[odysee]

Apologies. Missed adding the punch line-
BCG is essentially a tech company, and it requires constant upgradation and development of the products it provides for servicing its very demanding clients in a very competitive environment.
Technology does necessarily become obsolete in this digital world and hence what is no longer productive has necessarily to be written off.

[odysee]

At the cost of the possibility of my following comments being considered superfluous, I feel the need to elaborate on the crux of the Forensic Audit matter, which according to Mr Reddy ( conference call ) and Mr Sharma on Sunday (7th August 2022) dwells essentially around the matter of write down of certain assets by BCG in a previous financial year.
As Mr Sharma explained, the writing down or writing off of assets in a company’s books is a pretty standard and prudent practice the world over. This is done to ensure that the assets are not carried in the books at a higher than fair value. This could arise for various reasons including products no longer being revenue generating or being less productive than in the initial years of development. If these are carried at cost without being written down, then it would not reflect a true and fair value of those assets in the books of the company.
It is a fact that auditors generally are very mindful of ensuring that there is no overstatement of stock values or asset values in the books.
This principle also applies to loans and advances for product development or assets in the books pursuant to an acquisition of another company, or any advances peculiar to the nature of business (the adtech industry).
Prudence demands that these items are periodically reviewed and written down or written off as the case may be.
This is considered to be a good accounting practice and Mr Sharma was in full support of this prudent and necessary exercise. I concur.
It should also be clarified that there is no charge to the profit and loss account and the entry is a balance sheet adjustment.
In a nutshell, that is what was explained by Mr Shankar Sharma in the closing minutes of the Webinar, along with an expectation of a fair and balanced conclusion by SEBI.

[odysee]

Admin, would it possible to provide the Shankar Sharma Webinar recording here?
It is available on the Telegram group of Brightcom investors.
One observation in relation to that- the Anchor of that show, very deliberately, avoided any question or reference to BCG, despite a majority of participants requesting for the same as evident from the number of requests flashing across the screen for him to ask about that company. In fact, he was about to close the program and had already thanked Mr Sharma for his participation, when SS interjected and said to hang on a moment as he wished to respond to so many requests regarding BCG that he himself had observed flashing on the screen. Bully for him that he offered an objective view on the ad tech industry as well touching upon the FA issue being dealt with by BCG.

[odysee]

Logic, rationality and common sense are in serious short supply @Logan.
Unfortunately, the retail investor at large does tend to pay heed to these ‘analysts’ and ‘expert’ commentators, and help in creating such a negative perception on social media at least.
At one time, companies (or an industry body), that were conducting a business of manufacturing products that carried a negative public perception, would hire ‘Public Relations’ firms to assist in positively changing that negative perception. And a fair amount of success was achieved, both with the investing public as well as government bodies.
Wonder how we can tackle the current situation. Apart from the active involvement of the BCG management in improving corporate governance and positive communication.

[odysee]

Thank you very much @Logan for your prompt, detailed and meaningful response. It does offer a lot of clarity on some matters that a casual investor would possibly not pay sufficient attention to when looking at the comparative business results of companies in this sector.
And I ( along with many on this forum) would certainly explore the sites suggested by you for further information and deeper understanding.
My grateful appreciation again for your immense contribution to this forum.

[odysee]

Thank you @Logan for the very informative and instructive analysis of the ad-tech players.
Would you have the data on the current growth, profitability and earnings per share ( and PE ratio) also? Are they all free cash flow positive companies?
Really appreciate your insight and knowledge of this industry.

[odysee]

Sometimes, @Logan, these self proclaimed analysts forget that Red flags and Red rags can attract raging Bulls too.

[odysee]

It would appear a second FA is in progress, this time in relation to the SHP.
How helpful the outcome is, remains to be seen, as the general drift on what appears to have taken place with the promoters’ holding is reasonably clear without having the precise numbers involved.
Of course, some may reasonably argue that a deeper study of the various product offerings of the business of the group and client additions and business expansion may be more productive.

[odysee]

That’s very good detective work @vgsatwork. Now where exactly are we headed with this?
Until we get the official SHP released by the company as of 30.6.2022 and any accompanying clarification, we may have to wait till the next conference call for for a possible detailed clarification on the math that you have so deftly conducted.
For the sake of all long term and recent investors, let us hope that the management continues to lead professionally and progressively, and the business of the company continues to be robust as per guidance, and that we all eventually prosper with our investment.
The Corporate Governance, including timely and transparent communication, of course, needs a major overhaul.

[odysee]

Thank you very much @Rathi_b for summarisation of your interaction with Mr Reddy.
We really cannot expect him to reveal more than whatever is in the public domain.
But I presume you came away somewhat reassured, otherwise you would have mentioned that too.

[odysee]

My comments-🤐
I could add to what @Logan has articulated but it would be pointless as Mr Reddy and the management appear to be working in a different zone to ours, and responding to shareholders’ valid concerns is not in their realm of immediate or quick redressal.
The art of savvy communication is not one that they wish to excel in. At least not at this point of time when it is most required.

[odysee]

Chris, you may be off the mark on the PAT. The guidance percentage increase is above 40% mean. And not 25 to 30% increase.

[odysee]

I must admit it is not difficult to be critical about the handling of multiple issues by the management.
Such great optimism just a few months ago turning into such despondency today.
All the more puzzling as Mr Reddy had constantly stressed upon rewarding the retail shareholders ( including the old faithful and now tiring longtime lot). It is with great pride that we commented on the ever increasing BCG family, and every quarter many additional thousands had boarded our train for the really long journey from Kanyakumari to Kashmir.
We were chugging along merrily until the additional engine by way of a second bonus jolted us in January. That was done to enable yet more eager and anxious retailers to board our Superfast express on our thrilling journey.
However, the new engine did not deliver, and has in fact slowed down the earlier momentum, and is now in reverse gear.
It’s not that the company has not performed. It has, and brilliantly so. It’s not that the future prospects are cloudy-in fact they appear to be very promising. The growth has been fantastic and the profits and free cash flow are really heartwarming.
Then, why are we perceived to be so rapidly losing goodwill and trust and faith with the investing community?
The business performance was par excellence. But that has not been repeated on the administrative, communication and investor relations end.
What a pity that months and years of incredibly hard work of building back the image of Brightcom has been so rudely shaken only because of perceived deficient management depth in the financial, legal, secretarial and compliance department.
This situation can, of course, be swiftly salvaged if rapid action is initiated by Mr Reddy and his team without any further delay, and proper communication lines with investors are fast-tracked.
I am confident that a dedicated team, led by the inimitable Mr Reddy, that has overcome so many challenges and obstacles to emerge as a leading international ad tech player, can manage these other relatively mundane but important issues without much stress.
We have to be a little patient for a little more time, as indicated by Mr Reddy in the conference call. The ducks were all lined up. Maybe a couple stepped out of line. But I am certain that they will be back in formation in the not too distant future.

[odysee]

Not sure as to why the SHP should be be of any major concern. Mr Reddy clarified that he has not sold a single share personally in the last 12 months. The mystery surrounding the personal holdings/control through LLPs shall be resolved, I suspect, when the next SHP is released.
I would, however, like to see a balance sheet with far greater disclosures than hitherto. That issue never came up.

[odysee]

The only two other (positive) differences are the decent free cash flows generated and the domestic and foreign institutions continuing to invest in the company.
I’m also never clear on the disposal of equity shares received by way of bonus shares by capitalisation of free reserves of a company.
Whether I hold 3 shares at Rs 100 each or hold 5 shares after a 2:3 bonus at Rs 60 per share, the total value of the holding remains the same. Only the paid up capital increases to the extent of the bonus shares issued.
And hence the pressure on the management to retain or increase the eps on the enhanced equity.

[odysee]

It’s getting tiresome playing defence incessantly.
In absolute terms, an analysis like the one discussed above can be believable by investors not familiar with BCG or the unique nature of the digital advertising business , and its bias is visible only to the ones who have closely followed all developments in recent years.
A strong point by point rebuttal is required, else the perception being created is resulting in continuing destruction of shareholder value and reputation.
Millions would have read the ET article, but very few the positive comments on this forum.
Proactive communication is the need of the hour Mr Reddy, irrespective of the current challenges being faced by you and the company.

[odysee]

Chris, on your second question, without a doubt, you and I and scores of others on this forum with their “biased invested opinion “, with fingers crossed and hope beating (albeit faintly)in the respective chests.
As to your first question, the company could get 60 days since the audited annual results have to be declared too.
But having said that, the joker in the pack is the FA result which is due, but that pertains to a previous year and is essentially a balance sheet item.
As to the SHP, the genie in the bottle has shown no signs of emerging thus far, and as you have rightly observed, we need to wait for the conference call or some other communication from the company addressing that curve ball thrown at us.

[odysee]

Time and again, action or the lack there, by the management, results in avoidable anxiety at the investor level.
And it’s not that it would go unnoticed by Mr Reddy.
There have been a number of occasions in recent months when investor concern was addressed through release of some information or update to the shareholders via the Exchanges.
For some particular reason or reasons, that is not being done in the current turbulent times; and the compelling need of the hour is to do so.
When the markets are in such a funk, as in current times, the communication from management may not necessarily result in a reversal of the visible negative sentiment, but it would certainly ease the minds of the (thus far) faithful retail investor community.
Mr Reddy, kindly oblige your faithful flock.
I have a theory which I could share with fellow members, but discretion may truly be the better part of valour, at this juncture.
In the meanwhile, we shall resort to other means to lift our somewhat sagging spirits-mechanical winches included.

[odysee]

@Investor_2022, is this the same website that missed out on the crucial fact that BCG had given a detailed note to the shareholders through the Exchanges on ‘Impairment of Assets’ post the results of March 2020? Wonder if that was deliberate or just poor research.

[odysee]

I don’t think any retail investor is ‘forced’ to either buy, hold or sell a stock.
Whilst one can understand to some extent the frustration and consternation felt by shareholders as a result of some disclosure or non-disclosure by the management, it doesn’t merit a rejection of the business of the company and its performance or its perceived robust future prospects.
We invest in a stock purely based on the business prospects of the company , and that is the hard, cold reality. Corporate governance or deficiency thereof, wouldn’t usually trump the stellar business performance of the company.
A different perspective can also be considered as regards the rewarding of the long standing faithful retail shareholder. Two bonus issues within a short span of time resulting in more than doubling of the original holding is a very decent reward.
And we trust the best is yet to come, as we await multiple announcements by the company, followed by the inevitable conference call, where we can ask for complete clarity on many stated issues that have generated some concern in the retail investor community.

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