Unique Business Model
#Tipsindustries

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@NeilBahal

Topis covered:
1. Tips Industries Overview
2.Music Segment
3.Monetization
4. Tips Business Model
5.Acquisition Cost
6. Tips Film Business
7. Tips YouTube

8. Why Should Artists Choose Tips Over Other Labels?
9.Financials
10.Future Growth
11.Content Acquisition
12. Conclusion

1. Tips Industries Overview
It was founded by Kumar S. Taurani and Ramesh S. Taurani in 1975.
In 1975, the Taurani brothers used to trade
in LP’s (Long Playing Phonograph Records) for three of the biggest companies in India – HMV, Music India & CBS. By 1977, they had become the biggest dealers for these companies in Western India.
Driven by the ambition of both the brothers started their own record label.
TIPS Industries Limited is a leading Indian music label which creates and monetises music. Apart from music segment it is also into Film Production,Film Distribution & Film Promotion

2. Music Segment
Tips has an extensive catalog of film, non-film, devotional, pop & remixes
Tips has a library with more than 29,000 songs, Tips has a very fresh catalog with songs released in 2000 and most major hits of the 90s. Tips has a major Atif Aslam Library.

3. Monetization
Tips monetizes its songs just like other music labels i.e through distribution deals
with digital service providers like Spotify, Hungama, YouTube, Jio Saavn etc and OTT platforms like Netflix and Hotstar.

Tips does not license its music to Gaana and Wynk due to some conflicts in contract renewals.
Gaana has the highest market share in music platforms which is about 30% , Wynk has around 15% market share in India.Not licensing music to these platforms Tips is losing upon major revenue but management is in talk with both the companies official for settlement of the deal.
4. Tips Business Model
Produce Strategy- Tips has a A&R team which works only on researching and hiring upcoming artists. Tips has also recently signed five artists exclusive deals.
Purchase Strategy- Tips have cost conscious approach while acquiring the content and does not invest in something that won't drive value to the company.

Tips engages in buying the music as well as producing music for themselves. It also indulges in one time and medium to
long term contracts with artists.

This results in a lower payback period of less than 2 years which is relatively lower than the listed competitors.
5. Acquisition Cost
100% of the content cost is being paid of in the same year the content is acquired
and usually does not keep anything to write off in the future.

Tips is expensing its cost from the P&L A/c
All the content acquisition is done through internal accruals of the business.

Tips will be doubling the content acquisition in the future.
6. Tips Film Business
Tips has its own production house and has delivered movies like Race complete series.
The management has announced the demerger of the film business and a separate stock would be listed. Demerger is expected to be completed before December 21.
As music is high margin and ROCE business, it is expected to unlock significant value after the demerger.

7. Tips YouTube
Tips has a YouTube channel with over 45M subscribers on the main channel and 22B views.

Top 10 songs of Tips comprises more than 17% of total channel views
It has 11 other channels for regional and devotional content.

8. Why should artists choose Tips over other labels?
9. Financials :
10. Future Growth:
Tips is watching the global players monetizing IPs through NFTs and collaborations with gaming platforms and company is exploring opportunities in it.

The company expects growth at 25% to 30% CAGR.
11. Capital allocation
The company is focused on only acquisition of music and not diversified in any B2C product which eventually generated higher margins and ROCE for shareholders.

Management has historically done buybacks when the shares were trading at cheaper prices.
12. Conclusion
Pros : Tips has a small yet a strong songs portfolio with many hits so the company can capitalise on it to monetize in each possible manner.

Tips has a conservative approach while acquiring content.
100% of content cost is paid off in the first year itself.
The business is somewhat growth immune as digitization will hamper the growth in the business.
The demerger of the film business is beneficial as there would be two separate balance sheets for the business.
Cons :
Tips has no licensing deal with Gaana and Wynk music hence losing the opportunity on earnings.

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