July 4, 2020 at 7:41 pm #7531
@aindia, thank you for explaining everything in detail.
My opinions on the conference calls are more psychological and I won’t be talking about numbers as @aindia has given an excellent explanation about the numbers in detail.
1) Axis Bank Loans – As I’ve explained in a previous post, these banks are very greedy, especially the private banks. Mr Reddy talked about how Axis used promoters’ properties for leverage etc. I believe that this is not a big issue because BCG already has the cash to pay Axis (which they got from PO). BCG lawyers must have advised Mr Reddy to wait and see what the court says about the issue. He also said people were scared because it went to NCLT and he assured us that we need not worry about this. I trust him and I think the company knows better about it than us.
2) Lycos/DAUM – I always believed that this is not a big issue and I’ve written about that too. I believe DAUM should be lucky to get even $16 million for Lycos. If they put up Lycos for sale, I think no one will buy it, since BCG made use of Lycos brand and they have other plans with Lycos, maybe they are trying to get it back. Also since there was a case b/w BCG and DAUM, they want to close it off because that case may hurt them in the future if they want to expand or raise funds. But at present I don’t think we should be worried at all, DAUM doesn’t have any leverage on this like they had in the past. Also, I don’t understand why people are so worried about DAUM, some people think that it’s very important but my opinion is, apart from the payment, we need not worry about that. In the past, because of DAUM case there was negative sentiment and also since the case was not finished, Mr Reddy also couldn’t give more details but now there’s nothing to worry.July 4, 2020 at 8:13 pm #7532
3) LOC – I think this is the most important thing that the company is doing. We should be happy that the management is looking at growth again. I believe the consolidation is very important for getting easy access to funds. US is the main market for Digital marketing so I think it’s very important to set up the consolidated subsidiary in the US. All the big players like Google, Facebook, AOL etc are based in the US and that is why they get easy access to funds and also they need not worry too much about cross border transactions. All these years BCG(parent company) couldn’t take money from few subsidiaries because of issues with cross border transactions, some countries will impose double tax on income. Now, all the investors should show their interest on LOC and growth, they should not worry about DAUM, Axis, Oak etc.
4) Growth – Mr Reddy talked about how, if they get funds they can grow by 25-30%. From the day I started writing on this forum, I’ve always discussed more about growth and how important it is for the company’s future. I think growing the business more is the answer BCG can give to naysayers. All these years the growth was stagnant because of few issues but it’s good that all these issues are almost resolved. TTD is getting all the hype because they are growing more, and BCG can also have high growth rates if they get access to funds easily. In India it’s a big process but in the western markets its quite easy. Also the consolidated subsidiary will become more famous if it’s established in the US and that in turn will build the company’s brand/image. As Tiger Woods has said, “Winning takes care of everything”, I think BCG will answer to naysayers/critics by winning i.e by growing the business.July 4, 2020 at 8:22 pm #7528myainvestRegistered Boarder
I guess given the time constraint, no one in concall asked the question about taxes pending that was called out in annual report. It may be a minor thing and could have been paid already. However, clarifying these small things to exchanges/shareholders will have good impact on market sentimentsJuly 4, 2020 at 8:25 pm #7536
5) OAK – Mr Reddy didn’t say much about this but he mentioned that OAK is not like other firms who dumped the stock without informing the company. I think there will be more shares in the market but I believe that big parties will get interested in BCG if they get to know about the US subsidiary and also when BCG grows.
6) Increase in Shareholders’ – I think some of the new investors are “Corona Investors”, my guess is that since they didn’t have anything to do during the lockdown, they started investing in shares. We should be careful about these “Corona investors” because they are gullible to operators play. We can see that most of the stocks are going up even without any fundamental changes and I think these corona investors played a big part in that. These are the people who seek advice from idiots on social media and they take decisions based on what those idiots say.
7) edgecase/Ingress Ventures, AI&ML, IOT – I always believed BCG’s strength was in digital marketing and with new ventures we should not expect too much in the short term. I think Mr Reddy and his team know what they are doing, so we should support them on their decisions. I think the company and the whole market has implemented AI and ML in their businesses and as Mr Reddy said, in the future AI and ML will be like how internet is now. At present we may not know where it is going but in the future they will be part of our everyday life. All I can say is that BCG is well positioned to take advantage of any disruption that may happen in the future with respect to AI and ML. At present, I’m more interested in changes happening in the digital marketing field. Connected TV and OTT are gaining more attention and most of the big tech companies are investing in that. It’s good to know that edgecase(Ingress) does all these and I think BCG has made a smart move by making an agreement with edgecase to invest in them in the future. TTD is getting all the hype because they ventured into OTT.July 4, 2020 at 8:29 pm #7537
8) Audit – I understand Mr Reddy’s concern about revealing sensitive information of the subsidiaries. Since all these subsidiaries are private companies, BCG cannot reveal more details. But he told a caller that anyone can visit the company and take a look at the report audited by EY, so we need not worry about naysayers/idiots’ attempts to bring bad image to the company.
Conclusion – I liked the analogy that Mr Reddy gave “before the arrow goes forward, you have to pull back a bit”, I think this analogy perfectly suits BCG, most people are only seeing the price but as I’ve mentioned above even Mr Reddy knows that “Winning takes care of everything”, in fact BCG’s Twitter handle had tweeted about this last year. So, in my opinion, Mr Reddy and his team know what they are doing and I believe good days are ahead for the company. Since I don’t like talking about prices or predicting the future events, I don’t know what happens to the price in the future, but I can say that only fools and idiots are selling the shares now.July 4, 2020 at 8:35 pm #7538odyseeRegistered Boarder
Saul, I think the question regarding the unpaid taxes and delayed payment of statutory dues fell in between two stools ( so to speak), as the assumption was that Mr Reddy would address the issues and queries sent to the company prior to the con call. A lot of time was spent on the 2nd caller’s reference to ‘rumours’ , and then the remaining time was too short as others had to scramble. Maybe one can email Mr Reddy on this matter.4+July 4, 2020 at 8:55 pm #7540
Hi odysee, my understanding is that most of the companies will have disagreements with the authorities regarding taxes. Till last year, BCG’s software division had losses and I think those tax related disputes are because of that and in my opinion they are not so big. Also my guess is that since BCG has so many subsidiaries, there must be some misunderstanding b/w any one of BCG’s subsidiaries and the local government.
Yes, he was supposed to answer that but I don’t know why he skipped that. Many questions were repeated and as you mentioned there was not enough time to discuss many topics. That is why some of us wanted the company to conduct it for 2 hours. I don’t know whether they’ll reply to our mails about this but let’s all send the mail and see what happens.July 4, 2020 at 11:55 pm #7542VALUEBUYER001Registered Boarder
Thanks goodman sir ji for your detailed information1+July 5, 2020 at 12:46 am #7543sandyc316Registered Boarder
I hope the issue with tax is the old legacy issue and not a new one (Company has had some ongoing issues with Service Tax and Income Tax dept after the merger). Just to point out:
From the last 4 years ARs (2016 – 2019):
“Financial Risks: Tax Issues: the Company has had a few income tax and service tax cases against it, which, if lost, may impact future cash flows. However, none of these is material. “
From 2018 full year financial report as mentioned by P C N & ASSOCIATES:
“The Company has outstanding undisputed statutory liabilities towards
income tax to the extent an amount of Rs. 6,72,07,539/ -“
Compared with 2019 full year financial report as mentioned by P C N & ASSOCIATES:
“With respect to Income Tax, TDS the company is not regular in depositing with appropriate authorities.”
Hope this is just a rephrasing of last year’s statement by the auditor.4+July 12, 2020 at 10:43 am #7652MyshportRegistered Boarder
I have sent an email ti Investor Relations giving my suggestion on how to settle the DAUM issue without any serious concerns of fraud. The email is given below.
Ramesh Sharma <email@example.com>
10:39 AM (2 minutes ago)
For kind attention of Mr SK Reddy,
Founder, Chairman, CEO and MD
Dear Mr Reddy,
I am a small time investor in your company and I am writing to you with regards to your concern regarding the DAUM settlement.
I have, recently gone through the Edited Transcript of LYCOS.NSE earnings conference call or presentation 2-Jul-20 11:30am GMT
Thomson Reuters StreetEvents Thomson Reuters StreetEventsJuly 3, 2020
Your concern, regarding the settlement, as stated by you, is as given below.
Then coming to Lycos and Daum settlement. We were — in January, we had a settlement agreement ready to sign. We were to pay the first payment in January. And there was a challenge in terms of giving — handing off a cashier check and taking a signed agreement. And that’s where it stopped. Unfortunately, due to all the things, we couldn’t go to Korea, they couldn’t come to India, all these things kind of in a standstill state. And so that is where it is. We are trying to revise that now. But it’s probably best to go 1 shot and close it instead of having this 2-phase process. Once this funds are available, debt to go across and I can close it. So we are in that discussion right now. And I feel very strongly this is a done deal, there’s nothing to be concerned about. And we will immediately let you know as soon as we have a solution there.
My recommendation, to address your concern of “… there was a challenge in terms of giving — handing off a cashier check and taking a signed agreement” is as follows.
A foolproof method to ensure that the transaction goes through, without any hitch, is to route it through an Escrow Agent. This is the route followed for all, high value, aircraft sales and purchases. I am sure someone in your setup will be aware of this and can advise you accordingly.
Please do consider this option.
As I see it, the market perception of the company appears to be based on this one issue ie DAUM settlement. I am very sure that once this problem is taken care of, the market perception will also change.
Ramesh SharmaJuly 13, 2020 at 11:04 am #7657odyseeRegistered BoarderJuly 13, 2020 at 9:14 pm #7664MyshportRegistered Boarder
@odysee I am not too sure about Mr Reddy knowing about this procedure. This is based on his statement “…And there was a challenge in terms of giving — handing off a cashier check and taking a signed agreement”.
If an Escrow Agent is used then there is no question of any “challenge”.
Anyway, it is up to Mr Reddy to decide on his best option.2+
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