Betting on digital biz growth for margin push: Shemaroo

A: We definitely had a good first half of this year and we are expecting and our endeavour is that we hope to better in the second half. Digital business actually has been growing very good. In fact if you see the first half, because we got just recently listed, because the first quarter was not earlier given out so the half yearly our Profit after Tax (PAT) has increased by 73 percent. So, driven a lot by digital business growth and we have seen some very interesting traction on the digital business overall.

Sumaira: What are the average margins that you all clock up and you all are nearly at the 25 percent mark now. How much headroom do you have from here?

A: Two or three I would say in general. Our margins have been generally in the range of about 23-27 percent probably in EBITDA level about 29 percent also sometimes but around 23-27 percent. Now going forward as the digital business grows in general as we all are aware that digital business scalability of the margin is non linear as the scale grows because the cost factors actually don’t obviously linearly grow with the growth in revenue. That is something that is very interesting going forward. So, that is something that we will hope and our endeavour will be to work on a better margin in the digital business.

Latha: Only in the digital business or overall?

A: The traditional media margins are always in a certain range. It is the digital business which helps to improve the margin scenario still better.

Latha: How much money did you make in the digital business, largely ad revenues, right?

A: It is a combination of two or three things. There is Youtube, which is ad supported platform and then there is a mobile stream which has a whole lot of paid subscription or transaction based things. So you have things like the WAP business, the rupee one store and various other video services or even music services that are run on so many other mobile platforms. Then you have many new services that are coming up which is a lot of transaction based so iTunes for example, in this quarter we just launched few movies on Google Play for example.

Latha: I am asking how much did you make?

A: The new media business for us in this quarter has grown by 49 percent. We have clocked the new media business of Rs 16 crore overall. WAP has seen a very good growth. We in fact made a small interesting experiment with things like Lalbaghcha Raja which we monetised on a mobile platform. So, there is a whole lot of steps that we have been doing on the digital front.

Arun Kumar (viewer): How much of IPO proceeds have been utilised and by when can we see the full utilisation being done?

A: The IPO company was listed on October 1 and the funds came into the company only on October 1. So, as far as this quarter is concerned there was none of the IPO proceed in. However, overall we had raised the money to invest in working capital primarily for content which is an inventory in our balance sheet. So, that constitutes a large part of the working capital.

So, the investment obviously is in content and our target is that we would be deploying the funds over next 9-12 months. The key focus being that one is the digital business which is growing very fast and second key focus is the return to be generated on the capital deployed. So, we want to be very careful of generating good returns or how we are acquiring content. We just don’t want to go out and spray the money around.