UFO Moviez India Limited (UFO) Q4 FY22 Earnings Concall Transcript

UFO Moviez India Limited (NSE: UFO) Q4 FY22 Earnings Concall dated May. 27, 2022

Corporate Participants:

Kapil Agarwal — Joint Managing Director

Rajesh Mishra — President and Group CEO

Ashish Malushte — Chief Financial Officer

Analysts:

Shweta Shekhawat — Prabhudas Lilladher Private Limited — Analyst

Niteen Dharmawat — Aurum Capital — Analyst

Akshay Ajmera — Nirzar Securities — Analyst

Unidentified Participant — — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the UFO Moviez India Limited Q4 and FY ’22 Earnings Conference Call hosted by Prabhudas Lilladher. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Shweta Shekhawat from Prabhudas Lilladher Private Limited. Thank you, and over to you, ma’am.

Shweta Shekhawat — Prabhudas Lilladher Private Limited — Analyst

Thank you, Rutuja. On behalf of Prabhudas Lilladher, I welcome you all to the fourth quarter FY ’22 earnings call of UFO Moviez India Limited. We have with us the management represented by Mr. Kapil Agarwal, Joint Managing Director; Mr. Rajesh Mishra President and Group CEO; and Mr. Ashish Malushte, the CFO.

I would now like to hand over the call to the management for opening remarks, after the speaking, we will open the floor for Q&A. Thank you, and over to you, sir.

Operator

Management, your line is unmuted. Please go ahead, sir.

Kapil Agarwal — Joint Managing Director

Thank you, Shweta. Greetings everyone and thank you all for joining the Q4 and FY ’22 earnings call. This is Kapil Agarwal. Let me start first with the updates and highlights for this quarter for Q4. So Q4 ’22 was expected to start on a positive note, because of the overwhelming response to movies that were released in November and December of 2021. However, during the last week of December, as you all know the third wave of COVID had started to spread across the country. As an impact of the surge in cases and ensuing restrictions, some states orders it, the temporary closure of cinemas in January ’22, while many other states reinforced occupancy restriction. Due to this big movies that were supposed to release in January were deferred to a later date, and only some movies from the regional film industry were released. However, the impact of third wave was short-lived and cinemas that closed during the period has started to reopen in February ’22.

Even though the cinemas across India were operational in February, they were not many mass — big releases during this month except for some movies like Badhaai Do, Gangubai Kathiawadi etc. The actual flow of new releases began only in the month of March, towards the end of March and many mega hit movies like Kashmir Files, Radhe Shyam, RRR etc. were released and was successful in attracting audiences back to the cinemas. This is encouraging for business as it will encourage advertisers to increase their budget allocation towards in cinema advertising. In addition, the removal of occupancy restrictions in the first week of March gave ahead start to the recovery process and led to bounce back in the — in our CDC and VPF revenue during the month, month of March.

The decision to remove the occupancy restriction by state government was a welcoming decision, which — for which the industry had been waiting for since the beginning of the pandemic. This should now fast pace the recovery going forward. Another positive development that I would like to highlight is, the acceptance of select south movies in the northern circuit, which is — so now many more south movies leasing in north region, which is encouraging for our business. This is because earlier most south movies were only released in Southern region and we earned CDC revenue from there. Now as more of these movies will be released in Northern circuit it will offer potential benefit to our CDC revenues. We have been supporting the wider release of south and other regional movies through our distribution business in this northern circuit.

Going forward, we expect a steady flow, a steady revival in business as our CDC revenues have already seen a bounce back supported by steady release of the big films as I said earlier. Advertisement revenue has started, however, is expected to grow gradually. We believe FY ’23 to be a year of substantial recovery for the business, subject to no further pandemic induced restrictions.

Now coming to the headline numbers for the quarter and full year ended March 31, ’22, consolidated revenue stood at INR561 million in Q4 ’22 as compared to INR335 million in Q4 ’21. EBITDA loss in Q4 ’22 were INR119 million as compared with EBITDA loss of INR159 million in Q4 ’21. Loss at PAT level was at INR189 million as compared to loss of INR255 million in Q4 ’21. For full year FY ’22, the consolidated revenue stood at INR1,639 million as compared to INR922 million in FY ’21.

EBITDA loss reduced to INR472 million as compared to INR837 million in ’21. Loss at PAT level is stood at INR869 million as compared to loss of INR1,176 million in FY ’21. The consolidated fund the position of the company as of March ’22 is stood at INR1,190 million. On the debt front, the company continues to be [indecipherable] with net cash of INR320 million.

Lastly, I would also like to inform you all that as I turn 62 later this year, I have decided to step down from active management of the company. However, I will continue to serve the company as a Non-Executive Director. Mr. Rajesh Mishra who will presently President and Group CEO of the company will take over my role and is being elevated to the position of Executive Director. He has been associated with the company since inception and is currently responsible for overall operations of the company. I wish him the very best in future. I would like to take this opportunity to also thank all our stakeholders for their continued trust in the company during these unforeseen times.

With this I open the floor to take your questions. And I would request Mr. Rajesh Mishra, I’m welcoming him to this call today and I will request him also do and Mr. Ashish Malushte, CFO of the company to take the questions forward. Thank you.

Questions and Answers:

Operator

Thank you very much. [Operator Instructions] The first question is from the line of Niteen Dharmawat from Aurum Capital. Please go ahead.

Niteen Dharmawat — Aurum Capital — Analyst

Yes, thank you for the opportunity. So despite achieving a higher revenue, I understand that the COVID situation was there, but COVID situation was earlier quarter also. And despite having a higher revenue, the losses have gone up. I also see that employee benefit expenses have substantially gone up almost for two times. So what is that —

Rajesh Mishra — President and Group CEO

Speak out a little bit higher because we can’t hear you properly.

Niteen Dharmawat — Aurum Capital — Analyst

Am I audible?

Rajesh Mishra — President and Group CEO

Now it’s better and be glad if you can repeat the question please.

Niteen Dharmawat — Aurum Capital — Analyst

Sure, sure. I’ll do that. So my question is, since the revenue has gone up compared to last year same quarter and since we have some seasonality in our business. So quarter-to-quarter may not be a good comparison but year-to-year, maybe slightly better one. So the employee benefit expenses, I see gone up substantially during this quarter. So is this going to be the trend in subsequent quarters also? Or just one-off during this quarter that we have seen?

Rajesh Mishra — President and Group CEO

Yeah. So you’re right that the one of the biggest item of difference between Q3 and Q4 is the employee compensation expense, which has gone up by about INR8.87 crores quarter-on-quarter, but the thing that we need to bring to your notice is that in all through this two years of pandemic, the entire company had taken a very severe salary cuts and it was only when the theatrical business started opening up towards the end of December in ’21 before Omicron, we decided to reinstate the severe deep salary cuts where we had given, as a result, out of this INR8 crores of increase that you see INR4 crores is completely towards salary reinstatement. Additionally for two years, there was no salary hike that were considered and this was leading to a situation where company was, while the employees held back with the company for a long time, but some of the talent slowly started going away.And therefore, it was necessary to get them back into the salary increment stage. And as a result, the salary increments were rolled out in December, the impact of that was close to INR2.3 crores. So both these impacts put together is about INR6 crores, INR6.5 crores out of INR8 crores and the difference was annual incentives, which is more like a one-time. So if I have to answer your question the Q4 salary number which you see it’s more or less the number, which you will see going forward just about INR1.5 crores, which is more like a one-time expense that has come rest you can assume that as the base for extrapolating our salary cost for next year.

Niteen Dharmawat — Aurum Capital — Analyst

Got it. So considering the business situation now in Q1 for the current financial year, would it be fair to say that will turn EBITDA positive during this quarter?

Ashish Malushte — Chief Financial Officer

So this quarter certainly will be a challenge, because we are still slowly getting out of the problem. So you must appreciate that the film industry certainly has come back with a big bang and that’s a very, very big positive for us. Never ever we have seen that consistently for four months back to back you have releases which are backed by audience and theatrical collection is significantly going up for every movie. Previously, we used to have annually few such hits, but here in three months you have back-to-back four, five such hits. So it’s positive for exhibition industry, but the service providers like UFO for them to get the benefit, it will still have some lag and that’s exactly what we expect that as we progress, we should start seeing our losses reducing and then we will turn EBITDA positive, where a significant contribution is to come from advertisement revenue. You would see that my advertisement revenue is slowly coming back on track, but it will be some time before we could actually reach a stage of pre-COVID level or even a level where my EBITDA will turn positive. At this stage, we don’t want to give any estimate, but we are keeping all eyes on the consistency of the supply of the movies, which is pretty strong and the acceptance of audience. Because if these two things happen, the audience will coming back to the theaters will impact — will give the confidence to advertisers to look at this medium more positively, which we are seeing the trend and once that happens, the EBITDA positive stage for the company will quickly turn. But we don’t want to give any timing estimate for that.

Niteen Dharmawat — Aurum Capital — Analyst

Okay, got it. So, okay, I got it. So I’m not taking any prediction from you on the EBITDA front. But on top line front, when do you think that we’ll be able to go back pre-COVID level because most of the industries or other industries, which are impacted by COVID has started going towards pre COVID levels. So what is our estimate in terms of going back to pre-COVID level and since we have started some new business as well, some new offerings, like for example, distribution, now would have picked up. So when do you think this could happen.

Ashish Malushte — Chief Financial Officer

So if we annualize the question. Our revenues are comprised of critical revenues from rental, from CDC and from advertising perspective, with the coming back of the films into the cinemas the flow of content as Ashish just mentioned has steadily increased and there is a very good lineup going forward also. And this is now there has been a very good development that south films have also started fairing well in the Indian market, in the north belt, for the Hindi speaking markets. So this is increased the number of films or the big films and tent-pole films that will release in the North. So VPF revenue, CDC revenue and our rental revenue will very quickly come back to a normal and it is well on its way also even right now as you speak. Advertising revenue is something that will take time, because advertising was went on the backseat in the first quarter during the lockdown entirely in cinemas and there will be a time lag for the advertisers to come back into the situation. So two revenues that theatrical revenues for rental and VPF will move to pre-COVID levels by very soon. I would say, and advertising will take some times, especially the government advertising, which still has to see some uptick, whereas the corporate advertising is seeing good traction right now. On the government front, we have some concerns and that’s where we are working on that part.

Niteen Dharmawat — Aurum Capital — Analyst

Got it. Okay. Thank you and all the best.

Kapil Agarwal — Joint Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Akshay Ajmera from Nirzar Securities. Please go ahead.

Akshay Ajmera — Nirzar Securities — Analyst

Okay. Hello. Yeah, good afternoon. My question was regarding advertisement revenue is shown us 0.94 in your presentation. So this is less than one minute average minutes sold?

Rajesh Mishra — President and Group CEO

Well that is average minutes sold per show.

Akshay Ajmera — Nirzar Securities — Analyst

Yeah.

Rajesh Mishra — President and Group CEO

So that is, so what it says, on an average, we are selling less than a minute at this stage on our entire network in every show, this nothing but it shows the upside that is possible. Go and watch a movie in a premium multiplex, if we in a good festive period this can go as high as 20 minutes, 25 minutes sometimes, adding both intermission and in the beginning of the shows. [Indecipherable] opportunity which exists for the volume — on the volume front and this particular point in our presentation shows, would bring out where exactly we stand on our network, if nothing else, but it’s an indication of what kind of upside exist in the volumes.

Akshay Ajmera — Nirzar Securities — Analyst

All right. And the advertising sharing with exhibitors, the percentage is higher than earlier years. So is there some renegotiation with our exhibitors in the sharing?

So in our case, what happens is we also have a minimum guaranteed arrangements with the theaters — so what happen. So if there is a theater, it needs to charge the rental fee and against that rental fee, we take our advertisement right from them.

Rajesh Mishra — President and Group CEO

So in a normal scenario, that advertisement revenue that we earn should be shared in our pro rata — on a percentage basis. However, we also have a clause right, from beginning where we commit a minimum guaranteed some to them, which is generally equal to the rental amount. As such, the rental amount equals the costs. So the rental revenue is revenue and a minimum guarantee costs that gets nearly knocked off against each other. But where the same cost, when you’re comparing the minimum guarantee cost which is more or less equal to rentals, when you’re comparing only with the advertisement revenue in such COVID scenario that percentage was quite low, but as we — as in the current scenario, when the revenues are lower this percentage you will find more because only because of the minimum guaranteed. So to answer your question, there are no major deals where we have really renegotiated the — there would be some, but not many which would have caused this kind of a mood. This is primarily because the revenue line is currently at a lower level.

Akshay Ajmera — Nirzar Securities — Analyst

Okay. And we would have given some discounts on the virtual print fee or other charges in the pandemic. So, now those discounts are all gone away or we are back to full pricing?

Rajesh Mishra — President and Group CEO

Yeah, so you are right. During the pandemic, to encourage the opening of cinemas and for the films to release we had extended discounts in the initial period and also one of the reasons, was that many of the states look shutdown. They have not opened up the cinemas and even where cinemas had opened up, there was opening of cinemas with limited capacity. So in order to support the industry during those times we had extended discounts. But we are glad to inform that all the discounts have been removed. And currently, we are on full charge.

Akshay Ajmera — Nirzar Securities — Analyst

And one more question, we had also gone into a beyond distribution business. Can you share some outlook on that business?

Kapil Agarwal — Joint Managing Director

Yeah. So the distribution business we started actually during the pandemic period. And while we may need that we felt over here was that to help opening up of the cinemas someone had to take the lead to ensure that some content flows and that is where a chicken and egg situation happening and we saw this as an opportunity and we got into the distribution business. Now the distribution business, the way we have structured it and the mandate that we have the team is that it is a zero this low profit strategy with our dual aim to provide content to our cinemas, so which will help feed the cinemas and on the second hand once the cinemas that content that also provide traction to our advertising business. So with this dual purpose, we entered into a low cost zero risk strategy of distribution and primarily, we have worked with South Indian content and have helped them to bring them to the north Hindi speaking markets. And one of the basic offshoot of this that we are seeing over here, is that more and more South Indian language films are finding traction as you’re well aware and this will stand us in good stead in the long run also, because if you increase the number of films which is coming to the north market directly has an impact on our CDC and our advertising revenue in the future. As I said, distribution is dual purpose vehicle that we have used.

Akshay Ajmera — Nirzar Securities — Analyst

All right. [Technical Issues]

Kapil Agarwal — Joint Managing Director

Yeah. And till date we have released around 35 films of various languages.

Akshay Ajmera — Nirzar Securities — Analyst

What would be the revenue from that?

Kapil Agarwal — Joint Managing Director

The revenue is low because a lot of them released during the pandemic period and all that, but we have not incurred any losses. The revenue around that is — around INR63 lakh.

Akshay Ajmera — Nirzar Securities — Analyst

Okay. And could you give us some update on the a few — we have done a few new wins, then we have invested in a few companies taking small stakes for some update on some of those activity?

Kapil Agarwal — Joint Managing Director

Any particular ones you would want to mention?

Akshay Ajmera — Nirzar Securities — Analyst

So we have taken a stake. I understand. Our production company, which is supposed to become a co-producer to regional films, then we have a stake in our online library of information and plus we have some the initiatives where we have social media agency. We have a tie-up with them, a couple of those?

Kapil Agarwal — Joint Managing Director

Yeah. So we had invested in Mumbai Movie Studios Private Limited. This is a company, which it was primarily targeting low budget films from the regional market production. And it is designed to move into production of these films along with the producers on co-production model. So all of the films that were looked at under this company are in the name of where producers are already there and we invest a part of it and do it and take a position in the company. The typical way that deals that are looked and this is looking at the regional flow of content to the all India level and Hindi, our big budget films they carry much higher risk and even one failure rate of INR100 crore films can have a very drastic impact on company. Here we took a portion over here of very, very small budget films between INR2 crores to INR4 crores or something in that region. And we have released three films and under this category as of now.

Rajesh Mishra — President and Group CEO

Under MMSPL.

Kapil Agarwal — Joint Managing Director

Under MMSPL and we have had a good experience on these fronts, did not lost money on the new vehicles.

Rajesh Mishra — President and Group CEO

So here’s the objective of the intention is that basically was promoted by professionals in this field and therefore we decided to back channel. So it is operated independent of UFO. But for us, the major synergy advantage was, if the focus which they have giving impetus to the regional films of lower budget if we see that kind of genre and category picking up the production number, it directly helps us because as Rajesh mentioned in the last question, any increase in number of films first which it might be better VPF or CDC revenue. And more importantly, that leads to higher occupancy in the theater directly impacting positively by advertisement revenue. So in that direction, we have supported them. So therefore, we are more looking at whether, how many more movies, they can make and whether they can give that kind of [indecipherable] to other producers to create more movies. And simultaneously whatever profit is generated there, part of that comes to us and what we ever movies they have made super, they will make reasonable profit. They’re not lost money there so far.

Kapil Agarwal — Joint Managing Director

Our other expenses have shown a spike this quarter. Are there any one-off like in salaries and other expenses?

Rajesh Mishra — President and Group CEO

Yes. What we explained. Let me check the earnings presentation.

Akshay Ajmera — Nirzar Securities — Analyst

Yeah. Other expenses?

Kapil Agarwal — Joint Managing Director

Yeah, yes. So if you go to the earnings presentation slide, Slide 11, where we are giving consolidated financial highlights. Note which is about the provision that we have done for diminishing value of one of the investment that is a one-time effect of INR4 crores. My request to you and everybody when you’re looking at my Q4 EBITDA, when you’re looking at the core business EBITDA, this INR4.1 crores being one-time effect should not be considered for evaluating in your analysis. The performance of the company for Q4 as well as the full year as the INR4.1 crores.

Akshay Ajmera — Nirzar Securities — Analyst

What is this regarding?

Kapil Agarwal — Joint Managing Director

This is regarding one of the investments were, which was done before pandemic, which was we thought that it has a very and we still believe, as a synergistic value to us. Unfortunately during pandemic the whole film industry came to a grinding halt. So there were no revenues, which could be generated there. Now what happens is, while on the business front, you can — you will always have a view and you can see in a way where the business is leading to, but when you look at accounting, the accounting norms don’t allow you to carry the cost of the investment unless your current level or past performance is justifying it and as a result of which due to accounting reasons this provision in the value is required to be taken. So, currently, it is a provision and not a direct cost diminution in value. Hopefully, post pandemic now when the business is coming back on track for the entire film business industry when this company also turns around when it turns around we’ll be able to reverse this impact, but if it doesn’t go in that direction that probably this will be like permanent rig to us. But what you see now is that provision in the books is already made.

[Technical Issues] Besides that, is there any other reasons, because I think the other expenses have gone up substantially. So to give you a more realistic way of looking at my other expenses, generally, you can refer as SG&A. The full year number that you will see is about INR20 crores, sorry INR48 crores. And the quarterly number is INR20 crores. Yeah. So from this INR20 crores, as a requested if you knock off INR4 crores, there are two other items, which are more like a direct expenses you’ve come to a level of INR14 crores, it made cost of INR57 crores of SG&A. If you see my pre-pandemic level, the pre-pandemic level of SG&A was in the range of INR80 crores in FY ’19, INR77 crores in FY20. During pandemic, we had a very severe cost cutting measures, which led to pandemic level coming down in the range of INR42 crores to INR44 crores from a level of INR78 crores to INR80 crores, but as from Q4 onwards, the business is coming back on track. Most of these expenses are coming back in the same nature, which were there pre-pandemic. However, we are still able to reduce these expenses at many places as a result of which Q4 annualized is INR57 crores against INR80 crores of pre-pandemic level and we are expecting that as we progress and has completely the business comes back, like the rentals comes back, other expenses come back, probably INR57 crores annualized revenue level. We will move up by about 10%, 15%, 20% as we close the year, but still it will be lower than FY ’20 levels. That is where we have got down cost reductions or cost optimization during this year.

Akshay Ajmera — Nirzar Securities — Analyst

My last question is are we comfortable with the fund that we have raised or we may need to raise any more funds in the future for any?

Rajesh Mishra — President and Group CEO

Absolutely, comfortable, and fortunately for us finally and all of us the pandemic, we can safely say has come to end, Omicron was also one-month phenomenon. Now it’s only — the whole world is only growing in north in terms of coming back out of the pandemic problems. So same for us.

Akshay Ajmera — Nirzar Securities — Analyst

Thank you, and best of luck.

Rajesh Mishra — President and Group CEO

Thank you, sir.

Kapil Agarwal — Joint Managing Director

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Vakil from [indecipherable] Capital. Please go ahead.

Unidentified Participant — — Analyst

Hello, good afternoon. Am I audible?

Kapil Agarwal — Joint Managing Director

Yes, sir.

Unidentified Participant — — Analyst

Hi. So I just wanted to know regarding your opening remarks about the advertisement but business, you’re seeing a revival but currently right now there’ll be a time lag and the advertising revenue will take time to pickup. So I just want to know what could — when would you reach that INR200 crores top line that you did in the advertisement business, would it be an FY ’24 for that’s be right?

Ashish Malushte — Chief Financial Officer

Hopefully, soon. But at this stage, we got even three months into full period operation. Luckily, the advertisers have started coming back to this industry, not just us but also the premium demographic screens. So we really hope that it will be a fast-paced move from here. In one of the previous questions, we brought to your notice that volume headroom is very high. So keeping fingers crossed at this stage to give any estimate on timing is not really fair even to ask my advertisement team to say when we will reach that level. We should only see how the incremental progresses for last three months, it is quite positive, and we keep connecting with each other at the end of every quarter on these calls, and you can keep getting updates from us.

Unidentified Participant — — Analyst

Definitely. And so I just wanted to know also what is the operating cash flow for this quarter in Q4?

Ashish Malushte — Chief Financial Officer

So let me get this working done. In the meantime, if we can go to the next question. And we will connect back with you on the operating cash flow front.

Unidentified Participant — — Analyst

I also had — I want to know operating cash flow outlook for FY ’23 actually?

Ashish Malushte — Chief Financial Officer

That is something which we will not be able to give at this stage, which would basically mean that we will be giving an outlook on the business we normally as a policy don’t give, but we give very clear indication of how the business is heading on a long run basis on a short-term basis, but we don’t give the number estimates, but I can surely share with you through my IR team, the current level of operating cash flows if we may connect with you offline.

Unidentified Participant — — Analyst

Okay, no problem, no problem. Those are my questions.

Kapil Agarwal — Joint Managing Director

Thank you, sir.

Rajesh Mishra — President and Group CEO

Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of [Indecipherable] MSPL Capital. Please go ahead.

Unidentified Participant — — Analyst

Yeah, hi. Basically, I wanted to understand pre-COVID, what was your VPF revenue contribution in percentage terms? And just if you could give us a little update on the latest stance where users on paying these current VPF rates?

Ashish Malushte — Chief Financial Officer

So what we call VPF basically a content delivery charge, which we charge to the distributors for providing service of taking their movies into various theaters in a secured way and getting it’s played out there. Generally, we charge on a per show basis. So your question was, what was the margin there? So my request is, if you could go to — whenever you get a chance, if you go to our website in Q4 FY ’20 presentation, I’m telling you now, but you may not have it handy. So I’d tell you, which slide to refer to.

Unidentified Participant — — Analyst

No, no, I was asking how much is the VPF sales as a percentage of total sales?

Ashish Malushte — Chief Financial Officer

Yeah, okay. So that —

Unidentified Participant — — Analyst

COVID — in the pre-COVID standardize time?

Ashish Malushte — Chief Financial Officer

Yeah. So pre-COVID level in FY ’20 what we call as a distributor revenue was 31% out of the total pie. The remaining two were ex-EBITDA revenue and advertisement revenue. So that is the immediate answer to your question 31%, which was a pre-COVID level scenario and currently that proportion only slightly higher I suspect. So, currently, if you see distributor share is 58%.

Unidentified Participant — — Analyst

Okay. And what is most importantly what is the stock — I believe at some point there was some agitation from the producers and on the rates that they’re paying, so we prefer this virtual print fees. So what is the latest update on that?

Kapil Agarwal — Joint Managing Director

Can you repeat it? We can’t really —

Rajesh Mishra — President and Group CEO

Can you bit audible?

Unidentified Participant — — Analyst

Yeah, no, whatever I saying was, is there at some point there was some sort of agitation from the producers end on the VPF fees. So, and the intent of paying that VPF fees are not to the extent of which the fees, which is charged, the rate of the — rate which is charged, so what is the latest update, then the dialog between you guys?

Ashish Malushte — Chief Financial Officer

Yeah. So I wouldn’t say agitation. During the lockdown what had happened was many of the states have not opened up the cinemas and wherever the states had also opened up they had opened up with limited capacity and which was affecting their revenue earning capacity also, and there were request from people and also proactively we had given discounts on this front. So that the films could come — start coming to the cinemas. And ultimately — ultimate goal was to have the cinemas open up and the release of film flow to accelerate and towards the session and we had given discounts. But as I had mentioned earlier, we have stopped all discounts and we are currently charging full rates.

Unidentified Participant — — Analyst

So just to confirm, this was not an agitation on the aside it was a COVID issue, which cause this?

Ashish Malushte — Chief Financial Officer

Exactly.

Unidentified Participant — — Analyst

Okay. Okay, great, thanks.

Kapil Agarwal — Joint Managing Director

Thank you.

Rajesh Mishra — President and Group CEO

Thank you.

Operator

Thank you. [Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Ms. Shweta Shekhawat for closing comments.

Shweta Shekhawat — Prabhudas Lilladher Private Limited — Analyst

Yeah. Thank you. On behalf of Prabhudas Lilladher, we would like to thank the management of UFO Moviez and the participants. Good day.

Kapil Agarwal — Joint Managing Director

Thank you, Shweta. Thank you everyone.

Rajesh Mishra — President and Group CEO

Thank you everyone.

Operator

Thank you. On behalf of Prabhudas Lilladher Private Limited, that concludes this conference. [Operator Closing Remarks]