General Discussion

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    SKR should take moral responsibility of creating this mess and shattering lakhs of retail investors dreams. Other than early birds who entered at low price atleast two lakhs investors must have lost heavily. All because of his negligence… And may be greed. What a waste of intelligence… Sad.

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    “Rule Number One: Never Lose Money.
    Rule Number Two: Never Forget Rule Number One”,lost%20its%20revered%20AAA%20rating.

    The only people I feel sad are for Index Investors. Especially, investors of a fund called Kotak Nifty Alpha 50 ETF. Nifty Alpha 50 Index, as calculated by NSE, gave Brightcom almost 10% portfolio weightage. Just imagine what will happen during next balancing in all indexes. All Index investors will lose for practically no fault of theirs.

    For past few months, i was studying Index funds and its varieties (My favorite is Nifty Low Volatilty). Got a good lesson from this stock price movement. Wont go below Nifty 50, in Index investing. Happy being dumb.

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    I must admit it is not difficult to be critical about the handling of multiple issues by the management.
    Such great optimism just a few months ago turning into such despondency today.
    All the more puzzling as Mr Reddy had constantly stressed upon rewarding the retail shareholders ( including the old faithful and now tiring longtime lot). It is with great pride that we commented on the ever increasing BCG family, and every quarter many additional thousands had boarded our train for the really long journey from Kanyakumari to Kashmir.
    We were chugging along merrily until the additional engine by way of a second bonus jolted us in January. That was done to enable yet more eager and anxious retailers to board our Superfast express on our thrilling journey.
    However, the new engine did not deliver, and has in fact slowed down the earlier momentum, and is now in reverse gear.
    It’s not that the company has not performed. It has, and brilliantly so. It’s not that the future prospects are cloudy-in fact they appear to be very promising. The growth has been fantastic and the profits and free cash flow are really heartwarming.
    Then, why are we perceived to be so rapidly losing goodwill and trust and faith with the investing community?
    The business performance was par excellence. But that has not been repeated on the administrative, communication and investor relations end.
    What a pity that months and years of incredibly hard work of building back the image of Brightcom has been so rudely shaken only because of perceived deficient management depth in the financial, legal, secretarial and compliance department.
    This situation can, of course, be swiftly salvaged if rapid action is initiated by Mr Reddy and his team without any further delay, and proper communication lines with investors are fast-tracked.
    I am confident that a dedicated team, led by the inimitable Mr Reddy, that has overcome so many challenges and obstacles to emerge as a leading international ad tech player, can manage these other relatively mundane but important issues without much stress.
    We have to be a little patient for a little more time, as indicated by Mr Reddy in the conference call. The ducks were all lined up. Maybe a couple stepped out of line. But I am certain that they will be back in formation in the not too distant future.

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    The positivity is the need of the hour. We have seen similar downtrend after previous bonus. But we had a long rally after a positive event. Everyone know there are some positive events to unfold. I wish they are disclosed soon to fuel a longer rally. Cheers

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    As they say “if it ain’t broke, don’t fix it” – the bonus issue is a very good example of this. From the day the bonus was announced there was some pressure on the stock. If the price was maybe more than 500 or 1000 it would’ve made more sense but I think the CEO and the management team went with the previous winning formula but it backfired this time. They wanted to give bonus and also make the FPIs pay their money sooner. Hit two birds with one stone worked last time but this time not quite so well.

    There were other reasons as well for this negative trend – like FA, delay in crediting bonus shares, Ukraine war, global tech sell-off and later SHP confusion. Even after FA when Mr.Sharma converted his warrants to shares, the stock rallied from 80-odd to 160-odd levels (pre-bonus) but the delay in crediting bonus caused the most negativity. It even brought media’s attention and even after that they took a little more time to credit the shares. Maybe if they had credited at the right time or with a delay of maybe 1 or 2 weeks, the stock wouldn’t have performed this badly.

    Last time too after crediting bonus shares there was similar kind of a sell-off as the stock corrected/fell 25-30%. Last time people tried to sell 1 bonus share but this time it is 2 shares so the volume and pressure both are more. Add to that the increase in the number of shareholders too.

    Coming to the fundamentals, the performance of the company is improving and they are acquiring 2 companies (3 if you include Lycos) to grow even more. Last time when outstanding issues happened the company’s hands were tied because there was pressure on the financials (high working capital requirements and cash flow issues) and they couldn’t announce any dividend or other things to bring any confidence but this time they have increased the dividend amount 6 times. Paying 60crs is not a joke. Some people want dividends similar to IT companies but the fact is BCG is not an IT company (it never was). It is in a growing industry which has both tailwinds (positives) and headwinds (negatives) and you have to make investments to grow and to survive. Even giants like Facebook are pivoting to a different business. They started focusing on hardware for their Metaverse plans. 2012-13 to 2019 were very horrible for many ad-tech companies and many went bust. Today’s winners like Criteo, Magnite, Perion etc struggled a lot in that period. Since the whole industry faces receivable issues, you have to be very careful about your finances and you have to do the right moves. I really liked their plans to acquire audio ad company (or it’s assets). Diversification in the same field/industry is a good move.

    The management people have no choice but to improve corporate governance and investor relations. There was a massive improvement in the last 2 years but that also was not always 100%. From day one I have always been critical of this and I have asked the CEO about this in almost every conference call even though I look like an idiot asking the same question every time and not getting proper answers.

    I have said this many times and I’ll say it again – If any investor has any complaints then they have to contact the company/management and if they don’t respond then they’ll have to go to the authorities. It’s your hard earned money.

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    Dear Friends, bcg is a long journey and the need of the hour is for skr to scale up from proprietor mentality to a professional he trying this or has the success already got into his head…only time will tell.

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    The approach he is taking is evident from the fact that there is no sense of urgency to hire CS even after 8 months.He has to hire right people for key positions and hold them accountable for delivery.I am not sure who SKR is holding accountable for bonus issue bungling. Not having a CFO at a time when FA is going on is also inexplicable. I have been a long term investor and holding a sizable quantity. Last call was really disappointing. I am still a believer in BCG but feel SKR has to get his team and allow them to work and hold them accountable for delivery.

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    I total agree that , last conference call was very disappointing. Even though there are many outstanding ongoing corporate governance issues, they did not bother to discuss on a single item atleast.

    There was no explanation at all on bonus shares listing delay.

    CFO exit during FA is not normal , even though they mentioned as retirement, it cannot be decided over night . Either they should inform 6 months to 1 year in advance .. or they should extend his tenure for a year or two considering the FA and CFO experience in the company.
    It was mentioned very lightly in the conference call.

    And about SHP, everyone knows there is some manipulation going on. They did not want clarify despite someone asked question.

    And about FA, it was also mentioned very casually and in very brief.

    And lastly the Q&A was not convincing. Only 4 to 5 people got chance and they did not ask relevant questions.

    And other points :

    Huge dilution of shares is a big negative at this point in time.

    There was no mention of time lines of dividend credit.

    As someone pointed out, I am little worried about index funds which accumulated at little higher price and despite bonus they will be in deep red.
    Have to wait and watch for next turn of balance of stocks in these index funds.

    Drawdown in the stock should not be leaps & bounds and management should do the necessary to arrest it.

    I continue to hold the stock from the past 5 years.. hope it will still be a longterm play.

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    There’s this company called Man Industries and sebi has initiated forensic audit of that company too. Sebi sent notice to the company in October or November but the company informed the market last month (May 9th or 10th).

    There’s no news about this and nobody is writing anything negative about this company and this news didn’t have much impact on the stock price too. It fell from 85 to 75 and then there was not much fall and it went straight back to 84-85 and is now trading at 81.

    Man Industries management have said that they have given the auditors and sebi every available document, information and that they don’t have anything more to share as they’ve shared everything.

    So it’s clear that sebi is okay with companies not informing the markets immediately and it will give companies time to give explanation. Companies will have to inform the market only when the audit is initiated. I don’t think sebi will reverse it’s decision and not do the audit and I guess once they send notice they will conduct the audit even if companies provide all the information.

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    @Logon man industry did not send his CFO to home during FA, even kid can understand what could be reason for sending him during FA, market wont take such things lightly,
    also all know that why bonus was issued second time just for sake of Shankar sharma and he told that it was issued for retail investors benefit, so as per my understanding nothing is happening in forensic audit, I’m sure that if you open case with SEBI they will reply to that saying FA is on hold. Conference call was very vague this time, only his friends were allowed to ask question..this is just my view

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    @brightspot, I just shared some information on forensic audit. I didn’t defend the CEO or the company and in fact I’ve been very critical of the company about the topics you’ve mentioned. If you check the queries that I sent, I have asked every critical question that investors may have. As investors we can’t do more than this.

    In the recent conference call that Man Industries conducted, they just said that there’s nothing more to discuss as there was no update after the May 12th call (Man Industries had held a call on 12th to discuss FA).

    What I’ve understood from seeing all the companies that were asked to undergo FA, once the audit is initiated, everything will be in SEBI’s hands and companies can’t do much about this.

    Transcript of the recent conference call held by Man Industries (only this much was discussed about the FA)

    Caller : And finally any update on the forensic audit after the last call that we had any reply or revert
    from SEBI till date?

    Ashok Gupta (Man Industries): No further updates after that call of 12th May, nothing is there.

    This is similar to what Sun Pharma people had said in one of the conference calls when people asked about FA.

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    Hi everyone I know its difficult times but I feel dark can only uploaded shp once the legal formalities vif llp is done thn we will see increased promoters holding .. if u see nse every few seconds someone buying in lot of 1000 to 2000 retailers? Very unlikely very soon reversal hold on

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    @sac6310 – I couldn’t login to MCA portal due to some technical issues… Could you share either a screenshot of it or a high level details of SKR and other Promoter holdings

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    suddenly buy order of 25 lakh broke LC for sometimes ..hope LC saga ends today

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    I saw that too, there was some 16-17 lakh sell order before and after the 25 lakh buy order was executed these operators suddenly put more than 24 lakhs for sale. They are desperate to bring the price down. It would’ve come out of LC and maybe traded in green.

    Increasing the free float by giving bonus has made manipulation easier.

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    WoW LC cant sustain for long , huge buy order coming every minute

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    Nice entertainment, worthy of a web series 😛 (Upper Circuit now)
    Intraday shorters should be having fun sucked off them…

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    @Brightspot I was the 4th person who got to ask the question. And it took me by surprise because I never got any chance, the trick is to be in call 10-15 mins before the scheduled time and press *1 immediately. You will be placed in the queue. At least this is what happened to me this time. So I don’t think the concall was staged. Though I had the same feeling when I heard the person name ‘Ishan’ getting to ask the question twice.
    Pardon me if I did not ask any important questions. I am still new to this game. I thought promoter holding was the elephant in the room and I pressed a little more on it. And the second question about Free Cash flow to my mind seemed hard to understand. How can the number be exactly the same if it’s different from the operating cash flow? Coincidence? Perhaps.

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    It’s been a crazy day today, was looking at the timeline maybe inconsequential but wanted to share, at 1:04pm on a telegram group CI did mention today that with “22 lakh shares pending sell orders outstanding at the LC,his sell order of a minuscule amount of shares were executed before the 22 lakh share orders”, which continued onto a discussion of “ all or none, fill or kill “ orders.
    At 1:32 pm the story started to unfold on BSE first and then everyone knows what happened.
    So was wondering if the operator(if there is one) is following all these telegram groups and our forum as well. Might be coincidence as well.
    But all in all it was a fun day!!

    One more thing, coming to timelines, even after the SHP was released on April 5 the stock did make a high of 108 three trading days later, so even if someone didn’t like the SHP (that includes me) they had time to exit near the all time high. But I chose not to and I’m the only one to blame for that.

    I’ve been watching SKR for 8 years now, he’s been on every conference call patiently explaining to every investor even when BCG was trading at 5 INR, (and I know it’s his duty to do so). If the question of SHP wasn’t asked in the conference call I too would have called it staged.

    But it all comes down to whether you believe in what he said, do you trust skr, ( I’ve been with the company since 2014, when it was trading at 60 INR, and the stock crash happened after the US division of BCG filed for bankruptcy in the DAUM case, and stock came down to 2.80 INR)

    1. DAUM will be settled !!!
    2. Forensic audit : on asset impairment(alone) which has been shared with the exchanges in 2020.
    3. SHP: “nothing illegal” but cannot disclose more at the moment.

    These are all SKR’s words not mine, if there is an upward rally from here people tend to forget about the SHP and FA and all that. So dear friends in this upcoming rally (if there is one) remember to ask yourself these questions and take a decision accordingly.

    MAY THE FORCE BE WITH YOU (and all of us)

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    @rahul has the company clarified the free cash flow question, have you received the “accounting answer” to that question from the company ?

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