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Informist, Thursday, Dec. 12, 2024

 

--Retailers: Saregama to stop audio player Carvaan sales via standalone stores

--Retailers: Saregama to sell Carvaan only via large format stores, online

 

By Avishek Rakshit

 

KOLKATA – Saregama India Ltd. is planning to stop distribution of its audio player Carvaan to small- and mid-sized retail stores across the country by March, retailers aware of the development told Informist. Instead, the company will sell the audio player only through online platforms and modern retail formats, a move which could improve profit margins.

 

Saregama has stopped shipping new products to retailers and is now planning to exhaust the existing stock with the stores by March, retailers said. The decision over unsold inventory could be negotiated between the retailers and the company later.

 

The move is in keeping with the company's shift in focus to music licensing and content generation, on which it is expected to spend around INR 10 billion in the next few years. Launched in May 2017, Carvaan – a music playing device preloaded with songs owned by Saregama - gave the country's oldest music label a new lease of life when the company lost its focus on new music licencing.

 

In the very first financial year of its launch, which was 2017-18 (Apr-Mar), Carvaan accounted for 42% of the company's total revenue, and made up for 54% of the annual revenue in FY19. When the company stopped new music ventures, the audio player accounted for over 50% of the music company's annual turnover. However, Carvaan accounted for around 16% of Saregama's annual revenue of INR 8 billion in FY24.

 

In FY20, Saregama re-entered licensing new music, primarily non-film music, and repositioned its flagship music player, which looks similar to the iconic Murphy Radio, into a recurring advertising and subscription revenue generating device by improvising it. Nevertheless, the RP-Sanjiv Goenka Group company started focussing on other new avenues of music like artist management, and entered the live events business as well.

 

New promising revenue streams from new music licencing gave the company the confidence to refocus on the music industry, as a result of which Carvaan took a back-seat in the company's priority list, retailers said. For instance, in Jul-Sept, its licensed song 'Aaj Ki Raat' from Hindi language movie 'Stree 2' was the chart topper in Weekly Top Songs India & UAE on YouTube, and featured as the chart topper in Top 100 India on Apple Music. Another song from Hindi language movie 'Bad Newz' also achieved similar milestones.

 

In Jul-Sept of the last financial year, Saregama sold 189,000 units of Carvaan across India, which declined sharply to 108,000 units in the corresponding period this year and revenue declined by 40% on year to INR 212 million. During this comparative period however, its three other businesses – music licensing, video production, and live events saw an uptick. Revenue from music licensing grew by 22% to nearly INR 1.5 billion, and the video production vertical saw a surge of 377% to INR 720 million.

 

"There are distribution and inventory costs involved for the company to retail Carvaan from standalone electronics stores. But, it is much lower in case of sales via online platforms and large format retail," one of the retailers who has been selling Carvaan since 2019 said. "I was told that the company wants to improve its margins from Carvaan because of which Saregama has decided to stop selling it from mom-and-pop stores."

 

At 1517 IST, shares of Saregama India were down 3.5% at INR 497.60 on the National Stock Exchange.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Ashish Shirke

 

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