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[khosh]

Appointing BDO global.

[sandyc316]

Admin, can we also have an option for both? 🙂
Changing the auditor takes time. In the meanwhile we can have dividends.

[Logan]

In my opinion giving dividend is a temporary solution but appointing BDO or any other big auditor will be good for the company and the investors in the long run.

Right now the market sentiment is negative and giving dividends won’t fix that and the only way to bring trust and credibility is by bringing in a reputed auditor. Doing that will shut the naysayers, they won’t have anything to say against BCG.

Dividends are good and important but if the company fixes issues with market sentiment first then we need not worry about the stock price.

Stock price reaching it’s intrinsic value and the company gaining the deserved valuation is far better than getting small amounts in dividends.

[sandyc316]

Even though a lot of us think that bringing in a top auditor for the Indian parent will bring credibility to the numbers, I feel that the management does not see it that way. Here’s what I think about the management’s thought process:

– The Indian parent’s profit is a very small fraction of the overall profit and hence bringing credibility for that will not impact the overall valuation much. The credibility has to be brought to the consolidated numbers. The management probably thinks that consolidating all subsidiaries into 1 and appointing a top auditor for the same should work and I do see some merit in that thought process.

– Secondly, if a LOC can be secured for the consolidated business then that can go a long way in showing the market that the business is valued highly outside India and again I’m sure we would all agree with the management on this.

– Thirdly, and probably a very crucial part of the management’s thought process, is improving cash flow. A business which has nil or negative cash flow can seldom be the market’s darling. Imagine this – If the company for the current year had posted a positive cash flow of 160cr (instead of 16cr) and announced a dividend of 50 paisa as 15% of that(instead of 5 paisa), then I’m sure a lot of market participants would see value in the stock. I think the management would have done there maths and they believe the LOC would help the company in improving the cash flow. I don’t know the math here or how it works and I’m willing to go with the management’s take on this.

– Fourthly, is bringing in growth. For the last 5 years we’ve not seen much growth in the business. Only when there’s growth, we can expect a cashflow of 16cr to grow to 160cr or 1600cr for that matter. I think the management believes that getting the Lycos brand back and securing the LOC can both help in pushing for growth next. I’m skeptical about how much the Lycos brand is going to help us and I do hope the LOC is not used for further acquisitions immediately. This is something that has to be executed very well and will be very critical for the future prospects of the company.

– Finally, the issue of pledged shares is probably the last in the pecking order for the management as those are for some personal loans and may need a bit of time before all of it can be free.

[Diana Horton]

Dear Saul..

Many Thanks for bringing this topic. A good and an interesting topic.

I have gone through your article of Cost of bringing in the BDO as Accountants to Indian parent entity. Of course, a reputed firm will be essential to put a Validatory stamp on to the Quarterly Figures. This in itself a very big boost for the Parent, albiet the fact that, the profits that are generated are not compared to the Subsidiaries. However, with the advent of lot of Avenues opening up in the Indian Ad Segment and also the parallel businesses BCG is keeping a foot into and also considering the Long term vision, it certainly will be a Welcome move. Rather, we all would be be feeling proud and No one will dare Finger point at the Parent. This gives us strength and Self assertion. Audit and Revalidation are Very strong points here and that too by a reputed firm

Coming to the Dividend bit. I am equivocal. Considering the Low Market PE of what we have, BCG, has got the potential to go Leaps and Bounds, compensating for the Peanut dividend that one will reap from the payout.

Having said that, Dividend payout has three possible advantages.

First being… Coming out of the Clawing Clauses of our Indian Market surveillance system. They have pegged Regular Dividend payouts as an inclusion criteria .In order NOT to get caught into this system, Its better,BCG, pay out a bare minimum payout at least on three possible occasions to begin with and later on register a minimum YOY. Having a good history in the markets, will give potential for BCG to get chance for F&O options in the near future, which will be far more lucrative.

The second advantage I see regarding the dividend payout imminently is, it becomes kind off attractive in front of the MF entities who will be sneak peeking. Two to three registered dividends, is One of the tick box exercise to kindle their interests.

Third point regarding dividend is, Its a sign of respect, to the share holders of the company. The tandem shift in the attitude from a Private company to that of a Public company. Respecting the retailers that you are Family and The company is looking at all the retailers as part of BCG family and grow old together.

Appreciating all the efforts that you are taking Saul

Warm Regards

…………………………..DH

[VALUEBUYER001]

Thanks Saul Goodman Ji and madam DH

[Rathi_b]

Hello Diana and thanks Saul for this discussion, I think that giving dividends shouldn’t be priority now during covid times rather a proper audit by BDO would bring a lot of interest in this scrip. Considering impairments and pending issues like daum which may now take sometime and also the axis bank loan which is scheduled to be heard on 8th July I would have rather liked the company to not have given any dividend. Maybe the next quarter when one or more of the issues are settled, with good quarterly result dividend would have had much better influence on the stock price. The company has already been stating that they are witnessing surge in ad traffic amongst others, hence I opine maybe dividend after 1 or 2 quarters would have been fabulous. For now a BDO audit should be done for the parent company.
Thank you

[Author]

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