Digital biz to ramp up Shemaroo's revenue growth, says Gada

Hiren Gada, director & CFO, Shemaroo Entertainment, said the digital business has been growing at a substantial pace and expects the business to contribute significantly towards revenues. He was speaking from the sidelines of Valorem Advisors Conference.

So far, the business has contributed around 9 percent towards the company’s overall revenues but in the last 9 months it has contributed over 15 percent, said Gada.

He is confident of the company out-growing the media and entertainment industry. The industry is expected to grow 30-35 percent in the next two years, he said.

Talking on content acquisitions, Gada said it is an ongoing process. However, he refused to divulge details about the Netflix tie-up, stating that various negotiations were underway with other providers.  Below is the verbatim transcript of Hiren Gada’s interview with Ekta Batra and Anuj Singhal on CNBC-TV18.Ekta: First wanted to discuss the digital business, considering that is the way most media companies are heading now. For your quarter gone by, it was a strong growth that you have seen in your digital business. What is your sense in terms of what you could do in FY17 and how is it in terms of a proportion to revenues at this point and how much more do you expect to see?A: I think two or three things I would say, if I look at how the business is progressing, I think the landscape continues to grow at a phenomenal pace. In fact we are awaiting a big broadband launch but even without that the business has been growing and the overall usage as well as the number of subscribers have been growing. So, our business has been growing on back of that. If I look at the overall industry, the way it is looking like, probably next year or next two to three years, it looks like a 30-35 percent growth rate at an industry level. We will target to obviously grow higher than that. In the last four years we have been growing at CAGR of more than 55 percent so we will hope to maintain a very good trajectory and faster than the industry. Overall as a contribution, two years back this was just about 9 percent for topline. This nine month, we are already at around 16-17 percent of the topline. If I take a longer view, if I take like a four to five year view, at this pace it should be a substantial contributor because the way the landscape is getting established in terms of device, broadband, infrastructure, ad spend, growth, etc, I think this is an interesting and exciting part.  Anuj: The market wants to know what is the update on Netflix tie-up because you have spoken about that quite a few times, any update on that?A: As earlier I have mentioned, it is very difficult for me to talk about an individual negotiation or a discussion that we may be having but at an overall level suffice to say that with the kind of content that we have, today no one can run a meaningful bollywood service anywhere in the world without some content from Shemaroo. So, I think given that fact, we should be doing well. Virtually, all the players that are there in the ecosystem, we are having some discussion or some tie-up at different stages. Ekta: What are the new content deals that we could see in terms of a tie-up at least in the next couple of months? A: We are on a continuous acquisition activity and we have been doing like this year we announced earlier that we have tied up with Red Chillies library, subsequently we tied with Tips Industries library. So, it is a continuous process for us. So, movies like Ajab Prem Ki Ghazab Kahani, etc we have acquired from Tips. So, it has been a continuous process and journey for us and it is a constant thing to repletion and keep adding to the library.Anuj: What kind of compounded annual growth rate (CAGR) you will be able to report over the next three or four financial years, should we base our calculations on the last two or three quarters especially for digital, would that kind of pace continue because the base right now is a bit low? A: Obviously as the base grows the CAGR or the growth rate will come down. However, as I said earlier, given the fact that the industry is said to grow for the next about three years at roughly 30-35 percent CAGR, we will definitely look to outperform that. We have had a very good growth this year but as the base grows higher, I think the growth rate obviously would come off. However, the target internally definitely would be to grow faster than the industry. (Interview transcribed by Priyanka Deshpande)