[pranil]

Fine Admin.
I don’t want to contribute if it is not helpful.
I take leave from this forum.
Wish all the best for all the investors.

[pranil]

@admin
I want to mention there is no growth from 2015/16 to 2020 (usd terms) excluding lycos. This is also clear from management presentation. Let me know if I am wrong.
Saul touch upon my query but that is what i am discussing as I am not convinced with it.
If the group feels my points don’t add value, I will not post as I don’t have any other motive to write.

[pranil]

Dear Odysee,
Don’t lose hope, there is immense value in company. We are still generating good cash. And it’s matter of time when we start seeing growth.
My objective is that we should make management more accountable for the investment being made in business. At times investment can go wrong for certain external factors that’s fine but one should be careful. We can’t go On investing year after year without showing any growth plan.
It may be that some part of this investment would have gone in Lycos life, Appolo venture, block chain and AI and ML initiatives. But we don’t get any meaningful updates on these initiatives.

[pranil]

Dear Admin,
About copying content; sorry my only intention was to have to the point discussion, I thought if I reply in one separate post the effectiveness will be lost. Anyways I will do this if u feel it’s only way.
About making same point; well this is fact and we should go with this single point to management for clarification/understanding. I had recommended this point in questions for con call but later I realised it was taken out from questions we emailed to company. So somewhere we longterm investors not really bothered about this point. Rest of the points like axis bank, daum, audit etc will happen, I don’t have any doubts. But if we really get the growth going it will be real impetus to growth. So I suggest let’s discuss this point in forum, have final alignment and then approach management by email or concall question.

[pranil]

@ Saul. Missed one point; you had mentioned that bcg has paid back big amount of loans in last 5 years.

‘ I am happy they paid back loans. However loan paid back from profits so it is considered in my assumptions. I am saying profits are flat.. despite 500 MN invested in last 5/6 years.

[pranil]

3
Whatever cash they have will be used to buy media immediately i.e. when the receivables are realized then that amount will go to pay the publishers. It works in a cyclical way but the problem is that the cycles are very short i.e it happens every month. If you notice properly, they have improved their operating cash flows every year.

You may compare it with a typical IT company but that is not the case. IT companies don’t have this much working capital needs. There are many costs that we have to consider, they have spent money on improving technology (Compass), to pay for products, collocation centers etc. Also they have paid almost Rs.240 crores to banks (including interest) and that is not a small amount.

“”Their business model of high money cycle is not changed now it was there before investment; if they buy additional media properties of USD 500 Mn it should reflect in increase in top line? Lets ignore if money is received back from clients. But sales in flat over 5 years.””

I don’t know how they’ll improve the cash flow once they get the LOC but I give them the benefit of the doubt. It’s easy for us to point finger at them but no one here knows the day to day operations of the company so we should trust them now and if they don’t deliver what they promise then we’ll have the right to ask/criticize them. We can’t jump to conclusions now and we should give them time. They know what they are doing.

“”I also trust in company and its management that why I stayed invested over last 4-5 years. however as a investor I feel its my duty to ask questions and also praise them. If I ask questions doesn’t mean I don’t trust company or If I praise it doesn’t mean that there is anything to question. May be my expectations are more of big professional investors and not like typical retail investor; this could be due to my frequent interactions with fund houses. We receive max questions and sometimes even criticism from our biggest institutional investor…its quite normal.“”

[pranil]

2
My understanding is this : Year 1 you make Rs.100 in revenue and Rs.20 in profits, and you put all the profits back into business again so if you take 20% profit margin, next year you will get Rs.4 extra i.e total profits will be Rs.24 and year 3 it’ll be Rs.29 and year 4 will be Rs.35 and year 5 will be Rs.42 and so on.

If you see the above example, putting all profits that the company got over the years(Rs.108), you get Rs.42 as profits after 5 years. The above example I’ve given is simple and plain, they can’t have 20% growth rates constantly and there will be other expenses and changes in technology etc. Now, according to you total amount spent is Rs.108 but profit increased by only Rs.22 and you consider it bad but imagine if they got all that Rs.108 at once after the 1st year. There’s a big difference right? The growth rate would’ve been very high.

Also after year 1, they won’t receive the Rs.20 profit all at once, some will be stuck in receivables and they get that money in installments.

Firstly receivables are also profits; so I am okay if increased profits is stuck in receivables but here the profits are flat including receivables.

“Issues is not that we are getting return of 48 rs against 108 rs; we are getting 0 % return. When we invest 100 rs we earn 20 rs profit which is investing in business now next year we are again earning rs 20 profit. This is again investing in business and next year again rs 20 profit. How can we jusify inveting USD 500 Mn without getting returns ? thumb rule of investment is we should earn more than what we earn in Bank interest.

I am not blaming management for this investment; however as investor we want to know where exactly money is going and what return it is generating; may be if we invest for return after 10 years…fine but let us know.

We understand there is risk of technology obsolescence and change in business model; so we should invest only when we expect much higher than bank returns. But there is no guidance on future sales or returns.”

[pranil]

1
@ Saul, thanks for your views I don’t quite agree though. Business is simple or complex, investment principal is very simple; invest for growth or returns or future prospects. We cant justify any investment outside this including investment in start-ups and unicons. Most of them making losses but what they have is super growth. I am giving my views below your comments. It just my views, I may be wrong and I feel this is positive , constructive dialogue aimed at improving our understanding.

There’s a big difference between investing large sums at once and investing small amounts regularly. You should understand the working capital needs of the company, they should pay publishers every month and advertisers pay them after 3-4 months and that’s why accounts payable are very less compared to accounts receivable. They never had large sums to invest at once.

The $500 million you have mentioned is spread over many years, if they had invested the sam $500 million at once then the whole picture would be very different. Why else would they want an LOC? You can see startups receiving large sums at once and that’s why they are growing more.

“”I agree… but even now they invest rs 100 Cr every year which is equivalent to LOC. considering avg receivable cycle of 100 odd days we are investing about 10 cr every month over last 60 to 70 months; I am not expecting these investment to give returns every month/year but after 60 months it should show some benefit ?? I don’t think this is stretched expectation by any angle

Their business model of high money cycle is not changed now it was there before investment; so if we invest 100 Cr in year more than a year earlier in buying media properties; at lest it should show increased sales in following year. I am not expecting even profits but at least sales to grow…and for sales to happen it is irrelevant when we receive payments.“”

[pranil]

Dear Valuebuyer, daum wanted some USD 40 MN and SKR is negotiating. Where are 460 MN?
Unfortunately I didn’t get chance to ask question in con call. Almost everyone seems to be very happy with performance of company, I don’t really understand…if we should call it good performance. May be difference in thinking. I know many will not agree but I feel this is a key reason why big investors don’t want to invest here. No body cares about daumn, axis or dividend if there is growth. But if we ignor this part we may be surprised after closure of these events.

[pranil]

Usd 240Mn invested in business in just last 3 years. It doesn’t help to get any growth either in top or bottom line. Hard to believe usd 160 Mn LOC will bring 25% growth.
Just unbelievable; last 5-6 years usd 500 MN invested in business; it’s 7 times of current market capitalisation. And we are just standing at the same place.

[pranil]

Dear Admin,

I have mentioned support level and if you go to any technical expert he will tell the same.

I don’t want to be labelled as speculator. I am long term investor and I don’t want to prove my intentions here. I am practical person and I feel there should be harm in accepting the facts, no matter how bad it is. This help us guide our actions. Otherwise we will live is dreamers world.

It’s your forum and you have full right to decide what is allowed and what it not.

I wish you all the best to run this forum and wish all long term investors get their dues soon.

[pranil]

Dear Admin, didn’t understand fully. I am only telling what is happening in market and current technicals.

And focus was on actions from management.

Does it mean we should not mention what prices share is trading ?? Or the technical trend ?

[pranil]

Looks like we are going to test rs 7.

This time there was lot of positivity.. it is ruined by first Oak selling in open market.. it followed by lack lustre results, big 870cr write off and not completion of any major pending issues.

I hope management understands our concerns and respond positively to calm the nerves of market. As Saul has rightly mentioned price will not go by Actions of existing investors but addressing concern of potential new investors and they will only understand official company disclosures. We need disclosures on clarity of write off, ensuring transparency and closure of issues.

[pranil]

Dear Admin, I request you from all of us to email our list of questionable to IR team; let us hope they will use time to address all the concerns. If not we will ask our questions in call

[pranil]

Dear Sagraa,

All these initial cant sum up to 800 cr plus. DM subsidiaries should also be part

[pranil]

We can also check on Pisapathy; if he is still with BCG

[pranil]

Looking at the record of replies to email, I doubt emailing questions will be effective. Even if we email, let’s have plan to ask it in call

[pranil]

Hi Saul, I am okay with plan.
I suggest you or admin can do better job in this.
Let’s the group also share their view and we can decide who can ask questions.

My Qs, We can refine them further.

1. Despite investing over usd 150 MN In business over last 5-6 years; why the top and bottom line is US $ term is flat? How long management expect the investment will go without adding to bottom line?

2. Is their any plan to close daum issue by having alignment discussions in virtual meeting? By when?

3. What is impact of major advertisers avoiding advertising on Facebook in 2020?

4. Impairment is shocking; why we never get any indication of such huge scale of problem? How can we restore transparency?

[pranil]

Guys.. there is growing trend that big clients dropping advertising on top social sites including Facebook. It can have 2 possible impacts
1. Bcg generally have Prepaid inventory at Facebook. Which will sure have rate cuts due to lack of demand.
2. Other than these top publisher; small size and local publishers can have increased demand.. it should be positive for BCG.

I am not sure of actual impact but we should seek clarity in con call.. can some one ask this question? As I ve already 2 questions to ask.

[pranil]

Just one example…. million dollars deals are happening every week in Jio; in much complex platform. Investors are from US, Europe and Middle East. Source companies in India. No travel. Everything is done online.

[Author]

Posts