UFO Moviez India Limited (NSE: UFO) Q2 2025 Earnings Call dated Oct. 30, 2024
Corporate Participants:
Rajesh Mishra — Executive Director and Group Chief Executive Officer
Ashish Malushte — Chief Financial Officer
Analysts:
Tushar Pendharkar — Analyst
Ankit Kanodia — Analyst
Aditya Karanth — Analyst
Ashish Goyal — Analyst
Ashish Goyal — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the UFO Moviez India Limited Q2 and H1 FY ’25 Earnings Conference Call hosted by Ventura Securities Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the conference over to Tushar from Ventura Securities Limited. Thank you, and over to you, Tushar.
Tushar Pendharkar — Analyst
Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities Limited, I welcome you all to UFO Moviez India Limited Q2 and H1 FY ’25 earnings conference call. The company is represented by Mr. Rajesh Mishra, Executive Director and Group CEO, along with Mr. Ashish Malushte, Chief Financial Officer of the company. I would now like to hand over the call to Mr. Mishra for opening remarks. Post which we can start question and answer session. Thank you, and over to you, sir.
Rajesh Mishra — Executive Director and Group Chief Executive Officer
Thank you, Tushar. Greetings, everyone, and thank you all for joining our Q2 and H1 FY ’25 earnings call. The second quarter of this financial year began with the success of Kalki 2898 AD released on 27 June 2024, which performed well across both Hindi and Southern markets. Alongside, Kalki the quarter was marked by the record breaking performance of Stree 2 amidst a mix of varied content. So the first two months of the quarter saw average performances from titles such as Kill, Indian 2, Bad Newz, Raayan, Khel Khel Mein and Vedaa.
Meanwhile, a few titles including Sarfira, Ulajh, Auron Mein Kahan Dum Tha and Double iSmart fell short of expectations. In September, despite the lack of successful Hindi movies, the month proved to be the strongest of the quarter driven by Southern releases such as the GOAT and Devara Part 1. In total, 470 movies were released, including versions and languages during the quarter compared to 484 in Q2 FY ’24 and 476 in Q1 FY ’25. The combination of fewer tent-pole releases and the underperformance of several key films in the quarter, along with the lack of successful Hindi films in September resulted in a muted advertisement revenue for the quarter, contributing a decline of 17% year-on-year, an improvement of 12% on Q-on-Q basis.
However, a 7% increase in theatrical revenue and a 79% year-on-year growth in sale of product supported overall performance, resulting in an 11% year-on-year increase in total revenue this year. On the screen network front, the advertisement screen network grew to 3,735 screens, marking a 13% year-on-year increase. This includes 2,122 multiplex screens and 1,613 single screens, with the addition of 432 advertising screens over the past year. However, there was a 1% decline quarter-over-quarter. Turning to the key figures for the quarter and half year ended September 2024. The consolidated revenue of Q2 FY ’25 stood at INR968 million as against INR871 million in Q2 FY ’24, primarily driven by sale of products.
EBITDA was lower at INR102 million compared to INR177 million year-on-year, though it improved from INR66 million in Q1 FY ’25. The company has reported a net loss of INR9 million in Q2 FY ’25 compared to a net profit of INR33 million in Q2 FY ’24 and improved from the net loss of INR42 million in Q1 FY ’25. Regarding half year performance, consolidated revenues amounted to INR1,913 million as compared to INR1,725 million in H1 FY ’24. EBITDA of H1 FY ’25 was at INR168 million, compared to INR340 million in H1 FY ’24, mainly due to lower advertisement revenues.
On the PAT front, the company reported a net loss of INR50 million in H1 FY ’25 against a profit of INR58 million in H1 FY ’24. The consolidated cash at the end of the quarter was INR998 million and the net cash was INR409 million after considering outstanding debt. Looking ahead although the [Technical Issue]
Operator
Hello, sir, hello. Participants kindly stay connected while we connect the management team back on the call. I welcome back the management team. Please go ahead, sir.
Rajesh Mishra — Executive Director and Group Chief Executive Officer
Our apologies, we are facing some slight technical issue here. So I’ll go back a paragraph and start reading again. I think I lost you from that point. So I was talking about — regarding our half year performance. The consolidated revenues amounted to INR1,913 million as compared to INR1,725 million in H1 FY ’24. EBITDA of H1 FY ’25 was at INR168 million compared to INR340 million in H1 FY ’24, mainly due to lower advertisement revenues. On the PAT front, the company has reported a net loss of INR50 million in H1 FY ’25 against a profit of INR58 million in H1 FY ’24.
The consolidated cash at the end of the quarter was at INR998 million, and the net cash was INR409 million after considering outstanding debt. Looking ahead, though the quarter began on a subdued note with release of some films like Vettaiyan, Jigra and Vicky Vidya Ka Woh Wala Video, the upcoming release pipeline looks good with releases such as Bhool Bhulaiyaa 3, Singham Again, Kanguva, Pushpa 2 and Baby John in December. We are optimistic about building up momentum in the upcoming quarters.
I would now like to take this opportunity to thank all our stakeholders for their continued trust in the company. With that, I open the floor to take your questions. My colleague and CFO, Mr. Ashish Malushte, and I will be happy to take your questions. Thank you.
Questions and Answers:
Operator
Thank you, sir. [Operator Instructions] The first question comes from Ankit Kanodia from Smart Sync Services. Please go-ahead.
Ankit Kanodia
Thank you for taking my question. Sir, my first question is related to the press release we shared yesterday. In the notes, point number 4, we have alluded to an NCLT order, but I find it difficult to believe as in the order came in January, and we are reinstating our accounts now. Can you give us some more color as to what happened and why we are doing the reinstatement today rather than earlier?
Ashish Malushte
No, you’re referring to the press release, right?
Ankit Kanodia
Yes.
Ashish Malushte
That’s what you mentioned?
Ankit Kanodia
Yes, press release. Yesterday’s press release in the BSE notification, BSE announcement, half results, wherein the — after the financial statements, you have shared notes to accounts. And I’m referring to notes number point 4.
Ashish Malushte
Okay. Okay. So you’re talking about Regulation 33, Note 4?
Ankit Kanodia
Yes.
Ashish Malushte
Correct?
Ankit Kanodia
Basically amalgamation.
Ashish Malushte
Can you please repeat the question?
Ankit Kanodia
My question is, we have reinstated our last year’s quarterly revenues. And there, we have mentioned that please check Note #4. And in Note #4, we have mentioned that there was an NCLT order regarding approving the amalgamation scheme in the month of January. So can you throw more light into what was this order? What was the amalgamation scheme and why we are reinstating our last year’s account today?
Ashish Malushte
Okay. So I got your question, and thanks for bringing it up. So the thing is the effect has been given immediately after the order was received, which was somewhere in Q4 of last year. The problem is, in this particular quarter, I am — we are disclosing a comparison between current quarter, which is Q2 for current year with Q2 for last year, correct? Now when there was a Q2 — when we were in Q2 last year, this order had not come in. So therefore, the last year’s Q2 reported numbers didn’t have this order effect. Now that we are presenting to your comparison, we had two options, either we keep Q2 last year’s reported number the way it was without giving adjustment of the order or without giving effect to the order and comparing it with this Q2. But then this wouldn’t have been apple to apple, so therefore — and this is what — this is a very, very normal practice. This is nothing new. Just that this kind of reinstatement helps the reader of the financial statements to have an apple to apple comparison, okay?
Ankit Kanodia
Got it, sir. Sir, can you just throw some more light as to the order and amalgamation scheme of the four wholly owned subsidiaries.
Ashish Malushte
Okay, okay. Thank you, again. So this was a simple merger. We had certain 100% subsidiaries of ours and therefore — and many of those subsidiaries were formed for a specific objective, primarily in relation to DCI business, okay, in 2011, ’12. One of that was a company that we had also acquired and finally, it became 100% subsidiary. So this scheme is basically a very simple scheme in which we simplified our corporate structure and all our 100% — those 100% subsidiaries which were formed with a particular objective and that objective was met, those companies were only merged into the holding company. Now when you look at the consolidated number, there is no change because when they were separate that time also, the numbers were part of consol, 100%. And now that they are part of — I mean, they are merge into UFO, still the numbers would remain the same. So the scheme was only and only to get those 100% subsidiaries into UFO so that you have some savings in operational efficiencies and operational costs.
Ankit Kanodia
Got it. Got it. Thank you so much sir. That was very helpful. My second question is related to the dip in the advertisement revenue. Of course, we understand that whenever the industry doesn’t do well, in terms of blockbuster movies or the number of movies, then our ad revenues also go down. But when I look at the number of minutes sold per show, per ad screen, I think it is 2.68 in H1 FY ’25. And I don’t think in the last many years, I’m seeing FY ’15, ’16, ’17, ’18, ’19, ’20 up until FY ’24, we have never come down to this kind of level. So what do you think is the reason for such a low number on this metric because I think this metric is a very good indicator as to how our ad revenues will do, right?
Ashish Malushte
Yes. So it’s a good observation. When we are comparing it with the past performance in terms of volume, volume of minutes sold, and yes, in this quarter, you see a reduction. And I’m not trying to justify it, but you would have slightly similar level of volume even in the past. But more important point, which I want to drive is, yes, you touch base on the issue that we all face, which was content was erratic in Q1. And why I’m saying Q1 is advertisement business, my request to you all is just appreciate this point that advertisement business builds on the previous performance of the cinema as a medium.
So if in Q1, there is a bad performance of content as a whole perceived by the advertisers, their allocation in Q2 will not be good. So now you have to wait for Q2, wait for something like Stree 2 come, and then the allocation is there and next quarter’s allocation also becomes positive. So over here, the challenge was because of the content performance of Q1, which continued in Q2. But I want to bring to your notice one point, which is about the pricing. Now we don’t disclose the pricing for strategic reasons. But you can derive the pricing-related point. If you actually compare the fall in volume and the fall in actual sales, okay, turnover, the actual drop in the sales is far too lower in terms of percentage as compared to fall in the volume of the minutes sold.
So what it tells us is that the ad sales team in spite of having this challenges, were able to generate this kind of volume, which is not really very, very low, but this kind of a volume that they were able to generate at higher price points than what they were selling in the first quarter or in the same quarter last year and this was a very strategic move that we wanted to push after we exited COVID, and for us, exiting COVID is still a process, and it’s not only for UFO, for cinema industry as a whole. And this is one major win for us, I would say, that the teams were able to demonstrate that higher pricing, they were able to push in the market and still able to get this kind of a volume.
So this is one point which I want to tell. The corollary of — I mean, the other way to look at this, if we were — if we had given free hand to the sales team not to bother about pricing, then probably the volume could have been higher. I don’t want to speculate how high it would have been. But I’m sure you would appreciate that pushing pricing up is always a challenge in any industry and here you are actually seeing it happen.
Ankit Kanodia
Right Sir, my next question is related to this advertisement revenue only. So when in a quarter, our advertisement revenue year-on-year is going down swiftly, I just fail to understand why our advertisement share with the exhibitors or distributors, it is going up by 33% because when I look at your stand-alone and consolidated results, I see a 33% jump in the advertisement revenue share in the expense column. Why that is happening?
Ashish Malushte
Yes. So again, two reasons here. One is something which probably you would have been able to track that there were some very critical acquisitions that we did of advertisement site of some very large networks down South. And that was in the third quarter, I mean, Jan this calendar year. And over there, we had a larger commitments on the minimum guarantee. And those commitments were relatively higher as compared to what my sharing is, and that was bound to push my overall percentage up. Just to give you perspective, that was almost adding 400 screens to my network of 3,600 screens.
So a little over 12% was the increase in the number that I was doing to my network at a higher — the minimum guarantee value. Now the simple answer is that. But what I want to — since this point has come up for discussion, I want to quickly take you to some data points, and that is relevant for — probably relevant from the investor’s point of view. In 2020 or even before that, UFO was generally pursued to be a single-screen player. And there was a very common discussion whenever we used to meet the investor, the perception was okay, you serve single screens. Single screens are going to shut down over a period of time and therefore, probably you are operating in a sunset industry and we made efforts to explain them that that’s not true.
We are trying to service the whole plethora of the players in this industry. So ultimately, the thing that we were trying to do was to change the composition of single screen multiplex in my overall network. And when I say I want to change this composition, that means that I have to acquire multiplexes, probably at a higher minimum guaranteed value. Minimum guarantees is a sharing that we commit to the theaters. So ultimately, in four years, even considering the COVID period, what we have achieved is in 2020, my screen count was 3,792 and my multiplex count was 1,565 and today, my screen count is slightly lower to 3,735. So almost there 50 screens down. But from 1,500 multiplexes, the multiplex count now has gone up to 2,122.
Now this is a very, very significant move. So 2,122, probably we are the largest in terms of the advertisement network in the country, having multiplex as account. And these multiplexes have also helped us to make sure that the quality improves and therefore, the pricing improves. And overall, the health of this vertical would start looking better from now on when the content supports. So the reason why the share has gone up is because the quality of network was to be improved. I have given you a specific example of Jan where there was a 10% commitment that we had done volume-wise. But the deeper strategy behind it is what I explained to you, moving from single screen to multiplexes.
Ankit Kanodia
Yes. So if I got it correct, so does that mean that the ad sharing which we — which has — ad sharing with exhibitors, which has gone up slightly higher as in 76.43%. This should potentially go down to our average 30%, 35%, 40%, which it has to be, which it was in the past as well. That is what you would like to say?
Ashish Malushte
So mathematically speaking, how much it will go down will depend on the denominator. And denominator in this case is the sales that we do per screen. So if we, say, INR4.5 lakh, INR5 lakh, we will be around 60% — maybe 55%, 60%. The moment we start inching closer to INR8 lakhs, INR9 lakhs, this will come down closer to 40% to 45%. So this is the beauty. In fact, this you can actually see in our numbers. Q1, the sharing will be higher. My Q1 sharing was almost 85%. And in Q2, it has gone down to 69%. This is how actually it plays.
Ankit Kanodia
Okay. One last question, if I may. So at a time when the industry is probably going through a lull period, what makes us bump up our expenses on digital cinema equipment and land? I see that almost doubling if I compare H1 to — H1 FY ’25 to H1 FY ’24, it would be that from INR20 crores, it has gone up to INR37 crores, almost double.
Ashish Malushte
Can you help me with the line item because there is some..
Ankit Kanodia
Purchase of digital cinema equipment and land. It’s in the operating direct cost, second line?
Ashish Malushte
In fact, I’m very, very thankful to you raised this point. This actually explains that the industry is not in that kind of a bad situation. And I’ll tell you why. We have two lines of business primarily. Of course, those are closely linked with each other. The one which we have been discussing is about my service offering, where by servicing the theaters and then my advertisement right and I monetize it. But since we are in this business, whenever there is a theater which wants to buy equipment on its own, okay? We become one-stop shop for them and sale of digital cinema equipment, which is a trading business for us.
It’s another line of business for us. And it’s a steady business in India and international, predominantly in international. When I say international, in Middle East, Dubai. So over here, we play the role of a trader. We buy the equipment and we sell the equipment and we have 20% margin, okay? So all that you see here is only and only because more number of people decided to buy digital cinema equipment in India and in Middle East. And therefore, my sales was high and correspondingly my sharing was high — I mean not sharing, my cost of purchases was high. I think we earned INR3 crores more on a year-on-year basis from this trading line of business, if I’m correct. Yes, INR3 crores is what we have earned. So it is not to be confused with my core business expense, but it can surely be an indication of whether the industry is still investing into capex for this business or not, apart from us. These are outsiders.
Ankit Kanodia
Got it. Got it. Got it. And sir, if I understood it correctly. So basically, from a macro.
Ashish Malushte
Sorry, sorry, go ahead.
Ankit Kanodia
So from a macro perspective, there are two main levers for our company. One is the quality and the quantity of movies getting released. And then number two is the amount of people coming to the theater to watch. And number one, we don’t have any control because what kind of movies will come and how many movies will come that we can’t have any control. We are not in the business of making movies, right? But on the second point, in terms of making new — making more people come into cinema, I think we have started on two initiatives on — one is the Caravan and the other is Nova Cinemaz. So how do you see that in the near term and in the medium term, these help you to get more people on the theaters. And maybe that will help us in our revenue streams. That’s my last question.
Rajesh Mishra
Okay. So as far as the Caravan cinema is concerned, that is a moving-talkies business that we have been engaged in. And we see good traction in this business from state governments and even during elections and political parties and all those things. It is a very good business to be in because it is reaching out to areas where there are no cinemas, let us say. Right from going up into the rural areas or they are — government is using these vans and all, like they had used for Viksit Bharat campaign, Aadhar card updation and all those activities. So this business does not have a steady trend, but it comes in bursts and in particular times like election happening or for example, in monsoons, the business will go down.
It will — there will be very little traction because these are open air shows that are conducted. But December — I mean, the winter fares well on this business. And we are hoping to see traction in the coming quarters in this activity. See, regarding getting more footfall in the cinema, I mean we can reach out with initiatives like Nova and Caravan for the interior cinemas. And we will be looking at engaging people to come and encourage them more to come to the cinemas. Point to be appreciated here is that these are areas where there was no cinema at all. So the cinema viewing habit has to be rekindled over here.
But for that, again, we will be dependent largely to — to a large extent, on good quality of films coming in. So as I had mentioned, we are seeing a good lineup in Q3 and Q4 going forward. So this will definitely push that. As far as Nova is concerned, Nova is still a nascent business for us. One property opened up in Uttar Pradesh, and second properly, we are just opening up with Diwali with the release of Singham and Bhool Bhulaiyaa. So it’s still early days, but this is a business that will have a larger potential to reaching out to the hinterland over there, where there are no cinemas as I said. And this should be a very good initiative from our perspective and also from the perspective of the cinema viewing habits of people.
Ankit Kanodia
Thank you so much, sir, for all the detailed answers and all the best. I’ll come back in the queue if have any more. Thank you.
Ashish Malushte
Alright, thank you.
Operator
Thank you. [Operator Instructions] Next question comes from Aditya Karanth, an Individual Investor. Please go-ahead.
Aditya Karanth
Thanks so much. So I have a few questions. One, I think good that you highlighted pricing and the market at least reacting positive to that. I don’t think the market is aware, so that’s good. [Speech Overlap]
Rajesh Mishra
Can you speak a little louder please.
Ashish Malushte
Yes. We missed your point there. Sorry.
Aditya Karanth
Yes. Can you hear me?
Ashish Malushte
Yes. This is better.
Aditya Karanth
No, I was just saying a couple of questions, but I think it’s good that you highlighted pricing because I think the market also pretty much reacting to your words. So it’s — I think it’s new information regarding your pricing strength, I encourage you to play it out. But obviously, like pricing is not enough, right? You’re pricing into volume with revenue. So your volume still was quite on the lower end. And if you compare like PVR starts their quarter saying Bollywood has a big bounce back, 40% increase in box office collection, but it doesn’t show up on your side of it. You had Stree 2 also in this — in August, right, in August Stree 2. So that was a breakout hit.
So you had pricing and you should have had a good volume, but it didn’t happen. So can you just talk about like what the challenges were in this quarter with volume because your ad revenues are down relatively and your inventory sales or your — whatever your per revenue — per screen revenue or minutes sold, they’re all kind of down, but your pricing is up. But it’s clearly a volume issue. So what was the issue if we had like good box office and Stree 2? Just if you can talk about pricing, and then I have a few other questions on free cash flow.
Ashish Malushte
Yes, yes. Sure, sure. So let’s address this point. In fact, I tried to address this point in the first set of questions. So basically, Aditya, in our case, and when I say our, it’s not UFO. It’s primarily digital cinema — I mean, cinema as advertising medium. In our case, the content helps pushing the perspective of the advertisers. And therefore, it’s not necessary that if a particular movie has done phenomenally well, immediately, the next day after the release, the advertisers will start lining up and changing the allocation.
So here, at least a quarter is what we say or sometimes even more for advertisers to start relooking at this medium. Let’s look at the size of this medium. All put together, we will be less than maybe one — [Speech Overlap] we are now officially less than 1% of the overall AdEx. Now if that’s the case, what it means is 99% of the spends are already allocated anywhere else. So we have to really, really, all of us make a lot of efforts to get the advertisers back. The advertisers mind share back, if they have decided that [Foreign Speech]. So therefore, a Stree 2 doing well will be really helpful for those who on their profitability from sale of tickets and sale of F&B, which is your exhibition sector.
But digital cinema operators like us, service providers like us would have to wait for the past content to change the perspective that way. And therefore, we are really hopeful and things are also looking positive for this Q3, where the content is really having some good names in the next three months. So that’s the reason, basically, a good Stree 2 necessarily need not help us to immediately push my volume.
Aditya Karanth
Okay. Because I thought your business is directly correlated to success of Bollywood, right? Like because I mean when you have footfall increase in Bollywood, you should — it should show up on your.
Ashish Malushte
It is but with a lag. Aditya, what we’re trying to say is it comes with a lag. It is directly and directly linked with the success of the — or the way the content behaves in a way that it is able to get the footfalls in theaters because ultimately what advertisers are looking for is footfall. So this lag is always there, though it is directly related.
Aditya Karanth
Okay. And so — I mean, how should one think about your business? Like basically, like you had hits in this quarter, but it doesn’t show up. Next quarter, there may not be any hit. So then again, you will — nothing will happen. So like do you need like a sustained period of hits for advertisers to come back to this medium? Or what is the turning point?
Ashish Malushte
No, it’s not really like that. Currently, it is looking like that because, as I said, that for 1%, which we all are, we have to really make a lot of efforts to get advertisers to start looking at us again. But right now, it looks like it’s a game of content. [Foreign Speech]. But if you actually go back in pre-COVID period, this always was a situation. There will be a good content. There will be a bad content. But nobody used to really discuss so much about it and people used to go and start watching the films. What has now happened is for some period of time, people were choosing which content to see and therefore, the average consumption that which we always keep referring at five to seven movies a year is the average consumption of the typical cine goer, that also was reduced.
Now honestly, it’s a change in habit and we were waiting and seeing whether it’s sort of a permanent in nature, which would have been disastrous. And I will just give you one data point, which will not make me speak more about it. But in the last three months, you would have seen so many rereleases and rereleases doing good. In fact, Gen Z also is going and watching a movie of 1990. And that — what it is telling us is people really want to go out in the theater and have some good time there, okay? That’s not necessarily they have to chase a content and go there. So hopefully, this consumption pattern goes back and when I’m seeing five, seven movies a year, people keep watching. And there’s not much of discussion continuing on social media about [Foreign Speech] and all that. If that happens, we go back to a normalized consumption scenario. A normalized consumption scenario will help us to go back to the advertisers and get a higher allocation. That’s it.
Aditya Karanth
Okay. No, thank you so much. That is very helpful context on consumer behavior. Just maybe two questions. I’ll lump them together. One is, can you just help understand like, however you define it, but like free cash flow, how much does this network throw off in terms of cash if you look at — let’s say you’ve normalized your acquisitions and so on. And — what is the free cash flow generation of this business pre-COVID and now what is it? And you can define that as cash flow operations minus your, I don’t know, INR10 crores capex or something like that. But just give a sense of that first question.
And two, just on the percentage sharing number that’s still quite high, but — and so then again, you’re almost like working for the exhibitors rather than your network. But when does that normalize? And how does that happen? And what kind of timeline should we expect that to come to 45, 50?
Ashish Malushte
So let me take second question first. We try to actually address this Aditya at length that how from 85% you have come down to 69%, and why the sharing itself is at so high level because we are trying to improve the quality of network and we are successful. We have over 2,100 multiplexes on our network today. And that’s the reason why the commitments were higher. And as the revenue goes up, the percentage sharing would keep dropping down. That’s an elaborate decision, I would request my IR team to connect with you and share those details with you what we discussed. So that there’s no repetition for the rest of the investors on the call.
The first question that you have said, I’d like to slightly tweak — instead of just telling you what my cash generation was, what it is today, let me try to put it slightly differently. And if that helps, good, otherwise, I’ll go back and get you the actual data. Of course, that’s there in public domain. The way to look at our business is, today, what you are seeing is we are making some amount of profitability well at EBITDA level. At PAT level, we are really — we’re almost there. But from hereon, the trigger for pushing the revenue and profitability up is only and only the volume and the pricing of the advertisement minutes. So from my current 2.7 minutes per show, if I double theoretically, if I double it the volume and double my pricing, then I’m looking at 4x the same sales, whatever sales I have done, 4x of that will be my new sales.
And against that, you don’t have equal proportion of expenses such as sharing. So that is what, almost 50% to 60% — 55% to 60% of my incremental revenue would directly go in PBT. And against that, there is no compulsory capex that we have to do. We are basically milking my network. So you can consider whatever my numbers are showing you on a six-monthly basis as a minimum base, and then you can have your own estimates about where the volume and pricing can go of ad sales, and around 55%, 60% is going to get into our PBT. And that is nothing but your free cash after the taxes are taken out.
Aditya Karanth
Okay. Any specific ballpark in terms of past and the future. Assume like — I mean, I just assume normalized pricing normalized because you don’t know what the market clearing price is for your network right now. But if you assume like, maybe 10%, 20% higher pricing, 30% higher volume, like what is your cash flow come to something like that?
Ashish Malushte
So first if I have to actually do that, I have to give a guestimate about where I’m seeing.
Aditya Karanth
Yes, just guestimate, yes.
Ashish Malushte
Assume the pricing pro and when. And that’s the reason why we generally — or rather we have never given that indication. But if you do this math, which is simple excel. I mean you take current base and incremental revenue, 55% of that goes in bottom line, revenue to be determined by minutes and the spot rate.
Aditya Karanth
No, no, I’ve done the math. It is just that those numbers have not turned up yet.
Ashish Malushte
Yes. Actually, we have come a long way from where we were in the middle of the pandemic. And I think I keep saying that we have a slow path of recovery for all of us, and we are also one of the exhibitors — I mean the industry players. Now on, I think we should start seeing a major push.
Aditya Karanth
Yes. No, good luck. I think it’s still undervalued, but it will hopefully come through. Thank you so much.
Ashish Malushte
Thank you. Thank you.
Operator
Thank you. Next question comes from Ashish Goyal from Maxrock Investments Private Limited. Please go ahead.
Ashish Goyal
Hi, good afternoon and my festive greetings to the management. I have a couple of questions. Am I audible?
Ashish Malushte
Yeah, yeah.
Ashish Goyal
So my first question was on the sale of equipment business. So this piece has been doing good for us for like since the COVID period. And what would be the primary reason for it? And is it sustainable in the long run?
Rajesh Mishra
Yes. So the sale of equipment business is done in two regions. One is in our Middle East operations and also in India. Largely, the business is in the Middle East for the sale of equipments. And this has been pretty much a steady-state business for us. And in India also, as the aspirations of the cinemas are increasing and more and more people are entering into this business, they are also looking at buying of the equipments. But when they buy the equipment, they need an integrator to, one, sell them the equipment, maintain them and also provide them business support services like providing content and advertising sales. So this is also something which we encourage because this allows us to participate in the business without investment from our side, but still gives us value on the sale of equipments over here. So this is something that we would look at pushing in the future also. And as far as the Middle East is concerned, I think Saudi Arabia, when it opened up last year, it had a very decent uptick over there. And we expect to see good volumes in that region from that perspective also. So increase in the sale of product is a good indicator and something that we look forward to.
Ashish Malushte
Just on number fronts. In this quarter, you see INR22.5 crores of sale of product revenue, and almost margin on that is INR5.7 crores. Of that, out of INR22.5 crores, almost INR17 crores is in Middle East operations. And out of INR5.7 crores, INR4.7 crores is in Middle East operations profit — margin I mean, not the profit, direct margin. So in this quarter, the Middle East has contributed significantly higher.
Ashish Goyal
All right. Thank you. That was helpful. Second question would be on the screen addition front. So just trying to understand that we have added few screens and more of our — now screens counts are like the multiplexes, which we call the Prime screens. So I just wanted to understand how is this increase helping us in the overall business as on the face of the revenue, we don’t see much of a movement on that. So if you could just help us understand to put the numbers together.
Ashish Malushte
So, sorry, you mentioned that there’s an increase in screens?
Ashish Goyal
I’m saying in addition of new Prime screens, the multiplexes and maybe some movement in the new screen count. How are they going to help us in our core business?
Ashish Malushte
So firstly, your observation was the new screens adding is not adding to revenue. So on face of it, the revenues have not moved, but at the same time, the unfortunate fact of the industry was in this period, not many screens also closed down. So in one of the questions I had given data point where I said that in Q4 FY ’20, my screen count was 3,792, ad screen count. Today, it is 3,735, so almost 60 screens down. This is in spite of adding not many new screens. And why I’m saying so, while the screen count is almost there, my multiplex screen count has moved from 1,565 to 2,122. So almost 600 screens I have added in my network which are multiplex categories.
When I say those got added, but my number of screens overall remain the same, which means other category screens closed down. So what happens is when some of our revenue streams such as rental and CDC is directly linked with the number of screens because we don’t have a differentiated rate there, which is directly linked with the quality of screens as such, some correlation is there, but not a very direct link. So therefore, overall, my number of screens have remained where they were, and therefore, these two revenue streams would also remain where they are. But a better quality network helps us to position ourselves better, as I said in the previous question before the advertisers. And that is what should start happening from now.
Ashish Goyal
Okay. Thank you. And that’s — that is it from my side.
Ashish Malushte
Thank you.
Rajesh Mishra
Thank you.
Operator
Thank you. [Operator Instructions] We have a follow up question from Ankit Kanodia from Smart Sync Services. Please go-ahead.
Ankit Kanodia
Thank you for allowing me a follow up. So I just need to ask one more question. Since our share price has come down sharply in the recent months, and we have a good enough liquidity. Are we having any plans of maybe announcing a buyback at this price, at this valuation, given that we believe that the medium-term and long-term outlook are in favor of us. So are we discussing on those lines?
Ashish Malushte
The answer to that is no. The liquidity that you see is basically what we have managed to get through — I mean, we’ve managed to get fresh infusion into company during COVID — towards end of COVID period. And actually that has helped us to have a very decent cash position. So today, we are still very positively on a net cash positive level. So there is no discussion around buyback. Even technically, there’s no possibility of buyback because I’m sitting on huge accumulated losses. So that is also a challenge. Anyway, keeping that aside, there is no discussion around buyback. We are more focused on currently getting the business back on track, both on screen addition front and more importantly, on the advertisement revenue growth.
Ankit Kanodia
Sir, I didn’t understand the accumulated losses part because I see the results are positive. How can accumulated losses you’re talking about?
Ashish Malushte
So the results that you see would be on account of share premium. And my business was — which were in first two years of COVID.
Ankit Kanodia
Got it, got it. Okay, sir. Thank you so much. And all the best.
Ashish Malushte
Thank you.
Operator
Thank you. [Operator Instructions] There are no further questions. Now I hand over the floor to Mr. Tushar for closing comments.
Tushar Pendharkar
Thank you. On behalf of Ventura Securities Limited, we would like to thank the management of UFO Moviez and the participants. Good day.
Operator
[Operator Closing Remarks]