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Zee Entertainment Enterprises Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '20 Earnings Conference Call of Zee Entertainment Enterprises Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Bijal Shah. Thank you, and over to you, sir.
Thanks, Raymond. Hello, everyone, and welcome to Zee Entertainment earnings call to discuss company's performance in Q4 FY '20. First of all, I would like to apologize for shifting the call time a couple of times, which happened due to events beyond our control. Joining us today on this call is Mr. Punit Goenka, Managing Director and CEO of Zee Entertainment; along with Mr. Rohit Gupta, Chief Finance Officer and other members of senior management. We will start the call with a brief presentation from Mr. Goenka, then a brief statement on operating performance and financial performance from Mr. Gupta. We will subsequently open the floor for the questions. I would like to remind everybody that anything we say during this call that refers to our outlook for the future is a forward-looking statement and must be taken in conjunction or if the risk that we face. Before I pass it on to Mr. Goenka, I hope everyone has got an opportunity to open the live presentation link we had shared along with the call invite. You would have also received it after you would have registered for the call. If someone has not received it, the link is available on our website, under the tab Quarterly Results section. We would wait for a moment before we start the call as everyone gets a chance to open the link. Yes. We'll begin the call. Thank you, and over to you, Mr. Goenka.
Good evening, ladies and gentlemen. I hope you all are safe and taking good care. I appreciate you joining us today despite it being a weekend. As some of you might have read, I have expressed my thoughts in an open letter, thoughts pertaining to the future of ZEE, thoughts pertaining to what the new version of ZEE would look like, thoughts pertaining the lessons learned and the dreams and visions. But before we get to the quarterly business update, I'd like to take this opportunity to share these thoughts with you firsthand. Those of you who have read the letter must have noticed that I started with -- started it with these beautiful words from the Bhagavad Gita, which actually summarize my reality and give me the required strength for the new beginnings, beginning of a entirely new life for the company, beginning of a sharper, leaner, greener ZEE, beginning of ZEE 4.0. While I have touched upon the evolution of this company in 3 key phases, I would like to focus this presentation on the final aspects of ZEE 4.0. If the first 3 phases were about growth, success, lessons and learnings, the fourth phase will be about positive change, sharp focus and determination, which, in fact, led to the formation of the 5Gs: governance, granularity, growth, goodwill and gusto. Let's start with governance. We now have new members on the Board, bringing in the required blend of expertise, experience and business. Mr. R. Gopalan brings in 25 years of rich experience in the realm of creating institutions and corporates. Mr. Piyush Pandey takes the creativity quotient of the company to a whole new level with his 37 years of rich experience in the field of advertising and communication. Ms. Alicia Yi, on the other hand, brings an expert in leadership, human capital strategy, and diversity and inclusion as renowned value to the Board. And of course, the company continues to be blessed with the presence and mentorship of Mr. Adesh Kumar Gupta, and Mr. Manish Chokhani as independent directors. We have introduced 2 policies, which will strengthen our governance, mitigate our risks and safeguard our business interest. The focus going forward will be to build a process-oriented structure, achieving the highest level of automation with 0 manual intervention. Also, we will continue to maintain utmost levels of transparency. All the questions raised in some of our decisions taken earlier has been answered. With immense confidence here, I would like to state that an independent review commissioned by the Board has not found anything adverse to report. We will also be releasing the findings of this review for everyone's reference. Speaking of transparency, let me mention one more thing here. My initial idea was to represent this letter you all during the investor call and then release it to the world at large. At around 5:15 p.m. yesterday, it was brought to my notice that the letter had been leaked. And hence, I thought it would be best if the official version of the same is released immediately. While I didn't need to even mention this today, the fact that I am speaking about transparency, I wouldn't have been true to myself if I didn't bring this up here. I believe that there is no harm in accepting our weaknesses if the intent is to honestly work towards fixing them. Granularity. Maintaining a granular and transparent approach while reporting will be an important area of focus for us. I mentioned about segmental reporting. I'll detail disclosure of business KPIs. While Rohit will take us through some of these in the next 2 minutes, going forward, we will ensure that this process gets even more granular and transparent in nature, especially in relation to our digital business. On CSR, we now have a refreshed policy in place approved by the Board, which articulates our approach going forward. This all new policy defines the key areas of focus, such as women empowerment, reservation of art and culture, disaster relief and recovery as well as rural development. Last but not the least, we will shortly roll out our measurable ESG goals as well as the approach to achieve the same. Growth. The paradigm shift experienced across the global media and entertainment industry, coupled with the technology-led disruptions, demand one to evolve constantly. Therefore, we have initiated a strategy exercise to cover a 5-year strategic road map for the company, maximizing our core, expanding into adjacent spaces, and exploring new areas of business will be the key tenets to our long-term growth strategy. Goodwill. Like I mentioned in the last 18 months, we have made a dent to our goodwill. While the vested interests will now more than ever create rumors and speculations, and we experienced a few over the last few week itself, let me make one thing very clear. I am here to stay and remain committed towards ZEE. I have taken up this challenge to restore the goodwill, not just for me, not just for my family, but for the entire team at ZEE. And finally, Gusto. I'm very proud of the professional leadership team at ZEE. Our entrepreneurial spirit, rich experience, expertise in content creation and the unique ability to gauge the pulse of our consumers have been instrument to our success. The ZEE passion and commitment, which the team brings to the table, gives me a deep sense of pride, and I assure you that this will only grow with greater intensity. I intend to embark on this new journey of ZEE 4.0 with a clean slate with new dreams for the future, with immense learnings from the past and with your blessings. I seek your continuous support, trust and blessings, as we start this new chapter, this time, not just to make history, but to write the future. Now let's move on to the business updates. I'm requesting my colleague, Rohit, to take you all through the same. Rohit, over to you.
Thank you, Punit. Let me now run you through the operating and financial highlights of the business during the fiscal. Despite the macroeconomic headwinds faced by the industry, the operating performance of the company was resilient. Our continuous focus on creating quality content for consumers and reaching out to them across platforms has held us in good stead. And that is the reason our consolidated revenues grew by 2.5% despite a 7% decline in advertising revenue. FY '20 was a phenomenal year on the subscription front. 30% growth in domestic subscription revenues is a testimony to the strength of the network we have built over the years. We have said in the past that television will continue to drive growth for the company over the foreseeable future. And that is why notwithstanding the current period of slowdown, we continue to make investments in the media business. In the last few months, we have launched 4 regional channels. These channels will help us strengthen our position in the regional markets and will also contribute meaningfully to our top line once they scale up viewership. During the year, the television network had lost its #1 position after the merger of 2 of our peers. But we exited the year on a strong note, reclaiming the leadership. In the coming quarters, the focus of the business is to strengthen that position. Our channels in Kannada market and pay Hindi movie genres further strengthened the #1 position during the year. Despite some loss of share in the second half, we continued to maintain leadership in Marathi and Bengali markets. Our performance in the Hindi, Tamil and Telugu market was below expectations last year, and the team is working hard to turn this around. Given the stark reality of the revenue this year, the business is working to strike a fine balance between profit and growth, and I'm confident that we will be able to deliver a healthy balance of both. Now moving to the digital business. ZEE5 is now firmly established as the biggest publisher of digital original content in India. We released over 80 shows and original movies on the platform last year. Some of the shows like Rangbaaz, Abhay, Kaafir, Mentalhood and State of Siege have been true successes and have set a benchmark. While ZEE5 has been able to establish a strong position in a hypercompetitive market, I believe that the journey has just begun. We want to make ZEE5 the default digital entertainment platform for the Indian consumer, and we will continue to add new use cases to achieve that. The number of monthly and daily active users in the month of March was 63.1 million and 6 million, respectively, and the average monthly time spent per viewer on the platform was 136 minutes. In the movies and musical verticals, ZEE Studios and ZEE Music Company are strengthening their competitive positions. ZEE Studios was India's #3 movie studios in FY '20 in terms of box office collections. Despite the temporary disruptions to the movie reschedule, it is ramping up its pipeline of in-house co-production and distribution projects. ZEE Studios has also decided to go for direct-to-digital release of movies that were ready for release. ZEE Music company continues to expand its music catalog and is now home to some of the most popular music release over the last few years. Now coming to the growth outlook. India's economic growth has been slowing for a while, and the consumption demand has been subdued. These factors were already putting pressure on our advertising revenues during the year. The nationwide shutdown precipitated the situation and had an unprecedented impact on business operations and advertising revenues. Due to lockdown, broadcasters had to completely shut down production of original content for most of the first quarter of FY '21. As we speak, all markets, except Tamil, has resumed telecast of original shows. The advertisers has started pulling back scrappage spends in the second half of March, as lockdown brought sale of discretionary goods to a complete halt. Most of the advertisers also reduced ad spends as a way of protecting profitability and guarding against the uncertainty that COVID brought. There was some impact of COVID on our Q4 advertising revenues. But its full impact will be visible in the first quarter. As the economy is opening up, we are seeing signs of recovery, which is bringing advertisers back, but we are still far away from normal. In fact, we have to still figure out the new normal. We are hopeful that the onset of festive season, starting second half of Q2, will drive recovery in ad spends. While advertising spend has been materially impacted, the subscription revenues remain stable even though DPOs had some issues in collection during the lockdown. Now let me run through the key financial highlights of the year. During FY '20, our revenue stood at INR 81.3 billion, a growth of 2.5% despite a challenging macroeconomic environment. Our domestic subscription revenue witnessed a growth of 33%, highest in the industry. This is driven by the monetization of viewership gains over the last several years and the growing subscriber base of ZEE5. As you all know, it was a difficult year for advertising and our ad revenues declined by 7%. This was mainly due to the economic slowdown and conversion of our 2 FTA channels to pay just before the beginning of the fiscal. During the quarter, we have taken provisions, accelerated amortization and impairment in some of our balance sheet items. This is primarily due to the COVID-19 pandemic and the changed business environment. We have taken a conservative view of the likely cash generation of certain assets, leading to the reduction in their values. I would like to run you through these one-off expenses that are included in our Q4 results, and therefore, in that FY 2020 results. Starting with the inventory, we have taken an accelerated amortization charge of INR 2.6 billion in Q4 on account of slowdown in economic activity. The increase in inventory that you see, despite these one-off expenses, is due to the fact that the company has secured content against the advance and deposits that was given to content aggregators in FY '19. The current value of those advances and deposits is INR 4.2 billion compared to INR 9.4 billion at the end of FY '19. Secondly, an amount of INR 3.4 billion has been provided for the balances related to ad, subscription and other assets, where recovery has become doubtful due to the uncertainty caused by COVID-19. It also includes a provision for expected credit loss of INR 1.2 billion from a key subscription customer, which is a related party. Third, we have taken a loss of INR 3.8 billion, USD 54 million in overseas investments in accordance with IND-AS 113 to reflect the movement in fair value of these investments as on 31st March. During the year, the company has decided to sell these investments and appointed a consultant to identify a buyer for the same. While the investments were deployed in high-yield assets, due to the impact of pandemic, the value of the underlying assets declined significantly and potentially delayed the disposal and realization of the investments. Considering all the relevant factors, including avoidance of any additional losses on account of these market disruptions and uncertainties, the management decided to divest the amounts invested in these funds at a consideration of USD 30 million based on the sale agreement subsequent to the year-end. The company has already received 15% of the nonrefundable part consideration for the same. Fourthly, based on the opinion of an independent valuer, goodwill of INR 1.1 billion pertaining to acquire digital business has been written-off and provided during the quarter. EBITDA for the year stood at INR 16.3 billion, while the underlying EBITDA, excluding one-offs, stood at INR 22.4 billion. Adjusted EBITDA margins were at 27.5%. Cash and treasury investments as on 31st March 2020, stood at INR 10.2 billion. This includes cash and bank balance of INR 2.6 billion, bank fixed deposits of INR 4.7 billion and overseas treasury investments of INR 2.2 billion. With this, I would like to open the floor for Q&A session.
[Operator Instructions] The first question is from the line of Abneesh Roy from Edelweiss Securities.
My first question is on the subscription revenue. So a strong growth in FY '20 and even in Q4. From that strong base, how is FY '21 looking? I'm not asking on Q1, you mentioned that it is stable. But because of the overall income level, salary cuts and overall slow GDP, do you see a dip in subscription revenue in FY '21? Especially work-from-home consumers are also going more towards OTT, which may not necessarily be ZEE5. So putting all this together, how do you see FY '21, in subscription?
Abneesh, as usual, you are the first person in queue. So my response to you would be that -- my expectation is that the subscription revenue, even for the entire full year of the current fiscal, which is FY '21 will see a growth. It will be a moderate to a reasonable growth. It may not be the high-digit growth that you saw in the last fiscal. But we will certainly register growth there as well.
Right. My second question is on the INR 343 crore onetime provision towards advertisement and subscription. So could you elaborate on the advertisement part, which ones are this? Because normally in the TV, we see the big corporate advertisers, and similarly on the subscription, you mentioned the related party. So now with ZEE 4.0 and a higher focus on governance, will this be the last quarter wherein any related party on the subscription there is some impact, there is some provision? Would you give that clarity?
Yes. On the advertising side, the people that have been accounted for are nonaccredited -- clients who come through non-accredited agencies that we have, as an industry, a deal with. So that amount is being captured here. It has nothing to do with credited agencies, and it's just a provision. It's not a write-off. So we do expect to recover all this money from them going forward as well as for the norms laid out by the IBF credit control. On your second point, I do not expect any further adverse impact of subscription revenue from related parties. Because given the fact that we are not writing it off, so for good governance sake, we expect to firstly recover that money also, which we hope to write-back to our P&L as and when it recovers. Irrespective of that, we have factored in all that was possible, and therefore, have to come to this as a one-off conclusion point.
Okay. My last question is on the market share. So Hindi, Telugu, Tamil, 3 markets, loss in markets. Sir, normally, we don't see this. You have a bouquet, so 1 or 2 is fine, but Hindi plus 2 large regional, could you elaborate what happened? Is it the competition spending more? Second is, the ZEE5, you again mentioned on -- in terms of library, very strong market share. But last few months, I'm seeing much lesser activity in ZEE5 versus a Hotstar Multiplex, for example, so the 10 movies rights they have acquired and similarly Netflix. So how do you see ZEE5 market share, not just from a library, but more from a big tentpole properties?
Yes. So on the ZEE5 side, I think, activity wise, maybe what you are saying is right, Abneesh. But the fact of the matter is it again works in our DNA style of functioning. On the films that you talked about being done by our peers, I do not think we thought that one, as a strategy, would have been a rewarding one. And therefore, we did not enter the bidding war. I think we will remain committed to our original content strategy going forward, including our film strategy going forward, which could be produced solely for the ZEE5 platform or acquired for the network as a whole. Having said that, my belief is that the numbers of ZEE5 are only increasing. In fact, on the subscription side, we have seen the numbers go up by almost 60% to 70% as a combination of B2B versus B2C. And it gives me the confidence that they are heading towards the plan as we had envisaged it. Sorry, you had a question before this, Abneesh, what was that?
Yes, Hindi, Telugu and Tamil, what is the reason?
Well, Abneesh, the reason for this will be multiple, right? I mean, at the end of the day, the single largest reason is that the content connect with the consumer is not there. And then we have to rebuild and reestablish that. Everything else is temporary because whether it was the tariff order, which caused the drop to happen or whether it was the lockdown and the shutdown of original content. But eventually, we have to bring it back with content itself. And if you look at the return after the original content numbers, I know it's only 1 week, but there itself, you will get the confidence of the consumers coming back into the content itself.
The next question is from the line of Pratik Rangnekar from Crédit Suisse.
Hello. Am I audible?
Yes, Pratik, you're audible. Go ahead.
Yes. Sir, just a quick one on the qualification that the auditor has raised. The transaction or the contract that ATL has entered into, in layman finance terms, seems similar to writing up a put option. So if you could just throw some light on what was the business exigency for this step was taken? It was probably many years ago, but if you could just throw some light on that? And also, if you could provide some color on whether there are any more such contracts that may be active, and if possible, the total value of that?
According to us will be, firstly, even this contract is as an exceptional one. This is an agreement that was done between our wholly-owned subsidiary of the company and the Veria or Living Entertainment. We have -- basically, they have not performed on their own obligations. And therefore, we do not believe there are any potential liabilities to the company or its subsidiary. As the matter is sub judice, I would prefer and request if you take it off-line rather than on an open call with Bijal and his team.
Sure, will do that. Sir, my next question is on the content cost. So even if I kind of exclude the one-off accelerated amortization, the run rate has gone up from maybe, say, INR 8.5 billion in the previous quarter to about INR 10 billion, INR 10 billion, INR 10.5 billion. So would it be fair to assume that this run rate will continue even when the quarters, say, normalize -- when the situation, say, normalizes once the COVID effect is behind? Would that be a fair assumption?
No, Pratik. See, every -- there are 2 parts to it. So one is what we have called out in our notes to accounts that there is a INR 2.5 billion of additional amortization or accelerated amortization. Beyond that, every year, we do assessment of every line item in the inventory sheet, that, there, we think that carrying value of inventory might be slightly higher, lower, and this is happening at a global level, our international inventory, domestic inventory, everything. So this year, we have been very conservative, and we actually provided for that additionally. That number will be available in annual report. But every year's annual report also, you see that number. So that all -- that additional amortization has come during the quarter. From the coming quarter, you will see the programming cost or operating cost will be reverting back to the levels, which we have seen in the past quarters. So this quarter, there is -- I mean, INR 10 billion is not the run rate for the quarter.
The next question is from the line of Kunal Vora from BNP Paribas.
First one, regarding the overseas investment, you've sold them off at almost 70% discount and booked almost INR 380 crores loss. What was the nature of these investments? And why did you not mark-to-market them earlier? I mean, why suddenly a 70% write-off in the investment? If you can answer this, I'll go to the next one after this.
Sure. So the investments are always valued at the fair value at the end of the period based on the net asset value for those investments. This year, like I had mentioned in my opening remarks, we had planned to sell these investments. And as directed by the Board, we wanted to get out of these investments. But because of COVID-19, global pandemic impacts, as it has impacted all investments globally, it has had impact on these investments as well. And while you are right, this is a significant drop. But like I said, to safeguard the company from any additional losses that may incur -- incur because of the uncertainty, which still looms, we felt it prudent to register the sale, which we have done, and we have taken a 15% nonrefundable -- nonrefundable deposit -- nonrefundable amount as well, which is what we have got.
Okay. The second question on inventory. Inventory has gone up by a massive INR 1,500 crores this year, even after an accelerated amortization of INR 250 crores. Can you provide some broad breakup of what's in there and some sort of amortization schedule, which we should be looking at? Like when we can see a large accelerated write-off because the amount is very large now?
I think we have to break this down in further detail. And we hope to start providing that in the future. But for that clarity, let me just try and explain a little bit here. Of the INR 1,500 crores, there is a large part of the inventory, which is in excess of INR 350 crores to INR 400 crores, which is sitting in our movie vertical. And this relates to the fact that under the lockdown situation, films have been produced, they are ready to be release, but unable to release due to the shutdown of theaters. And the -- so is the case in our ZEE Music Company. These will start realizing value and as per the amortization policy, we will start passing through the books, as the lockdown opens up or we start striking direct-to-digital deals. For example, like we have done for one of the films in Hindi and one of the films in Tamil Nadu. So that's one part of it. The second part of it is that the growth in the inventory of the residual, which, let's say, for INR 1,100 -- INR 1,000 crores to INR 1,100 crores is largely on account of our digital and the new channels that have been launched in the 3 -- third and the fourth quarter of the last fiscal. Of course, we can give you more granular details offline with Bijal by verticals.
Okay. Just one last question. On the related party receivables, it's gone up from INR 500 crores to INR 800 crores, and even after -- that's after writing-off INR 120 crores of receivables on related parties. So what was the sales to the related parties this year? And how much has been collected?
Rohit?
Yes. So actually, the INR 800 crores is not related parties, it is with the 2 large strategic customers. That is one. Secondly, like I said, there was only one related party where we felt the need to take a provision, and we have already done that, and that amount is mentioned in our notes. Except for that, we have been receiving funds and collections from the other strategic partners as per the payment plan that we have. And there is no additional provision, et cetera, which was required.
Unfortunately, we can't share client-wise details because that is little bit confidential in nature for competitive reasons.
What do you think it looks like the -- again, if I -- assuming that INR 8 billion is from the related parties, in that case, there has been almost INR 450 crore of additional amount not collected, and that might be almost as large as the subscription revenue which might be received. And we just wanted some clarity on whether there is a big delay in collection from there?
No. Let me just add here that the amount that you see is actually as on March '20. There have been subsequent very good collection, and the amount has come down as on June. And of course, we are going to share our results of fourth quarter soon. So you'll have those amounts. But subsequent collections during the fourth quarter have been very good.
And one clarification. INR 8 billion amount includes INR 1.2 billion, which has been provided for, it is not written-off, it is just provided for. So INR 8 billion includes that amount. It is not net amount, it is a gross amount.
The next question is from the line of Naval Seth from Emkay Global.
Sir, I have a few questions. One, most of your onetime charges, provisions or accelerated content amortization is pertaining to COVID impact. Now this being 4Q numbers, have you taken into account the impact of COVID, which you would have seen in April and May, as Rohit in his initial remarks stated that ad -- impact on ad revenues will be fully reflected in 1Q? So is it accounting the incremental impact of COVID in 1Q? Or how one should look into this?
So we have tried to assess the impact of COVID that will happen for the full fiscal that we are going through, and we have taken that impact. We do not expect -- because we expect that the markets will start opening up as we speak, as we are witnessing in June and July itself. So the impact of COVID to our inventory's part has been factored in for the entire year from that perspective.
Okay. Second, on accelerated content amortization, as stated that it is on account of slowdown in macro activity. Can you please elaborate something on this? I mean what happened? Is that content not releasable or can't be telecasted now? Or how should one look into this?
Yes. So Naval, there are -- I mean, this has happened across multiple geographies. In couple of geographies, we have actually shut down the channel because they were linear and we are now going primarily digital. So let's say, we actually shut down our channels in Germany. Now whatever cost, which was set in for the inventory, we had to write it down. Similarly, in APAC, also, we have some channels, which are not really making sense now. So that -- there is a write-off on account of that. Beyond that, some of the movies, which were pretty old and where carrying value did not make sense, so that is where we have taken some of provisions or some of the impairment. So it is very specific to certain business. It is not some global provision that we have taken. Depending upon each piece of inventory, wherever we felt that carrying value is not making sense or wherever we felt that we are going to take a business call of not going ahead and continuing with that channel in global markets, that is where we have taken charge. And some of that is also on account of COVID because the marketing -- advertising market because our channels outside are -- many of the channels are advertising driven and their advertising has gone down significantly, so which, in our view now, does not make sense to continue and inventory write-off on those channels was required.
And my last question is on cash. The cash has come down substantially in last few quarters. What is the outlook over here? Because you have outstanding for the preferential outgo over the period of next 2 years. Additionally, you have investment in SugarBox. How should one look at cash position? Because inventories, there has been a hope that inventory investment would come down year after year, but somehow that has not been visible. So how should one look at cash generation? Or is it that the increased intensity of competitive -- competition and digital content one should believe that FCF generation is still far away?
Naval, Punit here. I think, firstly, we talked about this inventory coming down only in the last fiscal. It's not something that we've been talking for many years. I think we've spoken it so many times about it in the last fiscal, it seems like we've been talking about it for many years. But the fact of the matter is what we have committed is that the future inventory growth will be in line with what is passing through P&L, therefore, there will not be an accelerated growth in that. And that point we stick to. The reasons for reduction in cash are twofold. One is the sale of investments that Rohit talked about in the international market, which was reported as cash and cash equivalent has gone away. The second is the redemption of the RPS that we did in the fourth quarter. These were the 2 large reasons for the cash and cash equivalent to come down. The breakup of that has now been declared to you. We -- this INR 1.08 billion that we -- or sorry, INR 1.02 billion that we talked about is entirely free cash sitting within our books. We expect to generate free cash flow this year also. I am working hard towards -- with my team that we generate at least 50% of the PAT towards free cash flow. But given that this is a pandemic and COVID-19 year, so we are not able to substantiate that with that much, what should I say, gusto, but that's our endeavor going forward. Certainly, from '21, '22 onwards, we expect that minimum credit cash conversion to be 50% of our PAT, minimum.
Punit, I just like to add, the cash and treasury investments are at INR 10.2 billion.
Sorry.
Yes, INR 10.2 billion. And this includes cash and bank balance of INR 2.6 billion, bank's fixed deposits of INR 4.7 billion and overseas treasury investments of INR 2.2 billion.
The next question is from the line of Alankar Garude from Macquarie.
My first question is on the payables. We have seen our payables increase significantly since the last 3 years, apart from the increase in our inventory as well as receivable. So -- and this is happening both in terms of the absolute amount as well as payable days. So can you please throw some light on what is happening here? Are we delaying our payments to our content producers or any other vendors?
So firstly, Alankar, I think our payable days have increased by 3 days.
Punit, I was -- sorry, sorry to interrupt. I was talking more about the last 3 years. So I know that in the last 3 years, it has been constant. But if I compare the last 3 year's average versus the previous year's, it has increased significantly.
Rohit?
Yes. So let me take that. So first of all, contrary to what you are saying, we are actually paying faster. We are paying faster. What you see at the end of March, the last 10 days of March was lockdown. And obviously, there is an impact of that -- on that reporting date. But the payables has come down significantly. We are paying our suppliers well on time.
So just to elaborate on that, Alankar, earlier, if you look at the pre-NTO phase where we received subscription revenues, net of any costs, now most of the distribution costs actually passes through our books and becomes part of payables. So that's a huge increase that has happened in our payables out to our content partners. There, you will agree that until we do not close the reconciliation with them at the end of the year, the numbers will remain outstanding. So I think from a production house perspective and from a content acquisition perspective, we are in -- very much in line with our contracts with them. Maybe a day or 2 here delay maybe something that's caused. And likewise, there are times when we even prepay our partners at their request.
Understood, Punit. my second question is on the ad revenues. If you could provide some clarity as to where we are right now as compared to, say, what we were pre-COVID in terms of our original programming on television as well as any color on the advertising revenues?
So advertising revenues, well, I'm not giving you exact guidance, but my expectation for quarter 1 is that will be down by almost 2/3 compared to last year for us. I don't know, industry number. I don't want to comment on because that's still being collated. So that's what is our expectation. My worst-case expectation for the full year on advertising, it will be anything between 28% to 30%. It could only be better than that, it can't be worse than that. Beyond that, I'm not able to provide you anything more right now. But obviously, at the end of quarter 1, but most likely at the end of quarter 2, I can give you a far better guidance on how the comeback on the advertising revenue is likely to happen.
Understood. And on the original programming, Punit, so we mentioned Tamil. But in all the other markets, are we back to, say, 80%, 90% of our usual programming hours?
No, we are not. In Hindi, especially, we are not back to that level. Hindi, we are probably at just about 60% to 70%. Other markets, yes, we are back at 80% plus. But most of the markets and -- not most, all of the markets, by the festive season will be at 100% of our last year's run rate.
Understood. And one final question from my side, Punit. Any updates on further appointments of independent directors on the Board?
Updates as in, yes, we do have short list that we are working on. But I cannot share names until it has gone through the process of NRC which is the Nomination Remuneration Committee and then the Board approvals. But we are looking at some more expertise from the field and larger expertise from other fields that can add value to the company.
Okay. So that means at least 2 more members could be potentially added?
I'm not commenting on the number.
The next question is from the line of Rohit Dokania from IDFC Securities.
Yes. Two questions from my side. Firstly, Punit, you did sort of allude to the domestic subscription revenue growth going forward. But I believe that TRAI has now asked for broadcasters to implement NTO 2.0. So...
Rohit, there's a echo in your this thing. Are you on your mobile or...
Just 1 second. Just 1 second. Yes, is this better?
Yes, much better. Go ahead. Go ahead.
Yes, sorry. I was just asking, TRAI has asked sort of this broadcast industry to implement NTO 2.0. So even accounting for that, you think there would be growth in subscription revenue in this year?
Yes, yes. Even accounting for that, because my accounting for that is that it's not going to happen. And accounting for that reason not happening is twofold. One, the matter is sub-judice. So I do not understand on what basis TRAI has asked us to declare our new pricing by 10th of August. Assuming that is still enforced, my second question is, what is the date for implementation for consumer? For that, TRAI is silent completely because at the end of the day, my pricing is relevant only if the consumer date is finalized. So how do I assess the impact of the price of the NTO 2 implementation until I know what the date for implementation is it for the pan-consumer.
Sure. Fair enough. The other one was on ZEE5. Will it be possible to give any broad indications in terms of revenue metrics or sort of EBITDA losses metrics?
Rohit, less than a month to go, you will have the clearance.
Okay. Great. That's it. And also if you can also talk about your tie-up with ALT Balaji and what's the future plan out there?
So ALT Balaji tie-up was for a 3-year period, and it can be extended on mutual grounds further. And it's currently an exclusive arrangement between the 2 platforms. We do keep evolving and discussing further developments. As and when those certify, we will let you know. Currently, we are in the second wave of our contract -- the 3-year contract that we have signed with them.
The next question is from the line of Vivekanand Subbaraman from AMBIT Capital.
Can you shed some light on the non-content cash operating costs that you have for fiscal '21? And how much flexibility do we have on that? The second question is, what are the major cash flow commitments in fiscal '21, like plant inventory increase and SugarBox?
Yes. So the non-content cost for the company is about 40% or 45% of the total expenditure. Of this, the only other variable that we have is in marketing and selling costs. And there also, the flexibility will be in maybe high double digits, maybe to 14%, 15%, if at all. The rest of it is pretty much fixed cost in terms of transmission, people, et cetera. So that's where we are. In terms of cash commitments, Rohit, you want to take that? Do we have anything?
So we continue to make our investments. Like Punit mentioned, the focus is on converting PAT to cash at 50%, which may not be possible this year. But definitely, we are looking by '22 given that this is a year of -- as a pandemic year. So there are no specific commitments which are not disclosed.
Having said that, we will continue to invest in the content business because we cannot wait for recovery of the market to start investing in content. I think the content investment will happen first before the recovery will start on the revenue side. So therefore, you see, despite revenue not being fully up, we are up with almost 60% to 80% of our content line up from 13 July itself, we have gone up. And similarly, ZEE5, all our digital platform content will start, the original content will start from next month itself. So from that perspective, we'll start investments even if there is a lag in revenues.
Okay. Got it. And just one small follow-up on the cash commitment. So SugarBox, we had disclosed that there would be a INR 522 crore investment over a 2, 3-year period. How much of that will get deployed in fiscal '21?
I think the first -- the cash deployment from the company was to the tune of about INR 220-odd crores over the next 2.5 to 3 years. Given the current COVID situation, our contracts for deployment have been delayed in any case. So currently, we are running behind that cash requirement. As soon as we know the status of the contract kicking in, which is the rail-tail contract, we can give you a better judgment, but I do not expect much more to happen until the fourth quarter of this current fiscal.
Okay. Got it. Second question is on subscription. Do you think that the channels that have now been telecasted on DD FreeDish, do you think that will have a bearing on the subscription revenue trajectory going ahead? And a related question is the shutdown of several niche channels that are happening, do you think that, that will also be on the cards as far as ZEE is concerned? And how does all of this impact your long-term subscription revenue outlook for DD?
I think the guidance that we have given factors that in to our plan and as Bijal was talking about, we constantly reevaluate our portfolio of content offering that's out there, whether in linear form or digital form. And we have taken certain decisions in the international markets for shutdown of linear channels. Similar things we are evaluating even in the domestic market, and you may see some announcements coming in the current fiscal, et cetera. But having said that, I do not see them having a long-term impact on our subscription revenue perspective because any loss there, the gain we will see on our digital platform will be far higher. Because at the end, that audience doesn't evaporate, that audience just moves from one platform to another. And therefore, we will get our share of that niche content on our digital platform. The value, et cetera, of that being so small in the larger scheme of things doesn't really impact us in the short term, medium term or even in the long term.And on the FTA side, I think it will only benefit us because what we had shut down, which doesn't really impact the subscription revenue per se. Because if you look at the free dish distribution landscape is kind of stagnated at that 30 million, 35 million homes. And despite so many more channels either going on or coming off, that number is pretty now stagnated. So I don't see whether channel goes on or comes off will have any impact on our subscription revenue. I think that's what your first question was? Did I get that right?
Yes, yes.
The next question is from the line of Himanshu Shah from Dolat Capital.
Sir, in this quarter, despite there was no impact of COVID, our margins have came off very significantly. So any color you would like to provide on the margin front for FY '21, EBITDA margin?
So our margins certainly in FY '21 will not be anywhere close to the 30% that we've been delivering in the past. The margins in quarter 4 also were a factor of, as you said, not fully COVID, but yes, in the last month of the quarter, we did have COVID impact. But overall, if you see the economic slowdown, which we were witnessing from quarter 3 onwards and quarter 4 also witnessed a similar slowdown. So there was a reduction in advertising revenue. Obviously, in quarter 4, we had not taken any action on any cost reduction, which you will see in quarter 1 of the current fiscal. But having said that, in all probability, once things remain -- come back to normal. And hopefully, in fiscal '22, we'll be able to come back to our 30%-plus guidance of the EBITDA margins for the company as a whole.
The next question is from the line of Jaykumar Doshi from Kotak Institutional Equities.
Punit, my first question is, the environment is quite challenging, and we really don't know how soon it will get better or when it will normalize. Given this backdrop, is there any chance that you may reevaluate or reconsider your decision to -- for the commitment that you've made for SugarBox project?
Jay, I think the commitment for the SugarBox project has been done after taking due consideration. Of course, we will reevaluate all our decisions based on the current pandemic and COVID situation. Today, given that our investment requirement has moved to the end of the fiscal at the earliest, if things deteriorate further, we will re-look at it and come back whether what is the right thing for us to do. Whether that means we have to reduce our investments from the INR 500 crore levels to a smaller number or do something else to the strategy, those are evolving as we speak. But as I said, nothing is cast in stone. It is cast in stone for that point in time. And if certain assumptions do change, we will have to reevaluate as we do for any other business.
If you can sort of -- over the past 2, 2.5 years since the time ZEE5 was launched, at that point of time, our expectations were that ZEE would invest significantly in ZEE5 and somehow versus those expectations, we see investments have been fairly modest till date. So I just want to understand in terms of priorities, how much cash you are prepared to -- are you prepared to burn -- how much cash burn are you prepared for in ZEE5? Or what is the absolute investment that you intend to make in ZEE5 over the next 2 years? And how would it compare with the SugarBox? Because SugarBox is a INR 1,000 crore plus commitment, debt plus equity. I'm just wondering whether -- are you planning to make this similar investment or even higher investment on ZEE5? And if so, then what is the extent of investment that we should think across the business, movie library, movie piece, ZEE5 and SugarBox over the next 2 years, broadly ballpark numbers?
I think, Jay, if you look at the last 2.5 years, we have invested more than 7% of our EBITDA into ZEE5. That maths itself will tell you that the investments in SugarBox versus ZEE5 are -- one is a Goliath and the other is this thing. So from that perspective, our commitment towards ZEE5 and SugarBox cannot be compared. If tomorrow I had a choice and I had $100 whether to invest behind ZEE5 or SugarBox, I pick ZEE5, if that's the question you are alluding to.
Correct. That's helpful. In fact, maybe because we don't have access to ZEE5 financials, I didn't have an exact accurate idea of investments. Maybe starting next quarter, we will have a better sense.
Absolutely. Within next 3 to 4 weeks, you'll start having their P&L to look at.
Correct. And now a couple of bookkeeping questions for Rohit. One is, if you could sort of give me a ballpark number of what was the movie amortization expense in FY '20, including the accelerated amortization amount?
Yes. So I don't have the number right now with me. Bijal, can you give it offline?
Yes, definitely.
Sure. And what should we expect for FY '21, just from a modeling perspective? Because you ended the year with INR 5,350 crores of inventory, so roughly 1/5 of that will get amortized, minimum 1/5, and as you invest more during the course of year. So should I assume INR 1,300 crores to INR 1,400 crores is amortization?
Yes -- for different verticals differ. So for example, for our movie business, ZEE Studios, upon release of the film, within that period of, what, 60 days?
6 months.
6 months, sorry, we write-off over 90% of the investments.
Correct. But ballpark is INR 1,300 crores to INR 1,400 crores number, is that reasonable to expect?
Yes. For the company, yes, I think that number would be reasonable.
And you've indicated that you will continue to make the same amount of investments also. So it won't exceed that number, but it will broadly be around that range? Or will it be much lower in FY '21, your gross investment?
From my words, it was very clearly, it will not exceed this number. Whether it will be ballpark in the range in the current fiscal? I don't think so because given the current pandemic situation whether we'll be really going out and investing behind films and other things in the same manner, we lost 1 quarter trying to do that. So it will certainly be lower. But going forward, the guidance remains that what we take through P&L, our increase to inventory will be in line with that until we change that guidance before that.
Essentially, you have hit the peak inventory level, next 6 months balance sheet, it will be either at this level or lower, hopefully lower?
Yes, sure. Depending on when the theaters open, et cetera also.
Correct. Now there is a -- in one of the notes to accounts, it has been mentioned that due to COVID, you have taken several -- sort of taken few initiatives regarding liquidity and cash consolidation. At the end of that sentence, it's been mentioned that noncore assets sale. So is it with reference to offshore investment sale? Or are you actually looking at any other -- are there any other noncore assets that you are looking to sell?
Yes. If you'll remember, Jay, we had 1 noncore investment in an aviation company called Fly-By-Wire that we have exited. There was some real estate investments we are carrying for a long time in Hyderabad, which was a Padmalaya settlement that we had, that's a noncore asset. We have certain other properties in real estate in Delhi or around Delhi and in Mumbai, which we are trying to get out of. This has nothing to do with the treasury investments that you are referring to. These are pure real estate/really noncore from that angle.
Correct. Finally, again, another bookkeeping question. Sir, INR 343 crores of sort of write-off or provision in the administrative expenses. Now when I try to reconcile it with notes to accounts, notes to accounts, there is a mention of INR 41 crores pertaining to advertising subscription. And then I think it may be including another INR 113 crores -- or INR 117 crores pertaining to provisions on receivables from one of the distributors. But it still doesn't add up. So am I missing something? Is there -- this INR 343 crores, what's the breakup?
Bijal?
So the breakup at this point of time is not available, but this 2 number, which you talked about, INR 41 crores and INR 117 crores, are included. And over a number that, as I talked about, that there have been some provisions which are not in the -- I mean which do not require notes, but there are some provisions because we have shut down some of the offices, we have shut down some of the channels and all. So there are some provisions which we had to take or probably expense or settlements, which we have to do. So those provisions are there in the remaining INR 343 crores.
Understood. I'll take it offline. And final one...
That is slightly long list. So I mean these are small, small amounts. Some of these are small amounts, some of these are big amounts.
Got it. I'll take it offline. One final question. I'm aware that Dish TV was...
Sorry to interrupt you Mr. Doshi, but may we request you to rejoin the queue as there are...
It won't take more than a second. It's just a very quick one. Dish TV, I am aware that it's declassified as -- it's not a related party anymore. But is Siti Networks also not a related party anymore? Or is it still a related party?
Siti is a related party.
That key customer is that one, just for your clarity.
The next question is from the line of Balaji Subramanian from IIFL.
A couple of questions. First one is we have seen that the investment in movies have significantly gone up over the years. But one observation that I made was that during the period of lockdown, while your movie channel saw a sharp increase in viewership, that was very similar to what was seen for some of your peers as well. So one might have expected that your market share gains should be more than the others considering your investment. So it would be good to know as to why the viewership during the lockdown was not significantly better for you versus the others? That is question one.Question 2 is, as you mentioned in your opening remarks around ZEE 4.0, 1 pillar is going to be around granularity. So when can we expect to see some more detailed chats on ZEE5? And what will it be? Will it be KPIs? Or will you be disclosing the financials as well?
Yes. So I think on the first part, while the movie channels did see a large significant growth in terms of viewership, we, by virtue of having the largest portfolio of GEC channels and the content being reduced there, saw maximum decline on that account. So it kind of offset compared to our peers. If you look at our portfolio of regional language GECs, we do a lot more languages than what our competition does. So from that perspective, that growth kind of got offsetted. Of course, Bijal can share more granular data by markets, which we won’t have readily available right now.On the second question, we will be sharing with you at least the KPIs and the P&L for the ZEE5 business starting next quarter itself. Was that what you were referring to or something more than that?
That's right. But I just had a follow-up on the first question. So I didn't very clearly get your point for the offsetting of the movie viewership because of your large portfolio. And just to be clear, I'm also referring to the data on the Hindi movie space, where I look at viewership of Zee Cinema versus, say, Star Gold or a Sony Max.
Okay. So if you're referring only to the Hindi part, the losses that we had on account of ZEE TV and &TV was far greater than Star or Sony's losses. And therefore, we did not get the benefit of the gains of our movie channels as a network.
So basically, are you saying that the GEC viewership also influences the movie channel viewership, just to be clear?
No. I mean the viewership is in relation to revenue -- or what are you talking about? What are you trying to get to?
I am just talking about the impression compared for the 3 movie channels of yours, Star and Sony, that's it. I'm not bringing GECs into picture. GEC, I understand that there was some weakness for ZEE.
No, no, from that perspective, if you look at our viewership, in terms of the Hindi movie genre, has been at the peak for the last few years for us. The kind of levels we've achieved has been at the highest. Bijal?
So Balaji, let me answer this question. See, it is not that during pandemic our movie library has expanded. It has expanded over the years and across the languages. So now when you were talking about pandemic, why we did not see higher growth vis-Ã -vis others, I don't think that, that question is absolutely right. Because we were already at the peak, and when pandemic hit us, everyone started watching more movies and that market share held on. We have not done any change in our library or it is not that library of somebody else has changed completely. So we were with the similar library in the pre-pandemic and post-pandemic and the market share gain over the period of time is already reflected. So what movies we have bought is reflected in our market share and pre-pandemic. I'm not sure that why you think that in the pandemic when -- I mean when movie genre gained, we should gain more than others. There is no difference in library, which was pre-pandemic and post-pandemic. So we should gain in line with industry. And in fact, we have gained slightly more than industry as far as movies are concerned, not something really to write home about, but definitely slightly more than industry.
The next question is from the line of Yogesh Kirve from B&K Securities.
Sir, regarding your guidance on the free cash flow or free cash flow to PAT conversion of 50%. Now during our normal times, our profit used to be about INR 1,600 crores. So that seems to indicate that investments would be in the order of INR 800 crores to INR 900 crores going ahead. Now considering that our inventories that we expect to be relatively stable, at least for the next 6 months, 1 year or at least in the next few years, so what would take so much of investment? So that's my question.
I think the biggest investment from the company is on the ZEE5 platform that we are making. And that's what will be -- what will cause our -- the cash flow itself or the PAT itself to be lower. So I don't know how you're coming to INR 1,500 crores to INR 1,600 crores for the current year.
Sir, I'm referring to -- before this pandemic, our annualized profit used to be about INR 1,500 crores, INR 1,600 crores. So based on that, I'm doing the back calculations, right, so that the 50% investment rate would roughly translate into for INR 100 crore increase in investments. So that should be primarily CapEx and your working capital?
Yes. So I understand that. See, basically, we were in a high investment mode for the last several years. What we are saying is that it is not that investments will stop. There will be investment. In fact, when macroeconomic environment continued to deteriorate, that is also a time when we have decided to go ahead and invest in 4 new channels in our television business. And as Rohit pointed out, that we are already the largest publisher of digital contents in India. So it is not that investments are going to go away. Right now, we are in a phase where industry is seeing transformation, viewership is growing overall. If you see, number of screens are going up. And at that point of time, not investing would not be a wise decision.So what we are saying is that the kind of investment we have seen in movies will stop. That said, the competitive intensity on the digital side continues to remain high. There are still opportunities where we can invest. So let's say, Kerala market, we do not have a movie channel. Would we have aspiration to launch a movie channel 2 years down the line? Yes, we would have. So those investments will continue.And lastly, as things are changing, there are other investment opportunities on content itself. So there also investments will continue. Maybe our aspirations in movies will also go up at some point of time. So we are not in a phase where we are into a harvesting mode, where we do not want to invest. I mean there is really a significant opportunity, we would be very judicious in investing. But right now, we are by no stretch saying that there will not be any investment. That's one.What Punit also said during the call, that minimum cash conversion, which we are looking at is 50%, so that is the idea. So there will be investments in content in our platforms going forward also. The intensity of investment will be much lower. That's the point we are making.
Okay. And another question, sort of related to the -- related to inventory. So inventory days have moved, right, over the last, say, what used to have before FY '16 to current levels. So do we see at least inventory days that the shift we are seeing from last 4, 5 years. So from here on, it would be -- at least in terms of inventory days, it would not go up further?
Yes. So 2 things now. First, break the inventory into 3 parts. One is that we are buying movies for various businesses, launching new channels and also ZEE5. And that if you see even our FY '17 annual report, FY '18 annual report, FY '19 annual report, we've very clearly said, even before this inventory question came into discussion that we will be investing. So that has been going on. That's why we launched 4 new channels, we launched ZEE5 with very large movie library. So that part of investment is largely over. That's where we may not see so much of increase in investment, except for -- in ZEE5, so television side, we will not see.Second part is that we will continue to ramp up our content on ZEE5. So original content on ZEE5 will continue to grow, so there will be investments out there. And third part is....
Movie production.
Third part is movie production. So I mean if you see our evolution in movies, we started largely with co-production, then we continued to scale it up. We tested in several languages. So we think that we have actually understood the movie business pretty well in the new dynamics in which digital and multiplexes dominate the revenue share. And now we have aspirations to scale up movie production also. So that will continue to scale up. So far, the biggest issue or question mark on investor side has been the increase in inventory, which was driven by movies. That I don't think -- I mean that's why we are saying that, that movie inventory should not increase. And going forward, as Punit explained, we will be giving you more details in terms of inventory breakdown itself. So in that sense, you will get to understand that -- where we are investing. So that will also put to the rest question going forward even in case inventories were to increase. So that's one.Second point is in terms of number of days now. I mean the issue is that now we are seeing the revenue decline itself. So that is also cutting the denominator and increase -- leaded to some increase in inventory days. But going forward, we are not anticipating much of an inventory increase on movies, that is where I would like to stop. But I hope that you get the drift that we are talking about in inventory days. We'll make this guidance much more granular in the next 6 months.
Thanks for this elaborated answer. Just finally, regarding the accelerated amortization, so that was specific to this quarter? Or has there been any relook at the overall general amortization policy related to long duration assets?
So -- I mean if you actually look at -- I mean this question has been there, but almost since the inception of the company, there has not been change in movie amortization policy. And in fact, we have done enough and more exercise with ourselves internally financing, also along with the external consultants, whether our movie amortization policies increase with the revenue potential or revenue what we write on in the movies. And we really do not see any reason at this point of time for a change in policy. That said, line-by-line evaluation of every piece of inventory that has been continuing for a while, and that will continue. This time, I understand that the accelerated depreciation on that part, which is not called out in the notes to accounts in the higher side and a large part of that happened in the fourth quarter. So that is higher. But I will not be able to guide what kind of -- that depreciation will be next year. But at this point of time, no change in policy is needed. And cost should -- most likely as I said the overall content cost should revert back to normal from coming quarter itself.
The next question is from the line of Sushruta Mishra from JPMorgan.
This is Latika from JPMorgan. Just 2 quick questions. The first one, again on ZEE5. Given the pandemic clearly has accelerated digital consumption and this continues to be a very evolving space, does it, in any way, change your strategy to accelerate investments here over the next 2 to 3 years? And does the front-loading of investments, in that case, affect your margin expectations? What I'm just trying to get a sense is, is 30% minimum normalized margins a very sacrosanct number for you to achieve? And additionally, any thoughts of getting a strategic or financial investor onboard for ZEE5 to scale up investments here? That's the first question.
So on the first part, Latika, we do not see the opportunity for us to physically be able to implement more than what we are already trying to do, in terms of content that has been created for ZEE5. If we did 80 shows and movies for ZEE5 last year, can we double that number? No, not possible at all. Physically not possible to get that much content made and delivered of the quality that we want to deliver. I think we work on an optimum investment structure and that is something we'll continue to do. So no need for us to change our strategy. And this has been reevaluated and reconfirmed along with the team that we will continue with our strategy as we had planned for ZEE5.As far as the plan for raising -- getting a strategic or financial investor at ZEE5 level, no. Apart from actually bringing cash to the table, what else should they bring is a question that I keep grappling with all the time. From a cash point of view, the company is generating enough cash flow of its own for us to fund the growth of ZEE5. And -- so therefore, I do not see the need for it to happen today. 6 months, 1 year down the road and depending on the offer I get, I'm always open to reevaluate my options.
Sure. The second bit was just on advertising bit. You did give your worst-case scenario, and thanks to that, but I just wanted to understand how the different customer segments behaving for you as the economy is reopening? And also if you could comment on trends across Hindi GECs versus regional GECs?
So as far as our advertising market goes, as you know, that our biggest client is the FMCG sector. And that's the one that we are seeing returning with the kind of aggression that we are able to guide for the numbers. I think beyond that, right now, the other categories are still trying to figure out their own strategies. Our guidance is keeping our largest segment in mind, what we believe we can deliver on. So I think for now, that's all the guidance I can give. At the end of quarter 2, where I can give you more specific guidance of other sectors like autos, consumer durables and financial services. It will take 1 more quarter for us to go through the learnings before we can share the new reality.
The next question is from the line of Abneesh Roy from Edelweiss Securities.
Just 1 or 2 follow-up. Sir, you are an OTT player also and also you are a movie producer. So all this war between OTT and movie producers, where do you see the multiplexes coming back to normalcy? Do you see that happening in FY '22 in terms of occupancy or in terms of the ticket prices? Or do you see that the small budget movies and the mid-budget movie will continue to have OTTs as a preferred ones because they obviously get the space and they don't get screens in the multiplex also? So what's your take on when normalcy will come back for multiplexes?
See, Abneesh, let's dial back 3 years or 4 years back when OTT did not exist in this country, right? Everything was theatrical and satellite driven. Today, it is theatrical, satellite and OTT driven. Then it moved to theatrical, OTT and then satellite. Now we are talking about, in the current pandemic situation, OTT and then satellite. My view is that these things are the way the business model will evolve going forward. From my perspective, OTT and satellite is one bucket of monetization, which mean it happens post the theatrical or the consumer-based release as anticipated. But is there going to be a way for it to happen in theatricals and simultaneously in other platforms? Possible. So those models will evolve as we go forward. It's an ever-changing business environment, Abneesh, that we have to look at and it's never constant.
Right. And last question...
I think does that make sense or you just gibberish?
Yes. And last question on Zee Media, you quit the Board recently as a nonindependent director. You mentioned that because of these preoccupied changes there. So does this impact anyway in terms of any synergy benefits in terms of subscription?
See, synergies and those things are a function of arm's length transactions. Me sitting on that Board as an independent or a non-Executive Director has no relation to the kind of deals which are done between Zee Media and Zee Entertainment. Irrespective of me being on the Board or not, I do not expect anything to change unless the terms of the agreement change significantly. So I don't think the 2 are linked in any manner.
We will be able to take one last question. We take the last question from the line of [ Anil ] from PICO Capital.
This is with respect to redeemable preference share. So is there an event of default also as a clause in a redeemable preference share or management has the discretion to extend the tenure if you want to manage the cash flows?
I do not think -- it's a [ court's ] scheme and therefore, I don't think we have the discretion to change the terms of the RPS redemption.
All right. And considering the yields in the market are reasonably fair for the redeemable preference shares, is there any possibility of management considering a buyback to conserve future cash flows or early redemption, if not a buyback?
So every year, Anil, we again evaluate this, and we've been doing it since the last 3 cycles, whether redemption earlier stage will benefit the company in any manner. We will again reevaluate that given that the only change that has come post the last redemption is on the taxation of the dividend payable. So we will let you know of our decision probably by quarter 3 end as to how we want to proceed forward. As of now, our intent is to redeem the RPS scheme based on the current structure, which is 2 more tranches left. One is, at the end of current fiscal, the other would be at the end of fiscal '22.
Thank you very much. We'll take that as the last question. On behalf of Zee Entertainment Enterprises Limited, that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.