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March 2, 2022 at 9:54 am #13290kiranRegistered BoarderMarch 2, 2022 at 11:40 am #13293hw_twRegistered Boarder
Presentation on Impairments from BCG shared to exchanges back in July 2020 … Sharing it again for the new knowledge of new investors who had entered post this event
The impairments is a clean up activity done by the company and is across its 10 subsidiaries
– For Products, tools and datsets which are as old as 12 years ago and obsolete and also has regulatory challenges like GDPR
– Advances paid to Publishers … couldn’t recover them fully as there was less traffic to these sites
– Advances to colocation centres
Attachments:March 2, 2022 at 12:00 pm #13296sandyc316Registered Boarder
point is why he has posted the matter now on Exchanges , could have intimated long ago when sebi letter appeared
This has been troubling me as well. However, if you go through the clarifications posted by SEBI regarding reporting to exchanges about forensic audit, it says that reporting is not mandatory if the consequences are deemed to be “immaterial” (or something to that effect). Did the management believe that the impairment being non-cash item fell in that category and hence wanted a clarification from SEBI before reporting it to exchanges?
As for why, in that case, it took 5.5 months.. I’m not sure.
However, one thing is for sure… all of us long term investors would have one time or another had this thought – why the heck is SEBI not asking for a forensic audit so that we can shut the naysayers for once and all. I think many of us would be pleased that this is finally happening so that we can just get it off our back and move on!March 2, 2022 at 12:30 pm #13297
Does anyone know the timeline of forensic audit. For example, when it happened in Suzlon, Infy, Sunpharma or Binny – how long it took ? Min / Max timelines. I can only see the news of forensic audit initiation in these companies in internet. But can’t see the closure of these audits at allMarch 2, 2022 at 4:27 pm #13300conservative_indianRegistered Boarder
>>>>>>>> Thanks DH for sharing your views.
I do agree with you that this stock is an immense wealth builder and this correction coming out from non-disclosure of SEBI’s September 2021 letter is towards its expiry date.
It is not true that SKR didn’t make efforts to soothe nerves of disgruntled investors. What made market nervous was SKR has not Audited Consolidated Financials and when over 868cr are marked down under Asset Impairment, without proper Audit it raises suspicion. And most of the asset impairment happened in third world countries like Mexico, Argentina etc. That makes investors believe what most of the Indian Business Community is expert at…. But this was a matter recorded in FY19. Stock was in single digit then. And since BCG recovered from rock bottom levels, it was a tacit understanding in investors that the worse is behind. SKR delivered two token dividends to show his cashflows are genuine. And then a Bonus issue. And party started.
He came on CNBC for interview. Do you think CNBC anchor had any dream of inviting SKR? Infact he tried to reach audience thru media channels.
What he could have done was, disclosing the letter from SEBI in September. But he thought that let stock rally and he would spice up rally with second bonus and things would go under the carpet. Unfortunately, it didn’t. And now investors are afraid of second bonus. Stock corrected before Bonus. So after Bonus, it can go down by another 40% and still 20-30% correction is pending before Ex-bonus date. So, BCG is ruthlessly butchered for underestimating power of Corporate Disclosures/Governance and the BCG Bears’ cartel. There are deep pocket sideline investors not ready to digest the scintillating story of BCG. So, BCG is becoming victim of its own success. It had to happen someday.
Then what is the way forward?
I think correction would halt around 80-90 cum-Bonus. And then stock will adjust for the bonus. The internal revenue engine and the scope of Adtech is robust. So, stock has still potential to climb up and make new highs in 2022. All depend, how fast SKR can put controversy to rest. But it can not take long. Normally, such audit takes 6-12 months. Being in operation across the border, it may take some more time. Now what if, SEBI finds nothing?
In that scenario, the very reason BCG used to be doubted by large players, the inability of the group to declare Audited Consolidated Financial Statements, would be cleared. That opens the doors for BCG to get adequate media attention and possibly it can be included in Next Nifty 50 and included in F&O.
Now it makes a perfect sense why SKR did not show interest to list BCG on NASDAQ and instead he hinted Israeli subsidiary…
At this point no need to exit. Stock has risen 50x from the bottom. So, if it corrects 50%, even then bull market trajectory does not change. But what if, all is well… The bulls will not give chance to ride BCG again. Then even 500 can be possible.
Weak hearted investors should exit as always.
The rest can Sit Tight.
We may see Ukrainian crisis to remain like Covid but it’s impact would ease by May end … With margin of safety of a month.
I had made a post after Bonus Announcement. I was not happy with second one. But it doesn’t mean that time to trigger exit button. Wealth is made by staying PUT. By holding good counters for long till value unlocks.
I expert SKR to make more media discourse to keep interest of investors alive in this trying times.
Conservative Indian.March 2, 2022 at 5:43 pm #13303
The main reason for this negative reaction is because of informing the market after 5 months. BCG always had doubters and this incident didn’t help the situation.
Technically they should inform the markets/exchanges/shareholders once the intimation for the audit is communicated, that is, confirming that the audit actually takes place than just saying we will audit you but not confirming. The company and the regulator will communicate with each other and then the regulator will take the necessary action
But as a measure of good corporate governance they should’ve shared the details in September itself.
I’ve always been critical of the company’s corporate governance and everyone knows about it. They make simple matters go to extreme. I’ve asked the CEO directly about this topic too in the conference calls. I had even suggested the company hire a board member who’s an expert on topics related to stock markets and that person would’ve properly guided the company in these matters.March 2, 2022 at 5:59 pm #13304March 2, 2022 at 6:48 pm #13305
If it is going to take 6-12 months as pointed out by CI for the closure of forensic audit – I doubt the price will really be butchered heavily ( I don’t want to say it out loud to what extent actually). I guess company already have 200+Crs FCF and in plans to increase it to 500+Crs – may be they can postpone their target of 500Crs by a quarter and use some percentage of that money to buy back to a certain extent. They may have other plans, not sure if this would be feasible. But definitely hope this would not affect the current US audio acquisition.
Or if it is possible, cancel the second bonus and again do some buy back. After approval by shareholders/sebi for bonus, whether it is doable at this stage – again I actually dont know, given we are only very few days away from bonus
They could be busy with acquisitions etc, but hope no one can deny the seriousness of current scenario
I don’t think CEO should do concall right now – given the sentiments there might be many ugly/unprofessional questions thrown at him from several investors, which may deteriorate the circumstances further. Well if he can handle it really good – then no issues. If not, then I believe clarification/notifications to exchanges advising any actions to change the current sentiments or probably via a professional media channel (should not be like a news channel debate for TRP )March 2, 2022 at 7:17 pm #13306NIRAJ1Registered Boarder
courtesy to sudarshan ravi.
Here is a small list of some BIG LARGE CAP companies which have taken a Haircut with the same ASSET IMPAIRMENT case similar to BCG and they did not get audited for the same reason because of their popularity and stature. By BS Research Bureau… 1. Vedanta FY 15-20 Rs.49,392 Crores
2. RIL – FY 17 RS.39,570 Crores
3. Tata Steel FY 13-16 Rs.33.146 Crores
4. Tata Motors FY 19 Rs.27,838 Crores
5. ONGC FY13-15 Rs.6493 Crores
6. Hindalco FY09 Rs.3872 Crores
7. Grasim Industries FY 20 Rs.3245 Crores
8. M&M FY 20 Rs.1783 Crores
9. Indian Hotels FY 13-14 Rs.1178 Crores
10. Wochardt FY16 Rs.1049 Crores. —
– BCG has an ASSET IMPAIRMENT of Rs.868 Crores and the breakdown of this is posted on July 1st, 2020. As the CEO mentioned to the exchanges on Feb 28th 2022, the audit will happen and the company will submit all the trial balances, ledgers, proofs, accounts etc related to this ASSET IMPAIRMENT and come clean in few days, as SEBI needs the process to be completed with reports being filed when they open any case and they cant just hear from the companies that Audits are not required. View lessMarch 2, 2022 at 11:23 pm #13307
I’m not supporting the CEO or the management and their actions but I’m just sharing facts. BCG at least has informed the market/exchanges/shareholders about the audit but India’s biggest pharmaceutical company Sun Pharma didn’t even inform about its forensic audit to the exchanges and didn’t give information as to why and when the forensic audit started.
The market got to know about the forensic audit only when some newspaper reported it and if they had not done that then I don’t think Sun Pharma would’ve reported it. The exchanges had to ask clarification from the company to know about the forensic audit. In the clarification too Sun Pharma didn’t say when and why the forensic audit started.
This is what Sun Pharma said in the clarification :
(Date: September 05, 2019)
1) This is in relation to the captioned email/ lefter received from BSE and NSE respectively, seeking clarification from Sun Pharmaceutical Industries Limited (“Company”) regarding a media article that appeared on the website of Business Standard on September 4, 2019 captioned”Sun Pharma slides 4% on report of Sebi ordering forensic audit” (“News Article”).
2) At the outset, please note that the Company has always sought to comply with its regulatory obligations, including, making appropriate disclosures under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 (“SEBI LODR Regulations”). The Company is not aware of any information that could explain the movement in the price of the scrip as referred to the said News Article. Additionally, you may also note that a forensic audit has been ordered by SEBI w.r.t. the financial statements of Sun Pharmaceutical Industries Ltd. for the financial years ending March 31, 2016, March 31, 2017 and March 31, 201 8.The said forensic audit is presently ongoing.
3) As an organization, we are committed to adhering to all applicable legal and regulatory requirements and will ensure that any material developments in this regard are promptly notified to all our stakeholders in line with Regulation 30 of the SEBI LODR Regulations.
4) he above is for your information and records.
BCG management people have followed a standard procedure which they could’ve handled it better, that is, informing the exchanges in September itself but what about Sun Pharma which didn’t even tell any investor about the forensic audit? Would people have known if that article didn’t appear on media and if the exchanges hadn’t sought clarification from Sun Pharma?
Here are few articles about Sun Pharma’s forensic audit.
Sun Pharma Admits Forensic Audit Underway as per SEBI Order; But Fails to Disclose It to the Bourses
Sun Pharma confirms SEBI forensic audit underway
Sun Pharma, however, did not provide any specific details on the reasons for the Securities and Exchange Board of India to order the forensic audit.
In the conference call held on Feb 6, 2020, the management people said the following to an analyst from Morgan Stanley:
Sameer Baisiwala: SEBI forensic audit work that was going on?
C.S. Muralidharan: Compared to our last update there is no further development at this point of time which we have to share. We do not have any update from the regulator. All the queries have been responded to.
Dilip Shanghvi: We have responded to all the questions. And our assessment is that there is nothing that we have shared that is a concern for us.
The same person has asked about it again in the next conference call (May 27, 2020) and again they didn’t reveal much.
Sameer Baisiwala: Sir, is there any update on the forensic audit being done by SEBI?
Dilip Shanghvi: No, I think nothing that we wish to report at this point of time.
I’m not saying Sun Pharma is a bad company and I’m also not comparing it with BCG or saying BCG is better etc. Since we are discussing about the forensic audit topic, I just shared some information about it. SEBI is the regulator and every company has to follow its rules, regulations and guidelines.March 3, 2022 at 1:28 am #13308
(June 19, 2018)
The General Data Protection Regulation (GDPR), enforced by the European Union last month, has cleared the ambiguity on privacy, and would benefit consumers and firms worldwide, said Brightcom Chairman and CEO Suresh Reddy. Besides being a threat to Google, Facebook and Whatsapp, the data privacy law had prompted staff training, change of codes, alteration of information flow and purchase of newer equipments across IT firms, he said, speaking to The Hindu over the phone.
“The ambiguity over the usage of information and privacy has gone. We are compliant with the new law and are helping non-compliant clients to suit the new requirements,” Mr. Reddy said. Saying that stricter privacy laws were expected to hit the market, he added, “The US, Australia and Singapore are watching the GDPR implementation. It is expected to be a template for them to develop their own versions.”March 3, 2022 at 7:27 am #13309
Agree sentiments are negative currently. But if you look at the sequence of events
1. Sebi sends letter for forensic audit on 16th Sep 21
2. Company asks Sebi, it may not be necessary as they are compliant with all standards
3. Sebi confirms back on 25th Feb 2022 saying we need to do it
So when does the discussion on topic of forensic audit gets confirmed, from company’s point of view ? My view is, it gets confirmed only on 25th Feb!
If sebi had confirmed on, say for example, 20th Sep 2021, company would have sent notifications on 20th Sep 2021 itself!March 3, 2022 at 7:49 am #13310
SKR should publish fully audited numbers of FY21 to immediately turn negative to positive sentiments otherwise panic would continue7+March 3, 2022 at 8:52 am #13311kiranjRegistered Boarder
People don’t spend time to understand the background of the concern but just get panic and move away to some momentum stocks and lose the gem. I hope these type of scrutiny is a part of the multibagger journey. Now brightcom is spoken about many and the stock is gaining more visibility every day. When things are declared clean by authorities the story is going to be completely different which everyone of us is looking for.March 3, 2022 at 10:21 am #13312March 3, 2022 at 5:44 pm #13313jmathewRegistered BoarderMarch 3, 2022 at 5:46 pm #13315March 3, 2022 at 6:04 pm #13319March 3, 2022 at 6:40 pm #13321DeepakRegistered Boarder
Price of bcg from 37 in sep to 150plus in feb. In that
5 month only one acquisition is already done and another usa based acquistion is on card. As per mr reddy the focus of the company is to grow multifold which will generate more cash flow and the share price will follow the same.The same way company grew from lot of acquistion in past from 10 million revenue to 600 plus million revenue.March 3, 2022 at 7:04 pm #13322odyseeRegistered Boarder
Do forgive me @ Deepak. I do not quite understand the point you are making in your assumptions in #13320.
All kinds of conclusions can be arrived at from a ‘what if’ or ‘suppose’ scenarios.
We should deal with facts as they are and what information we have access to. The rest is pure speculation.
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