Shemaroo's investments in new initiatives stood at Rs 45 cr in 9M FY21

Content aggregator and distributor Shemaroo Entertainment has invested Rs. 45 crore on new initiatives including the two new TV channels, Shemaroo TV and Shemaroo MarathiBana, during the 9M FY21 period.

"The company has been in an investment mode in various initiatives which are now started contributing revenues. Hence it is important to note that the expenses made on these new initiatives net of revenue for the period under review. So for the Q3 FY21, it was Rs 16 crores and for the nine months ended December it was Rs 45 crores," Shemaroo Entertainment CEO Hiren Gada told analysts during the Q3 FY21 earnings conference call.

He further stated that excluding these investments the company would have delivered operating profit of Rs 23.5 crore in Q3 and Rs 46.4 crore in 9M FY21. "If you were to exclude these investments and new initiatives the EBITDA from the operations was the positive Rs 23.5 crores for the quarter for Q3 and which indicates an EBITDA margin of 27% and overall EBITDA for nine months was positive at Rs 46.4 crores indicating an EBITDA margin of 20% for nine months ended FY21."

Speaking about the new initiatives, Gada revealed that one of the large investments has been in the TV channel project which is Shemaroo TV and Shemaroo MarathiBana. The company has also started monetising the two channels.

"Both have now started at least in terms of advertising revenue while this is just a beginning. So once these revenues stabilise and reach a certain level to that extent the investment required on this particular project would come down in that proportion," Gada revealed.

In Q3 FY21, the company's operational income stood at Rs 88 crore. The company reported an EBITDA of Rs 7 crore and a net loss of Rs 1.5 crore for the quarter. For the nine months ended December 2021, the operational income, EBITDA, and net loss stood at Rs 234 crore, Rs 1.5 crore, and Rs 23 crore respectively.

For the third quarter, digital media revenue was down 17% year-on-year at Rs 40 crore and for the nine-months ended December the digital media revenue stood at Rs 113 crore which is down 26% year-on-year. Traditional media revenue de-grew by 1.5% YoY at Rs 48 crore and for the nine months ended considering that the first two quarters it was there was a massive fall it stood at Rs 121 crore which is down by nearly 50% on a year-on-year basis.

Gada noted that the festive season and reduction in COVID cases has resulted in the resumption in economic activities and this, in turn, has led to a reasonable or significant revival in advertising spend as well. He also expects broadcasters to resume the acquisition of the same content over the next few quarters.

"Our continuous cost rationalisation efforts in the last few quarters are contributing positively to the overall financials. We continue to strategically yet cautiously invest in our new ventures. As you know we are in the phase of transition from and evolving from a B2B company to B2C operating models and have witnessed some level of operational recovery as these new investments have stabilized. During the quarter, we continue to focus on strengthening the viewership and reach of our two broadcasting channels Shemaroo TV and Shemaroo MarathiBana," he averred.

On the performance of the broadcast business, Gada said that Shemaroo MarathiBana has completed one year of operations and has strongly established itself as the second most-watched Marathi movie channel in the Marathi genre. Shemaroo TV strengthened its reach by closing some key distribution partnerships and began monetisation through advertisements towards the end of the quarter.

"On the digital side, our performance on YouTube continues to grow exceedingly well. Shemaroo Filmi Gaane has crossed 46 million subscribers to become the 21st most subscribed channel globally. As you know we had launched ShemarooMe in February 2019 which was our subscription-based OTT platform primarily targeted to the B2B2C audience and we have taken efforts to expand its global reach in which in this particular quarter we are partnered with Ooredoo and Qatar," he added.

On the product business front, Shemaroo launched two new preloaded audio speakers Bhakti Maalai which is a Tamil devotional speaker, and Bhakti Anand which is a sub Rs. 1,000 devotional products for gifting purposes.

In response to a question, Gada said that ShemarooMe is a B2B2C kind of platform which has been integrated with Airtel, Vodafone, Tata Sky Binge, and JioFiber. "We have integrated on multiple international telco participants and the revenue in that sense comes through partner platforms customer base using the platform. In terms of direct B2C, our focus till now has not been very high, we have not invested in marketing and all and to that extent the numbers I mean it is irrelevant to talk about any B2C numbers over there."