[odysee]

So the question arises @Logan, as to how and when this stalemate gets resolved? The gap between the 8-9 crore BCG offer (assuming no upward revision) in all these months of ‘negotiations’, and the expectation of around 24 ( if so) crore by Axis is proving very difficult to be bridged. Or so it would appear. Appearances can be deceptive, and I wouldn’t in the least bit be surprised if this whole charade is part of a much bigger game-plan. Under normal circumstances, and as stated publicly by Mr Reddy, both sides are ‘keen’ on a settlement. It is only the interpretation of the ‘almost done’ bit that needs deciphering.

[odysee]

It’s interesting to read the various posts speculating on the timing of the warrants, the LOC, the Axis bank settlement, stock price management etc etc. The reality is that none of us has a clue as to the time frame within which any of the events will actually materialise as the overall strategic agenda of the management is not in the public domain.
The only obvious fact is that the stock price is down 24% from its recent high of Rs 9.41
We are all patient veterans ( or veterans of the art of patience) by now.

[odysee]

A very interesting development- in the December 2020 rebalance of the EMQQ
( Emerging Markets Internet + E-commerce ETF) , Route Mobile from India has gone into the index.
I suspect that Affle ( and IndiaMart) might make it in the next rebalancing.
How does that bode for BCG potentially, going forward, if it does manage to get in the public eye ?

[odysee]

Sorry, both the above reports.

[odysee]

Can any forum member assist in putting up the above research reports on the Moneycontrol board?
Would certainly help in countering the nay-sayers.

[odysee]

@manas18goel, it is a valid point, and has been raised by Logan and others in the past too.
Mr Reddy had promised to provide information on the age of the receivables/ debtors at a conference call. And this is necessary on an ongoing basis, to be able to identify the flow and regularity of debts being cleared, in addition to have some inkling of the doubtful ones which would continue to remain outstanding for more that 180 or 360 days.
The current overall receivables situation is around 124 days or thereabouts, but no age analysis is provided.
A point for the AGM or the next conference call perhaps.
It would also be interesting to have information on which advances get converted to actual business, and in what period of time. Otherwise the asset impairment figures can be of some concern where advances have been paid but do not result in revenue generated.
@Logan is better informed in these matters and may like to add his views.

[odysee]

@vstvm1981, thank you. A fantastic report.

[odysee]

@Logan, I would speculate that the issue of warrants suggests a longer term play on the aspect of promoter holding ( reduced to 22% post conversion of all warrants-if that were to happen ), 40% held by new ‘known’ shareholders and the balance by friendly large shareholders (including the earlier preferential allottees) and smaller retail.
Could somehow facilitate the entry of a bigger player at a certain price point with a decent stake, as well as enhancement of promoter holding and control.
First a dilution with funds coming in, then a redistribution with a revised holding pattern.
Some words quoted by @rathi_b -“done it with foresight and keeping regulatory and legal issues in mind..” are instructive.
Random rationalisation on my part, hence please excuse if it sounds absurd.
Thank you @rathi_b and others for your efforts and contribution to all on this forum.

[odysee]

What a sorry state of affairs.
A CEO we venerated for all these years has suddenly lost all support from his diehard supporters on this forum.
His lack of transparency and inability to keep his word, plus the overriding compulsion to deny any reward to his shareholders, has been a slap in the face for all of us who fought tooth and nail to eulogise him despite many events and actions that suggested a more objective and realistic assessment on our part.
But then, such is the nature of greed, that prevented us from calling a spade a spade.
This latest surreptitiously devised proposal of his on the convertible warrants has laid to rest any hopes of a meaningful recovery in the stock price, apart from dramatically reducing our relative stake in the company.
So all of us whose average holding price is significantly higher than his gifted price to new operators and their cronies can now bid goodbye to all the hopes we have been nurturing for the last few years.
Amen!

[odysee]

@buffet, maybe we should restrain ourselves from expressing our frustrations on a personal level re SKR, although the temptation is always there because of years of feeling let down. I too have vented on this forum, but realised that at the end of the day we have clung on to his coat tails, for better or worse, hoping he would lead us to the promised land.
The choice to invest and stay invested has been ours, although the flurry of presentations and positive news flow in the last few months was very seductive.
We should have all smelt a rat when in the August conference call he casually stated the the consolidation of the subsidiaries had been put on hold.
In reply to a direct question on the delay in getting the LOC, he said that he had anticipated receiving all clearances a few weeks earlier. But for some reason it was delayed and the BCG management was supplying additional information to the prospective consortium of lenders.
I would speculate that the process for this unfortunate warrants business begun around that time.
What has been especially disheartening is the fact that when he had the issue of 3.3 crore shares at Rs 10 each on a preferential basis, he had informed all shareholders in advance and given updates regularly until the issue was done.
And the full money of Rs 10 per share was paid up and received.
Now for an issue of 10 times that quantity, at a much lower price, where only Rs 1.92 has to be paid up front, we were left completely in the dark.
He could have considered a partial rights issue of the same warrants to existing shareholders at a lower price and the balance to outsiders at a higher price to maintain some semblance of equity and justice for the long suffering current shareholders.
And this is notwithstanding the controversy around the question of the issue being required or not in the first place.
Hopefully, @rathi_b and other stalwarts will get us some answers.

[odysee]

@rathi_b, just wondering if you and your investor colleagues plan another visit to meet up with SKR this month. Not sure if that could take place before the ‘getting’ of the LOC by BCG or after our ‘giving’ the NOC for the Warrants to be issued by BCG.
One question that you should definitely pose is on the pricing of this mammoth gift ( or issue if that sounds more diplomatic) of 34 crore warrants ( and shares) at Rs 7.70 each, when the company earns over Rs 9 per share in a single year.
Logan had posed a question on Saturday last as to why this proposal was at all necessary as the granting of the LOC ( which was imminent) would have resolved most outstanding issues including funds required for growth. I agree with him.
And you had confirmed post your last visit to the BCG office, that indeed the LOC was almost done. And SKR then further indicated that the documents for the first tranche of funds from the LOC were submitted.
And now suddenly this whole new saga of a massive dilution at a ridiculously low price, which will definitely adversely impact all the long term investors. And not a whisper in all these months of this form of fund raising.
I cannot comment on new entrants to this stock, but seriously, how many of the ‘older’ long term investors have made any returns on their investment? Ever? In the last 5 years? Hopes were always kept alive-an eps of Rs 9, book value of Rs 55, consistent performance quarter after quarter. And the icing on the cake was a great conference call where we would eat up every word that was uttered, and come away feeling warm and satisfied. The pot of gold at the end of the rainbow was just around the corner.
Sadly, a dream is just that- a dream.
On a more serious note, it would really be instructive for all of us on this forum if you did get another opportunity to interact with Mr Reddy, so we could understand better the strategy behind this decision, and the likely revised prospects of the business of BCG as well as the settlement of outstanding issues within a defined time frame.
Very grateful to you and the other investors who took the initiative to directly interact with the management.

[odysee]

@rahul, I think it stands to reason that any allotment of this preferential nature would be to close associates and known parties.
The second gentleman referred to by you for 22 million warrants is Mr Saha and not Shah.

[odysee]

@Logan, I doubt if one will get an answer to that question of why this enormous dilution.
We all were under the impression that logically the promoters would try and increase their stake to have a better grip and control over the company especially after the previous dilution.
Now their holding drops to 22% odd, which is a dramatic reduction from the original 39 plus percent.
I cannot for the life of me fathom as to why any promoter with such a bullish outlook on his field of business reduce his overall holding percentage. And this is after SKR has suggested time and again that the stock is grossly underpriced.
All this talk of the LOC and the ‘imminent’ receipt of the first tranche sounds ludicrous now.
This warrants business must have been in planning for a few months now, including this massive dilution; and all along we were hungrily waiting for the LOC announcement to settle Axis and Daum.
Have we been led by the nose? I would think so!
So, what is the strategy and objective of the management and promoters behind these extraordinary decisions, and how will the long term retail investors be impacted by all this?
The equity capital will exceed 170 crore in a few months , with a huge amount of floating stock.
I wonder if some of these questions will get addressed at the AGM or the next conference call.

[odysee]

@bitran and @Logan, I am still hopeful that the details of the proposed issue of warrants will be disclosed in the revised notice of the AGM to the shareholders, as is the norm. After all, how can shareholders be expected to vote on a proposal this significant, without assessing and understanding what the proposal is, and how it would impact the company and the interests of the shareholders?
I truly hope that apart from the promoter group, a strategic investor is being issued warrants and is brought in to add value to the business and growth of the company.
Just bringing in a cash-rich investor would only provide funds, but the value addition may be restricted to their bringing about stability ( if long term players), or inspiring other institutional and potential international investors.
Not sure if this move is for just ensuring adequate promoter control and some funds coming into BCG for meeting immediate financial obligations, but the size and quantum raises questions about the fate of the LOC.
The strategy at play here is obviously not in the public domain, but may be revealed over time, starting with the AGM notice as a first step.
The very fact that the perceived price management was done over the preceding months, to enable such a large issue at a price that will pass regulatory muster, indicates planning for the warrant proposal some time ago, and is not a sudden knee-jerk decision by the management.

[odysee]

@JRS, the members are the the shareholders who have to pass the resolution at the AGM approving ( or not) the proposal to issue the warrants.
The details will , I suspect, be revealed in the notice to the shareholders for the AGM and the detailed agenda shall provide the names , purpose etc.
Regulatory approval for the issue of warrants will be applied for in the normal course by the company, subject to approval by the shareholders.

[odysee]

@sandyc316, Reliance shares are not manipulated to be quoting around 2000. And they did not go up to 5000 plus a few months back, to fall back to 2000 ( equivalent of BCG Rs 5 going to Rs 13, and dropping back to 5 and being maintained there for 2 months, to enable a massive convertible warrant proposal at 7.70.
Yes, the long term investors, who so fervently believed in SKR and the company, are confused and feel cheated, as nothing in the last many months of interaction with the management through conference calls or personal visits indicated even a potential scenario of this kind.
We await the notice for the AGM to shed some light on this unfolding drama. Mr Reddy’s ability to disappoint retail shareholders remains intact and undiminished as of now, and is gathering strength even as outstanding issues are getting resolved.

[odysee]

@Logan, waiting for your considered comments. Unless you also are in a state of shock and disbelief as I am.
Could there be another explanation for what is contained in the notice to the stock exchange?

[odysee]

Unless the 34 crore warrants are issued at 7.70 payable now and converted later into shares at a rate to be determined or at a much higher predetermined price which we will get to know about later.
Anyone willing to comment?
Cannot imagine an issue of such a huge quantity at a total price of 7.70 which will increase the number of shares to above 85 crore ( equity of 170 crore plus) after conversion.
Something doesn’t add up.

[odysee]

This is insane unless the information contained in the notice is not clear.
Are they issuing 34 crore shares effectively at 7.70 each?
Can someone please clarify?

[odysee]

@dileepvin, pref shares are generally not sold in the open market ( unless listed) as they carry a fixed dividend rate and can be redeemed only from profits or a fresh equity issue.
BCG has not issued any preference shares, only made a preferential allotment of common equity shares ranked at par with the existing equity shares earlier this year. They do have a lock-in period though, and can be traded only when that period is over.

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