Radiowalla shares insights on its leadership team and balanced expertise across business, finance, and operations, along with a 100+ member workforce supporting its growth in audio and advertising.
Mubina Kapasi: Hello everyone and welcome to Small Cap Spotlight. Today the company that we’re casting the spotlight on is called Radio Wala, a very interesting company in the business of marketing and branding as well as essentially providing smart solutions for a retail businesses in the form of radios. But let’s understand a bit more from the management themselves as to what exactly the company is about, what they do, their business model and of course what’s the vision they have for the company.
I have with me Mr. Harvinderjit Singh who is the CEO and co-founder of Radiowalla. Thank you so much Mr. Singh for joining us. To begin with could you explain to us a little bit about what the company does?
It was established more than 15 years ago, roughly 15 years ago. So if you could just give a brief brief description about your company to our viewers.
Harvinderjit Singh: So thanks for having us here and give us the opportunity to present Radiowalla.
As the name suggests, Radiowalla, it is to do with audio. And what we set up this company in 2010, so it’s exactly 15 years and we listed on SME exchange last year after 14 years, so they say Banwaas Kata and we went public. And the idea was you know when we set up this company was to set up a digital audio platform.
Let me quickly give you a brief background about the founders and then I will talk about the company. This was founded by me and my co-founder Anil Sirivatsa. Both of us had been in audio background.
I used to be the CFO of Radio Mirchi, I was the second third employee there and we listed the company in 2006 and created that brand from scratch. And Anil is the original audio guy. He has been doing in audio business for 50 years and he started his audio journey.
He used to run a digital audio platform in US before he moved back to India and set up India Today’s FM radio station which was called Meow, which was India’s first talk show format radio for women. And so that’s how the journey started and we knew each other and we thought of doing something in digital audio platform. We started as a B2C channel, but the music licensing became very expensive and it was not in our means to be able to run that business.
And mind you, that was even before Spotify, Ghana, Savan, anything. It was way before the time I would say. And that’s when we pivoted to B2B business where we saw the need of retail stores.
They were burning CDs and sending music to each other, each other location. I can’t do this, this is piracy. So you can’t just copy music and burn CDs.
So that was the first problem statement where they wanted something to be legalized and something which can run across their stores. So in a retail environment, just to give you a background, music is an integral part of a customer experience. It’s not a good to have, it’s a must have.
And the brands are now very particular on what kind of music gets played based on the audiences or the shoppers they get it. And that’s when we created a digital platform and we got our learnings from US market and there was nothing in India happening at that time in this space. So we had to literally engage and coach the retailers why they should take our service.
And it is not just playing music, it is what happens in between music as well. So their new promos, the jingles, new product launches, all that we were doing it in a professional manner with professional voiceover. And that’s how the journey started, you know, one client at a time.
And it took us almost two years to engage with the industry and, you know, get them to accept, yes, that there is a service requirement for this kind of a business. And that’s how we started our journey of Radio Bani.
Harvinderjit Singh: So in many ways you all, I mean, basically created a category of sorts, you know, it created a whole product that maybe retail stores didn’t even know they existed or how simple it could really make life.
And thank you, very interesting to know that both the co-founders have had experience and a journey that has played out in, you know, the audio and the radio businesses. And now this is how you guys are using it. I’d like to understand now that, yes, it started off as an in-store radio solutions provider.
But now, as I understand, you’re a comprehensive engagement platform, because also digital out of home services, and there’s advertising services, etc. So tell us a bit about that, because all of these require different skills in time.
Harvinderjit Singh: No, you’re right. See, as a category creator, it took us time and to build up the scale. So it’s a, I would say it’s a journey, which had to take its own course. So as a revenue model, retailers pay us per month per store for the service, what we provide, you know, and we ensure that there is all the music is licensed, so that they don’t have an issue, because they can’t keep a track of which label is under which agency of licensing.
So we keep a track of that. There’s nothing happening at the front end other than the volume control, the rest all we manage. And we ensure that you know, the music is not repeated.
Because it’s not just the customers, the staff is staying there for 10 to 12 hours. And there they have to be engaged. And that’s where you know, it’s a comprehensive solution for both for the staff as well as for the customers, to that extent.
As we went into the scale, advertisement came in much later, almost after a decade. And that was the reason for that is an advertiser would only be interested if you give them a certain scale of reach. And after 10 years, you know, we have now got to a situation where we are catering to more than 200 million footfalls per month in the retail stores, what we service it.
And that is exciting for the brands who want to reach out to these shoppers, who are spending 35 to 40 minutes in the retail store. And, you know, that’s the time when you engage with them, they are busy shopping, audio is subconscious, you’re not gone there to listen to the music. But it’s a kind of a carpet bombing, you listen to it three, four times, and it registers.
And if you are hearing about some schemes being offered at that time, you’re already at a point of sale. So it’s a great conversion matrix, what happens at the retail store level. As we were engaging with these customers and audio medium, we saw an opportunity that, you know, even digital screens in the retail environment creates a full ambience, you’re listening to audio, you can see the product on the screen, screens are without any sound, because you don’t want to disturb the shopping experience.
And you and they can’t have a clash of audio as well as on digital screen sound. So that’s what we added on, because the same brand, same advertiser who wants to reach out both from a visual medium as well as an audio medium. So we are not into street furniture that we are putting up hoardings outside on the street, we are focusing on closed door environment, which is the retail stores, malls, where the brands are already wanting their presence.
So kind of a ecosystem we are creating. That’s why we are becoming from a audio company, we have become a kind of a retail media company. All right.
Mubina Kapasi: Okay, very interesting, indeed. Let’s understand who some of your clients are, because you do work with some brands like Jubilant, there’s also as I understand, Reliance, Landmark Group, etc, with whom you have certain partnerships. Could you tell us a bit about that? And also, I understand that there’s international expansion as well.
So could you just share a bit about that?
Harvinderjit Singh: Sure. So today, in the Indian retail industry, we work with over 600 clients across 30,000 retail stores. So it’s a shorter negative list than, you know, our client list.
So we have been fortunate that, you know, we have been able to service almost 80% of the organized retail in India, be it McDonald’s, be it KFC, be it Mercedes, be it Land Rover. So all these customers are our clients, and we have been able to service them over the years. And that’s what we have not had kind of a client outgo on account of our service ever.
So we have had clients like Reliance with us for the last five years. And as they are growing their number of stores, we also grow with them. So it’s a win-win situation for both.
And internationally, we expanded with the Middle East. But some of our clients have gone to U.S. and other markets, and they’ve opened stores there. And they have taken our services there as well.
So that’s how it’s not a greenfield. It’s like kind of existing clients where we have grown. And today, we are in 10 countries.
We have recently launched in Botswana in Africa as well, so where we are servicing 200 stores now. So the market is right now with digital presence. Everyone wants kind of increase their revenue share, better their customer experience in a retail environment.
And our service is digital. I don’t have to be physically present in any location. We just need the IP address of the location, and we can service them.
So that’s the beauty of the scalability of this product that, you know, I don’t have to have multiple team members employed as we grow. Our number of employee growth has not, you know, like if you have grown by 3,000 stores, that doesn’t mean I have increased my workforce by 20%. So we are using a lot of digital tools as well to better our experience, better our productivity.
So yeah, that’s how it helped. International business is going to be very key for us. We were originally focusing on India because India’s retail market is huge, and it is also getting organized.
So today, if you say even in the restaurant side and the hotel side, you know, you have over 250,000 restaurants. And we have just, we just entered that space. So there’s a huge market potential sitting for a company like ours.
And now it’s a question of how quickly we embrace technology, because I can’t have, for servicing these customers, you can’t have 100 people on the ground. It won’t be economically viable. So we are investing in technology, wherein people can do it yourself kind of thing.
On the go, they can, you know, start our service and all those things. So which we are in the process of launching now as well.
Mubina Kapasi: Okay, so as your, you know, your clients expand their retail businesses to international geographies, in a way organically, even your presence is sort of expanding internationally.
Harvinderjit Singh: That’s right.
Mubina Kapasi: Now, of course, a big chunk of your growth in a way depends on retail and how quickly retail is spreading. Also, again, this is something that’s very cyclical in nature.
This is something that I perceive as perhaps risks for a business like yours. But could you explain what you perceive are the biggest risks to a company like, company like yours?
Harvinderjit Singh: See, everyone said when, you know, television came, historically, everyone said radio is dead. When OTT came in, everyone says cinema is dead.
But it doesn’t happen that way. So, and we have seen, since we work with retail stores, they are growing. Even D2C brands, when they came in, lots of them are clients now because they have opened up physical stores.
So, so we are seeing that growth, you know, last year, we grew almost 3000 stores added, we added on. And this year, again, we are on track to add similar kind of numbers. So, what is happening is that there is a shift from an unorganized retail chains to retail, organized retail.
And when I say organized retail, even smaller chains who have three store, four store in regional locations, they want to upgrade their customer experience. And customers are also today, you know, they know about what’s happening around the world. And they also demand from a retailer, hey, your store is sounding very bland, the music should be good, and the smell should be good.
These are the things which attract customers to stay in their stores. So, I won’t say that as a risk factor to that extent, because there are new categories which are opening up. And we are, you know, we are, we are putting in technologies, it’s not simple, plain vanilla music.
You can go today and you know, in certain of our stores, you can select from the playlist, I want to put in a request. So, from the next one hour playlist, you can select the song and it will jump the queue. You know, that’s a kind of a customer engagement, that’s the experience you are getting.
So, these are the things which we are adding on. Technology is going to be a very key factor for us, we have to keep abreast of, you know, what’s new in the market, how we can bring in into the thing. Advertisement till as I said, it took a decade to start.
But now when we are starting, brands are wanting to engage with us. And we have, since we are present out of our 30,000 stores, around 6,000 stores, I can run third party ads. And now we have brands like LIC, RBI, Maharashtra Tourism, BIS, Amazon Pay, they are advertising with us because they want to target those shoppers.
And I can be as granular, you know, if you want as a brand, I want just two stores in Bandra, or I want 50 stores in Bombay, or I want just Western India, I can slice and dice and give them the reach as per their requirement. So, it’s a new medium. It’s no longer just a plain vanilla radio.
We can engage with customers and the brands based on their requirements. And we can, based on our experience with the retailers, you know, we get certain data points on what is the kind of customer, what’s the profile of the customer. And that’s what helps brand to plan their ad campaigns as well.
So, risk like any business, as you mentioned, yes, if the retail industry shuts down tomorrow, you know, theoretically, that’s a risk. But we survived in COVID as well. And we never laid out a single person in our team.
And we continued with our businesses because apart from retail, I’m just taking the segue, we have another portfolio called Corporate Radio. So, where we create audio content for corporates for training and learning into spread with music. So, it’s kind of, again, an engagement platform for their employees.
And these are large companies having more than 50,000, 60,000 employees. And today, you know, it has become a good medium for engaging with employees. And, you know, imagine a worker sitting in a factory in small town, how do they know about their company? So, we do CEO interview, we do CXO interview in vernacular languages so that they can understand that content as well, because not everyone understands English at a worker level.
So, those are the kind of engagements our platform, we are creating, it’s all digital. And we all understand audio. So, how it can engage.
So, content, ultimately, it is a content which is, if the content is not engaging, your client will not stay with you. So, those are the, you know, new innovations we are bringing onto our platform.
Mubina Kapasi: So, okay, there is potential for growth, no doubt.
I mean, enough and more has been said about, you know, the India consumption potential, etc. And that’s indirectly connected to your growth story as well. We spoke about costs too, because expansion does not mean tacking on, you know, costs, you don’t need to really, it’s a digital model.
So, then I would imagine that this makes it a very attractive space, you have almost a negative list that there are only few who are not your clients. So, I mean, worried about there being no barriers to entry, because competition is free to enter, there may already be existing competition. So, I just want to understand the competitive edge that you guys enjoy, and how would you protect that?
Mubina Kapasi: See, you’re right.
A lot of people, particularly after our listing, because a lot of data became public. And, you know, then everyone, and we saw a couple of large media houses wanting to enter this space as well, because they suddenly realized that there is a business here. But, you know, what happens is that a lot of time, you know, from outside it looks, but there is a lot of tech play behind.
We have to get integrated into the client’s IT systems, because all their retail network is, you know, connected via their intranets, or multiple platforms, somebody would be on Linux, somebody would be on X, somebody would be on Y. So, we have to build a solution, which is like plug and play for everyone. And took us some time, three, four years to ensure that our platform, which is incidentally a proprietary platform, it’s not a third party platform. So, we had to build that platform that it can service all kinds of clients, and all kinds of situations.
So, you’re right, theoretically, anyone can enter the space. But, you know, to understand what kind of content will get played at what time of the day, what we call day partying, the mood of the shopper, how it works. So, there are scientific studies behind that.
So, I would say that, yes, we welcome if anyone else wants to enter the space, but it will take them some time. And I’m sure I cannot service 100% of the market. So, there would be other players who would come into, there are regional players who are entering the space.
But that’s how the industry gets developed. I think we have done the heavy lifting, and we’ll welcome and it can give us opportunities to expand in other territories as well.
Mubina Kapasi: And, again, like it’s not just audio, that is your offering, there’s also DOH screens, etc. But, like I mentioned, you know, this is sort of a different skill set. And also in terms of the financial needs of maintaining a digital out of home asset, it’s more intensive in terms of the cash that would be required, audio services are still very active. So, how do you manage your capital allocation over here?
Harvinderjit Singh: So, in fact, that was one of the reasons we did the IPO also, and we mentioned that we would be making some investments in the digital screens as well.
See, what happens is that there are two kinds of digital screens business what we are work with. One is where the customer or clients already have their digital screens, but they want the content to be managed, their own content, their own new launches and all that, and they want a uniform platform, a CMS, which can work across the thousands of stores. So, which we do that service for them, and they pay us per month per store for the service.
So, there we don’t invest in the screens. Okay, so that’s one part of the business. Second part is where the ad business is there, where we are generating ads from third parties.
Now, that’s where we are making some investments in the digital screens. And, you know, it also mitigates our risk, the risk what you mentioned from an audio business perspective, when we are offering a multiple platforms to a client, and where the retailer is making money as well, without spending any energy, because we are selling, and we are generating business, and we are sharing that revenue with the retailers, because real estate is theirs. So, it’s a kind of an entry barrier for because any new player cannot invest that kind of money in digital screens as well.
So, you know, that’s a strategy we have that we are in, we are covering both from an audio and video, digital screens perspective. And our return on investment is pretty, we have figured that out, based on the advertisement potential and the revenues we are generating. It’s a very steady cash flow business.
Mubina Kapasi: Okay, I understand, I was just reading up a little bit, and you’re servicing, I think, more than 30,000 stores right now. And now, of course, you’re adding even DOOH. So, I just wanted to understand how do you manage this? I mean, is it all done through cloud or through digital? How does it work? And also, would there be a certain capacity that you could handle? Like, for example, you can handle 50,000 stores, or you can handle 60,000.
How does that work? If you could give us a sense of, you know, what your capacities to managing stores would be like?
Harvinderjit Singh: So, as I said, being a digital platform, and that’s what we are at the backend, where we are, you know, automating our processes. Earlier, like if we were to upload a playlist on each store, it was a manual process. Now, it is all via our platform, where at a single command, I can upload on 1000s of stores for a client.
So, ultimately, what is happening is that our backend processes are getting more and more automated, and it is freeing up my space or time to expand as much as we want. And from a handling perspective of a client, we have two kind of teams. One is a business development team, whose role is primarily to get the retailers and malls and restaurants and corporates on board.
So, that’s the one team. Second team is an ad sales team, which works with brands and agencies to generate advertisement. So, as we grow, these are the two teams primarily where I will increase the manpower to service these clients.
So, I understand that, of course, it’s a digital model, you know, but in terms of the servers, you know, not that I’m a tech… Oh, it’s on the cloud. Oh, it’s on the cloud. We have no, it’s we have worked with Amazon cloud and everything.
So, there is no, it’s unlimited. So, we don’t have any restriction on that. Okay.
Mubina Kapasi: Okay. Understood. All right. So, basically, you can even potentially expand to 2 lakh stores without having to really tweak anything in terms of…
Harvinderjit Singh: Absolutely. So, the world’s largest company, which are out of the US or Japan, they service around seven and a half lakh stores. And so, and we are like 30,000.
Yes, it’s a good number in India. But I think the potential is we’re just starting on it. In India itself, as I mentioned, there are over two and a half lakh, three lakh outlets.
So, if we have just 10% of the market, so there’s a huge potential in India itself. Understood. And internationally, as we mentioned, and we announced also publicly that it’s a public information that we are opening up a subsidiary in Middle East now, because that is becoming a good developed market for expansion.
So, and we already service some clients over there. So, now it’s the right time to, you know, set up a subsidiary there as well.
Mubina Kapasi: All right. Okay. So, there’s audio services, there’s corporate radio, there is, you know, outdoor advertising services. And all of these different segments have different growth rates for obvious reasons.
I mean, your audio is of course, so the growth rate for that will probably be a little different. What I want to know is that how do you see the revenue mix of what’s contributing what to Radiowalla? Because DOH is relatively new. Is it perhaps more margin creative as well? So, I just want to see what Radiowalla could look like in terms of the services it provides and the contribution of these services to your top line.
Harvinderjit Singh: So, as you rightly said, right now, primarily it is audio services, which is a subscription, which the clients are paying us. So, that is the largest chunk of revenue. Advertisement, we started around three years back.
And once we had a certain scale, I think the biggest revenue growth will come in from the advertisement revenue stream over the years, because that is building up quite nicely. And we are the only platform which is registered with DAVP. So, all the PSUs and government ads and all now they can run on our system as well.
So, we see that as a huge potential for us, advertisement. DOH will take some time. So, I would say immediate next two years, advertisement would be the key driver for growth.
And by that time, we will create a whole space and again, an inventory of digital screens, and then they will start generating revenue over there. And mind you that basically, I don’t have any incremental cost. My ad sales team, which today is going for selling audio, that’s the same guys who are going to buy digital screens also.
So, for us, the customer acquisition cost is not going to be that high going forward to that extent. There’ll be a lot of cross selling opportunities, basically, where you penetrate further into the client. Okay.
And actually, this came in because our customers asked for it. Can you give me some video space as well in the stores? So, there is a demand.
Mubina Kapasi: Super. I want to know a little bit about your financials. Now, if you could share a bit about your trailing 12 month top line, bottom line, and also any, if in case you do have any revenue targets or milestones that you’re looking to achieve in maybe the next five or 10 years for Radiowalla?
Harvinderjit Singh: Being a listed company, I can only give you the last audited numbers, which is the March of 25. We did 21 crores of revenue and previous year, we had done 15 crores.
So, we saw a growth of almost 37% over there. And, you know, in another investor call, I also had mentioned that we would like to maintain this growth going forward as well, even though on a larger base. But because with advertisements kicking in and another one year or two year digital screens kicking in, we see a good growth potential.
Idea is to improve the margins also, because like we were at a 10% EBITDA margin over the last two years. And that’s what our focus is going forward as well that to improve the margins as well, because our fixed costs are not going to go up.
And last year, we had an IPO expenses, which we had to expense of everything based on the accounting standards. So that had a hit on my profitability.
But going forward, we don’t see any swing in expenses. And we want to maintain a healthy growth rate from a revenue perspective.
Mubina Kapasi: Okay. All right. I just want to know a little bit about your team. I know you mentioned that you have, you know, one that’s a business development team, you have some people in your advertising team.
So could you tell us net net, what’s your employee count like? And also considering that some of these businesses are new relative to of course, your audio, which is something that you and your partner as well do have experience in. I’d like to know, have you added anybody new to take care of, you know, the newer businesses that’s DOH, advertising, corporate radio, etc.
Harvinderjit Singh: I’ll tell you, we have a very interesting mix of team.
So Anil is a business guy, he’s done businesses, he’s a creative guy. So he understands the creative part of the business. I’m a chartered accountant, I’ve been in corporate world for 30 years with various companies in media and technology, in consumer goods, before full time I went coming to Radio Wala along with Anil.
So and we have a third pillar, Harpreet, who is our chief operating officer and a deputy CEO. He is an engineer by background and an ISB grad. So he brings in the ops skill set.
So all of us, Deepak Chetty, who is our chief revenue officer is with us for last 14 years now. And, you know, he understands the business development side of the business. So if you see the mix of people, everyone brings their own skill set.
So we are not, you know, tiptoeing on anybody’s role or business activity. And that has helped us, you know, expand. We are today around 65 member team, plus around outsource, you know, on a need to hire basis for the content side for RJs and on.
So around 30 of them, so total around 100 people we work with as a team.
Mubina Kapasi: Right. Great, Mr. Singh, this was a very insightful conversation.
And I think we got to learn about a new business, something that often we’ve used while shopping. It’s been in the periphery of our, you know, auditory senses, but sometimes we’ve really not paid attention to it. So thank you so much for us while shopping.
And of course, for joining us on Small Cap Spotlight as well. Thank you so much.
Harvinderjit Singh: Thanks for the opportunity.
Thank you. Bye bye. Have a good day.
Okay, well, there we have it. That was Radio Wala Networks. Remember, folks, this story and this video does not in any manner comprise as a stock tip or an investment advice.
Please do consult your own financial advisor or do your own research. Thank you so much for watching. Stay tuned to SmallCap Spotlight.