Entertainment Network (India) Ltd
NSE:ENIL
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
176.32
346.2
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Entertainment Network (India) Ltd
You don't have any saved screeners yet
Good morning, ladies and gentlemen. Welcome to Entertainment Network India Limited Q4 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Prashant Panday, MD and CEO from Entertainment Network India Limited. Thank you, and over to you, sir.
Thank you, Lisanne. Welcome to this very unique conference call on a Saturday. In my last so many years, I don't remember doing this conference call on a Saturday, but there's such a time that we adjust to it. So thank you very much for attending this on a Saturday, we truly appreciate that.
Now I will just take 5, 7 minutes to explain the larger narrative on the quarter's performance. The most important point that I would like to make, and request you to note is that the quarter 4 was very badly affected by the Omicron virus at the beginning of the quarter. And as you will recall, the impact of that virus lasted till about the 10th or the 12th or the 15th of February. So approximately half the quarter was pretty badly hit by the Omicron variant. So I'm going to give you a split of our revenue segments. By the first 45 days of the quarter and the second 45 days of the quarter, to show to you what impact the variant had on our quarterly numbers.
Now first, our overall quarterly number, revenue number was INR 99.4 crores. And this reflects a 0.3% growth over the same quarter last year. Now remember, last year was a perfectly fine quarter because there was absolutely no impact of COVID. In fact, the COVID impact had not been there even in Q3. And therefore, the Q4 of last year actually reflected 6 good months of the business. This quarter, as I mentioned, began with 45 days being destroyed by Omicron. And despite that, the revenues of the company have remained flat, which I think is a big positive point in the results that have come out. But let me give you the split of the 0.3% by month.
Now at an overall revenue level, January was down 28%. So please note that we began the quarter with negative 28% in revenues. February was down 2.5%. As I mentioned, the impact of Omicron continued through the middle of February. But look at how strongly we rebounded in the month of March when the impact of Omicron was over, retail establishments opened up and business became normal. In March, our overall revenues were up 20.4% compared to last year. So this should tell you that the quarterly numbers have to be seen as the first 45 days and the second 45 days, which is -- or for ease, you can look at it as January, February as pandemic hit and March as a regular quarter.
Now let me give you the same split for our 2 components of the major of the business. One is, of course, radio and the other is what have been generally called non-FCT solutions business. The radio business number has grown by 7.6% in this quarter, which is absolutely fantastic because radio was, is the main breadwinner for the company. It is the most profitable part of the company. And therefore, when radio grows, it actually suggests in the future also one can expect profitable growth to happen.
But again, let me give you the split of this 7.6% by month. In January, the revenues were down 2.2% compared to last year. In February, the revenues were up 15%. And in March, the radio revenues were up 11%. Now please note that radio is just a button. You can turn off -- turn on the advertising and turn off the advertising in a phone call coming from the advertisers. So when the pandemic lift, then the advisers are quick to call. And that is why in February, we had shown a growth of 15% despite Omicron very much being present for half the month because it's easy to turn on radio advertising.
Now let me show you the non-FCT split. Non-FCT for the quarter, our solutions business, for the quarter was down 11.4%. And this 11.4%, you will understand from the quarterly split how significantly hit it is by the Omicron. Because when government stops giving permission for on-ground events, when retail establishments are stopped, when celebrities or performers refused to perform because of the scare of the COVID, then you will see the impact of that on our results when I explain to you by month.
While overall solutions was down 11.4% in the quarter, in January, it was down 61%. In February, it was down 50%. Remember, in February, after Omicron restrictions are lifted, clients will then start planning activities, solutions business takes longer time to roll out. And therefore, even February was very badly hit at 50% negative growth. But look at March. March, we stayed the smart recovery with 30% growth in revenues compared to March last year. So clearly, the results of the radio segment, the non-FCT, the non -- solutions segment as well as the total revenues show to you the impact of Omicron variant on January, February and March performance.
And the good news is that the strong results of March are continuing in this -- in the beginning of this quarter because this is the first quarter in 3 years now, which has not been affected by COVID. So we are seeing -- we are on the cusp, I believe, of a very strong rebound happening in FY '23 and beginning with the first quarter for a change.
Now 2 points more. One is that remember my radio percentage growth of 7.6%. Please keep that in mind because other radio stations when they will announce their results, they are largely radio companies. And therefore, the comparative number would be 7.6% for you to look at. That's the first point.
The second point, I just want to repeat from what I have been saying for many, many quarters, is that I believe that radio is entering a very, very -- a period of golden -- a golden period of growth in FY '23 and possibly in FY '24. And I'll tell you why I say this. I say this because FY '23 and FY '24 are expected to be sluggish years of economic growth.
You are very well aware about all the headwinds that the economy is facing. And secondly, that the shops are now expected to remain open because the pandemic is now hopefully behind us. Whenever the economy is sluggish, but the shops are open and functioning, radio does very, very well. And the reason for that is simple, because brands and advertisers put more emphasis on generating footfall on clearance sales or giving discounts. And for all of those things, radio is a primary medium. And I say primary because much of this happens on a frequency basis, you need to remind people again and again and again and again that some great offer is available. And that is why radio works the best. It's a local medium and it supports the retail establishment. So I think FY '23 and FY '24 are going to be golden years for radio. And we've seen in the beginning of that in March of this year. And I mentioned to you that it's continuing in April of this month. So I thought that I will mention this split to you.
Now if I were to look at product wise that the solutions business got hit, the biggest product which got hit by the solutions business was what I call my television impact properties which shows that I create and takes to television, like the Mirchi Music Awards and Hindi is the only event -- that is the only award show that happened in the quarter. None of the other big award shows, whether it's Filmfare, whether it is IIFA, could take place because of Omicron. But we pulled off Mirchi Music Hindi, we also pulled off Mirchi Music Award South, and we also pulled off Mirchi Music Awards Punjabi edition in this quarter, which is a tremendous statement or the attraction that these event brands have got for them. Unfortunately, we were not able to pull off some of the other events, which are the Mirchi music awards in Marathi, the Mirchi music awards in Bangla, both of which are happening in this quarter now. But we also could not pull off 2 other very large and profitable properties of ours, which are the Mirchi Cover Starts and the Mirchi Top 20. Both of these unfortunately have missed the season and will now come back only in the next season. It's because of these events that we could not do in the quarter that my solutions business has actually come down. But otherwise, I think it's a pretty good and strong performance of the solutions business as well.
Now one of the impacts when the solution business goes down is on my digital revenues because the digital revenues emanates from the solutions revenues. When I do a television property, there's a lot of support and a lot of marketing muscle that I put on a digital assets of the company for which the clients pay. So it boosts with our digital revenues. So as the solutions business goes down, so does the digital revenues. Digital revenues accounted for approximately INR 6.4 crores, [ 6.5% ] of the quarterly revenues. This is down from the 12% or 13% number that we have scaled in the past. But again, it's a temporary phenomenon, and we remain on the path to achieving a 25% share for our digital business in the coming couple of years.
Now I want to make a couple of more statements before I open it up. On costs, I want to make a very, very strong statement. Remember that compared to pre-pandemic times, the costs in this year, FY '22, which is the second year of the pandemic, the costs are down INR 91.6 crores, almost INR 92 crore compared to FY '20. I mentioned in the past that we hope that almost 50% of this will be sustainable cost savings. And as evidence of that, I just wanted to tell you that in the year of FY '22, the costs have gone up by only 0.8%, less than 1% compared to FY'21 which means that the costs were initiated in FY '21. But in FY '22, we have also kept the control on costs very, very strongly. And as I mentioned, in '23 and '24, I expect at least 50% of these savings to be retained. So that, I think, is a very strong showing.
And finally, we launched our business in Dallas in the U.S. There are 3 very important cities as far as Indians are concerned in the U.S. One is, of course, New Jersey as a state. Two is San Francisco in the Bay Area and the third is Dallas in Texas. So these 3 places now we are present. And all 3 -- and 2 of it online and apps, we are present in all across the U.S., all across the Middle East. And therefore, we believe that the business in the U.S. and in international poise for strong growth in FY '23.
And finally, our digital platform. Remember, we launched in the U.S. around the February 12 or 10th or 12th of February -- 11th of February, we have been doing a 3-month experiment in the U.S. without advertising, without any marketing support, just to study the consumer reaction. And I think some of the consumer reaction points are amazing. They are better than we expected.
To give you an example, in every month, consumers are spending as much as 270 on the app, which is remarkable. Because remember, everybody doesn't turn in every day. Most people will tune in a few times a week. And therefore, it implies that they are spending a lot of time on the apps when they come on to the app. The biggest contributor of listenership is our radio stations, which we stream online on our app in the U.S. and in the Middle East.
Now here is an important statistic that is relevant in this industry. It is called retention. Now retention really means stickiness. So once you have attracted a user to your app, how many of those can you retain as time passes? To give an example, the 30-day retention is 7.3% for our app. That is double of the retention rate of most of our audio competitors who are there in the market. I don't want to name them at this stage, but you can pretty much get these are competitors who have -- who are bigger than us who launched 3, 4 years ago. They've raised huge amounts of money in the market. They've got crazy valuations and they have a retention of far lesser than what we've got, which tells you that the app that we are about to launch has a solid [indiscernible] that it provides to the users, which makes them come back to us again and again. And that stickiness is a very valuable aspect of any app.
We're also going to be launching with about 800 hours of audio stories in India, we will be launching in India. And remember, 800 hours is not a big number, and we're very proud of that because the biggest contribution that Mirchi makes is that it curates anything that it puts out. The user doesn't have to go through millions of hours of refract to come to something good. So 800 hours of human-curated content, we will launch that and then we will probably add about 100 hours of human-curated content every month.
And last point on the app before I open it up is remember that the revenue numbers that our competitors in the app business generate a miniscule. I'm told that the revenues per annum are between INR 2 crore and INR 6 crore approximately for many of these competitors of ours. Now for us, we believe that this is an easy hurdle to cross because of the solutions business that we run.
We know clients. We know their needs in the audio product business. We have been giving them audio solutions. We are now going to be giving them app solution. So we believe that this is a revenue hurdle that we can cross reasonably quickly. And I think that is the reason why we are so optimistic about our app business. When we launch in May end, we will give it a month to get feedback in India, and then we will be mounting a marketing exercise starting approximately from June. We will, of course, keep you informed about it.
With that, I would like to open the line for questions. I've got Sanjay with me over here. He is our Head of Finance. And both of us will be happy to take your questions. So Lisanne, can you please open it up?
[Operator Instructions] The first question is from the line of Deepan Sankara Narayanan from Trustline PMS.
So firstly, I wanted to check about this digital revenue contribution. So we were expecting something closer to INR 20 crore kind of run rate, but we have been delivering only INR 6 crores kind of run rate quarterly. So can you provide us more light on what has exactly happened? And how do we plan to scale this up?
Yes. So Deepan, in my introductory remarks, I mentioned why the digital component of the business fell. It is only 6% of our revenues in this quarter. And the reason I mentioned is that our digital business derives from our solutions business.
To give you an example, when we do an event called Mirchi Cover Star, a law of the push on Mirchi Cover Star is done on using digital platforms, external digital platform and also our own sets on those external digital platforms. But when the solution business itself falls, then obviously, the subcomponent digital business also falls. So it is just a result of that.
And I also mentioned in the call that it is a temporary dip because as the solutions business, and I mentioned that the solutions business grew by 33% in March. And as it picks up in Q1 and Q2 going forward in this year, you will find that the digital component of the business will be back on the trajectory to 25% that we have been maintaining, we will achieve in the next couple of years.
So what is the run rate we are expecting for FY '23, sir?
See, I think in FY '23, because solutions business is growing, I think we would be expecting the earlier peak that we have hit of about 12% or 13% to be surpassed. Like I mentioned, this is on route to 25%, which you should hit by about FY '24. I think we have said FY '25. So yes, I think we should be crossing the 12% piece that we have hit in the past, Deepan.
Okay. Okay, okay, sir. And so as you have explained about radio and solution business, gradually, the improvement happened towards the fag end of the quarter and particularly on March month. So have you seen such similar run rate growth in digital as well?
Yes, exactly. Because again, remember for us, digital is made up of products which derived from the solutions business as well as direct digital which is the digital solutions that we provide to clients or digital video content that we produce for clients. So all of that is back on traction. In fact, we've had a pretty strong April, but we'll talk about that at the end of the first quarter, yes. But to answer your question, the traction is continuing in this quarter.
Okay. We need to know that. And finally, on the app, spending per se, so the INR 6 crore kind of run rate will be maintained for the whole year? Or you will see a further increase in the marketing spend?
Okay. So Deepan, what we said, we are very clear about this, that we would like to -- like the app to create its own user base. Now you know that there are 2 ways by which apps are built -- or digital business have built. One is called the unicorn strategy, and the other is called the camel strategy. I'm sure you're familiar with both of these. The unicorn strategy is not something that we are seeing to follow at all because that's like a gamble and there are many, many failure for every bit of success. Remember also that we have a successful business already operating, and we are building the digital business on top of that. So the approach we are going to be taking is more similar to the camel approach. And therefore, the spend that we intend to do on marketing or what is called consumer acquisition will be far more limited compared to what you would expect typically from a new digital business to happen.
Our focus on the other hand, is going to be on providing exceptional content, which actually is what defines Mirchi. So we will be spending our monies more on the people who generate content, on the content production cost itself and on app development itself. Now you will notice when you see the app is launched in India. And this is, again, feedback we'll work, that the user experience on our app is absolutely fantastic. It's not cluttered. It's very intuitive. And it's also something that users are saying is very easy to use.
So our money will be spent on content and on the technology behind the app, not so much so on the marketing side. And as you know, the biggest spend in a new upstart business is marketing spend and that we will keep a tight control on. We hope to find a sweet spot where actually users are promoting the app themselves. So that if I'm a user, and I like it and I talk to 10 people and I can pull 10 people in, a bit of growth that we are seeking in the user base. I hope that answered your question. So the run rate will probably be about the same, but it will be, therefore, tightly managed.
The next question is from the line of Jinesh Joshi from Prabhudas Lilladher Private Limited.
I understand that this quarter was impacted by Omicron. And hence, the on-ground activities were limited. Sir, but despite that, our production expense of INR 25 crores is higher than INR 10 crores that we reported in 3Q. So can you explain the reasons behind this?
Yes. So Sanjay, here, Jinesh. I am taking this question. See in this quarter, when we are reporting the numbers, we have seen, as Prashant has already mentioned, we have got 2 TV properties done. One is the Mirchi music awards Hindi. One is Mirchi music awards Punjabi. Actually, it is 3, and third is Mirchi Music Awards South. Now these 3 TV properties put together when we produced them has got a bigger expenditure portion than the normal -- other -- I mean, I would say, other than the TV property solution products. So therefore, you are seeing a bigger and more expenses in the Q4.
Sure. And secondly, can you help me with the capacity utilization results of legacy batch 1 and batch 2 stations for FY '22?
Yes. I can provide you that. Before that, just going back to your earlier question, it is also true that in the production expenses, we will find another component, INR 0.3 crore, which Prashant just informed this growth now that is related to the digital platform-related expenses. So that is also a component.
Now coming back to your question on the capacity utilization numbers for traditional radio business. I would first like to give you the first quarter numbers and then the financial year numbers. So in my top 8 metrics, the growth in capacity utilization is 25.3% over the same quarter last year.
Sorry to interrupt, sir. Sorry to interrupt. I don't want the growth numbers. If you can share the utilization number, that would be more helpful.
Okay. So for the Q4 FY '22 top 8 stations, I had a number of 104%. For 27 stations, I had a capacity utilization number of 80.8%. For my batch 1 stations, I have a capacity utilization of 76.3%. And for my batch 2 stations, I have 29.9% of capacity utilization overall.
Sure, sir. And for full year, if you can share that corresponding number?
I'll just give you. One moment please.
And Jinesh, while Sanjay is calculating those numbers, I just wanted to make a small point to bring to your attention that the growth in the next couple of years is expected to be more driven by capacities and volumes and less by pricing. And therefore, I wanted to just recalibrate your expectation of volumes. Normally, we take 13 minutes per hour as our benchmark volumes and then we express our capacity utilization figures basis 13 minutes per hour.
Now the reality in the marketplace is that during season, the radio stations operate at somewhere around peak -- on peak days and peak weeks before Diwali or before New Year's and those kind of -- before Ganpathi in Mumbai and those kind of seasons at typically about 250% to 275% capacity utilization with approximately 30 minutes of advertising or 31, 32 minutes of advertising. So we believe that current numbers that Sanjay will give you for FY '22, there is a big room for volume expansion left in the radio business still. Sanjay?
Yes. So for the full year number, Jinesh, in my existing 35 stations, the capacity utilization stands at 74.7%, out of which top 8 markets accounted for 81%, I mean, that kind of capacity utilization we had. In batch 1 stations, we had 31.4% for the full year. And in batch 2 stations, we had 26.5%.
So Jinesh, just to bring my earlier -- I went back to the front over here, that 81% in the top 8 stations, if we could sell equally well throughout the year, that 81% could become even 250%. If we could sell throughout the year. Now what is it that we do not sell very well? We don't sell Sundays very well. We don't sell Saturdays as well as we do Monday to Friday. We don't sell April, May, June, July, August as well as we sell in the remaining months because of seasonality. So if we can -- and television, by the way, sells uniform inventory throughout the year. So if we can improve the selling process in the whole radio industry, then the volumes are set to rise and there is enough headroom available for growth from volumes alone.
Got it, sir. One last question from my side. If I remember correctly, in the last call, we had mentioned that the Mirchi digital app was supposed to be launched in India around March. But I think in the initial comments, you mentioned that the time line has been revised two-way if I heard it correctly. So any specific reason for delay? And is the March launch pretty much -- sorry, the May launch pretty much on track?
Yes. The app is ready. It is under testing in -- within our own internal user group. And we also decided to wait for a little longer for the reactions to come from the international markets. Therefore, we are now actually fully ready to launch. And while we have mentioned that May 30 is the date that we are looking at approximately launching, that's simply because we are trying to add a little more content and there are a couple of more features which are under development. But we are ready to launch even today. And I think we will choose the date between today and end of May to launch.
[Operator Instructions] the next question is from the line of Sumit Rathi from Axis Securities.
I just wanted to check this run rate of INR 6.3 crores on digital or our strategic initiative expenses towards digital platform. Can we expect the similar kind of quarterly run rate for the next few quarters?
Well, a similar question was just asked some time back. And I mentioned that we will be keeping the correct lid on the marketing expenses on the app. But yes, you can expect something similar like this number to happen on a quarterly basis in the months coming -- year coming by. Yes, more that kind of thing, yes.
Okay. So this should even out on a yearly basis, like quarterly, they can be here and there, up and down?
Approximately, yes.
All right. Another set of question that I had was, can you give us a breakup of core solutions and the radio revenue which we achieved in this quarter? I understand the growth rate in the radio was around 7 -- at 8 percentage, which was impressive. But what exactly is that number? Can you give us that?
Sumit, it is there in the investor relations deck that we have sent you, but I'll just give it to you. Around 99 -- out of INR 99.4 crores of revenue, INR 65.9 crores was core radio and INR 33.5 crores were solutions. And the radio grew at 7.6%. The solutions business was down by 11.4%.
Yes. In the core solutions, which is comprising of digital -- no, solutions, we have like traditional and digital book?
Now, there are 3 components in our solutions business. One is what we call multimedia solutions which is basically where we develop a solution for a client, we use more than radio views, multiple mediums. It may be digital, it may be television, it may be on ground, it may be whatever. So we use multiple media. So we call that multimedia solutions.
The second component of the solution business is what we call IT solutions, which is largely on ground or activation that we carry to television for amplification, et cetera. That's called the IT business, like the Mirchi Music Awards happen or a lot of events on ground that happen.
And the third component of solutions is what we call digital content solutions, which is where we design solutions for our clients which are primarily digital led and they may use videos, they may use audio solutions. They may be on public platforms. They may be on other platforms. They may be using the external influencers, they may be using our own Internet influencers, et cetera. And they may also be using many other products which are available in the market. For instance, we use Gaana very often. We sometimes use other audio platforms as well. So all of that is called the digital content solutions business. So these 3 solutions, these 3 components make up together the business and then there is the radio business.
The next question is from the line of Vishal Bagadia from Roha Asset Managers.
So I had one question on the digital side on the app side of the business. So what would be the content cost, which would be incurred by other budget on the app side?
So Vishal, content is made in 2 ways when we hire a content team. So we have a lot of people who are now hired to buy us and they make content. So there is -- it is reported as HR costs rather than content cost, right?
And then there is content that we produce externally. Like when we launch our app in India, there will be a few marquee shows that we will be putting on the app. These are externally produced by celebrities and by other production houses, those are reported content costs.
So in general, our philosophy is that we will be using both of these models. But our focus will be on trying to create most content in-house. Now remember that at the end of the day, there are 350 creative people already working in the radio business already accounted for in terms of their salaries in the radio business itself. And therefore, whatever extra content we can produce from our existing resources to that extent comes to us free of cost. And therefore, in a blended cost basis, the more the percentage of content produced internally, the less the overall content cost to the company. So that is going to be our philosophy. But we will be picking up marquee shows and iconic shows from the market.
So sir, on the content, which we would acquire externally, it would not be much of a cash burn for us?
See, when we are launching, we are launching with a few marquee shows using celebrities and some of them are expensive, to be honest. But that's more to be a marketing launch costs rather than pure content cost. But the good thing about the audio business is that even externally produced content is not necessarily very expensive. Also remember that we offer a lot of production facilities on our own. So even externally produced shows will cost us much lesser than they will cost a normal platform, a platform that does not have the infrastructure of a radio company. So to answer your question very specifically, we expect external content costs to be reasonably tightly controlled.
The next question is from the line of Karan Taurani from Elara Capital.
My question firstly was pertaining to the monetization of your digital app in India and globally. So of course, you have got this advertising which would be playing on the app. But what about the pay based mechanism? Are you exploring some amortization of that as well?
Thanks, Karan, for your for your question, and it's good to have you on every investor call. So I really appreciate that. Now answering your question, the app will have several modes of monetization. One, of course, is the advertising that comes on the content that we put out. And remember that pure advertising on the audio apps business, in fact, even on the music apps is very limited. And therefore, I don't expect too much revenues to come from pure audio advertising on the app.
But like I mentioned, the bigger -- the way to get more advertising on the app is to provide it as a part of a solution, a larger solution to our client's marketing needs. So if an advertiser has certain marketing challenges and when you are developing solutions to overcome those challenges, many times there are situations where the client can benefit from having his or her own audio solution or an app-based solution. And we've been doing that content generation for many years now. So we have expertise in that particular area.
To give you an example, if there's a client and who wants to, let's say, communicate with -- it's an HR initiative and they want to communicate with their 100,000 employees who are there on their various campuses around the world, I mean, we can develop a solution based on our app and make it available to them on the app. So we can generate -- we have other ways of generating revenues apart from pure audio advertising. And we will -- I think that is our core strength because we've been doing solutions for many, many years, and we will build on that.
Then there is also the transaction model, which is -- remember, at some point in time, we will be adding commerce to our app. We are already experimenting in that area, but there are some distance away from launching any of that at this point in time. But at some point in time, we will be doing that. And therefore, there will be revenues which will come from transactions. There can be transaction-based revenues even on the audio stories that we have, even on the radio stations that we will put out, on the music that we've put out, et cetera. So that is another model that we'll certainly be looking at.
So -- and then there's, of course, subscription at some point in time, depending on the kind of how the market evolves. I'm told that even in the audio OTT piece, there are some 70 million paying subscribers, many of them who come through the telecom tie up, but they generate subscription revenues in their books. So if the market opens up, as it has in various countries around the world, and that also will become a revenue source for us. So -- but primarily, to begin with, I would expect most revenues to come from our solutions approach, a strength that our competitors do not have.
Right. Very insightful. So this is more of an extension of your solutions business that has been?
Well, I'd say that it is built on the strength of the solution business.
Right, right. My second question was in terms of content cost. So you mentioned INR 6.5 crores as the cost. But does that also factor in the music royalty cost? Because the music royalty cost is very high on digital. So are you going on MG basis, yes?
Karan, we don't have -- we don't -- we are not likely to offer music in our -- in India because of the same reason that you mentioned because the music royalty costs are phenomenally high and then we don't have any intention of becoming one more music provider in an already cluttered market.
So when it comes to music products, we have music products that we are launching on other existing platforms. For instance, we have 17 radio stations already available on Gaana. So if there's a music aficionado who loves Mirchi-curated content, then he or she can pick it up on Gaana or on other music OTTs. We have many podcasts and many music playlists which run on Spotify as well. So yes, the Mirchi -- so as far as music is concerned, it's not going to be the mainstay or not even going to be there on our app unless we're able to strike some deals with the film producers or with the labels or whatever it is. So then and only then will we do it. But otherwise, we are not planning to be like another music OTT app.
Right. but globally, I think one of the reasons you mentioned that globally, you will be launching 12 stations. So what about the royalties there? I mean how will that work out the math with the music labels? Because your live stations of Indian music is getting played abroad.
Well, Karan, that's the beauty about the international markets and something that our regulators must take note of in India. That if anybody wants to launch any radio station or any playlist in the international markets, there are very, very reasonable price offers available, very reasonable price.
I'll give you an example. We are entering the Canadian market very soon. And the entire music royalty that we would pay for the first year, because we are just in start, I don't think we will even cross 1 million streams in Canada in the first year would be some CAD 5,000 in a full year. I imagine that and compare that with what happens in India where the label will start by asking you INR 10 crores, INR 20 crores just as a minimum guarantees, right?
So it is sad. Just imagine that it is so sad that in India, you don't get any radio stations online. Amazing, isn't it, right? Anywhere else in the world you go, FM radio stations will simulcast on the online platform. So something that the regulators in India should take note of. But to answer your question, in international market, music royalties are far more reasonable, and that is what we are tapping when we are expanding our footprint globally.
Right. I just hope that something happens because this is actually just very unfair in terms of radios getting charged on any higher royalty on the digital platform.
Absolutely. And that is why there is some legal action we have started. We are hoping that the courts will provide us some amount of reasonable settlement on that issue. It will take some time, but the process we have begun already.
Just one last thing, if I can squeeze in. What is your view on this entire IPAB thing in terms of traditional music royalty? You believe any uptick could happen over there? Or is that status quo as of now?
Well, as far as I'm concerned, that matter is now settled because the IPAB ruled on the matter defect rates for 1 year, and they provided the basic construct on the back of which the rates would be gradually extended year after year. So the extension matter is now in the Delhi high court. It is being heard. We have requested that the rates now be set for 5 years or longer. But the broad structure in the hard work has already been done by IPAB. So I think that the same structure would continue in the next 5 years.
So as far as sound royalties are concerned, the rates have already been fixed. As far as performance royalties are concerned, again various courts over the years have ruled very clearly that users like us do not need to take the license at all from IPRS. Because remember what are we doing? We are playing this recorded music, just play from out from a CD or from a track that the label makes available to us. So we are taking a license from the sound recording bodies. And we pay them, we don't pay to the performance societies.
And Lisanne, if there are no other questions, and I think we should let the entire investor community have a nice Saturday.
Sure, sir. We don't have any more questions in the queue.
Okay. Good. Then we can call this meeting to an end. And if I may just summarize and say that if there are any more questions that you would like to ask, our contact information is there in the presentation deck, and we would be happy to put out the answers to your questions. Thank you very much, and have a great weekend. Thank you.
Thank you. Ladies and gentlemen, on behalf of Entertainment Network India Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.