Why I Invested

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  • #319
    m4max1979
    Registered Boarder

    Hi Sobha, Thanks for sharing you opinion on the board. I too invested in pretty much the same manner you did. However, my early investment was small and I started averaging recently, but I do understand your pain, I have gone through it myself. As stated earlier as well, I have doubts about BCG getting LoC from any lender, However, I would disagree with you on the issuance of preference shares. I think that the company is closing loans from internal accruals and would issue preference shares to close daum. Think about it, BCG has already allocated USD 16 million in its books for payment to daum. Now they are not going to pay USD 37.5 million for settlement and I am sure daum would not settle for USD 16 million after fighting a court case for most part of this decade. Last year BCG board had passed a resolution for raising Rs. 60 crs through preference shares and i think it was priced at rs. 6 per share. If the promoters take the entire preference shares then promoter stake goes up to around 51% which is something they might desire given the shareholding of goenkas & Co. is more than SKR himself.

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    #320
    sobha
    Registered Boarder

    Agree that your opinion is a probability.

    But some facts don’t coraborate.

    If so, why they are not making disclosure in annual report?

    In the mini conference call, skr said – he is happy to purchase the preferential shares for rs 10. When he was talking of rights issue, he was saying of rs 6.

    But it is likely that he may have already reached 50% in binami names.
    But preferential issue is a possibility.

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    #321
    BCG4LongTerm

    Having gone through the court documents, I am of the view that Daum dint have a strong case considering the cross-border complexity. Their law firm was simply dragging it perhaps to earn their fees.

    Overall, SKR played smart and hard game with Daum.

    -As Lycos was in SKR’s control, Lycos earnings are channeled into investments in infrastructure and as outsourcing contracts to standalone entity.
    Revenues of YMA(Lycos Inc)
    FY14 FY15 FY16 FY17 FY18
    $36,971,677 $54,278,784 $31,894,292 $16,842,193 $13,591,603

    We can clearly see the decline in revenue. PAT was $12+ million(23.5%) in FY15 and declined to $112K(0.8%). As a result, Lycos value eroded significantly.

    – Jurisdiction: If Daum has to seek claims from standalone entity, it has to fight the case in India and not in US. They are not ready to fight in India which can take another decade.

    -Patent Sale : SKR sold the patents and made whatever money he could.

    -Chapter 11 of YMA for buying time to build an alternate brand to Lycos. SKR went onto create Brightcom. SKR’s need for Lycos brand is no more there.

    -Receivership: SKR dint resist the receivership and happily gave Lycos Inc back to Daum, knowing quite well that there wont be any buyer for Lycos Inc given the weakened financials. Daum was never keen on receivership and it was using that as threat to force SKR for settlement. However, SKR surprised Daum by giving up Lycos Inc, leaving Daum in very bad shape.

    -Write-off : Lycos Inc is written off from the books in FY19. To get back the Lycos, it has to treated like a new acquisition valuing it at this point in time.

    Valuation of Lycos: For FY18, $13 million revenue and $110K(<0.8%) PAT. The numbers would have further declined during FY19. What will be the valuation of such a business? Can Daum find a buyer for such a business? Will anyone pay more than $5-10 million? I am guessing the settlement amount will not exceed $10 million.

    Even without LoC, it should not be a challenge to close Daum issue with internal accruals.

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    #322
    BCG Hopes
    Registered Boarder

    Thank you Sobha .. all points make sense !!

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    #323
    108BULLGURU
    Spectator

    sometimes i do wonder if it was a good diea to settle with Daum in time rather thna drag it for years on and damage the company and destroy so much of wealth.Time and energy would have been used more constructively to deliver lot of good.
    Don’t know what were the limnitations of the management and who made them go through this line of approach.
    I think it was very very unwise.
    Daum would have agreed some where n between on a reasonable amount i think.

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    #324
    BCG Hopes
    Registered Boarder

    I think main issue about DAUM case is not about money, SKR and BCG management think that they were cheated by DAUM . Or rather DAUM played too smart !!

    Ethically BCG was right ,,

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    #326
    108BULLGURU
    Spectator

    wise managements keep ego aside and make wise business decisions rather thna beringing the company to the door of near bankruptcy and closure.

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    #327
    VALUEBUYER001

    By this prolonging for years,BCG has saved some money and the main hidden agenda achieved is acquiring BCG shares through goenkas at dirt cheap rates

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