Good afternoon, ladies and gentlemen. This is Aaditya Mulani from the HT Media Group. I would like to welcome you all to our Quarter 3 Financial Year 2024-25 earnings webinar. As a reminder, all the participants will be in listen only mode. After we are through with the presentation, there will be an opportunity for you to ask questions. I now hand over to Ms. Anna Abraham, CFO, Hindustan Media Ventures Limited and Head Investor Relations at HT Media Group. Thank you, and over to you, Anna.
Thank you, Aaditya. Good afternoon, everyone. Welcome to our earnings webinar, where we will be discussing the results for the third quarter of the financial year 2024-25 of HT Media Group. On the call today, we have Mr. Piyush Gupta, Group CFO, Mr. Pervez Bajan, Head of Financial Controllership and Taxation, and members of our Investor Relations team. I trust that you had the opportunity to review the results of Hindustan Media Ventures Limited that it was announced yesterday, and of HT Media Limited released earlier today. Do note that our remarks during this webinar will align with the presentation slides. These slides, along with the financial statements, are available on the stock exchanges and can also be accessed on the investor relations sections of our website. Moving forward, please have a look at the cautionary statement, which is now on the first slide.
In line with our standard practice, we would not be providing specific guidance on revenue or earnings. The next slide gives a quote from our Chairperson on the company's performance of the quarter, and I quote, "The third quarter of the fiscal year bodes well for the overall performance of your company. Revenue grew in the annual festive season with a corresponding improvement in both business and operational metrics. On a consolidated basis, we reported growth in revenue and an improvement in operational profitability compared to last year as well as sequentially. Print advertising revenues are on the back of price and mix, seeing improved revenue growth. This, coupled with sustained control on our operational expenses, have led to margin improvement on a YoY as well as QoQ basis.
The quarter also saw our radio business post strong revenue growth because of non-FCT business, although margins continue to remain under duress. In the digital business, the company continues to post revenue growth and operational improvement. Sustaining this positive momentum across our three business areas and ensuring smooth leadership transition will be our primary focus in the medium term, while we remain steadfast in our commitment to delivering credible and trustworthy news and engaging entertainment content through our legacy platforms as well as new age product offerings." Quote end. We now have the agenda for the day. We will update you on the consolidated performance, as well as provide an overview of the current radio and digital business segments. Following the presentation, we will open the floor for Q&A. With that, I now hand it over to Mr. Piyush Gupta.
Thank you, Anna. Good afternoon, everyone, and welcome to our third quarter FY 2025 earnings call. We will be tracking your screen. As you can see on the webinar, the first chart is on the consolidated financial summary. As I just articulated, there is upward momentum in total revenue on an annual as well as a sequential basis. On a YoY basis, the revenue is up 9%, and on a sequential basis, it is up 11%. If you look at the EBITDA, which came in at a positive INR 46 crore, that is a 64% improvement on a YoY basis and a 42% improvement on a sequential basis. PAT came in at a negative INR 3 crore, which is a substantial improvement, and on a sequential basis, a 50% improvement.
Cash position remains extremely strong with December cash balance standing at about INR 940 crore, which is the same as it was last quarter. Deep diving into the business unit performance, let us have a look at the print performance. Advertising led growth in print segment revenue reflected improved momentum. Financials I have already tracked. If you can see the print also grew by 9% on a YoY basis. Circulation revenue, now that we are increasing a certain level of copies, so there is a certain amount of trade promotion which is going there, but our copies continue to be on an increasing path, came in at about INR 52 crore. The total operating revenue had a 7% growth at INR 387 crore. Operating EBITDA came at INR 42 crore and operating margins improved by 400 basis points.
Same situation is on a sequential basis where you can see the growth on top line at 22% and operating EBITDA growing handsomely to INR 19 crore. If we look at the ad revenue growth, in print business, English and Hindi, if you track the top left portion, the English growth is 14% at INR 181 crore. QoQ, it is INR 181 crore. Circulation revenue, if you look at it, is a decline of 22% at INR 13 crore, and on a sequential basis, it is down 18% for the reason that I articulated earlier. Looking at Hindi, the ad revenues are up 3% and on a sequential basis of 17%, and circulation revenue is a -6% on a YoY basis and a flat on a sequential basis.
If you look at the radio performance, there is a very handsome growth of 29% on the top line with a very good performance on the bottom line. If you look on a sequential basis, the growth is 46% and 88%, respectively. Looking at the digital business, which is a part of HT Media consolidated results, our top line grew by 32% to INR 51 crore, and the loss position improved marginally by 24% to - 26%. Similarly, on a sequential basis, it was down 7% on top line and - 14% on the bottom line.
Thank you, Piyush. We will now begin the Q&A session. You can click on the Raise Hand option, which will enable the moderator to unmute you for posing your query. Please introduce yourself before posing your query and kindly restrict to a maximum of two questions per participant so that we may be able to address questions from all participants. We will now wait for a few moments while the question queue assembles. The first question is from the line of Mr. Mohit Kumra. Please introduce yourself and ask your question.
Can you hear me, please?
Yes, Mohit, we can hear you. Good afternoon. Please go ahead.
Good afternoon. My questions are very specific to HT Media firstly, and very specific to the balance sheet, my first question at least.
Okay.
In your current liabilities, you have sundry deposits of INR 500 crore.
Okay.
What are these? Why do we need deposits? Are we a deposit-taking company? What is happening? I do not understand.
Let me give you a specific answer. You will understand thereafter. I am presuming that if you are using the balance sheet, you are using the 31st March or the September balance sheet, the second quarter balance sheet, right?
Of course.
Yes. So INR 588 crore of deposit that we take is consequent to our AFE business. If you understand the AFE business, we take deposits from our prospective advertisers in which we take an investment position. It is a reciprocal second leg of the entry on the AFE deal that they have done. We are not a deposit-seeking company under RBI, and we do not seek cash deposits. These are all AFE deals. These are ad for equity deals. Thereby, the counterparty gives us deposits, and accordingly, we subscribe with a similar amount to their equity or whatever financial security that we are taking.
Fair enough. I understand. Thank you so much. But on the same vein, I wanted to ask you announced yesterday also a bunch of acquisitions, so to say. Are these also all AFE, all of them?
They are all AFE, and they are not acquisitions. These are minority investment positions. They are all AFE, and they will also give rise to a security deposit like the one that you are seeing in the September balance sheet.
And your ad for property within the AFE, am I correct in assuming that this is, let us say, give and take INR 200 crore?
Well, we do not give the specifics, but you will be in the ballpark because there are two asset classes that we deal in. These are financial securities, which will be equity or any other securities, and the second asset class is equity. I do not have the exact split right now, but we do not even give that on our
Of course.
But you will be in the ballpark.
Sir, I am talking about property, ads for property.
When I say AFE, it is a generic word for both asset classes, equity and property. In the balance sheet, when you look at that security deposit number, that culminates both properties and equities.
No problem. I am talking about the asset side now, not the liability side.
Mm-hmm. Okay.
You have listed properties under two heads. One is investment property and one is held for sale. Both of these are your AFE properties, right?
Yes.
These are approximately INR 200 crore.
Okay.
Only the property part of it.
Fair enough. Yes.
You intend to sell all of these. There is no intention of holding on to them.
That's what the business is. These are not used for captive consumption, and we are not keeping this for a long term. As you understand the AFE business, the generic characteristics of the business is that most of these assets are for sale.
That is my balance sheet part. Can I ask you another question or should I get into the line?
I think please get in the queue if you don't mind.
No problem at all. Thank you.
The next question is from the line of Lalit Kumar. Please introduce yourself and ask your question.
Hi. Am I audible?
Yes. Hi, Lalit. Please go ahead.
Hi, sir. This is Lalit Kumar from BestMediaInfo. I just wanted to ask that as per the recent Dentsu report, the print industry has been shown on a decline and it is expected to go from 17% to 15% by the year 2025. I just wanted to know, is your strategy aligned with the ongoing trends and how is it that you are taking this?
This is a great question and this is one of the things that we keep on debating internally. Yes, we are aligned with the report. Those declines, will we track them to the T? Will we be better or will we be worse? Only time will tell. Multiple things which are happening here. One To extend the life of print, we have an AFE business, as you understand, which I was just answering to the previous caller. Besides that, we are diversifying our business in quite substantial way. This journey is not a new journey. It's been there for a while. The latest entrant to this journey is the OTTplay platform on which we are currently investing.
From, let's say, if I were to just broadly give you a perspective from about 8-10 years ago, where print revenues in the total revenue stream to constitute about 85% of the revenues. Today, they are less than 70%. Of course, print is still a substantial part of the overall consolidated revenue. Our diversification journey into digital, into radio, into other digital properties like OTTplay and Shine.com and Mosaic Media Ventures, et cetera, is something that is showing some traction. Obviously, we are investing with a very clear hope that we'll be able to diversify our revenue streams. Print has been under pressure for the longest time. It will continue to be so. At this point in time, it's still the core of the business at this point in time.
Thank you. Thank you, sir.
Thank you.
Thank you. The next question is from the line of Namit Arora. Please introduce yourself and ask your question.
Thank you for the opportunity. Good afternoon. This is Namit Arora from IndGrowth Capital. Sir, I have two questions. One is that you have a very strong balance sheet and significant access to cash. Given that, is there a thought process around taking more risk, in terms of creating growth avenues? I know you were alluding to some of them. But given the very comfortable financial position, are there adjacencies that you are looking at in the broad media space that you could be taking slightly more risk to deploy this cash to create growth avenues for the future?
Look, Namit, again. Namit, right?
Yes.
Yeah. Namit, again, another great question. As I said, look, I think everything has to be collaborated, not just from an affordability point of view, which is the cash on the balance sheet, but also where your right to succeed and where the right adjacencies lie. Being a legacy media company, which has a very strong brand presence, obviously we are extending ourselves into the digital news genre, and with news, we are also going into various other languages, which hitherto we were not there on the digital platforms. We are extending ourselves into other adjacencies like OTTplay, into Shine.com, which is a classified engine, into Mosaic, which is basically catering to our VC and our PE kind of a stage. So those are the things that we are doing.
Now, beyond a certain point in time, I do not think we would like to just deploy investment for the heck of it because there is something called a right to win and something called the absorption capacity. So at this point in time, I think we would like to focus on the things that we are doing and we would like to rather go deep than go wide on this. Our investments in OTTplay and in our digital businesses, and digital business is not part here. I am talking about the sister concern which is Digicontent Limited, are reasonably substantial and we will keep on doing that because really those are the avenues where we have a great right to succeed. We have a lot of skill because we have been doing that and our investments are currently tracking that.
Got it. This is very helpful. Thank you for your detailed and candid thoughts. I have one more question. With your permission, can I go ahead?
Please go ahead.
Okay. Sir, you have two listed companies now. I understand that one is a holding company with a 74% stake, but administratively and otherwise it is probably a little cumbersome. Any thoughts on rationalizing that or you think given the difficulties in the Indian environment you are likely to continue with both the listed companies?
No. Look, the simple answer is we would like to simplify things as much as possible, but given the Indian environment as you rightly alluded towards, these are a bit of challenges. But if we get, let's say if we manage to bring all our creditors and shareholders together, we would definitely like to follow that stream. But at this point in time, we are continuing the way it is.
Got it. Thank you for your detailed thoughts and all the best to the entire team. Thank you, sir.
Appreciate it.
Thank you. The next question is from the line of Hari S. Please introduce yourself and ask your question. Mr. Hari, you will have to unmute yourself. We will move on to the next participant for now. The next question is from the line of Narendra Khuthia. Please unmute yourself and ask your question.
Hi, am I audible?
Yes, please. Go ahead, Narendra.
Yeah. Hi. Thanks for the opportunity. This is Narendra from RoboCapital . My only question is regarding the radio business. Could you throw some light on where the radio yields are as compared to pre-COVID levels and what needs to be done to take these yields back to those levels?
That's also a great question, Narendra. The simple answer is no, they are still struggling versus the pre-COVID level. There are multiple things that we are trying in the marketplace. Of course, taking yield at this point in time where the digital music or the digital audio is gaining so much traction is not an easy journey, but we are on it for the longest time, and there is some improvement in this quarter's result on a YoY basis. Of course, that doesn't take us to a pre-COVID level at this point in time. However, from an overall audio business perspective, there are a lot of new initiatives that we are throwing into the mix.
If you see the handsome growth that you see this quarter, it's primarily driven not just by on-air properties but by off-air properties as well, including events and various other adjacencies which sit very well with the radio business. So yield is definitely top of the agenda, but it's a marathon. I mean, it's not a sprint, so we are at it, and hopefully sooner rather than later, we'll be able to bring it up to a pre-COVID level, which has been the stated intent, and we are at it, but we're still far away from the pre-COVID levels.
Okay, sir. Could you share some steps that we are taking towards this, if possible?
Sorry, come again. What's your question?
Yeah. So I was asking, could you share what all initiatives are we taking to do this right?
So multiple. Look, I think, on the digital platform, we are taking our audio properties digitally because a lot of customers are shifting digitally. That is where we are now also trying to capture our customers and our listeners so that the revenue basically can come from a different stream. We are doing a lot of events, musical events in various cities where we have got a radio property present, which is an auto extension of a terrestrial radio property. That is the other thing that we are onto, apart from obviously the yield management and the inventory management that we are at any point in time. Also the point to be understood is radio is a very heavily regulated business and there is a lot of royalty and license commitments and fees that we have to pay to the government.
There are various proposals that at the industry level are pending with the government to take some ease off the sector. Some part of that, the government has already relented, and the balance we are hoping at some point in time will be given. With those things coming into being, the economics will change very substantially for the better, of course, but that is only something that time will tell.
Okay, sir. All right. Thank you so much, and all the best. Yeah.
Thank you.
Thank you. The next question is from the line of Yash R. Please introduce yourself and ask your question.
Hello.
Yes. Hi, Yash. Please go ahead.
Yeah, hi. First of all, congratulations for the good set of numbers as far as ad revenue numbers are concerned for English. We've done well, so would like to know the reason behind it. What are the verticals that have contributed and whether we have this revenue on account of a greater volume, or is it because of pricing that has improved drastically?
Okay. So let me request my colleague, Anna, to take this question. Anna?
Yeah. The volumes in the advertising market this quarter were not very robust. It is pricing and mix that has helped in the revenue growth, as was articulated towards the first part of the conversation. This is a festive quarter, so that helps a plenty. We also had a lot of initiatives and events during this quarter as well, which also helped us garner our additional revenue.
Okay. Sorry for cutting in. I did not make myself clear. My question was with regards to previous year, so I can see a decent amount of growth at 23% over previous year as well. I understand that quarter-on-quarter would not be comparable because we have festive during this quarter. But what about the comparison versus previous year?
I was actually giving you the comparison versus previous year only. Market volumes have not grown versus previous year. However,
Okay
we have been able to grow pricing. It is a combination of the absolute price increase as well as the categories, because there is a difference in pricing between categories also. So there is a mix impact, there is a pure pricing impact, and as I mentioned, we have been able to garner more revenue from special initiatives and events this quarter vis-à-vis quarter of last year.
And if I may just add to what my colleague just said. Look, as I was explaining to one of the other participants on this call earlier, the industry reports are also not predicting an exponential growth in the print revenues.
Right
which is how we stand out in terms of volumes. Really the next lever that we have is on the pricing, which Anna is alluding towards. So, we've been onto pricing, but given the festive buoyancy, et cetera, that was a good opportunity, and we managed to capitalize very well on that. So that's definitely given a flip to the P&L. The other initiatives which Anna was articulating are these various events and off-air or off-property events that we've done, which helped us garner handsome revenues.
What events would these be? If you can just give an example.
We have multiple events ongoing that happen both in English markets and in Hindi markets. The Leadership Summit is a big event that we had. We also have other initiatives like in the HT Mindset Hub, which happened this quarter.
Okay. Which are the verticals that contributed to the growth?
Well, both of them contribute.
Yeah. We do give segment financials, so you can see that. Print and radio have both grown.
Okay. No, I am talking about the print vertical per se, print business per se, English part because I can see a comment that says- Key commercial categories except FMCG, BFSI, and industrial. There has been no word on the sectors that have done well or the categories that have done well.
Most of the other sub-sectors have grown well. Auto has done well, real estate has done well, retail has done well. We've only quoted the ones which have not done well.
Okay. That's great. What about the circulation revenue? I think I missed that point. Why is there a degrowth, not just versus previous year, but previous quarter as well? Is this because of the drop in copies?
Well, not exactly. As I was explaining to your colleague earlier, we are on a journey to increase our copies in the marketplace, and for that, we are giving a certain amount of discount as initial discount for the copy. That's bringing down the circulation revenue. The realization per copy to that extent is coming down slightly, but we are increasing the number of copies with the hope that our circulation can increase.
What about the copies? Are they flat versus previous quarter or where is it?
No. So basically versus previous quarter, they are going up, but on the revenue, you will find that the revenue is going down because there is a cost associated to that which is coming, which is only the initial cost. Once the copies have become structured, the cost goes away and the copies stay.
Okay. So the cost is just the discount is what you are talking about, right?
Yes.
Okay. All right. That is about it from me. Thank you.
Thank you. The next question is from the line of Mehul Parikh. Please introduce yourself and ask your question.
Good afternoon, Piyush and Anna.
Hi, good afternoon, Mehul.
Yeah. Okay. One of my questions is, the tie-up that we have with BSNL, where we are offering OTTplay on BSNL network. They are offering it free to their subscribers. Are we getting paid for something or is it a per subscriber or is it a lump sum amount?
Mehul, first of all, that tie-up is having a sputtering start. BSNL being a government organization, is into various discussions with us, so the full-fledged tie-up has still not come into the being. But whatever services that we are providing to them, we are getting paid. So BSNL might be providing it to their customer base, et cetera, for a discounted price. But whatever services we are providing at this point in time, we are obviously getting paid for it. But as I said, that tie-up has to come into full bloom. It's still not there.
Okay. Are we expecting it to happen?
Well, it's a multiple discussion process, discussion with Bharat Sanchar Nigam Limited. Bharat Sanchar Nigam Limited is discussing with a lot of service providers, so we will have to wait and watch.
Okay. And the expenses on OTTplay that we are doing every year, are we expecting it to go down in future or continue at this levels?
No, go down for sure.
Okay. Thank you very much.
Thank you. The next question is from the line of Vedant Bhasin. Please introduce yourself and ask your question.
Good afternoon. Am I audible?
Yes, please, Vedant. Please go ahead.
Yeah. Hi. I would just like to ask one question related to the events. You alluded to the fact that you have got significant revenue coming from there. But if you can just detail which segment would this additional revenue be under. Would it be under the print or radio? And how much would that be? If you could just quantify it.
Well, it will be under both the segments, but I will ask Anna to give you the details. Anna.
Yeah. We have it under print and we have it under radio. We will not be able to quantify it for you. But across categories, we have had advertisers participate in the initiatives. In print, we have had it in Hindi locations and in English locations. It is nothing. Every quarter we do have similar initiatives. It is not as if this is specific to this quarter. Just that it is two scaled events happened this quarter and it happened together. Otherwise, every quarter we do have some level of events happening.
Okay. All right. If I can just understand from the events side, would you say from your margin standpoint, is this more or less accretive than the normal, maybe print ad volumes or radio ad volumes?
Well, one thing that you need to understand is, well, they are all different. First of all, there are some events which are continuing for a very long time, like the Hindustan Times Leadership Summit. These things will already have an IP created to that, so they will have a better margin. There are some that we are doing very tactically. They might or might not have a margin. And some we do to garner a certain amount of revenue to make a segue into a certain segment, which might be at a marginally negative margin also. Basically, if you want to paint a general picture, I would say the on-property revenue will be generally always more profitable because it's automatically got a brand associated with it. But if the event has become branded over a period of time, obviously it can come to those levels or exceed.
But the ones that are done tactically for a specified reason might or might not have those kind of margin profiles.
All right. Understood. Thank you very much.
Thank you. The next question is from the line of Mehul Pathak. Please unmute, introduce yourself, and ask your question.
Hello, Anna, Piyush, can you hear me?
Yeah, Mehul, please go ahead.
Yeah. Congratulations on a good set of numbers on the top line.
Well, I'm happy, Mehul, that you're happy.
No, I'm not happy. Am I happy?
Well, as long as you smile, I'm happy.
No, the ad revenue going up is definitely a pleasant sign.
With your good wishes and your blessing, Mehul, we'll be able to take it even further up. Let's see. This is not a forward-looking statement. This is just to you.
Okay. Two questions. The first is that other expenses on a half-yearly basis are up INR 80 crore. I have usually seen that whenever top line goes up, the bottom line also significantly goes up, and therefore accretion to the bottom line is just not happening. Some color on-
Yeah, we are also Okay, Anna wants to say something.
Yeah.
Please let me complete my question. Some color on the bottom line, on the expenses first with some breakup, if you can share as to how much of that is strategic and how much is to generate revenue. For example, if it is strategic, the other expense, then I would say that, okay, in future it might give. At least some, I would say, color on the management thought behind the increase in expenses. The other thing is when can we hope that the top line will grow faster than the expenses? That is question number one.
Okay, Anna, go for question number one.
Yeah. Mehul, the other expenses cost that you are seeing is largely on account of our investment in OTTplay. Because except for salaries, all the other costs of OTTplay tends to set in this particular line, and therefore, and OTT is also a separate segment, so you can see what the costs are, and therefore, most of it, and that is really the reason for our increase in cost and some related investment costs on account of the events. Every other cost is completely under control, and in line vis-à-vis this. That is the answer to your first question.
When will we start seeing the rate of change of top line has to be higher than the rate of change of expenses. five, six years we are waiting. When will we see that happen?
Mehul, let me try to triangulate 2 or 3 conversations here. One of our other investors on this call was basically talking about making investments in future-looking businesses, which is currently the OTTplay, and the digital business, which is not sitting here. But that is where it is going, right? The second thing is how do we bulletproof or hedge our print revenue schemes, which are under perpetual pressure, and the pressure has only gone from bad to worse post-COVID. Now, the whole thing is there will be some tactical plays, there will be some strategic plays.
Now, if you basically break down the segment separately, if you look at the print revenue separately and divorce that from the investment P&L of OTTplay, et cetera, you will see that the operating leverage, really what you are talking about is indeed in this quarter on the print side flowing down to the bottom line. So the revenues are growing much faster than the expenses. But what vitiates the picture is because OTTplay expenses are sitting, which, by the way, themselves on a YoY basis are 65% lower than the same quarter last year. But there are still substantial expenses happening there. And that is a business for future that we are on the journey of creation at this point in time. Hence, that is vitiating the picture. But print itself, the operating leverage is flowing.
Now on the investment P&L, we are very prudently making those investments in a calibrated manner to see that the outcomes really impact. If these businesses do all scale up in the next four, five years, then of course you will have that operating leverage flowing from all the business and all the revenue streams.
We are not. We are saying using the word if.
Well, if this is five years, I mean, I cannot give you a five-year statement. What I am saying is we are investing for a business we believe will create a long-term sustainable value creation for all shareholders. We are on this journey, and we have been transparently sharing with all our shareholders. Whether that will go into a 30% EBITDA business or a lesser or a more number, only time will tell. We found the space, and we are very diligently investing in the space. Let us see what eventually comes out when this business becomes mature.
Thanks, Piyush. Can I ask my second question or I go back into the queue?
If you can go back into the queue, Mehul, that would be appreciated.
Okay, fine. Thank you.
Next question is from the line of Mohit Kumra. Please introduce yourself and ask your question.
Can you hear me, please?
Yeah, Mohit, please go ahead.
Hi. This is specifically related to OTTplay now. You do not give a lot of forward-looking statements, but it is common knowledge that there are about 125 million paying viewers in India for OTT in all. YouTube and Netflix and what have you, everything in the world. That is a roundabout figure. Can somebody looking at your company or investing in your company at least assume that you will take 1% of that market out of 125 million? Is that a fair assumption to make?
Well, that is definitely a fair assumption. I think it will be more than that. But one thing, if you want to pull up that equation into economics, you will have to basically from the total addressable market, you will have to go to the value proposition, that is what is the subscriber paying you. Then you will have to basically go into the cost of acquisition and then saying which are the mature subscribers who are now coming, let us say, on an automatic-- because you are talking about YouTube and Netflix, most of these are on an auto-renewal property. We are definitely addressing more than 1%, but at this point in time, there is a certain ARPU and there is a certain acquisition cost that we are getting out of pocket on, and those are the metrics which have to go up.
The addressable market will definitely be more than 1%, because if there are 125 million or 12.5 crore people there, with a bouquet of 30-plus OTT that we are giving them for a fraction of the cost of the sum of parts, we will be able to address a much bigger market than 1%, for sure.
I am just trying to be pessimistic at the moment, to be honest. Let's say 1%.
Yeah. No, fair enough. Call that as your baseline, but I am saying we will move beyond the baseline there.
You will be very disappointed if it is 1%, let's say, in two years, three years. You will be disappointed, at least.
Well, me personally, absolutely.
Okay. All these are ballpark figures. As of this moment, your digital, if I analyze your nine months, it is approximately INR 50 crore, your revenue. If I just take an average of, let us say, INR 200 ARPU, I went to your site and saw the different schemes. You have approximately two lakh users right now. Am I correct in that or is that compounded?
Yeah, well, that is not correct, but we will not like to share that on a public call. That number is not correct.
Okay. I will not try to trick you into telling me something. My first question was that it is reasonable to assume that if this business is to be successful, you will have 1% of the market, let us say 10 lakh users, let us say INR 200 ARPU, let us say, in a couple of years, you should at least be doing INR 200 crore-INR 250 crore of business per year from this stream, if you want to be.
I absolutely agree with your broad calculation. I agree.
Fair enough. When will this expense of yours absolutely See, running any business, you switch on a tube light in your office, your expenses are always there. But when will the chunk of the expenses peter off in this? Because you initially told us in previous calls that you had been expensing everything. Nothing is capitalized in this business. Everything is expense, right?
Yes.
When do we expect this to peter off, the expenses?
Well, if you just compare the segment on a YoY basis, the expenses this quarter versus the third quarter FY 2024 are down 65% if you see that. Right?
Yes.
If this journey continues, you can already extrapolate how the numbers will go forward. Now, the only trick is, expenses again, you will have to break down in two or three big buckets, right? Some will be direct expense, which is the CAC kind of expense, cost of acquisition of customers. Then basically, renewal has a certain kind of expense, and then you have the SGA kind of expenses, right? So the moment the product itself establishes and embeds itself into that 1% or 2% or 10% or what have you, the CAC itself goes away, and then obviously, the economics change very substantially. The only other second part outside of expense is the ARPU, as you are talking about, INR 200.
Now, if it is 200, it has a mix of people who are currently on a discounted scheme, people who are currently on a full-price scheme, and everything in between. Once that number settles at somewhere close to 200, as you are saying, the economics become very different.
I would also-
Sorry to interrupt. May we request you to fall back in queue for follow-up questions, please?
There is no follow-up question. I was just having a discussion with him on the same point.
Okay. You can have one last point to make.
I would like to sort of register what you can only call as a complaint right now. There is a Mr. Avinash who is the CEO of OTTplay separately, right?
Yes.
Now, his interaction with the public, if you just make a simple Google search and he has interviews with other people, if you go to the news part of the Google search. This is discussed, and I have said this once before also in some two, three calls ago. Whatever he says in public, your shareholders have a right to hear that directly from you or from him. Since this is becoming a very big part of your business, I am sure all your investors would deeply appreciate if Mr. Avinash was here to answer questions. Because if you just Google right now, there is an interview with somebody called MediaBrief.com in which he is confirming that the thing that BSNL has done, and he is confirming that some big event on live sports is going to come, a big announcement is going to come.
Don't you feel that your investors who come on this call deserve to hear it before anybody, A, and directly from him, B? All this. We should hear this, right? You are very steadfast in your-
Okay. We have heard your point. What you hear on this call is factual, and which should be what is taken as the correct picture. We are the representatives of the company to be able to disclose this information and to give you the factual position.
He is the CEO.
Yes, I get it. But there are sometimes expectations also which are conveyed. Therefore, if at all you want facts, please take what we are saying as facts. In the meantime, we have registered your point. We will ensure that the street is not getting many different information, but the factual information, please refer to our call.
Thank you for your time.
Thank you. The next question is from the line of Hari S. Please introduce yourself and ask your question.
Am I audible, sir?
Yes, please go ahead.
Okay. This is Hari from Individual Investor. My question is regarding this cash holding has increased for this quarter. What is the reason? The second one is regarding this holding, like adjustment, cash for adjustment, because it has become a huge investment, like maybe it should be reported as a separate head because are there any provisions being made on the investments or are they in a profit or not? That would be helpful, sir. Thank you very much.
Yeah.
Hello.
Yeah, we heard you. I think there was a bit of a disturbance, but let me try and address what we thought we heard you. There has been cash generation on the back of better operating performance of the company, better working capital release, and you were alluding to the investments that we do as part of AFE, I think. There also, as Piyush articulated earlier, the journey is always to ensure exit and generate cash. On that also, we've been successful. All of those has contributed to the better cash that you're seeing in the books, and we've reported that as well. Whenever we publish our financials, any provisions, et cetera, are clearly separately called out, so you have information on those. Any mark-to-market movements are also reports. Any profits that we make are part of our other income.
I think all appropriate disclosures are in place as and when we give the detailed financial statements and the balance sheet.
Okay. Thank you very much.
Thank you. The next question is from the line of Yash R. Please introduce yourself and ask your question. Dear participants, I would request for follow-ons, please limit yourself to one question only.
Okay. Hi. So with regards to the staff cost, I can see there is a slight uptick in the cost versus previous quarter. So that would be around 4%-5%. What's the reason behind the same? I mean, since it's a bit
You mean the previous quarter sequentially versus the second quarter, you mean, right?
Correct. So it was, if I am not mistaken, it is INR 140 crore. So there's a small uptick. It's slightly lesser than 5%.
Yeah. We had in quarter 2, there are some variable components which we acquire on a half yearly basis which there were some reversal in quarter 2. Otherwise, as adjustment for the reversal, it is a flat cost.
Okay. Just one more question. Can you give us the copies that are there per se for the quarter for English and language per se?
That is not an information that we disclose.
Okay. All right. Yeah. Thank you.
Thank you.
Thank you.
The next question is from the line of Mehul Pathak. Please introduce yourself and ask your question.
Mehul Pathak, independent investor. Can you hear me, Piyush, Anna?
Yes. Hi, Mehul. Please go ahead.
Larger level question, and that is last five years, INR 700 crore of net worth is gone. It is wiped out. Last three years, I am a little disappointed with the chairperson's statement for the quarter. There is nothing in it for the shareholder. Yes, certain business-related micro statements are being made, but now it is last three years, salaries have increased in the company. Salaries have gone up, let us say, from INR 329 crore in 2021 to INR 413 crore now. It is almost a INR 90 crore increase in the last three years. Internal stakeholders have been kept happy. External stakeholders, even now there is nothing, and I do not think even this year there is likely to be a dividend. When I look at the performance, it is not going to happen.
I had this call with Anna, and there was another gentleman in your company where I had requested that I would like to know, does the company have an internal goal for all their senior executives or at least for the board on return on capital? What is the purpose of this business? Why is it running? If the cost of capital in India is, let us say, 12%, if you are below 12%, the business does not have a right to exist. What is the purpose of running a business that will never make 12%? And 12%, if you see on return on capital, may mean around INR 200 crore of net profit from here. I do not see that happening.
On the other hand, money is being retained within the business, and you all are investing in various businesses, and return on capital is not visible to me as a shareholder. Did Anna have a chance to-
Yes, of course, he had a chance. Let me try to address. There are two parts to this question, Mehul. I totally hear what you are saying. On the ROCE point, I totally heard what you are saying. If you have got serious points, I think you should definitely bring them to the AGM. Happy to have a discussion on that. But coming on to the net worth is gone, therefore, the market capitalizations might be various places. I do not want to say this whole stuff, but you look at various other listed media companies, and you can look at the market capitalization of them in 2018, 2019 before the pandemic, and now.
There is a bit of a challenge, and that is the only reason that we are trying to, because of a strong balance sheet, invest in our forward-looking businesses such that the growth and the ROE and the return on invested capital, all those matrices can show up. Now, obviously, we are trying our level best, and these are all thought-out decisions which are happening with every stakeholder in the way we are transparently bringing it to all our investors every quarter. Now, whether the switch will flip in one quarter or one year, it is really tough to say.
But with all earnest, the management is putting their best foot forward. On the market capitalizations, et cetera. If you just look at the comparative set in the listed space of print media companies and radio media companies, et cetera. You will see that we are much lesser impacted.
But because we had a strong balance sheet, we have a wherewithal to invest in future-looking businesses so that we can create long-term value for all shareholders, majority and minority. Regarding your other point on the employees, et cetera. I do not think we are giving anything other than market-dictated increments here. We have gone through multiple rounds of rationalization before COVID and after COVID, but that is where we are, and I do not think it is fair to compare that we are not doing anything for the external shareholders. We are very diligently trying to build businesses for tomorrow. Now, how they will pan out, we will transparently keep all the shareholders in the know. But we will not be able to predict what will come out in the next five years or four years. We are trying our level best there.
Piyush, I am not grudging internal stakeholders. If the stakeholder is getting salaries, I welcome it. My point is, while you are saying that compare the market cap of other print companies. Other print companies have distributed INR 2,000 crore each. D.B. Corp and Jagran Prakashan Limited has shared, which even Hindustan Media Ventures Limited has not done. So we are way behind in terms of performance, even on Hindi. So I have not heard anything back. What is the glide path? If you can discuss with Ms. Bhartia and come back to us shareholders and say that, "Okay, after three years, we are looking at 15% return on capital." Do you internally have a target? Is anybody thinking return on capital?
We are thinking all the things, Mehul, but just for the positivity of time, we are definitely thinking about it, but I do not think I have anything new to share. We are definitely thinking, hence we are trying to invest in not various other companies, which are the competition set that you named, are trying to create businesses of tomorrow. We are trying to do that. Now, how that will come out, we will see. But that is the journey, and we have got this balance sheet, and we are utilizing our balance sheet to create long-term value. Now let us see whether we are successful or not.
Thanks.
Thank you.
Thank you. Thank you all. With this, we come to the end of the Q&A session. If you have any further queries, please reach out to the investor relations team. Our contact details are given in the investor presentation and are also mentioned on our websites. I now hand over to Piyush for closing remarks.
Thank you, Aaditya. Thank you, dear investors. Thank you for joining our earnings call. We hope to see you again in the next earning call, which will be the full year FY 2025 earnings call. Season's greetings, and all the best to every one of you.