[odysee]

Thank you @Logan. My apologies are due, as I possibly did not convey my true intent with clarity. I am in full agreement that ‘new age’ companies do not need to pay dividend for proper market recognition, and you have given ample number of examples to demonstrate that.
My query and somewhat convoluted prose was essentially to evoke a response on the valuation parameters that would and should apply to an extraordinary company like BCG , but whose prime business and the digital ‘world’ it operates in, is still not fully comprehended by market analysts and investors, in India at-least.
Thank you for your patience and indulgence, and we can put this matter to rest now.

[odysee]

Thank you very much for your response @Logan. I appreciate your lucid comments and explanation on the likely ground realities once BCG becomes debt-free and the consolidation of the 12 subsidiaries is completed. I trust we all ( the shareholders of the India listed company) would not be dependent for dividends (if declared) on the free cash flows generated only by the holding company’s operations but also the consolidated operations, as the group consolidated free cash flows will obviously be substantially larger. My reference to ‘dividends’ is not because I believe giving or not giving is critical ( it’s not), but only to highlight perceptions relating to valuation of an India listed corporate whose major profits are generated by wholly owned subsidiaries abroad as opposed to by itself through its branch offices located in other countries ( notwithstanding the tax and compliance issues involved).
I trust my musings above make some sense.

[odysee]

May I pose a query to @logan please. It has been pointed out on numerous occasions earlier, that there are complexities involved in transfer of funds from one subsidiary to another, or from a subsidiary to the parent company ( in this case Brightcom Group Ltd), and can result in tax related issues; or the funds are needed by the respective subsidiaries themselves for their own growth and expansion of business etc. My question then is- how would the benefits of brilliantly performing subsidiaries flow to the holding company i.e. BCG? The holding company itself is mostly in the business of software development and consulting, and generates appropriately 20% of the Consolidated revenue but negligible profits and cash flows. The bulk of the profits and consequent net cash generated stays overseas. BCG is listed in India and we are hostage to the market perception of the wealth of the company ( Standalone? Consolidated?) and how the Indian shareholders will likely benefit when most profits are generated by overseas subsidiaries ( and do not flow to the parent company).
Will this dynamic undergo a change also with the current restructuring in progress?
Maybe we can raise this with Mr Reddy at the next conference call.
I would be delighted if @logan or any other member can share his or her thoughts on this particular matter.

[odysee]

Thank you @Logan for this clarification. It would be interesting to compare the the financial results then (when the stock traded at a high of 95) versus the financial performance for 2019-20. I understand that only financials will not determine market perception and price, but, nevertheless, it would provide some perspective on how sentiment and expectation of future performance can influence market cap. With regards.

[odysee]

Absolutely right @Raj. Good question. Have been here since 2014. Patient. Hopeful. Optimistic. Impressed. Encouraged after every conference call. But still poor as a church mouse. Wonder when that will change. The market may not understand BCG or its business as often mentioned. But at the end of the day the market will have to determine the price when you and I and many others can choose to either hang on to a great (not properly understood) business, or to take some money off the table if that opportunity presents itself. At one point of time, a few years ago, the market thought a 3 digit price was fair. Now it would appear that even a 2 digit price is a struggle. And this is when the turnover and profits have almost doubled. How frustrating is that? Mr Reddy has a great advisory board when it comes to the business of ad tech. But it is beyond high time that professional help is sought to woo and wow the market and bring some cheer to the shareholders.

[odysee]

Continued adjournments of the NCLT case will not matter to Axis Bank at all.
With BCG it’s a different story; the tag of ‘defaulter’ remains till issue settled. And, consequently ,other expected important milestones will get further delayed unless some out of court settlement takes place in the interim.

[odysee]

@Valuebuyer001, according to the Sebi notification dated 23rd September 2011 on acquisitions and takeovers, Chapter-V on ‘Disclosures of shareholding and control’, paras 29(1), 29(2) on page 63 (of 71) appear to suggest otherwise, if the holding was over 5% at any point of time. But it’s possible my interpretation is not fully correct.

[odysee]

Comments ( and speculation) suggest that Oak may have fully exited by now. But is Oak not required to inform the stock exchange of their exit? They held over 7% at one time. They informed the exchange the previous time they sold some stock a couple months ago. My understanding is ( subject to being corrected) that until Oak’s holding drops to below 2%, they have to inform the exchange of any change in holding. Unless the requirement is for intimation every quarter rather than when the change occurs. Which would suggest then that the intimation would be made as of 30th September 2020. Can someone please clarify on this?

[odysee]

Apologies. Meant Axis bank , typed Axix.

[odysee]

Saul, is there any indication or feedback on when the consolidation exercise is likely to be completed? If my memory serves me correctly, the January conference call suggested a conclusion of the consolidation ( plus a holding company being in place )and LOC after due diligence by May/June 2020.
Given some delays on account of COVID-19, are we close, very close or almost done?
Or does the overhang of Axix bank keep the proverbial spanner in the works till settled? The last conference call confidently suggested ( pardon the grammar), that 95% of the exercise had been completed, and things would be wrapped up ‘very soon’. I was hoping that the June quarter results whenever announced would give the consolidated results of the 12 subsidiaries. Or do I hope in vain. It’s frustrating to see BCG not getting the recognition it deserves from market participants.

[odysee]

@ rags.to.riches, on a lighter note I was contemplating changing my forum id from ‘odysee’ to ‘lycos.riches.to.rags’ with the way the market is treating our company’s stock. But then i realised we all have to persevere and suffer this pain for a while longer. 😊Admin, do excuse this post.

[odysee]

George, first the dividend has to be approved by the general body of shareholders at the next AGM. Only then the dividend will be paid. Normally the AGM should be held by 30th September 2020 but in Covid times an extension may well be permitted. Conscientious companies will generally stick to normal dates unless an extraordinary situation deems otherwise.

[odysee]

Well, Axis Bank did sign a One Time Settlement agreement with BCG with a determined amount payable. It is unfortunate that this amount wasn’t fully paid when it was meant to be. This is a pretty routine practice in reality as a part amount is paid and the balance hangs fire for an extended period of time. Let us hope that the two parties arrive at a settlement as opposed to the courts deciding for them. That would be time consuming and undesirable as other important issues will have to take a back seat till this is cleared. Fingers crossed- all over again.

[odysee]

NCLT- I hope the new date has not been granted because BCG wanted more time to file a reply. They have had 3 weeks already. Surely that was sufficient time to do so. This long drawn out matter should be settled and closed at the earliest in everyone’s interest. Cannot really understand this uncanny ability of the company to let things drag on , sometimes endlessly.

[odysee]

Just wondering if anyone has any information on yesterday’s scheduled NCLT hearing re Axis Bank.
Whether the Case was heard, deferred, another date set, disposed off, orders passed?
The ‘freeze’ order on the Preferential issue monies- vacated or continues.
Since this is considered an important matter by all long term investors, it would be very welcome to get some clarity.

[odysee]

@Sateanna, it is possible that an arrangement was worked out in January or around the time of that particular conference call, but because of changed circumstances due to Covid 19, the deal could not be concluded. We have to bear in mind that the new pending Daum settlement could not be signed by end March 2020 because of sudden travel restrictions, and it is possible that all parties stepped back temporarily; but Oak has a deadline to exit and hence the selling.

[odysee]

Admin, thank you for the above article. But it’s distressing to note the payment environment that all these companies including BCG have to operate in. Free cash flows and growth could remain a perennial problem unless something at the industry level changes that could provide relief to the smaller players. Even the LOC will need to be linked to the receivables on an ongoing basis; because as the business grows with the first lot of available funds , so will receivables. And growth will again get stunted unless the LOC is variable and linked to the quantum of receivables.

[odysee]

I would add @ Logicalspeak, that with the consolidation of the overseas subsidiaries, and international auditors/ accounting firms involved now, there are unlikely to be many grey areas which would require management explanations and clarification going forward. I would imagine that a thorough scrutiny and review has been conducted by the management in the last many months, of the assets and liabilities of all entities in the BCG embrace, and with the assistance and guidance of BDO Global or other reputable firms, most suspect or ‘iffy’ items would have been eliminated to reflect a much healthier balance sheet. This , I suspect, would be an ongoing exercise annually.

[odysee]

@Logicalspeak, your comments in #7738, it would be very important to scrutinise and study the cash flow statement for each year as that would show the deployment of funds for the various ventures/ investments and upgradations, repayments etc and net free cash flows available, despite the very handsome annual profits declared. Then explanation can be sought for those deployments and the status thereof currently, particularly if they are revenue generating deployments or ‘experimental’ in nature which could require a write down or impairment if not productive.

[odysee]

Dear Saul, forgive me for coming on this thread but I had to refer to your comments at #6936 dated 7th June 2020 on the earlier write-off of Rs 150 crore by BCG which had adversely affected market sentiment and resulted in a huge fall in the stock price.
Is the current impairment/write down of Current Assets by Rs 869 crore odd not a somewhat similar situation albeit on a much larger scale? The management has put out an explanatory note as we have all seen, but it does beg the question as to how this wasn’t picked up in the preceding 4 years since it was explained that potential impairments are evaluated /considered every year on an ongoing basis as per BCG established practice.
Should Mr Reddy have given a more detailed explanation spelling out that it will have no adverse impact (if so) on the business operations and profits going forward? And how has the balance sheet as on 31.3.2020 been impacted and in what manner considering he stated that it was to provide a healthier Balance Sheet?
I can understand that with the consolidation of 12 subsidiaries and the audit thereof, a clean start is needed as also to obtain the new Line of Credit , but these niggling concerns are bothersome, and I would greatly appreciate your considered views and thoughts on this particular issue. Best regards.

[Author]

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