Update from today’s concall:
Low CMP:
Suresh said the they are do not have any control in the stock price but ensuring that business is running well. Agreed that value realization has taken more time than unexpected. Said company is taking steps to resolve all issues like Debt, Daum, Big Four auditing, LoC etc and working to resolve issues one by one. Requested the retail investors to show patience for some more time and that company is at inflection point.
AI/ New technology/ Wearables:
Gave general update on importance of AI in agriculture, food, medical field etc. Brightcom also focusing in AI in digital media as well as Agri AI. Though only small contribution to the top line as of now, company is treading cautiously and not throwing lot of money it. Not only AI but other science based deep tech is being explored by the company to stay relevant in the industry and have few ideas in the mind which will be taken on in the times to come. The wearable (band and ring) is in back burner, it is still in the work and have not discarded the product or the technology but the focus right now is to sort the current issues first and later work on these launches.
Daum settlement:
It is still work in progress. Next meeting with Daum in the end of Nov to get agreement in place so that the amount to be paid to Daum can be announced to public. Following which the money to be paid will be lined up and any payment in this regard will further bolster the confidence of investors. Agreed that settlement discussion is taking quite a long time but hope the next meeting will fruitful.
Axis Bank Debt Closure:
There is little change in the settlement amount mainly in some of the parameter and that i being worked resolve it. Assured that later in Nov some announcement will be made in this regard.
Big 4 Auditor & Consolidating all subsidiaries:
Working with a renowned Big 4 auditor based in New York to consolidate all subsidiaries in one. This US entity will also help to facilitate financing initiatives being lined up. About 40% of revenue business is already audited by EY (a Big Four player) and rest by local players. Once the process is over, 100 % will be audited by Big Four auditor. When asked about the expected timeline, Suresh said it could take three months.
Pledged shares:
Selling of around Rs.40 lac worth pledged shares by one of the entity (Comfort Fincap) recently had created confusion in the market, this was primarily due to miscommunication between both parties. This pledge was for personal loan taken by Suresh. When asked about the figure of pledged shares to be released on closure SBI & Canara bank loans and the remaining pledged shares post that, Suresh said he do not have figures at the moment and will share the details probably as an investor update to the exchange.
LoC:
Once the issues are sorted, looking to bring investors – DII or FIIs. In his recent visit to New York he met with investor relations and investor bankers to line that up. Plan is to bring the investors in a way that equity is not dilution (like secondary buy from market or other method) and this is being worked out with reputed auditor based in New York as discussed above.
Dividend Policy:
Clearing of debt is inline with LoC (pre conditions for LoC) and also pave the way for dividend distribution as the Free cash flows gets improved when debts are paid. He said that he came to know few investors were skeptical with dividend policy declared but assured that it will be better in longer run when FCF improves.
weEndeavor Group and role of Jacob Nizri:
We-Endevour is a a group of executives who are with BCG. This group was formed since BCG is unable to give them stock options from the company due to issue with International issuance of stocks (basically in Israel). The group have more freedom and they still part of Brightcom Group and manage Brightcom Group. They have flexibility and freedom to work on non-conflicting business areas. weEndeavor is an entity which BCG does not control but instead BCG is contracting individuals from weEndeavor and is more of an arrangement to tackle the complex employment laws in Israel. More of an arrangement between Jacob Nizri, Shahar, Shirley and Yaniv. These four individual are in the business with longest time in terms of industry experience and this is a convenient structure for all parties to flourish without any conflicts.
Affle Valuation and Discrepancy with market:
Suresh said last week one analyst had a call to discuss about the Affle valuation and the reason why BCG lagging behind in spite of much ahead of Affle in many of the parameters. What Suresh is trying to do that even if he is not able to grow the business this year for example and instead work only on the steps to bring back confidence in the stock by changing the perception, the Market Cap of BCG will also be in line with these players. Assured that he is working to resolve all current issues and reiterated the company is at an inflection point. Timelines cannot be given as some things not in their control for example the NOC was obtained very late in spite of clearing debts this July. Affle is a fresh company which took entry into the market and was able to take the advantage to get the market potential. BCG will also make trust building measures to clean the reputation in the market. Like how the investors are frustrated, the management is also bothered and looking to get the credibility in the market.
