[sateanna]

Yes admin ji, please go ahead. You can mention it as questions from 100 odd retail investors so that it makes it mandatory for SKR to answer the questions. Saves lot of time on the call as well.

[admin]

Thanks @Pranil, @Sateanna, I will be sending email to IR on behalf of members of brightcom investors community forum later today evening.

Before sending it, will rearrange the order of all the questions we have received so far based on the priority and post it here. Suggest few of us (3-4) to also send the final list to IR with a request for extending the call by at least 30 mins.

[m4max1979]

Could you please add a few questions from the financial results published for March quarter if they look reasonable.

1. Reason for auditor making a remark regarding irregularities in payment of
statutory dues and income tax.

2. Standalone financials:
1. What is the provisioning for bad debts in net trade receivables of
Rs. 216 crs. Last year the provisioning for bad debts was Rs. 7.4 crs

2. Name of institutions for long term borrowings of Rs. 99.37 crs

3. Consolidated financials:
1. Which entities have been given loans of Rs. 652.59 crs mentioned in current
assets

2. What is the breakup of “Other current assets” and why has it reduced to
Rs. 157.4 crs in FY2020 against Rs. 540.6 crs in FY2019

[sateanna]

Noted Admin ji. Will do the needful. Thanks for all your efforts.

[Logan]

1n

Hi Admin, these are my questions/suggestions. I’ve left out the questions that others have asked.

1) We appreciate the management’s efforts to resolve the outstanding issues but at the same time the company has to look at market sentiment also. When it comes to the financials of the company there’s a lot of ambiguity in the stock market. Many people are trying to spread negative and false information about the company. Our suggestion for the company is to appoint a Big 4 auditor or BDO Global to audit the company’s India operations as well. Appointing BDO will bring trust, credibility, recognition and also boost investors’ confidence. The company can appoint BDO for FY 2020-21.

2) We understand that the company doesn’t want to give out sensitive information about it’s subsidiaries but since there’s a lack of trust in the market about the numbers, the company should find a way to give information about it’s subsidiaries’ financials. We need to see auditor’s signature on the subsidiary’s financials. Even the analysts expect this.

3) We need a breakup of many items in the balance sheet. There are many items classified as “other” and the loans and advances are very high and there’s no information about them in the footnotes either. We all have confusions in that, it’ll not only help us if you give us the details but it’ll also help analysts who want to track the company.

You may say that these are followed according to accounting standards and give verbal answers but we need a presentation on that and also they have to be mentioned with proper details in the annual report.

[Logan]

2n

4) Redmond Investments, part of the promoter group holds close to 5% of the company, it has pledged 100% of its shares. In the previous annual reports it was mentioned that the pledge was because of ICICI Bank loans but that loan is paid off yet the pledge is still there.

5) Promoters salary not disclosed in the annual report. We don’t need verbal answer to that, we want it mentioned in the annual report.

6) COVID-19 ‘s impact on the business and how much hit will the business take going forward.

7) Market share in the industry and how well is the company prepared for the future?

8) Impact of various companies investing in digital sector in India and how our company can take advantage of that.

9) Can the company’s AI division take advantage of disruptions happening in the healthcare industry due to COVID-19?

10) LOC amount and how much growth rate does the company expect after taking LOC?

11) On LOC, we know that interest rates are very low in the US (close to 0%), will the company get loans at lower rates or has to pay higher rates?

12) Need more details on LIL Projects, what their operations are and who their clients are.

13) The CEO needs to promote the company on various business channels like CNBC TV18, ET Now etc.

14) We understand that the company doesn’t want to disturb people like Jacob Nizri, Brad Cohen, Etai Eitany, Shirley Lowenstein, Yaniv Ben-Atia with market related activities but you can share their views and opinions on the industry on your social media platforms and doing this will educate the investors and also we can know more about the company’s subsidiaries and the people involved.

[admin]

Questions for conference call on July 02 2020

Have tried to take as much questions we have discussed and ordered based on priority. As discussed, will be sending mail to IR shortly.

1. “Certain legacy items on the balance sheet, across all subsidiaries have been impaired, in view of projecting a healthier overall balance sheet going forward. We will send out a detailed note to clarify further.” Please let us know more on this impairment.

2. Please let us know on the status of Axis loan closure.

3. Please let us know on the status of Oak sale.

4. Regarding share pledge, with whom they are pledged and when they will be released? Redmond Investments, part of the promoter group holds close to 5% of the company, it has pledged 100% of its shares. In the previous annual reports it was mentioned that the pledge was because of ICICI Bank loans but that loan is paid off yet the pledge is still there.

5. Is there any plan to close Daum issue by having alignment discussions in virtual meeting? By when can we expect to happen?

6. Reason for auditor making a remark regarding irregularities in payment of statutory dues and income tax.

7. We appreciate the management’s efforts to resolve the outstanding issues but at the same time the company has to look at market sentiment also. When it comes to the financials of the company there’s a lot of ambiguity in the stock market. Many people are trying to spread negative and false information about the company. Our suggestion for the company is to appoint a Big 4 auditor or BDO Global to audit the company’s India operations as well. Appointing BDO will bring trust, credibility, recognition and also boost investors’ confidence. The company can appoint BDO for FY 2020-21.

8. We understand that the company doesn’t want to give out sensitive information about it’s subsidiaries but since there’s a lack of trust in the market about the numbers, the company should find a way to give information about it’s subsidiaries’ financials. We need to see auditor’s signature on the subsidiary’s financials. Even the analysts expect this.

9. We need a breakup of many items in the balance sheet. There are many items classified as “other” and the loans and advances are very high and there’s no information about them in the footnotes either. We all have confusions in that, it’ll not only help us if you give us the details but it’ll also help analysts who want to track the company.

10. You may say that these are followed according to accounting standards and give verbal answers but we need a presentation on that and also they have to be mentioned with proper details in the annual report.

11. Promoters salary not disclosed in the annual report. We don’t need verbal answer to that, we want it mentioned in the annual report.

12. What is impact of major advertisers avoiding advertising on Facebook in 2020?

13. COVID-19 ‘s impact on the business and how much hit will the business take going forward.

14. Market share in the industry and how well is the company prepared for the future?

15. Impact of various companies investing in digital sector in India and how our company can take advantage of that.

16. Can the company’s AI division take advantage of disruptions happening in the healthcare industry due to COVID-19?

17. LOC amount and how much growth rate does the company expect after taking LOC?

18. On LOC, we know that interest rates are very low in the US (close to 0%), will the company get loans at lower rates or has to pay higher rates?

19. Need more details on LIL Projects, what their operations are and who their clients are.

20. On Edgecase.ai, has BCG invested in the initiative? Nature of the partnership.

21. Any update on the initiatives taken by Pisapathy which was discussed in the last conference.

22. The CEO needs to promote the company on various business channels like CNBC TV18, ET Now etc.

23. We understand that the company doesn’t want to disturb people like Jacob Nizri, Brad Cohen, Etai Eitany, Shirley Lowenstein, Yaniv Ben-Atia with market related activities but you can share their views and opinions on the industry on your social media platforms and doing this will educate the investors and also we can know more about the company’s subsidiaries and the people involved.

[odysee]

An additional point to be considered is the audit of the Israeli subsidiary, Online Media Solutions, by E&Y. Was that only a one time enterprise in the past or are E&Y statutory auditors of that subsidiary and the results ( almost 38% of the consolidated) we see annually are audited figures.

[buffet]

Conf call details & dial-in numbers:

Brightcom Group Limited Investor conference call
Date: 02/07/2020.
Start Time: 17:00 Hrs IST (Indian Standard Time)

INDIA ACCESS NUMBERS
Access Number 1:1800 103 3881
Access Number 2:044 7126 1301

More details @ – http://brightcomgroup.com/investors/

[allenasrini]

Is there any PIN number for the call?

[raviblk]

Is pre registration required for the con call ?

I am new to this .Pl advise me

[admin]

Lot of queries regarding con call.

Dial in the access numbers (provided below) and mention your full name. Operator will then ask if you are retail or institutional investor, to which you have to say retail investor. That’s all and you will be connected to the call.

If you are within India, access below numbers
Access Number 1 – 1800 103 3881
Access Number 2 – 044 7126 1301

For international investors, please refer the company website for more details,
http://brightcomgroup.com/investors/

Date: 02/July/2020.
Start Time: 17:00 Hrs IST (Indian Standard Time)

[buffet]

@allenasrini … No PIN required.

[buffet]

is conf call going on? .. unable to hear anything? Also unable to re-dial…

[buffet]

Summary of conf call as I understood. Please add/update as appropriate.

LOC: In the conf call, SKR mentioned that the LOC has been approved in principle but creditor due diligence is in progress. LOC would outright impact the topline by 25-30% with the current in-place resources & processes.

BCG Israel subsidiary: E&Y is auditing the same. Constitutes 38-40% of overall revenue. This is an answer to naysayers doubting BCG numbers.

Daum settlement: It’s done deal. SKR wants to conclude the same F2F, in the presence of lawyers. In principle, there is agreement between two parties on the final settlement. But having the trust deficit between involved parties which is understandable given the Daum’s past backtracking. @ the time of signing the deal, the first installment would be given from reserved funds. Subsequent installments may be given from cashflow and/or LOC.

The business impact of COVID: Huge surge in traffic observed & will have a positive impact on business in subsequent quarters.

Edgecase initiative: Currently BCG has not invested in Edgecase. But has an agreement in place to get stake when certain conditions/milestones are met.

AI/ML: BCG is working on different AI/ML initiatives in healthcare, Agri & DM segments.

Axis loan: Axis is asking 20 cr. As per BCG, it’s 8 cr. The settlement discussions are actively going on. SBI & Canara bank loans are settled.

[aindia]

Key takeaways (Opinion) from concall of 2 July’20-LIST “A”

Overall opinion: No major negatives if we drop Impairment issue.

SKR:Bullish on India
-a 5year play is guaranteed. Referred to RIL+FB association.

Opinion:

First time ever in all these years he sounded very optimistic about prospects in India.

SKR:June Quarter

could yield pleasant surprises—-why ? Positive outcomes from HIGH productivity of WFH and Traffic spike up

Opinion:

Exponential growth,across the globe, in “screen time” (growth in traffic being ratified by publishers across geos, may yield much better YoY growth in June Ending Q1 FY21 financials-particularly good growth in volumes and softened pricing

SKR:

LoC approved but s.t the ongoing Due Diligence. No releases so far.

Opinion:

Perhaps, there is some more waiting in store for LoC,because Top 10 auditor may have just completed CY ’20 figures of subs. FIRST half of CY 20 is gone by, so they like to vet the 6M figures of CY20.

SKR: Daum Settlement
requires 1:1 exchange of agreed amount with signed agreement across the table. Covid-19 remains a blocker so far.

Opinion:

1.Plan B is -a MUST to close on it.
The Dilemma could be , if any advance is released ( not out of LoC) the agreement may hv included advance followed by staggered releases of balance. Pending no disbursement LoC yet ,both BCG and Daum may have agreed to wait till the pandemic is gone.

2.If LoC formal sanction goes through quickly, such agreement will have a different shape like ONE BULLET Payment. This bullet payment figure could add to further savings and with no residual scope for contesting, which otherwise is a risk in staggered payments model.

We may have to wait it out. Need not be concerned about the closure prospects. Also because BCG has already been working on Lycos URL and its properties in parallel.

SKR: On Why stagnant top line OR no growth in the recent past?

Liquidity( sufficient free cash flows) being the biggest constraint,working capital cycle is skewed towards a higher no of (124 in Digital) days for Trade Receivables and a low number of (30 for Digital )days for “Trade Payables”. Hence the need for LoC

Opinion:

There exists always opportunities to grab more of DM business but for inadequacy of working capital .Once LoC funds are available,the revenue could easily bump up YoY by 25 to 30%. Current yearly consolidated revenue could grow to ₹3360 cr+ I.e;$443mn for FY’21.Such a revenue growth would yield better free cash flows that go on to drive up both top and bottom lines. In this DM/Ad Industry $400 cr revenue threshold once crossed, would boost, all round,the financial parameters, more importantly the Free Cash Flows.

SKR on Axis:

SHs not to be concerned at all.
Now we ( as in both BCG & AXIS)have clarity on closure.

Opinion:

My sense is :Since the NCLT order is scheduled for 8th July, we can expect sign off on 7th EoD, if not earlier. This time comfort may have been given by the judge @ NCLT to facilitate a mutually agreeable closure transaction (Judge may have also advised a mid-path solution to work with )within themselves and not risk the admission into Tribunal. Once bitten twice shy, BCG wouldn’t take the battle beyond 7th July.

Note:Takeaways from CC to be continued.
Please list your queries so I provide my opinions .
Urge you to validate each of those opinions

[aindia]

———————————————————————-
CONSOLIDATED LEVEL READING OF ARs- With a focus on DIGITAL segment figures

A. Company had been claiming there would NOT be any need to write-off any portion of Account Receivables ( for FY 19 it was at ₹898cr and for FY 18 it was at ₹887cr – at GROSS level)

HOWEVER, as a prudent measure, we see it make provisions. Example for FY 18 &19 , provision for bad debts were of ₹12.14cr and ₹8.74 cr ( Ref pg 97 of 2018-19 AR)…..1.4% and 0.97% respectively. NOTHING alarming about them at all.

———-

At STAND ALONE / SOFTWARE level:

Account Receivables ( for FY 19 it was at 235 cr @ SA)

For FY 18 &19, the SA level provisions for bad debts were ₹11.14 and ₹7.43 cr ( Ref pg 64 of 2018-19 AR)…..4.65 % and 3.16 % respectively. NOTHING alarming about them either

———————————-

ROW / DIGITAL

Figs for Rest of the World ( RoW) are as follows:

Account Receivables ( for FY 19 it was at ₹663 cr for RoW and for FY 18 it was at for FY 18 it was at ₹648 cr)

For FY 18 &19, the SA level provisions for bad debts were :

Just ₹1 cr and ₹1.31 cr ( deduced from 2018-19 AR)…..0.15% and 0.19 % respectively. AS GOOD AS – ZERO.

————————————————————-

SUMMARY on ACCOUNTS RECEIVABLES:

INR Provisions made for SOFTWARE/ domestic segment are not alarming, either at ABSOLUTE or % levels. Secondly, SW REVENUE as % of total is south of 20%……hence “MAJORITY of Receivables provisions are made in this segment .
Provisions for DIGITAL segment,( deduced from TOTAL minus SW)are a reflection on company’s CONFIDENCE in recovering ALL of RECEIVABLES( dollar denominated) from its DIGITAL SEGMENT.
Staggered process ( or a process with a lag)” of realising the DOLLAR denominated Receivables helps in their relative tapering down on a going forward basis. AR (Accounts Receivables) in absolute dollar terms-are on down hill?- along with free cash flow growth due to it.
If this trend continues and in association with Dollar denominated “real ( why? Top line in the recent years has been just flat …as seen in the recent company.ppt) and significant” business growth, decisions on dividend could be addressed easily.
Healthy growth in REVENUE DOLLARS from here on associated with stable/ flat CoGS will peg the Receivables to grow marginally….hence don’t be shocked to see a ₹1000 cr or more AR figure ( this note was written before the recent results declaration of Audited results for FY 20).Actual figure AR increase is just marginal from a wholistic view point of view. If this is how it plays out now,the takeaway is that it will drive free cash flows up. ——-mkt recognises the need for re-rating.

Note: The above doesn’t cover deep probe n analysis of SW figures

[raviblk]

Thanks for the Update. Waiting for the openion of Admin , Saul Goodman and pranil

[anand84sharma]

https://finance.yahoo.com/news/edited-transcript-lycos-nse-earnings-211340403.html

[sateanna]

The recording is available on you tube

[Author]

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