[nitin_asce]

@logan couple of queries which are coming to my mind.
1) why SKR choose this path. There are international subsidiaries and if CEO takes salary from multiple subsidiaries and then subscribed to PW themselves isn’t it correct way of increasing the Shareholding.
He could have increased his salary that’s it. So very intrigued why this path was chosen. Is there something we don’t know.
2) he might have resigned but he may still call the shots within the company and may get a puppet CEO. The risk is really high.
3) during all this turmoil if he is not able to get his shareholding or his PW are cancelled, he may guide company to lower numbers thus share price will automatically come down and then he will increase his holding.

Still I am unable to get this puzzle that what he is trying to achieve. Can you throw some light on above queries based on your understanding.

[AdUp]

If executed correctly, this could be the best thing that could have happened to us retail investors. Suresh was a big baggage for BCG reputation and the only way to get rid of him could have been through a black swan event like this. If not for now, such kind of event would have been inevitable somewhere down the line. In fact, it probably could be even worse than this (if this is not already the worst), as he would haven been emboldened by getting away with wrongdoings.

As a fellow hyderabadi, I feel ashamed and embarrassed of such people as SKR and Raju. I wish they get the treatment they deserve for breaking the trust of so many investors. They could have done so much better. It is sheer and utter stupidity. Anyway, I am glad they both are out.

I kinda have the feeling that the auditor had bigger role in this whole drama than what is out so far. I would not be surprised if this whole “brilliant” idea was proposed by the auditor and Suresh just went along with it. But this is a pure speculation from my side.

This step by the board is definitely a huge one in the right direction. I wish they could have already named an interim ceo, but it is probably just me eager for the next step.

[Saach]

@Logan, going through my association with this company from 05-Sep-2014 as an investor (retailer) and am watching its ups and downs of this company, very closely. Dear Logan! I appreciate your association with this group as a blessing for retailers from the beginning by sharing timely, your professional and honest views for guidance, from time to time. I, personally, am obliged for your suggestions. I look at the present situation, though seems very hard and unfortunate for retailers (for short time), very positively, if the forthcoming fresh changes in TOP management level could prove to be dedicate, full of inner fire for growth and progress, would bring an amazing result, in the near future. I pray and wish all the best for prosperous future of the company, Warmest regards.

[Raj]

*Important Case Study: DSQ Software Ltd vs BCG 👉👉👉 Shareholder Alert!*

https://www.sebi.gov.in/sebi_data/docfiles/11808_t.html

In a significant turn of events, the promoter of DSQ Software Ltd, Dinesh Dalmia, was found to have fraudulently issued preferential warrants, which were later exposed by SEBI. These warrants led to the sale of numerous shares in the open market. Following investigations, SEBI has issued an order for Dinesh Dalmia and associates to buy back the sold shares and return them to the company’s account.

*Verdict Order:* “Shri Dinesh Dalmia and DSQ Software Ltd shall deposit a sum of Rs.630 crore (being the value of 1.30 crore shares calculated by taking into account the average price of the scrip in the relevant settlement) within a period of 45 days in a separate escrow account to be maintained with a nationalized bank, till completion of investigation by various Police agencies including The Calcutta Police and Central Bureau of Investigation.”

This move caused a remarkable rebound in the share price, which had initially plummeted from 2000+ levels to as low as 150. The shares eventually surged back to 1000+ levels due to the buyback. It’s important to note that over 90+ crore shares were allotted as preferential warrants in the last two rounds of 33.14 crore and 14.5 crore, along with bonuses. Even considering around 55% of this total, a significant number of BCG shares were sold in the open market.

This case underscores the potential game-changing impact of SEBI’s buyback order. Investors are urged to consider coming together united to explore legal options and seek justice. If this action has already been taken in the case of DSQ Software Ltd, there’s a high likelihood that similar precedent could apply to BCG shareholders. Legal judgments often refer to earlier cases, and SEBI’s existing rules and regulations support the notion of a just judgment for retail/public shareholders who have been wronged by promoter groups.

Stay informed and vigilant! Your investments matter. Share this on twitter for maximum reach with these hashtags and add others if you feel appropriate #ShareholderJustice #DSQSoftwareCase #Brightcom #SEBI @SEBI_India @NSEIndia @BSEIndia @PMOIndia @nsitharaman @dir_ed @ZeeBusiness @NDTVProfit @CNBCTV18News @AnilSinghvi_ @SunilSanghai

[Saach]

@Raj, thank you so much for sharing very important and valuable information which could transform the current situation into positive one. Mostly this depends on SEBI who is seriously and speedily looking into this case with professional team.

[AdUp]

On a side note: it seems like Headstead is back on BCG’s Moneycontrol forum. Long term investors in BCG will know his contributions. Can someone PM him to join this forum? (if he isn’t here already i.e.,) I don’t have rights to PM on MC. He has great insights into adtech industry and BCG and has been a long term investor in BCG. He would be a great addition to this community.

Attachments:

1. 

   IMG_20230828_052714_794.jpg
   

[vkhare789]

Hi Logan,

As you know that retail investors have more than 60% of ownership in this company. Do we have power to elect board of directors who can take decisions in favor of shareholders? I think that current BOD would be inclined to choose CEO/CFO who acts in favor of Suresh and his well-wishers. Please suggest if we can form a group. We can vote for BOD change which would be beneficial for shareholders. Please suggest if that is legally and realistically possible.

[Longplay55]

@AdUp…….yes, Headstead is back on MMB, and he could be an excellent value-addition to this forum…..Like Logan ji, he has in-depth knowledge in Ad-Tech industry vis-a-vis stock-market-valuations & has got ‘problem solving’ skills instead of messing-up with issues. For me, he appeared to be “result-oriented’.
Since he is a Gold member on MMB, it appears; his profile is not accesable to others, hence we need to request him on MMB portal. But for sure, Headstead is worth addition to our forum.

[explorer]

I doubt the intention of the admins. A couple of months back, I posted a message about nonexistent of the US based subsidiaries with proof. The admins rejected the post. This would have helped some retail traders knowing a part of BCG’s story. Any idea why it was not allowed? Happy to post again if the admins allow.

[Logan]

News analysis. Brightcom: Satyam-like rescue operation needed to protect interests of retail investors, employees

[vkhare789]

Hi Logan, Any thoughts on below?

As you know that retail investors have more than 60% of ownership in this company. Do we have power to elect board of directors who can take decisions in favor of shareholders? I think that current BOD would be inclined to choose CEO/CFO who acts in favor of Suresh and his well-wishers. Please suggest if we can form a group. We can vote for BOD change which would be beneficial for shareholders. Please suggest if that is legally and realistically possible.

[odysee]

Hindu business line has got it wrong @Logan. The turnover was not Rs 258 crore in 2018-19, jumping up dramatically to Rs 7496 crore in 2022-23.
That in itself suggests a ludicrous and unbelievable increase in the business and points at fraud.

[Logan]

@nitin_asce, like you, it’s a puzzle even for me and all the investors. Even Mr. Shankar Sharma has said the same. Every investor is in shock and horror.

No shareholder would’ve objected if he took crores of salary or if he subscribed to stock options but he took the wrong path. The Trade Desk will pay billions in stock options to its CEO if he performs as per the board’s expectations and BCG could’ve followed the same. He’ll be remembered as a culprit in history and it’s an embarrassment for his family also. In a legal and honest way he could’ve achieved a lot without taking the wrong path.

On next CEO/chairman, even if SKR has influence, the new CEO cannot miss mandatory regulatory compliances and rules. If the new CEO becomes a rubber stamp then he/she will end up like the old CFO and they’ll be removed again by sebi. From now onwards, how much ever the pain will be, they must and should follow all the rules and regulations.

On the third part, I’m not sure what actions sebi will take. It’s better to wait for sebi’s actions. I don’t think he’ll have access to capital markets for many years to come.

[Logan]

@vkhare789 and @saach, we can form an association legally with Sebi’s blessings and approval but my concern is who will take the responsibility. I’ll always support if someone takes up this initial and will sign whenever you require my signature but somebody should take the responsibility. Because of my health issues I’m not in a position to take such a big responsibility.

In the past, investors of Lakshmi Vilas Bank had formed an association but they couldn’t do much as the bank had very high levels of debt and was sold to DBS Bank later and investors didn’t get anything.

Satyam’s case worked because there were FIIs and FPIs but I’m not sure who will take the responsibility here as the majority is held up retail investors. Most of the companies in similar situation will fail or have failed because of high levels of debt but thankfully BCG is a debt free company.

The board and management team of foreign subsidiaries of BCG still have time and they can make sure that we can navigate through this crisis. Though there’ll be short (and long term) pain, if they take good decisions then BCG can recover from this.

We should send request mails to sebi individually or as an association and make sure that sebi doesn’t take drastic actions which will impact the shareholders of the company. Let them ban the culprits but they should not ban the company from accessing capital markets. Lakhs of shareholders and hundreds of employees should not suffer because of the misdeeds of the CEO and others.

Like I’ve mentioned in one my previous posts, there’ll be many scenarios, and in my opinion, the best scenarios would be

1) The current board taking correct decisions and appointing a good chairman/CEO and cleaning up all the mess. Make sure there’s continuity in the operations and business.

2) A new strategic investor (like institutions, mutual funds, PE or VC funds etc) buying substantial stake, taking control of the operations and board, making sure that they appoint an able chairman/CEO, clean up all the mess.

3) Sebi/Government interfering and appointing board members and make sure retail investors’ don’t suffer. Sebi not banning the company from accessing capital markets.

The first is easy to do as it depends on the current board and management as there’ll be continuity but the second and third are relatively hard because we have to rely on others.

In the Q4 conference call, I had asked the old CEO about Sebi potentially banning him and the company from accessing capital markets and to that he said that they have plans if such a scenario happens and nothing should impact the business and operations. I don’t know how much we can trust him and his words after recent events but because the company is debt free and the subsidiaries are independent, there are chances that the operations will not be impacted. But we can never say this for sure.

(These are just my guesses and opinions and everything may change in reality so please don’t take my posts for buy/sell decisions and if you have any doubts then approach SEBI)

[Logan]

@odysee, I think it’s a typo and they must’ve forgotten to add zero (0) at the end. The actual revenue in 2018-19 was 2,580 crores.

[Saach]

@Logan, Quote – “we should send request mails to sebi individually”. Thank you so much for suggesting so many ways to encourage the retailers for having patience and keep an eye on forthcoming actions by SEBI. I confirm having sent a complaint, online, being an investor in this company since 1914 and requested SEBI for an immediate legal action against the culprits, if proved. Simultaneously, to protect the interests of retailers who were affected due to this game. Warmest regards.

[lycos.rags.to.riches]

I would say need of the hour is periodic updates from the board. I accept they can’t name the new CEO immediately. But below updates could help pacify the anxious investors.
Transition Team members – Board has formed a transition team with the following team to oversee the smooth transition of the management, including executives from the subsidaries as part of the transition team will greatly improve the investor sentiment, as currently only SKR was running the show.
Reply to SCN – New team should give a clear picture of where the company stands on SCN, whether the company will request for more time to respond.
Assurance from the transition team – We dont see any issues with the business operations of the company due to the ongoing events and the investors are rest assured that the financials of the company are sound to sail through the events. If Vijay Kancharla as one of the founders provides the assurance then i think fall might stop or someone has to buy atleast 20 Cr shares from open market to change direction.

[odysee]

@lycos.rags.to.riches, what you have stated is the minimum I was expecting from the company latest by today. Surely, it’s the crying need of the hour to have an interim CEO announced or appointed, to maintain continuity of business operations and bring stability in the market and provide some relief to the tortured minds of the investors. We all understand that hiring a new suitable CEO could take a little while, but there is sufficient managerial talent within the group internationally that could be tapped for this role. Convincing a well regarded and experienced professional to accept this role could be a challenge though, and this is where some skilful and deft manoeuvring has to done by the Board of directors.
Equally important is the task of identifying and appointing a well reputed audit firm to take on the challenging responsibility of being the Statutory Auditor. This may take some exceptional skilful handling too.
I, for one, am disappointed that SEBI asked for an instant dismissal instead of simultaneously suggesting as to what could be done in the intervening period to ensure continuity of operations of a public listed company and attempting to safeguard the interests of millions of small and large investors. Alas, it is easier to just wield the big stick by the powers that be, rather than adopting a more holistic approach that factors in the interests of all stakeholders in an international enterprise. A very heavy price is being paid by lakhs of investors and employees for the wrongdoing by one or a handful of people at the helm of this painstakingly built up international company.

[whyShares]

I think the most natural thing for SEBI to do will be to nominate the same auditor who carried out the Forensic Audit of BCG to be the Auditor of BCG to clean up their books and present a real picture. They already have a lot of exposure to BCG. I am sure there must have been several previous occasions where SEBI has nominated an Auditor to reconcile the books of a crooked Company.

[Logan]

Twists and turns in the Brightcom case

SEBI has ticked off Brightcom auditors. This may lead auditors to be more upfront about irregularities in companies’ books

I still can’t figure out why the previous CEO did such a stupid thing and the auditors rubber stamped it and brought trouble to us. Like mentioned before, everything could’ve been done in a legal and honest way but he chose the wrong and illegal path.

I hope and pray that the central government and SEBI will intervene here and protect lakhs of retail investors as mentioned in the article.

There is a good possibility that the Central Government would step in and do to Brightcom what they did with Satyam — take control of the company and hand it over to someone who can possibly manage it better.

[Author]

Posts