I told you already to last year 135, over 25%, 30% [Foreign Speech] around 175 and 180 around that much it will be depending upon how — but this will be definitely happening, I’m seeing that it’s happening. But the two more quarters to go and if we crack some other deals, so maybe it can go a little better also, it can become better also.

Garvit Goel — Invest Research — Analyst

Because December quarter is the strongest for us and so, I hope it will be better than September and December is already very good. So we can expect a better performance, right?

Kumar S. Taurani — Chairman and Managing Director

We are working hard. We are pushing from everywhere. We are releasing many new titles as well, big titles this quarter. So Honey Singh is the key artist, big artist coming this year. And we have also recorded Badshah, Badshah songs also coming. So maybe Badshah will also launch this quarter because it’s a party, parties happened and they sing party songs. We are doing many things like that.

Garvit Goel — Invest Research — Analyst

And sir, the PS-2 that you are saying it will be released in June and July next year. So the entire post for PS-1 and PS-2 you have written-off in this quarter or something to be written-off at the time of the PS-2 release?

Kumar S. Taurani — Chairman and Managing Director

No, no. We have written-off only PS-1. PS-2 we will write-off when we release the music of that.

Garvit Goel — Invest Research — Analyst

Okay, okay. Understood, sir. Understood, understood. And is there any kind of new platform where we are currently in discussions with or any kind of inorganic opportunity we are considering or any kind of such development internally going on, sir?

Kumar S. Taurani — Chairman and Managing Director

We regularly talk to all the partners whether it is our content is available or whether our content is not available. We always try and — to crack deal. So — and these things happen. So I think just wait for another quarter, we will try and give you good news.

Garvit Goel — Invest Research — Analyst

Okay, okay. Understood, sir. Thank you very much, sir. Congratulations for good set of number. And Happy Diwali to you and your team, sir.

Kumar S. Taurani — Chairman and Managing Director

Thank you. Happy Diwali to you and all the investors. Thank you. Thank you.

Garvit Goel — Invest Research — Analyst

Okay.

Operator

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

Ravi Naredi — Naredi Investments — Analyst

Really it is a fantastic result. My point is, since I have joined late, why the reason of other expenses raises too much.

Kumar S. Taurani — Chairman and Managing Director

Because of PS-1, we have released a big film, PS-1 and it has a huge cost of acquiring rights of that film and marketing expense on that film. So that’s a major reason for huge cost, expense.

Ravi Naredi — Naredi Investments — Analyst

Understand, sir. And this is again reason of EBITDA margin down by 1,100 points?

Kumar S. Taurani — Chairman and Managing Director

Yes, yes, yes.

Ravi Naredi — Naredi Investments — Analyst

Okay.

Kumar S. Taurani — Chairman and Managing Director

But overall if you see numbers, we are quite up.

Ravi Naredi — Naredi Investments — Analyst

Hello?

Kumar S. Taurani — Chairman and Managing Director

Hello. Yes. Maybe our percentage is down but our numbers if you see top line, bottom line compared to last ’22 second quarter or this year’s first quarter, we are quite up, big time up.

Ravi Naredi — Naredi Investments — Analyst

Right. Sir, can you tell top five contributors in our revenue like YouTube, OTT or TV channel and any other?

Kumar S. Taurani — Chairman and Managing Director

See, I can’t tell you customer-wise but I can tell you that 75% is digital market and from 75% you can say around 45%, 50% is YouTube, 25% to 30% other digital companies put together and rest is radio, sorry not radio, TV and public performance we get money from sink deals, etc., small, small money that comes.

Ravi Naredi — Naredi Investments — Analyst

Right, right, right. And sir, will you manage TV films con call separately when you come out with result?

Kumar S. Taurani — Chairman and Managing Director

Yes. Absolutely, we do that. And we have done that. I think recently few days back, I have done the one call, first call [Speech Overlap].

Ravi Naredi — Naredi Investments — Analyst

Okay. Okay. I will listen. Okay. Thank you very much. Thank you. Thank you.

Operator

Thank you. The next question is from the line of Om Prakash from Ultrasign Holdings [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hello?

Kumar S. Taurani — Chairman and Managing Director

Yeah. Yeah, Om Prakash-ji.

Unidentified Participant — — Analyst

[Foreign Speech] YouTube viewership of all channel related to this industry, then that was only 250 crores to 300 crores in last quarter but you showed 27.3 billion views. Can you explain this difference?

Kumar S. Taurani — Chairman and Managing Director

No, there is a — we have — we don’t have one channel. We have around 20 channels, 18, 20 channels. So we — whatever we have written…

Unidentified Participant — — Analyst

Yes, sir. I accumulate all channels viewership, in above section.

Kumar S. Taurani — Chairman and Managing Director

Yeah. We’ll come back to you in this meeting — in the end, I’ll tell you. Just tell me what is the difference you said. What you have calculated?

Unidentified Participant — — Analyst

According to me, these views are 3 billion but you showed 27.3 billion views.

Kumar S. Taurani — Chairman and Managing Director

30 billion and according to you is 27 billion, report we have written and according to you it’s 30 billion.

Unidentified Participant — — Analyst

3 billion.

Kumar S. Taurani — Chairman and Managing Director

Okay, okay. I’ll just tell you, give me a few minutes. Okay.

Unidentified Participant — — Analyst

Okay, okay. Thank you.

Kumar S. Taurani — Chairman and Managing Director

I’ll come back to this within this week — in this meeting, yeah. We’ll find out.

Unidentified Participant — — Analyst

Okay.

Operator

Thank you. The next question is from the line of Basava from Basava Assets [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Hi. Thanks for the opportunity. I have few questions regarding the Tips South. First of all, congratulations on the Tips Tamil. You got 450K subscribers and around 180 million to 190 million subscribers from the PS-1. I think it is a really good performance. My question is on Tips Telugu. Could you please explain your strategy on Tips Telugu? So for whatever the — I mean, around two to three songs are releasing on average for every week. But those are all not from the good star cast. So those all upcoming kind of thing. So, I mean, in Tips Tamil you’re going with one approach and Tips Tamil you are going with a different approach, though, you have the Hari Hara Veera Mallu and Shaakuntalam with a good power cast. But so far in the Tips Telugu it is going in different direction. Could you please explain that one, your strategy?

Kumar S. Taurani — Chairman and Managing Director

See, we have to built the rapport over there. We don’t have a much content in those languages.

Unidentified Participant — — Analyst

Okay.

Kumar S. Taurani — Chairman and Managing Director

So we whatever attempt — we get we are. We have build the content also in that zone, those languages. So that’s why we are doing that and whatever good film, big film, so we are open to everything. We are not open to just big films or just small films, like you said we have bought Hari Hara Veera Mallu and that Shaakuntalam, or PS-1, PS-2. So we are buying many films.

Unidentified Participant — — Analyst

Okay. So whatever the — I mean — so for the small films, we are not paying much, those are all just like…

Kumar S. Taurani — Chairman and Managing Director

Yes, yes.

Unidentified Participant — — Analyst

Yeah. Okay.

Kumar S. Taurani — Chairman and Managing Director

We are paying a correct value.

Unidentified Participant — — Analyst

Okay. That is what my exact — I mean, question. So it is — can we assume something like — is something like a volume channel so far from the small film. So it will perform according to their views and according to their views we are paying. Is that the correct assumption?

Kumar S. Taurani — Chairman and Managing Director

Pay everybody the same money. Absolutely, we buy films in few lakhs and we buy films in crores so that is — don’t worry about that.

Unidentified Participant — — Analyst

Okay.

Kumar S. Taurani — Chairman and Managing Director

Can I answer to Om Prakash-ji’s question? Operator, can you open Om Prakash-ji’s line?

Operator

Yes, sir.

Kumar S. Taurani — Chairman and Managing Director

Hello, Om Prakash-ji.

Operator

Sir, his line is in talk mode.

Unidentified Participant — — Analyst

Yes, sir. Hello.

Kumar S. Taurani — Chairman and Managing Director

Yeah. We have checked our system, 27.3 billion is the correct number and wherever you got such a big difference, 3 billion, you can please write us an email, we will reply you.

Unidentified Participant — — Analyst

Okay, sir.

Kumar S. Taurani — Chairman and Managing Director

But our number is correct, because we have — we take these numbers for YouTube, we have a system in place with YouTube, and they will report to us on a daily basis you can see.

Unidentified Participant — — Analyst

But I checked in about your all channels, YouTube section.

Kumar S. Taurani — Chairman and Managing Director

I really can’t — I don’t know but if you can please tell us — give us an email — you can send us email, we will definitely tell you, no problem. For example, just I got that 9.7 billion is only in September. However, you have counted, just write us details of that also, [Foreign Speech] where is the mistake.

Unidentified Participant — — Analyst

Okay, sir. I will make.

Kumar S. Taurani — Chairman and Managing Director

No problem. Okay, sure.

Operator

Thank you. The next question is from the line of Rakesh Wadhwani from Monarch Networth. Please go ahead.

Rakesh Wadhwani — Monarch Networth — Analyst

Hi, sir. Thank you very much for the opportunity. Sir, I have one — I have a few questions. One is like we have acquired lots of regional content also in this last two quarters because we can see non-movie songs and — so rest are the movie songs. So, they will be either from Hindi or other regional songs also. So just wanted to see where you are acquiring, in which language you are acquiring more and seeing more traction?

Kumar S. Taurani — Chairman and Managing Director

We are acquiring in many languages, whatever you see my all channels we are acquiring in all those things. But I think it’s a good suggestion, next quarter maybe we will include the language by how much content or how much how songs we are acquiring, we’ll give that as well in the report. So you will be perfectly knowing how many songs we’re acquiring language-wise.

Rakesh Wadhwani — Monarch Networth — Analyst

Okay. And, sir, second question, you mentioned in the presentation and — so Q4 results and as well as in the Annual General Meeting that the content cost will be around 2x of the last year. So we assume it will be in the range of INR55 crores to INR60 crores and — so INR55 crores to INR60 crores and we have around INR100 crores cash flow and next two quarters cash flow will be also accumulated. So what is the reason behind buyback? I just want to understand your perspective [Foreign Speech] because INR60 crore content cost expense [Foreign Speech] and some amount of cash will be with us because in order [Foreign Speech] you can just like PS-1 or PS-2 [Foreign Speech] you should have some buffer cash with you, so that good movie come and you can get it.

Kumar S. Taurani — Chairman and Managing Director

Right. So that’s we are doing that. So what is your question basically?

Rakesh Wadhwani — Monarch Networth — Analyst

No, sir, buyback [Foreign Speech] so that invest in any good news like four, five movies comes and you can — that is my thinking.

Kumar S. Taurani — Chairman and Managing Director

Yeah, understood. So we have surplus cash. We have lot of cash, I don’t think I need that cash [Foreign Speech] quarter-on-quarter basis. So I don’t feel [Foreign Speech] and why to keep money in company [Foreign Speech] it’s good for all of us we get less tax, free money [Foreign Speech] is good. I think [Foreign Speech] within one or two months same cash will be there after spending so much money.

Rakesh Wadhwani — Monarch Networth — Analyst

Okay. Okay. Thank you very much for clarifying on that one. Thank you. That is from my side. Thank you. Happy Diwali.

Kumar S. Taurani — Chairman and Managing Director

Thank you. Happy Diwali.

Operator

Thank you. The next question is from the line of Mayur Parkeria from Wealth Managers. Please go ahead.

Mayur Parkeria — Wealth Managers — Analyst

Good morning, sir. Am I audible?

Kumar S. Taurani — Chairman and Managing Director

Yeah.

Mayur Parkeria — Wealth Managers — Analyst

So, sir, I wish you and the entire team Happy Diwali and good set of numbers. So congratulations on that. Sir, I had couple of questions. One is on the balance sheet if we look at the current assets and non-current assets, both put together are roughly INR40 crores. Sir, what would be the inventory in that, which has been non-monetized and which is in work-in progress inventory how much will be there?

Kumar S. Taurani — Chairman and Managing Director

Yeah. Chellani, a question for you, please reply.

Sunil Chellani — Chief Financial Officer

Yeah. It will be around INR30 crores.

Mayur Parkeria — Wealth Managers — Analyst

So the current asset part is the inventory part, right, hopefully?

Sunil Chellani — Chief Financial Officer

No. It is we have to put together because we have to bifurcate it current and non-current.

Mayur Parkeria — Wealth Managers — Analyst

Okay. So, sir, why would any part of inventory be in non-current assets?

Sunil Chellani — Chief Financial Officer

Depending on which — what is the age of the inventory. Suppose we have given some advances and the advances are old and six months or eight months old so we have to bifurcate what is the current and what is non-current.

Mayur Parkeria — Wealth Managers — Analyst

But, sir, normally is non-current means thing [Indecipherable] more than one-third, so is it that — so because I was just trying to coordinate with our policies that we will write-off most of it. So is it that the project is longer duration and advances, which the actual project will commission and factor or we’ll get the music little longer in period and that is why…

Kumar S. Taurani — Chairman and Managing Director

I’m talking about the advances.

Unidentified Participant — — Analyst

Right. But advances would it be for acquisition of rights of movies — like the movies rights, right?

Kumar S. Taurani — Chairman and Managing Director

That’s right.

Unidentified Participant — — Analyst

Okay. Once again I’ll reiterate this is a great policy of writing-off 100% of the cost. So, hope no matter what — there will be cycles in the industry in future also. Hope you continue to maintain that kind of a policy, it’s a transparent and a conservative policy so that’s great. I joined the call little late so I had two more questions. Can you throw some light on the deal with ISRA?

Kumar S. Taurani — Chairman and Managing Director

Deal with?

Unidentified Participant — — Analyst

ISRA?

Kumar S. Taurani — Chairman and Managing Director

ISRA?

Unidentified Participant — — Analyst

Yes, sir.

Kumar S. Taurani — Chairman and Managing Director

Actually I want to brief all of you. We have two good things happen with Tips and the industry — actually industry. One is ISRA. ISRA is a body of singers association, Indian Singers Association and government has given the license to collect money on their singers behalf. But when this Corporate Act was formed so the singer right is actually assignable. We can take that right from them and then we don’t have to pay them any royalty or anything and 99.9% all the music companies in India are doing that. We are buying them, we are paying them lump-sum or producer — if he is recording for any film producer, singer is singing. So we are paying them money and we are — give them lump sum and no royalties or nothing. But their interpretation of few sections of the law was different and they were little troubling us in the market [Foreign Speech]

So, few people were scared [Foreign Speech]. So, that was like a tidbit. So, we have resolved that with them. We have spoken to them and because of that, business of their public performance was also hurting. [Foreign Speech] So, we have settled with them and we have to pay them some money, all the members put together. So, we will have a little hit. But with that, our business will be too huge for that section in next three years. It will be grow like — 100% it will grow. So, we have — entire industry has taken this call and we have settled with them and we have signed the deal with ISRA singers’ association. We will pay them some money from our earnings of their public performance basically. So, we have done that. And also number two, there was another case on Tips-Airtel that Wynk service. They have put a — they’ve given abruptly like radio they do.

They decide how much royalty they have to pay. They have taken that route for Internet I think in 2017 so we have put a case on them. And in 2019 we won that case., A single judge Kathawala ji has given the order in our favor. All the points he favored us, he notes this is right on all the fronts. Then Airtel gone to — gone for two bench application [Foreign Speech] So, that was also we are fighting with them for last three years. Ultimately last Thursday order is came in our favor — Tips’ favor. No, Internet is not radio. It is not compulsory. You have to take a license. You can’t use. It’s my exclusive property of Tips and they have take my rights. So, we have won that case. So, these are two good news. And actually this even judgement, Tips has fought, but this has actually saved the entire industry. Actually we have fought for that. So, these are the two good news I want to share with all of you.

Unidentified Participant — — Analyst

Great, sir. That’s great. Congratulations. Sir, on the ISRA [Technical Issues] everything is like normal the way you used to give the singers. Only thing on the public performance there was — it was taking a little bit. As of the actual impact if we see, now the thing will be it will get more clarified the picture the uncertainty has gone and the revenue model and the sharing model is more clear now.

Kumar S. Taurani — Chairman and Managing Director

Yes. Yes, absolutely.

Unidentified Participant — — Analyst

Okay. And sir, how much hit will it come to Tips and over what period?

Kumar S. Taurani — Chairman and Managing Director

I think first two, three years it will be INR2 crores, INR3 crores. And longer-term that will be — it will come on a percentage basis so maybe it will come more, but then we are also making more money.

Unidentified Participant — — Analyst

Okay. So INR2 crores, INR3 crores per year, sir.

Kumar S. Taurani — Chairman and Managing Director

Yes.

Unidentified Participant — — Analyst

Okay, great. Last question from my side, sir.

Kumar S. Taurani — Chairman and Managing Director

But that — please understand that support that all the singers today we have settled with IPRS so earlier we used to make from IPRS only INR1 crore, INR2 crore. But now we are making INR10 plus crores from them. So, that’s a big thing. So, similar thing will happen with ISRA. So, now all the creative people; singer, composer, lyricist, and publisher like us music company publisher; everything — everyone is on the same side — one side. So, it’s a big thing for us. I think we will — really you will see the very-very big monies coming from that section, the genre of the music.

Unidentified Participant — — Analyst

Okay. Great sir. Last question from my side, sir. In our vision, first the vision itself talks about our vision to have almost a bouquet of hits, right. If you look at the — hello.

Kumar S. Taurani — Chairman and Managing Director

Hello. There is a disturbance in your sound, it’s coming and going.

Unidentified Participant — — Analyst

Yeah. Now is it clear?

Kumar S. Taurani — Chairman and Managing Director

Yeah, it’s better yeah.

Unidentified Participant — — Analyst

Sir, I was saying our vision itself it says that we need to maintain and grow the must-have hits catalog, right. I just wanted to understand, sir, what is our strategy given the cash which we have and what is our strategy for acquiring new music on that side and what kind of checks and balances will you need to balance the cost of acquisition for good music? What is the — it is already in the hindsight whether the hit actually has played out or not. So, how will you balance — what checks and balances will you keep to ensure that the cost is also maintained but at the same time utilize the balance sheet cash to continue to acquire good music? And what is our actual plan of acquisition in the next two years, sir? Yeah, that will be my last thing question. Thank you, sir.

Kumar S. Taurani — Chairman and Managing Director

See, actually that problem we have. Now we have a market of two, three companies for content acquiring. But today we have five players in the market. Everybody wants good music, but then also we are very selective. So, we don’t want — like I earlier also said, see, there is some other company has put — there is a market of INR800 crores of content comes up and they want to acquire INR200 crores, INR250 crores content; but I don’t have that budget. I don’t want to acquire so much of content. I am very cautious. I want a very selected product. Whatever I like, I don’t mind paying INR2 crores, INR3 crores more, but I want a very selected product. Who is the — what is the criteria behind the music. We have our own parameters and our experiences with that plus data also to keep on checking. So that — we have a clear view whatever budget we allocate, maybe 5%, 10% here or there we can go, but we will not be very aggressive. We will be selective. That’s a key point of content acquiring.

Unidentified Participant — — Analyst

But sir will it not also — will it not also play on the fact that if the competition is aggressive, we may [Technical Issues] period of good music for a couple of years because the industry structure is becoming like that and it’s put on that — we may have the cash, we have our own related policy. But what if the acquisition we lose out on good music during this era, sir?

Kumar S. Taurani — Chairman and Managing Director

I said that we will try and we’ll get a quality music. I said that. And in our business, quality is better than quantity. So, our focus is on that. And trust me, we will maintain our growth. We will be better than many many other companies, I’ll prove it to you. Just give us another — and we are proving actually. If you see quarter-on-quarter basis or yearly basis, touch wood we are doing well and we don’t want to be very aggressive and then suddenly we say [Foreign Speech] We don’t want to do that.

Unidentified Participant — — Analyst

Right sir. Great to hear your views, sir. Thank you, sir. Thank you.

Operator

Thank you. The next question is from the line of Garvit Goel from Invest Research. Please go ahead.

Garvit Goel — Invest Research — Analyst

Hello. Thanks for the opportunity. Sir, actually I wanted just clarification on this ISRA side. Basically you’re saying it will help in long term. Sir, can you please explain how this thing will shape up because actually I’m not getting that, sir?

Kumar S. Taurani — Chairman and Managing Director

Actually I can’t hear you. Please can you repeat and if you can be little slow, please.

Garvit Goel — Invest Research — Analyst

Hello. Sir, what I was saying is you were mentioning about ISRA so you’re saying this will help to in the long term. You were mentioning about ISRA so you were saying it will help us in the long term. So, can you please explain a little bit more how is it going to shape up for us? How it’s going to help you further, sir?

Kumar S. Taurani — Chairman and Managing Director

See, as we said, everybody goes in the market and says [Foreign Speech] I want to license event is happening. And so that way now these companies won’t go and we can claim whatever we’re charging to the parties [Foreign Speech], we can charge more. We can increase our prices 50%, 60% which we wanted earlier. But because of this chaos, we were not doing that. We were not going aggressive about that. So, that will help us plus there is so many small, small issues with Government of India and now we have settled with the artists. Artists will support us in all those things also to recover more monies. So, I think it’s a very, very good thing happened with the industry and you will see the very, very big kind of results in future. In next two, three years you will find [Foreign Speech].

Garvit Goel — Invest Research — Analyst

You’re saying we are giving the fixed amount to this ISRA and later on we can realize more money because ISRA will not go to the singers to realize — to claim their money.

Kumar S. Taurani — Chairman and Managing Director

Yeah. They won’t go to the market. They won’t do anything in the market.

Garvit Goel — Invest Research — Analyst

Understood, sir. Understood very well. Thank you, sir.

Kumar S. Taurani — Chairman and Managing Director

And one more thing, there also in next one, two years they will all come back on a profit sharing basis. So now after this profit-sharing basis so they will also help us to increase our profits. It’s in their advantage as well.

Garvit Goel — Invest Research — Analyst

Okay. They will get incentivized in that that condition, right.

Kumar S. Taurani — Chairman and Managing Director

Yes, yes.

Garvit Goel — Invest Research — Analyst

Okay, great. And this is for the entire industry?

Kumar S. Taurani — Chairman and Managing Director

Absolutely, entire industry. ISRA company signed and all that PPL — this is handled by PPL and PPL all major companies the entire Board has signed this and they are taking next that agreement in the AGM also. And their major member has major voting rights in that AGM.

Garvit Goel — Invest Research — Analyst

Okay. Understood, sir. Thank you, sir. Thank you for the explanation.

Operator

Thank you. The next question is from the line of Rakesh Wadhwani from Monarch Networth. Please go ahead.

Rakesh Wadhwani — Monarch Networth — Analyst

Hi. My questions are answered. Thank you.

Operator

Thank you. The next question is from the line of Ashok Saha from LFC Securities. Please go ahead.

Ashok Saha — LFC Securities — Analyst

Thanks for taking my questions. Sir, my question relates to our inception and IPO since many years ago. We came out at a price of INR350. So over the years so forth now so large year [Indecipherable] was done at INR140 in the March ’20. So since the price increased so would it be fair to assume that it will be on similar not that it will be done on tender basis only because it’s a most efficient way to buy businesses?

Kumar S. Taurani — Chairman and Managing Director

There has to be a current value or more than that. We can’t go at such a less price. So, still we have not debated this. This is only thought I told you. We will discuss among ourselves and we will discuss experts with this and we’ll come back.

Ashok Saha — LFC Securities — Analyst

Okay. Sir, my second question relates to the — our final consumer is public but who pays us? Is it radio industry pays us or the person or the company which makes the program who pays us? Who pays us major amount and can you just name one or two largest customer or the person who is paying us just like our [Technical Issues]?

Kumar S. Taurani — Chairman and Managing Director

Radio people don’t pay us. There is a case going on with the industry so there is a big problem in radio industry particularly. So, let’s keep that as a — out for some few more quarters. And rest of my customers — our earlier business when we used to sell cassette and CD, it was a business-to-consumer. But now as our customers are like people like YouTube, Spotify, all TV stations so our business is B2B so now we give them and our big customer is YouTube.

Ashok Saha — LFC Securities — Analyst

Okay. So, YouTube is the largest customer. Does it make sense to…

Kumar S. Taurani — Chairman and Managing Director

We supply to all the music companies not only for the Tips, all music labels.

Ashok Saha — LFC Securities — Analyst

Yes. But we are the most efficient in all this category. So, does it make sense to acquire some other companies. We want our competitor inorganic growth because there are many all forms and everything is available. And also there is one newer way of making a radio like Saregama has done it and I think one more company has done and made a radio with songs — recorded songs and everything. So, are we thinking on the similar lines to monetize our assets?

Kumar S. Taurani — Chairman and Managing Director

No. Actually please understand my consumer — my customer what listens my music is a young audience. The young audience has their — they know how to operate technology on Spotify, Race, or YouTube and listen to music, I can make my own playlist so I don’t need to venture into that and I don’t have a such a huge repertoire I can go for making of radio and there is a lot of expense behind that. And actually it’s not a profitable business for — at least for me. So, I am very happy what we are doing and we’ll continue doing that. So, that’s good for us I feel.

Ashok Saha — LFC Securities — Analyst

So we make almost 90% of the profit of new releases only, new songs only.

Kumar S. Taurani — Chairman and Managing Director

No, you can say our majority of income is from our repertoire.

Ashok Saha — LFC Securities — Analyst

Okay. So it consists of the new music or the new ideas or something?

Kumar S. Taurani — Chairman and Managing Director

No. It’s a combination of both you can say new and old.

Ashok Saha — LFC Securities — Analyst

So percentage-wise, new one is some higher because we are also going in a regional way also?

Kumar S. Taurani — Chairman and Managing Director

No. Still that new releases we have started from last year, we are still checking how much will be the ratio of new versus old. So it will take another three, four quarters to tell you exactly what’s happening.

Ashok Saha — LFC Securities — Analyst

But any rough idea new versus old or something like that?

Kumar S. Taurani — Chairman and Managing Director

Rough idea? You can calculate 30:70 or 25:75 something like that.

Ashok Saha — LFC Securities — Analyst

70% is approximately new releases and…

Kumar S. Taurani — Chairman and Managing Director

Old 75% will be, 25% new.

Ashok Saha — LFC Securities — Analyst

Okay. What is the percentage of the buy from the new movies?

Kumar S. Taurani — Chairman and Managing Director

So, I didn’t get that. What you’re saying?

Ashok Saha — LFC Securities — Analyst

Songs of the new releases — movie release. So, do you buy new movie release songs also?

Kumar S. Taurani — Chairman and Managing Director

Yes.

Ashok Saha — LFC Securities — Analyst

So, that’s what percentage?

Kumar S. Taurani — Chairman and Managing Director

Percentage of new movie buying from — how many movies are being produced and how much I buy you’re saying, 2%, 3%.

Ashok Saha — LFC Securities — Analyst

2%, 3% only. So remaining are the repeats or something like that so it’s a very good.

Kumar S. Taurani — Chairman and Managing Director

Yeah.

Ashok Saha — LFC Securities — Analyst

Thank you, sir. Thank you.

Operator

Thank you. Ladies and gentlemen, in the interest of time that was the last question. I now hand the conference over to the management for their closing comments. Over to you, sir.

Kumar S. Taurani — Chairman and Managing Director

Yeah. Thank you, everyone, for joining us. I hope we have been able to answer all your queries. I would also like to highlight that our presentation now has a link of all our songs displayed on Slide 3 and you can view the songs on YouTube. In case you require any further details, you may please contact us or Faraz Ahmed at Orient Capital, our Investor Relations partner. Thank you and Happy Diwali to all of you once again. Thank you so much.

Operator

[Operator Closing Remarks]