UFO Moviez India Ltd
NSE:UFO
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
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 |
98.17
163.85
|
| 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.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
UFO Moviez India Ltd
You don't have any saved screeners yet
Ladies and gentlemen, good day, and welcome to the UFO Moviez India Limited's Q3 and 9 Months FY '23 Earnings Conference Call hosted by Ventura Securities Limited. [Operator Instructions] Please note this conference is being recorded.
I would now like to hand over the floor to Mr. Tushar from Ventura Securities Limited. Thank you, and over to you, sir.
Thank you. Good day, ladies and gentlemen. On behalf of Ventura Securities Limited, I welcome you all to UFO Moviez India Limited Q3 and 9 months FY '23 Earnings conference Call. The company is today represented by Mr. Rajesh Mishra, Executive Director and Group CEO; and Mr. Ashish Malushte, Chief Financial Officer.
I would now like to hand over the call to Mr. Mishra for his opening remarks, post which we can start the questions-and-answer session. Thank you, and over to you, sir.
Thank you, Tushar. Greetings, everyone, and thank you all for joining our Q3 and 9 months FY '23 earnings call. Let me start with the update and highlights of the 9 months so far.
The year started with the resumption of operations, revenue revival at increased audience appetite to consume different language movies in cinemas. Q1 FY '23 began with the release of blockbusters like RRR and KGF Chapter 2 et cetera. However, during the same time, big budget movies such as Samrat Prithviraj, Jayeshbhai Jordaar, Jersey and Attack struggled at the box office. A similar trend continued in the next quarter where in big budget Hindi movies with high expectations underperformed due to various factors even as the regional movies continued to excite the audiences.
The steady release of movies aided by the revival of overall theatrical revenues; however, this was not enough to bring back the advertisement revenues to pre-pandemic levels as Hindi content did not resonate with the audiences at large. However, Q3 FY '23 marked a steady recovery on the back of a healthy movie mix with the release of 603 movies including versions across languages.
Movies like PS1, Kantara, Drishyam 2, and Avatar proved to be blockbusters, while films like Vikram Vedha, Bhediya garnered decent business, but some [ 10 4 ] films like Ram Setu, Cirkus, and Doctor G could not make the mark. However, the steady flow of content at equal intervals in the theater has kept the audiences engaged, presenting an increased footfall to big screens and improved box office collections. This has helped to pullback advertisement spending in this quarter despite the dip in Q2. Advertising revenue has grown by 47% over Q2 to INR 195 million and surpassed the Q1 number of INR 178 million.
On the government advertisement revenue front, the central government revenue continues to be a challenge due to reduced central government spending across the medium. Though the state governments and PSUs have started allocating budget towards in-cinema advertising.
On the corporate advertisement front, we believe with a steady flow of content increasing advertisers' confidence and content acceptance amongst the audiences will boost the corporate advertisement revenues going forward. With Pathaan breaking the records and the strong lineup of movies such as Shehzada, Michael, Selfiee, Shakuntalam, Tu Jhoothi Main Makkaar, and Bholaa in the coming months, we are confident that the part of recovery in business around will better in the coming quarters.
Now coming to the operational screen numbers. We have highlighted in our Q4 FY '22 earnings presentation that approximately 250 screens were under watch for low utilization or they were not fully operational. Our advertisement screen count for Q3 FY '23 stood at 3,410 screens versus 3,482 screens in FY '23, which is a decline of 72 screens. So on a 9-month basis, our total advertisement screens have come down by 74 screens. These screens primarily belong to [ Carnival Cinema Network ], which is currently under stress. However, due to our continued push for acquiring new screens, we have ensured that the screen mix that is prime and popular category mix has improved. The Prime advertisement screens has gone from 57% in Q4 FY '22 to 60% in Q3 FY '23.
Now coming to CDC and VPF service revenue [ streams ]. CDC screens have declined by 99 screens. Majority of this was again, as I mentioned earlier, Carnival screens. And VPF service screens have been declined by 1,449 screens. For those who are unaware of the two categories, let me first explain what are VPF service screens. These screens are those screens where we were collecting VPF revenues on behalf of the multiplexes on contractual basis. Majority of the VPF fees that were collected were passed on to the respective multiplexes and only a small percentage was retained as our service fee. Whereas CDC revenues are those revenues that are our -- sorry, whereas CDC screens are those screens that are our core digital cinema rollout [indiscernible] screens and where we don't share any revenues with anyone.
Now due to the contracts with 2 multiplex chains having ended, the VPF service screens now stands reduced by 1,485 screens. However, the net income from these 1,485 screens stood at INR 30 lakhs in Q3 FY '23 and INR 98 lakhs in 9 months FY '23.
Coming to the headline numbers for the quarter and 9 months ended December 31, 2022. Please note as FY '21 and FY '22 were the washout years due to the pandemic-induced restrictions, we have compared our performance with the pre-pandemic period that is Q3 FY '20 and 9 months FY '20 for better representation of recovery in the business.
Consolidated revenue stood at INR 1,109 million in Q3 FY '23 as compared to INR 1,426 million in Q3 FY '20. Overall, a recovery of 78%. Business EBITDA stood at INR 101 million as compared to INR 360 million in Q3 FY '20. Loss at the PAT level for the quarter stood at INR 3 million as compared with a profit of INR 274 million in Q3 FY '20.
On 9 months performance, the consolidated revenues stood at INR 3,093 million as compared with INR 3,946 million in 9 months FY '20, a recovery of 78%. Business EBITDA stood at INR 253 million in 9 months FY '23 as compared to INR 919 million in 9 months FY '20. Loss at the PAT level stood at INR 120 million as compared to a profit of INR 320 million in 9 months FY '20.
As far as consolidated funds position is concerned, the balance at the end of the quarter stood at INR 896 million. On the debt front, as of December 31, 2022, the company is net debt free with net cash of INR 65 million.
I would like to take this opportunity to thank all our stakeholders for their continued trust in the company.
With that, I open the floor to take your questions.
[Operator Instructions] First question comes from [ Rahil Shah ] from Crown Capital.
Hello? Am I audible now?
Yes, that is better.
Just in terms of the -- going forward for the revenue growth and EBITDA margins, can you provide any outlook? How do you see this business shaping up? So you have this year's views. And if you have any target set for the next quarter and even the financial year, that would be helpful on the guidance.
So as I've mentioned in my opening remarks, the lineup of the films is very good for this quarter. And the best part of it is that Pathaan has worked in the Indian market, which reinstates the faith of advertisers in the medium. People were very quick to write the obituary of the Hindi cinema market, but this has been proved completely wrong by the massive success of Pathaan. And I'm sure this momentum will only build up for the future. So good films and a good lineup definitely translates -- will translate for better advertising revenues and EPS revenues for us. And the overall sentiment of the industry has also gone up on the back of the success of Pathaan.
So overall, will this show the positive impact on the margins going forward?
I'm pretty sure that this will have a very good impact on our profitability and revenues going forward.
Okay. And at this stage, you -- are you in a position to give any projections [ or ] nothing as such?
Hi, [ Rahul ], this is Ashish. Sorry, [ Rahil ], right? So [ Rahil ], as a policy, we have always stayed away from giving any future projection or estimates, even on open earnings call. But at the same time, as Rajesh mentioned, and coming back to your question, that how about the projections, where do you see the company going, the way our business is structured, beyond a particular level which we have already achieved, the incremental profitability predominantly comes from advertisement revenue.
So our core offering helps us to reach breakeven including some support from ad revenue and thereafter as we start selling more and more ads against our inventory of 15 to 20 minutes per show, and we start selling more and more ads. Currently, we are at around 3 minutes, every incremental rupee that we earn adds almost 60% to 70% of margin, which flows directly into PBT.
So in that sense, it is relatively easy for a third person or an analyst or an investor to evaluate or make estimates of our projections on different sensitivities about advertisement revenue. And as Rajesh mentioned, since the first 9 months, we had a challenge on content, which was holding back the advertisers from having their spends at the same pre-COVID level. Now the outlook seems to be changing for Hindi language movies and footfalls after Pathaan's success. And we will be closely watching this quarter, which should eventually on an immediate basis translate into uptick into advertisement building on the current increase that we have seen in Q3 over Q2.
Next question comes from Avinash Gupta, an individual investor.
My -- I think there is some -- I could see some bit of improvement. But my focus is, where do we see the company going from here, because the last 4, 5, 6 quarters, right, ad revenue, which is in question, which actually is the number which flows into our top line in terms of profit. That is more or less static, right? And in this quarter, you were saying Pathaan is okay. So possibly this quarter numbers will improve, but probably there were 2 or 3 movies in the last quarter as well, which were good, but that didn't impact our financials at all. So what is the view, which direction are we taking the company to?
So if we see our advertisement revenue, it primarily used to come from government advertising and corporate advertising. As far as the government advertising is concerned, I have mentioned in my opening remarks that the central government advertising is continuing to be a challenge because the overall government seems to have reduced their advertising spend and from [ around ] big margin.
If we analyze our corporate advertising revenues, currently, we are seeing our corporate advertising revenue has almost gone back to our pre-pandemic level. So we are seeing corporate advertising revenue catching up very quickly. It has already caught up almost.
That was the case in the last quarter as well. That was the same case last quarter as well, because advertisement revenue was practically at the pre-COVID level, right? It was almost same. All the difference was like [ 3% to 4% ].
So, Avinash, can I give you some numbers here?
Yes, please.
Yes. So Q2 -- so Q1, my advertisement revenue started shaping well. We were about [ 78% ] of revenue. This was just when the business was opening up, being the last industry in -- to open up after the pandemic. But Q2, which we are hoping that the buildup will be positive, unfortunately, because of the [indiscernible] content and the [ boycott ] calls, the advertisers stayed away and the revenue...
What was the number for the corporate one? I'm just asking for the corporate. Government, I know. What was the revenue number for the corporate?
I will be able to answer your question. So INR 13.3 crores was the total advertisement revenue for my Q2. This INR 13.3 crores has now [indiscernible]. Now coming to your question on corporate revenue, so of this INR 13.3 crores of Q2 revenue, INR 9.5 crores was in corporate, okay? Now this INR 9.5 crores has moved up by 38% to INR 13.1 crores.
Okay. In this quarter?
In this quarter. So Q2 to Q3 comparison, if you actually open -- I mean this would be available in the earnings presentation or if it is not, then I'm giving you this number. INR 9.5 crores for Q2, which has moved to INR 13.1 crores for Q3 from corporate stream. So this is a 40% jump over Q2 is what is encouraging.
And at the same time, I would tell you that currently what is happening is we are around Pathaan release and Pathaan good feel time, but actually, Q3 was not all that good. You had after the first movie, which was the only movie which reasonably did well was Drishyam 2, many of the other movies which we were thinking that will do good, including Cirkus and in the beginning Ram Setu, didn't do well.
Now what happens is -- see, for us, what was the challenge? The challenge was advertisers had already started spending on other medium. We were the last ones. When I say we, not UFO, digital cinema as a medium. So the challenge for us as digital cinema platforms was to get the allocation back to us, but advertisers needed a conviction [Foreign Language]. Now in the southern part of India, there is a very steady and consistent performance of movies and footfalls, right from Pushpa, last almost 13 to 14 months.
But in Hindi, if you see the way it happened, [Foreign Language] it went up, then it dropped. Then again, it slightly picked up in Q3 beginning, again during Q3 it fell including Cirkus. Therefore, what is happening is, unfortunately, we are looking or staring at a relatively continuous streak of success of Hindi movies. When that happens, the advertisers start allocation to this medium coming back. [Foreign Language], then it can be like in some quarter, they might allocate less or some quarters, they will allocate more. But currently, we all are trying to fight to get the allocation done to our medium.
So therefore, we have to very closely watch the content, linked with content success, how periodically that success is there and whether it is translating into revenue growth. So for us, 38% growth is where we are [ drawing the content ].
Okay. So the first 1.5 month back, and the next quarter half is already gone, right? So did you see some improvements in the corporate ads and in this particular 45 days of this quarter?
Yes, certainly. Uptick is visible. And as I said, it is directly linked to the success of the content. We have to wait for a few quarters because it was a very long kind of a halt for us.
No, I'm actually representing -- I'm representing [indiscernible], right? I'm the one who manages his funds technically. So we are really [ holding off ] almost like 3 years practically now till date, right. So it's like the patience is running out a bit, I guess.
[ Thank you for your confidence in us ] and we are sure that slowly we are getting out of it. And we have demonstrated it on the theatrical business front. We need to now just be little -- keeping fingers crossed kind of a situation for the content...
Why just in this quarter? In the coming quarter, I guess, this March quarter, right, there should be some visibility, right, in terms of the ad revenue. I guess, so Pathaan is doing good, then possibly this quarter, we'll see some upside.
Next question comes from Anand Venugopal from Valorem Advisors.
Sorry, it's from [ BMSPL Capital ]. So yes, my question is -- so my question is, why is 26% of your shareholding pledged? And why is the promoter holding so low?
We don't think that any of the shareholding is pledged. This is point number one. Point number two, as regards of promoter holding is concerned, this was one of the initial startup, moving into IPO story in India. We started in 2005, and this was a capital-intensive business. And what we are currently seeing, which happens in all the other startups. The promoter in our case also, Mr. Gaikwad came from a professional background. It's not a business background that he came from.
So obviously, he had to dilute a lot very beginning of the project when in the initial period, there were investments needed and the profitability was far ahead. And the promoter stake was diluted from first and second round of fundraising, and it remained low even at the IPO level. And in fact, from there on, there has been no further sale or transfer that the promoter group has done. The dilution beyond IPO that you see is clearly and purely because of the fundraising that we have to do during COVID. And as a result of which that fundraising led to the reduction of everybody's [ stake ] including the promoter.
Okay. Sorry, I just saw in BSE website that your promoter holding is pledged as such. So that's the reason I just asked.
Good you pointed that out. We will have a look at it and if the data is to be corrected, we'll get it corrected.
Next question comes from Vaibhav Badjatya, HNI Investment.
So I was just looking at the presentation and if I compare 9-month numbers of advertising revenue with 9 months pre-COVID numbers and particularly looking at corporate and hyperlocal. So there is still 50% below pre-COVID. So I was just trying to understand the earlier discussion that you have already reached closer to the pre-COVID level. Maybe I'm missing something that's why I just need some clarification.
So you're right. The recovery is for this particular 9-month period is -- for us, the corporate and this is exactly 50% and government, the recovery is low. But it will be better to see how this recovery is looking like as compared to the peers. So if you see the PVR performance for 9 months and PVR is the most reputed kind of a chain, having a very strong track record of advertisement revenue, even in pre-COVID period and after the recovery of post-COVID started.
So in their case, the recovery for 9 months is 65%; and for the quarter, it is 38%. For INOX, the recovery is 64% for the 9 months; and for the quarter, it is 35%. In our case, the recovery for 9 months is 41%; and for the quarter, it is 46%. This is purely on a totality basis. But our advertisement revenue from corporate would have seen a growth, which is 50% level against the 46% overall growth.
Now if you compare it with PVR, INOX, they are also in the range of 60%, 65%. So what is happening is, for us, as an industry, as I was trying to address the previous question, we are facing a challenge of getting the allocation back to us without really reducing the price points significantly low, okay? So it's not just a challenge at my corporate advertisement spend level, but this is also a challenge for others.
Right, right. Got it. Understand. So I mean, I just wanted to get clarification if I was missing something because still there's a long way to go in recovery of corporate and hyperlocal revenue because it's below that...
But it is just a matter of getting the sentiment back, the positivity of the sentiment back in our favor for the advertisers. And now the new allocation will also impact in the new calendar year. So the job becomes relatively easy.
Right. Got it. And for the government -- and for the government advertising, I understand that there has been a problem on that front. But is there a way where we can, we as an outside investor, can track that how government is allocating their advertising budget in between different medias. And that's why probably it will get us a better sense as to where the things are headed for us, because in cinema, allocation is really low as of now. So I just wanted to understand the way that how as an outside investor, we can track it.
Yes. So you have a valid point. Unfortunately, there is no source of data, which can convincingly tell you how the allocation between [ most ] different media is or will be. But at the same time, I guess there were some questions which were -- question and answers, which were there in the parliament in which the government has very clearly stipulated that they have curtailed the advertisement spend.
So if we -- my team can access it, I think even you can do it. It is in public domain. That showed that the allocation there compared it with in the last 3 years, including pre-COVID. So that will give you the reduction in the allocation, which is quite massive. Same is the case with us, probably even more deeper than us. But what it can't give you is within that shrunk allocation that they have done in the current year or last year, how has been the bifurcation between or amongst different media. That you will not be able to get.
I think they have hinted on print only or print and television. The other medium they have not stated. But [Foreign Language], it's in public domain. It's a question and answer.
Okay. And because you have earlier said that central government spend are not yet back, any hint from the revised budget or something that you're getting that central government advertising is coming back next year? Or do you have any sense on that?
On the future budgets?
Yes. For central government.
Central government, as I said, I mean, right now, there is almost negligible advertising on that front. However, the good thing is that our traction on the state level of advertising is increasing. So there has been a very positive traction on that front. And going forward, we will be focusing more on the state government level also at the number [indiscernible].
So just to quickly tell you, on the state government front, we -- in the pre-COVID period in Q3 FY '20, the revenue was INR 4.7 crores from state, okay, and PSUs. And in this quarter, there is a recovery from that INR 4.7 crore level to the tune of 82%. And this quarter, we have INR 3.9 crores of revenue. So quarter -- INR 2.4 crores was last quarter to INR 3.9 crores this quarter.
So what we see is what best can be done to fill this gap, [indiscernible] central government starts the [ mission ] back in different media including digital. So it's a good challenge to have, trying to reinvent our whole sales strategy to how best we can navigate through this half of our revenue in a [ way for stress ].
Next question comes from Manan Patel from Airavat Capital.
Am I audible?
Hi, Manan. You are audible.
Congratulations for better performance. Sir, first question is, I would like to -- if possible, it would be great if you can provide the numbers of screens that have been added during the quarter and the number of screens that have shut down. So in the sense, we get an idea [ of what's happening to the industry ].
Manan, towards the end we started losing your voice. Screens added, right?
Screens that were shut down during the year or during the quarter, because I keep on -- I see your updates on LinkedIn or something where you post that this cinema was added with some screens and all. So am I audible?
Yes, we can hear you.
Yes, yes. So you are audible. So I got your point, what you're saying is currently, you are only seeing the net numbers going up or going down in different segments.
So it would be helpful to understand the trend of where we are heading.
Yes, you're right. It is important because in this period, what happened was post-COVID there were a huge number of screens, which closed down, primarily because of nonperformance or inability to cope up with the challenges. But as we mentioned in our Q4 earnings call last time, that these screens were from a lower revenue generating kind of a [ set, COD category centers ]. And again, what you're saying is right, you're seeing the LinkedIn updates, because during this period, no new screens were coming up, but everything was in pipeline.
So slowly now, the pipeline is releasing the newer screens and the interesting and very encouraging part is these multiplex screens are not only of the premium multiplex players, but also regional players or even local level players are coming out with multiplexes, who ultimately tie up with providers like UFO Moviez and that is what we put it in the domain. So at this stage, we have not given out the numbers, but let me collate it and in case it's possible for us to connect offline, I can provide it and then also put it in public domain on this.
Sure. That would be very helpful. Sir, the second question is...
Just hold on. Quickly, I'm getting a number. This is Q2 versus -- Q3 versus Q2, 102 screens added. So on a gross level [indiscernible] so the gross addition in the ad category is 92. This is what is coming from those LinkedIn profile updates. We don't do the updates for every screen, but we do it for the key strategic and important properties. 92 is -- so against the 92 installations in advertisement screens, we have 164 de-installations. That gives you a net reduction of 72, which is what is stated in or shown in the results.
Now this 164 is what -- and thank you that you asked this question, because somebody would carry an impression [Foreign Language] 164 they we have lost, but that's not the reality. This is something which is a damage of the entire COVID period. Fortunately, we can say now we are reaching a stage where all this cleanup is over, because some screens clearly closed down. So there was no question of checking back. Some screens kept the property, but they were not sure whether they're going to open up. Some screens opened up in South, but in North, the content was erratic, so they are not opening up.
But in the last 2, 3 months, we -- at least 2 months ever since Cirkus, we can now say that the movie content, both on Hindi and regional is steady, sufficient period has elapsed. So now we are taking a critical look at it. And in those screens which are nonoperational, we have those in the last 2 quarters, we have taken out. So this is how you see that reduction of 164 and a net level reduction of 72 on advertisement screens. I hope I have answered your question.
Yes, sir. Very helpful. So just understanding is from -- going forward, the screen number might increase or stay stable rather than reducing. Is that understanding right?
Your understanding is correct, except we need to keep a watch for 1 quarter. That's it, all I'm saying, because [Foreign Language], that is 1 year period we had kept in mind after the business opened up towards March last year, but we are not expecting a significant drop any further.
Okay. Understood. Sir, you didn't mention any update on NOVA [ Cinemaz ] in your commentary. So was -- how was the pilot coming up? And how are the new inquiries for the same? Do you have any views on that?
Yes. So as we had mentioned earlier in our calls also, this is an infrastructure business. And what we are doing is we are working on the pilot and pivoting the pilot around with market feedback and everything. So we hope to have some screens up and running in the next couple of quarters, which would seize the market and set up the trend for our intended rollout of this thing. So -- but as of now, currently, the NOVA, particularly the EUC model that we had said, that is still under development phase.
Okay. So we were trying to finalize the business model around that. So has that been finalized?
Yes. Business model has been finalized, and we are engaging with as a part of our strategy with village level entrepreneurs, and they have shown a lot of traction in that. And as soon as some deals fructify, we will come back to the market about the possible opening up of screens, where all it will open up, et cetera.
Understood. Sir, the next question is, again, on advertisement. So while we say that Hindi movie content has not been doing well, but if we look at the regional cinemas, they have done pretty well and which was not as big a trend before COVID. So before COVID, the frequency of regional or South cinemas was not as good as it is now. So doesn't that help our advertisement funds, even though Hindi is not doing so well?
It does, definitely. But if you see right now, what is happening is, earlier Hindi cinema used to perform at a certain level and South Cinema used to perform at a certain level. It's not as if South cinema has started performing super phenomenally, because if you see the ratio of films that get released in the North, so around 200 to 250 films release in a year in the Hindi speaking markets, in the Hindi language let's say.
And compared to that, if you put all the languages of South together, it's around 900 films that release. So within those 4 major language markets, you are always typically getting some films which are doing well. So the percentage of ratio of hits continues to be the same in that region. Only thing what has happened is when there was a gap between the content coming into the North market, the South market, which had opened up earlier, the films started releasing in the North market earlier.
And of course, no taking away from the fact that some of the South films have really done well, like KGF 2, Kantara, these were surprise hits and especially the way they have performed in the market. And -- but this is a very welcome trend.
Going forward, what we see is the overall pie of content when it increases and people have more acceptability of South language films and stars, it will definitely give a boost to our VPF and CDC revenues and advertisement revenues in the North. Is there anything I can clarify further on this side?
No, sir, that's very helpful. And lastly, sir, so we had raised funds during COVID, and you mentioned, I think, around INR 90 crores cash we have. So any idea how we are planning to deploy those funds going forward, either inorganic or organic in whatever manner? Any clarity you would have developed over these quarters for that?
So not at this stage. As we mentioned, even when we raise the funds, that was more of a buffer in case if the industry was to go through one more severe round of COVID restrictions. And therefore, that funding was raised and we are happy to state that, that funding is intact. In other words, we didn't go through any such massive issues and we were slowly able to get back to profitability -- EBITDA level profitability.
So at this stage, the whole focus is on getting the core business back. But as you have rightly said, that there has to be some strategy or planning around the utilization of the funds. But right now, the core and the only focus of the entire management is to make sure that the recovery on the back of the steady content both in North and South is faster, healthier in our core business. So I think we should wait for this recovery to come back, but the healthier part is that this cash that was raised is very much intact and not touched upon.
As and when there are any opportunities, if at all they come up, the market will be communicated at the right time. Not that anything that we want to convey to the market at this stage about it.
And the last question is, we have election -- we have multiple state elections also and central government elections. So do you see any indications from your interactions with the government bodies that the budgets might improve substantially during the year or next few quarters?
So our teams are in talks with various -- at various state levels also, but nothing that we can communicate at this stage. This is all moving parts.
Next question comes from Aditya Sen from RoboCapital.
I've got 2 questions. The first would be, do we expect any sort of increase in the operating cost going forward?
The answer to that is, yes. The operating direct cost going up is very healthy, because as my advertisement revenue grows, I have a 30% to 40% direct costs, which are [indiscernible]. So to answer your question, yes, we want the operating direct costs or direct costs to go up because it is directly linked with revenue. But on the manpower cost, there has been post -- during COVID, there was a very significant and deep salary cuts, which was taken across the company. That was reinstated last year, December, and there were increments that were also given. And therefore, you see the overall salary costs going up. We don't see it going up further significantly from here, the overall manpower cost.
On the SG&A front, we have actually managed to have some amount of reduction in expenses in some areas, which are more or less common in nature. And over there, we are very cautious in making sure that even further cost optimization without cutting the corners that we can do is what is being planned, but not that we want to hint at any significant savings going forward. But we have been able to rationalize the cost, reduce the cost, and more importantly, maintain the lower level of SG&A cost all through these last 3 quarters of operations, which is likely to continue.
Right. And the next one is, can you give us an idea of the total overall revenue pool in India in the movie distribution business?
So you mean what is this theatrical business, the collection?
Yes, yes, right.
So pre-COVID, we were approximately INR 13,000 crores, INR 14,000 crores as an industry. Those were some of the numbers which have been published by [ big 4 ] reports. Last year, I think, before publishing a report, I think you have published it. Let me try and pull the number, give me a minute, which was at least 60%, 70% lower than pre-COVID because obviously, there was only 4 months of business or even maybe deeper cut.
This year, they have not yet come out with a report, but their report is expected to be released in March. And that will give a very clear indication of what the market is looking like. If you ask me, our overall box office in South would have surpassed pre-COVID. In North, we had a challenge, all of us had a challenge in Hindi content. But from this quarter onwards, we should be closer to the pre-COVID levels, at least in this quarter.
In the North or in the total India?
In the North. In the South, the success continues, which is very healthy and good for us as an industry. I'm talking about in Hindi-speaking market [indiscernible].
[Operator Instructions] Next question comes from Shantanu Chatterjee from Mount Intra Finance Private Limited.
So I have a very simple question like as we have seen like for whatever reason, our advertising revenue is not picking up or not going back to the pre-COVID level in a hurry. So in these circumstances, like, are we -- is there any option for us to like monetize our business in some other way or there is any other revenue stream that we can think of? Or like, is there any other way like which can help us to compensate for that revenue?
So the advertising revenues will -- as I was mentioning, if we see Q2, Q3 FY '22 and Q3 FY '23, the corporate advertising revenue is -- recovery is very healthy over there. The dip for us is the government -- central government advertising, which is hitting us. Now as far as any additional revenues are concerned in this cinema space, so we have rental revenues, VPF and CDC revenues and advertising revenues. So we are pretty much covering the gamut of it over here. So from cinema service -- cinema level revenues, this is what is right now there.
Our focus is to build up the government revenues, specifically the state government revenues and PSU revenues on a much quicker scale and of course, take the corporate revenues to a higher level. That is where we are core focusing on. This is the lowest hanging fruit for us, and that will be our core focus area.
Shantanu, if you actually study our business model, we have always made sure that we have not taken any risk on content ever. And that -- so what has happened is that has been the reason why we are able to demonstrate a steady streak of profitability year after year, because we are not taking risk on content.
Now any monetization that we have to do in this field necessarily means either going OTT where for distribution or exhibition or going into the distribution big way where you are taking content risk or production of movies where you're doing content risk.
Now all these areas are new to us. We are not experts in these areas. We are very much expert in digital cinema business. So instead of getting defocused, at this stage where the recovery seems to be starting in a meaningful way, we would rather remain focused on our core business.
Okay. No, no, sir, that's well appreciated. I know like we are very focused on our like return ratio and like not doing any kind of loss-making business or taking unnecessary risk in our balance sheet. That's totally appreciated. I understand that. Sir, my only concern was like if you see like across areas like there is a dipping government advertising. That same thing is being observed in other medium also. So I was just trying to find out, is there any way we are thinking of like which can like put some additional revenue to our business. That was the only point. It's really appreciated whatever you have told.
Okay. Yes, thanks.
Next question comes from Krunal Shah from ENAM Investments. I repeat, question comes from Krunal Shah from ENAM Investments.
My question is on the film distribution business. As I joined the call a little late, so not sure if it has already been discussed. I just want to understand what's the performance there in terms of the gross revenue and the net revenue?
Yes. Just give me a minute, let me get the data points for you. So the film distribution business, as you know, we started last year with the focus where we are trying to make sure that we don't take content risk. But at the same time, we help smaller budget movies to reach to the business in meaningful way where they can expand their monetization abilities. And in the process, we have a distribution-led service fee, okay? So that has been the model on which we have been distributing films.
The [ content ] what we are seeing currently on 2 fronts -- 2 parameters that we see, one, whether we are able to attract content of this particular category on a regular basis. And I'm very happy to say that we were -- we are. Currently, in Q1 we did 12 movies; in Q2, we did 14 movies. In Q3 we are did 15 movies in 7 different languages.
And as I said, none of this is like big star cast or where we are supposed to give any big kind of MG or financial commitment, okay? So for us, this is a success factor. Why I'm saying so? If I'm doing on an average 14-15 movies a quarter or 60 movies a year of the 1,600 movies, which are released in India. So I'm already at 3%, 4% in terms of counter pools, okay? So this is one parameter. Second parameter is, we are making sure that in none of the movies we are making loss at an operating level, okay? This, we have been able to succeed in almost every movie.
Now if you see on the number fronts, these 15 movies may not translate into a very attractive kind of a net revenue every time. Like in last quarter, we earned INR 1.9 crores of profitability at the net level. In Q1, we earned INR 1.4 crores of profit. But in this quarter, we have against these 15 movies, we have earned INR 20 lakhs of revenue, but it is a net revenue.
So when we look at it, it is not just the profit that we're earning. Two significant advantages are there, and these are having extremely long-term benefit to the company. One, as we start doing these movies, our relationship on both fronts, the producer front as well as more importantly, the theatrical front, becomes very, very strong, because it's a direct connect with the theaters now in addition to me as a service provider, okay? This helps us by retention of the theaters in a meaningful way.
And two, this also supports my ancillary revenues or in ancillary, it supports my other key revenues. One, my CDC income goes up as I start doing this movie. Like 60 movies if I had not done, somebody would have done or -- might not have happened, but the reach wouldn't have been at the same level. Now when we do it at this level, the reach, my [ VPA ] for a CDC revenue automatically sees an uptick, which is not figured out in or factored into this INR 20 lakh revenue.
Same way, it also helps us to garner more of the trailer revenue in some cases. So these are ancillary advantages of -- on the revenue front. So to answer your question, 15 movies released, INR 20 lakh net revenue directly from distribution business. The ancillary benefit would be in the range of another INR 40 lakhs, INR 50 lakhs. However, we are looking at it as our deeper engagement strategy with our partners, which is on the exhibition and the production side.
Got it. Got it. And sir, what would be the gross revenue? That will be like INR 1.1 crores in that...
The gross revenue you want against this net revenue.
Right. For the quarter.
But the way accounting happens on a net revenue only majority as per the...
For the last quarter, I think you had reported that...
Last quarter, there were a couple of movies where the contracts were such that we were required to recognize gross and net. But now onwards, the contract structuring is such that in this quarter, there could be some revenue pertaining to the previous period movies, which is recognized at a gross level. But otherwise, the contract structuring is such that we'll be recognizing revenue only at the net level. And that is better [indiscernible] the top line, just INR 2 margin. It doesn't make any sense because that will distort my overall numbers and even difficult for the analysts to evaluate.
Right. So going forward, it will always be net revenue?
So it is contract-specific. We are trying to now enter into contracts in a way where we are able to recognize net revenue. In case like last 2 quarters, if some movie comes up, only in those exceptions, we might have to do gross, but I see lesser possibility of that.
Okay. Okay. Got it. And from this net revenue, the costs will be hardly anything and most of it will show up at the bottom line?
Yes, yes. There is no cost except very few lower level, lower management level people if we have hired. Otherwise, we are trying to use our existing manpower, which is deployed into digital cinema business, because its incremental work is not major, and that's exactly what is the leveraging opportunity which we had. And we are reasonably successful so far, and hopefully, we'll remain our -- remain to be successful in future also.
Got it. Sir, now going forward, we are doing right now 60 movies a year. How many more movies can we do without taking content risk? Because inherently, this business involves content risk. That's what I understand.
It all depends upon what sort of films we are targeting. So for example, if it is big-budgeted films, they would be requiring a content commitment, MG commitment from you and all those things. But the whole thing that we need to understand over here is that content risk is a very big game where larger players who are committing INR 300 crores, INR 400 crores per film are participating or someone giving even a INR 20 crore MG is a big risk factor for something like this.
So consciously, we have stayed away from taking any content risk on the films. We are building upon our equity and goodwill in the market, our existing infrastructure. And as Ashish mentioned, like even the Head of Distribution business was earlier our Head of Operations, who we migrated to the distribution business and our South head, we have given the charge for the North business also. So -- and including our all office staff, we have just kept it like that.
So the idea here is to look at driving the distribution business on the backbone of transparency rather than just handing out money because the films are a very, very volatile business. And getting into this game is not what we have kept in mind as of right now. We -- whenever a film releases, the CDC revenue comes to us. Film does well, it translates into advertisement revenue for us.
Right now, our whole -- entire strategy is not to get into the content risk game, and that is the way we have been building up on the entire business. The beauty of this will be that we have become almost the default distributors for the North market for the South language films. Smaller regional language films are also started to use our facilities. The step to move forward is to move towards a fixed fee income distribution models wherein you keep leveraging your existing staff more and more, and that is the way we are looking at this business.
Last question for the day comes from Kaustav Bubna from BMSPL.
Just wanted to touch upon what was previously mentioned on fundraising. So when you had raised funds, I think, when was it 1, 2 years ago?
December, last year.
Yes. So what was the purpose for this fund raise and why hasn't the cash been utilized yet? So what was the purpose for this fund raise and why hasn't that cash been utilized yet?
Okay. So I spelt out that time that when we were actually starting the fundraising process, we were in the middle of the second deadly round -- COVID round of Delta. There was no certainty about when things will open up. We were drying down our resources. By the time, we were in the process of raising the fund raise -- completing the fund raising, slowly the business was opening up. But at the same time, there was no certainty that any new wave would come up or not.
So therefore, we had -- what we had done was we had gone ahead, raised the funds as an emergency funding support to tide over any possible third wave. We saw the third wave of Omicron, but very fortunately, it was a very short wave and the whole country bounced back almost in a month's time. And fortunately, this period, there were no closures of cinemas, which was otherwise a [ soft ].
So the funds were raised for that purpose primarily. That purpose was -- it was a more prudent way to -- when somebody looks at making sure of a going concern of an entity, especially business, durable business like UFO should not get into trouble only because of one or a few waves of COVID. So therefore, those fund raise were made. We didn't need that fund for that purpose. And therefore, you see that funds still lying as part of my gross cash.
And hence, now how will you use it? Will you reward shareholders with it? Will you use it to pay off your debt?
No, we don't know if you were there on the call. The question has been answered adequately. Were you there when I answered the previous question?
No, no. Hence, I'm asking this. So I didn't hear that part. So how will you use this now?
I would request you then in next couple of days, this con call will go online. You can hear that question. We have adequately dealt with that question. There's no point repeating that answer in my view.
Now I hand over the floor to Mr. Tushar for closing comments. Thank you, and over to you, sir.
Okay. Ladies and gentlemen, this concludes the conference for today. Thank you for your participation. You may disconnect your lines now. Thank you, and have a pleasant evening.
Thank you.
Thank you, everyone.
Thank you, sir. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Door Sabha's conference call service. You may disconnect your lines now. Thank you, and have a good day.