[Logan]

@odysee, the best solution is that the management should bring in someone who can guide them on topics related to the market/investors. With SEBI’s approval and considering all the legal rules and regulations we retail investors can appoint one person and nominate him/her to the board. That person can represent every small investor.

The challenges to this are the management may not agree to it as they’ll have to disclose sensitive/confidential information or some investors may not agree with this idea because they’ll think that the person may do partiality as he/she may give sensitive information only to a particular group (which I also believe is a serious thing to consider which can’t be ignored)

All these are unnecessary if the management keep up with their words and improve corporate governance and communications with the investors. I don’t know what’ll happen with the FA but even if it comes negative the business will still go on. Mr.Shankar Sharma said on live TV that the company has followed the proper accounting guidelines when they did the impairment.

Sebi gives same penalty even if the issue is small. Companies approach Securities Appellate Tribunal (SAT) and sometimes SAT will give more time and relief to some companies.

This is 1-2 months old news but I saw this just this weekend and will check properly the coming weekend – Securekloud (8k Miles) got a negative report on forensic audit and sebi put fines and penalties like barring the CEO and other people from securities market for 2 years and ordering the company to remove few people from the board and management but the company approached SAT and SAT gave relief to them saying they can be reappointed and continue to be board members etc.

The order was very big and had legal terms which was little difficult to understand for a layman like me but what I understood from that was that sebi found irregularities and even the management of that company had agreed that they had done irregularities but interestingly SAT still gave relief to the company. They said that since the company did those irregularities before 2020 and since then they haven’t done any, they can continue running the company and those people can be re-appointed.

(I’m not saying similar thing will happen to BCG or I’m not saying negative FA result is good or anything, I’m just sharing what happened with FA outcome and later events in Securekloud)

[Logan]

The FIIs investing in BCG are not active funds and most of them are passive funds, means they invest in stocks that are part of an index or indices. If a stock is part of an index they buy and if it’s removed from that index they sell. Because BCG is part of BSE 500, A group etc, funds are buying the stock.

They select stocks based on many criteria, like market cap, P/E ratio, sector etc and once selected the funds don’t do research like how an active fund does. They don’t talk to the management, check the competitors, verify the books etc.

The other FII/FPI are the funds that bought preferential equity in the company when BCG raised money last year. They on the other hand actually talk to management and invest (because their money goes into the company unlike other funds who buy stocks from the market).

For domestic mutual funds to invest, the management has to take the initiative and talk to these people regularly (like almost every week or twice a week sometimes). I’ve seen in other companies where their management hold analyst meet very frequently. What my understanding is that the domestic mutual funds were uncertain about the company because of the Lycos case with DAUM. In one article (I don’t remember which) they wrote that analysts were uncertain because BCG (back then Lycos) moved into new areas and analysts were sceptical on that. I think they were talking about Lycos Life and how it didn’t succeed. And later Lycos case happened and BCG had to lose Lycos and brought more uncertainty. If Lycos is brought back and if the management explains clearly to analysts about their business and future plans, even domestic mutual funds will start investing. Again even here the management has to take the initiative.

I agree with @tanv151 on attending conference calls and raising concerns. We see so many people talk negative about the company and influence others but if they are that good and always right then why don’t they expose the company by talking to the management in the conference calls? Writing in various platforms and influencing others is easy but doing the actual work takes effort.

Regarding Vijay Kancharla’s appointment, I think most people voted against it because of reduction in his holdings. Institutions prefer companies to move away from founder/owner mentality and be more like corporations.

I don’t know what he contributes to the company but people are angry that there was a reduction in his holding and till they get clarity he won’t get any love from the investor community. The CEO and Vijay Kancharla built this company from scratch with their hard work and effort but they are to be blamed for the current situation.

I’m guessing the promoter holding was less than they were actually showing and didn’t want investors and the market to panic looking at the low holdings so they dragged it till they acquired those LLPs. I’d have preferred if they had told us what the actual holding was. Saying the truth and facing the consequences is far better than hiding and postponing it and losing trust later (which is happening now).

The business is good, industry is good, there’ll be little slowdown like every other industry but it is bound to bounce back once the recession and inflation fears cool down but the management/promoter attitude must and should improve. They have the responsibility of looking after the interests of more than 3.5L shareholders who have invested their hard earned money.

One thing to appreciate is that they have held conference calls after each and every quarter without fail and also held it after the MediaMint deal was cancelled (reworked according to them). The management said that corporate governance will be the third pillar and they’ll focus on it more and we all will appreciate them if they do that.

[Logan]

The match felt like a rollercoaster ride. My heart was in my mouth when DK got out but thankfully Ashwin was there and maintained his cool and got us to the finish line.

I don’t know what to write about Virat Kohli’s innings and his commitment to the team and our country. Take a bow legend.

I wish everyone (including BCG’s haters) a very happy Deepavali. Jai Hind.

[Logan]

What I’ve observed all these years is that Drama always follows BCG.

It’s like that dialogue in KGF movie

Violence.. Violence… Violence…
I don’t like it. I avoid.
But…. Violence likes me..
I can’t avoid.

In BCG’s case, it’s Drama instead of violence. There’ll always be one or other thing.

We all thought that it would end with BCG paying off all the loans and completing Lycos deal but new things happened and the management not focusing enough on sorting them out or improving corporate governance hasn’t improved the situation.

The CEO said that they’ll focus more on corporate governance this year and let’s see what actions they’ll take to improve that. Their first focus should be on earning the market’s/investors’ trust. I’ve not seen a company trading at such cheap valuations with such growth rates. The market is not ready to give good valuations yet. It did give a good valuation last year but because of FA, SHP, huge free float etc that valuation couldn’t sustain.

FA is not in their hands but other things are. They should give more clarity on SHP issue and be frank and direct with the investors. The CEO gets negative and annoyed if anyone asks about SHP but he has no choice but to give proper answers.

Even in the recent announcement regarding audio ad acquisition and Daum settlement deal, they should have provided basic details at least. What’s the point saying that the board discussed this and that without saying what this and that are? Even the market wasn’t convinced with that announcement. I guess the CEO is not ready to take other people’s suggestions and is not able to understand what the market thinks. He doesn’t want to lose control of the company and still runs it as a private company. This may be good for the growth of the business but I’m not sure the market will appreciate that. Investors want companies to be more transparent, give more details than required, and do things sooner than expected (eg – dividend payment).

Markets appreciate this more than anything else –

“Action speaks louder than words.”

It’s time for BCG’s management to follow this mantra. At least from this Deepawali/Diwali they should consider this as a priority and start acting soon on their words. We all want BCG to be valued like the other companies i.e. based on business, growth, future, etc.

The management should focus on ending all the dramas and removing the uncertainty as much as they can. If these are done then automatically the market will give BCG a good valuation.

[Logan]

I’m not sure whether the management knows how to communicate with the market/investors. They should give some details at least like name of the target company or the settlement amount (Lycos-DAUM) or timelines of these events etc.

I feel that they still have private company mentality. Like I’ve mentioned many times before, there’s no one on the board who knows and understands the market. Mr.Peshwa Acharya is good at marketing and I think he’s new to public markets, Mr.Nilendu Narayan is good at accounting and others I don’t think will bring anything important to the company.

[Logan]

Board Meeting on Monday, 17th October to discuss

1) Audio Ad Definitive Agreement

2) Lycos deal with Daum

Attachments:

1. Board-Meeting-AudioDaum.pdf

[Logan]

I think admin was busy and might not have sent the questions list to the IR so if anyone gets chance to ask questions, please include my queries also.

Please ask the CEO about how Brightcom of 2023, 2024 will be different from Brightcom of 2021, 2022 etc. What did he mean by that?

Other than FA, please also ask about India business, Audio ad deal, Lycos, investor communication improvement and finally about his thoughts on stock price slide and volatility.

And please record the AGM, I’m having trouble logging into NSDL and don’t know whether I can attend the AGM or not. It would’ve been better if they held it on Saturday.

Thanks in advance.

[Logan]

@admin, these are my queries for the AGM. Please review them once and send them to the IR. I’ve not asked about SHP, FA etc because those were answered in the last conference call.

Congratulations to the CEO, management team and all the employees of BCG on a great year and thank you for all your efforts.

Questions

-In the last conference call you said that Brightcom of 2023, 2024 will be different from Brightcom of 2020, 2021, 2022 etc. Can you please explain what will be different and share your future plans?

-In the past you talked about growing the India business of BCG, what plans do you have for that and when can we expect higher growth rates in the standalone business?

-Since we’re at the end of the September quarter, how is the business doing this quarter? Are you going to do better than the guidance? How much free cash flow are you expecting to generate this quarter?

-Are you experiencing the effect of higher interest rates and inflation? Will there be a slowdown in the business in the coming months?

-Update on Audio Ad company acquisition? Why is it taking so much time to announce the deal?

-Update on AI and ML business?

-Now that the MediaMint deal has been reworked, what plans do you have for the backend services business of BCG?

-How much will you be spending for R&D on Quantum Computing?

-Update on Lycos deal with DAUM? When can we expect this to be done and dusted?

-We would like to see an improvement in communications with the investors. We don’t get our mails and phone calls answered and for us to get our queries answered we’ll have to wait for the conference call every time. When can we expect to see improvements in this?

-Finally, looking at the stock price slide and volatility, we shareholders are a little anxious. What is your message to all the shareholders on this? We know that stock prices are not in your control but we would like to hear your thoughts. The company is doing excellently but that is not reflecting in the stock prices.

[Logan]

@admin, these are my queries for the conference call. Please review them once and send to the IR.

1) Why was the MediaMint deal cancelled even after due diligence, definitive agreement, share allotment etc were completed? Didn’t the management check about the competition/operational issues while doing the due diligence? You could’ve cancelled the deal before signing the definitive agreement right?

2) Who decided to cancel the deal? Was it BCG or MediaMint?

3) Did forensic audit play a role in cancelling the deal?

4) What happens to the shares allotted to MediaMint people?

5) Because of various issues (forensic audit, variation in promoter SHP, Lycos case with DAUM), BCG is not having a good name in the market. How do you plan to change that? Because of these things, shareholders are anxious. What is your message to all the shareholders who have supported you all these years?

6) What is the update on Lycos deal? Closing the Lycos deal will bring much needed credibility and it will be appreciated by all the shareholders.

7) What is the update on audio ad company acquisition? When will you reveal the name of the target company?

[Logan]

What I feel is that the problem is not with buying MediaMint or not but announcing the deal and then cancelling it. Like I said in my previous post, they have big responsibility now and whatever decision they take it should benefit all the stakeholders. Buying MediaMint may not be ideal for some reasons but why announce it, give them shares and then cancel it? Why make it more complicated and make people lose trust and point fingers at you? All these could’ve been avoided if they thought about these when they did the due diligence.

Usually they do 3 types of due diligence, one is financial, second is legal due diligence and the third will be operational (which some companies skip).

People will not forget these type of things. Just look at the perception that Lycos created. It won’t add much to the business but still anyone you ask they’ll always judge BCG by considering Lycos first. When it comes to business, I’ll be the last person to get excited about getting Lycos back but when it comes to getting credibility back, I want them to complete the Lycos deal first.

[Logan]

I think they should have thought about all these things before making the decision to acquire MediaMint. It’s not as if they didn’t know that MediaMint would work for BCG’s competitors.

The management has the responsibility of looking at the interests of more than 3 lakh shareholders. If it were any private company it wouldn’t have mattered but BCG is a public company and they should be more responsible in handling these things.

I don’t know what happens to the shares that were allotted to MediaMint people. They have lock in period until next March or April. I can’t understand why they do all the required procedures and then cancel the deal.

Like every other time let’s see what they say about this in the conference call. One good thing is at least they are hosting a conference call after the announcement else we’d have to wait till the next call to get any clarity.

Last time they didn’t answer our queries as I sent it too late but this time I’ll send it as early as I can. There aren’t too many queries so maybe I’ll send it by EOD tomorrow.

[Logan]

Edited Transcript of BRIH.NS earnings conference call or presentation 19-Aug-22 10:30am GMT

Conference Call Transcript

[Logan]

@admin, these are my queries for the conference call, please review them once and send to the IR. Sorry for posting it so late.

——To The CFO,

On behalf of all the shareholders we welcome you to BCG. We hope we will have a great relationship with you as we had with Mr.YSR.

1)Some section of the market has doubts on BCG’s financials, as the new CFO, what are your thoughts on this and what measures will you take to improve on that front?

2)What are your comments on the forensic audit initiated by SEBI?

3)The management said that BCG would produce a free cash flow (FCF) of 500crs by the end of June quarter but now you’re reporting it as operating free cash. The company from the past many years has been reporting a good amount of operating cash flows. What’s the difference between the two and which should we consider?

4)The auditor has commented that the financials of the subsidiaries are not reviewed by their respective auditors. Why is this so? When will they review the financials? Does it happen every quarter or once a year (when auditing is done)?

5)Since BCG is no longer a small cap company, we request you to publish the audited financials of all the subsidiaries.

——-To the CEO,

Congratulations on a great quarter, we are excited to see great growth rates in BCG’s business. We appreciate you and the entire team of BCG for all your efforts. Though we all want to concentrate more on the business and the company’s future, few outstanding issues make us concentrate more on them than about the business. Hope we get clarity on all those issues in this conference call.

1)Should we be concerned about the forensic audit? Market will react extremely to even a small negative comment by the regulator. What are your thoughts on this?

2)There’s a confusion in the SHP of the promoter holding. In the last conference call you said that you have not sold a single share but we are seeing a significant reduction in your holdings. The same with Mr.Vijay Kancharla’s holdings. In a letter addressed to a shareholder, you mentioned that the reduction was because of pledged shares. If that is the case then will you get back the shares which are being pledged? If not, why did you show it as your holdings all these years? Should we be concerned about this too?

3)You said in the last AGM that you are going to change the accounting policy and have experts review and comment on the company’s financials. We expected you to publish results of all the subsidiaries like how other mid and large caps do. What’s the reason for not publishing results of your subsidiaries?

4)Your comments on Free Cash Flow?

5)The second bonus issuance has created a huge float and as a result the stock price is not stable. Why was the second bonus considered when you had already issued bonus shares previously? Do you have plans to reduce this level of free float?

6)What’s the update on the MediaMint deal? Is it put on hold or cancelled?

7)What’s the update on audio ad company acquisition? What’s the name of the target company?

8)AGM updates? Will it be virtual this time also?

9)Effect of high inflation and slow growth/recession on BCG’s business? Should we expect lower growth rates for this FY?

10)Update on consolidation of all the subsidiaries?

11)Update on the preferential shares allotted last year. Will you acquire those LLPs or will those shares come to the market?

12) What’s the reason for the delay in appointing a company secretary?

13) In all the previous conference calls you had said that there’ll be an improvement in investor communications but till now we haven’t seen any improvement. When can we expect that to happen?

14) Update on Lycos deal with DAUM?

[Logan]

Adtech giant Criteo faces $65M fine in France for GDPR consent breaches

This is what happens when you don’t change your business as per rules and regulations. Google, Facebook and other companies have paid thousands of crores in fines for violating GDPR norms.

$65M is not a small sum, if that was levied on BCG then the effect would’ve been very high for all the stakeholders. So I guess that’s why they thought it’s better to write off assets (impair) and comply with the regulations (instead of dealing with potential complaints, fines etc). I don’t know whether sebi finds anything wrong in the write offs that BCG did.

GDPR Fines (top 5)

1.Amazon — €746 million ($877 million)

2. WhatsApp — €225 million ($255 million)

3. Google Ireland — €90 million ($102 million)

4. Facebook — €60 million ($68 million)

5. Google LLC — €60 million ($68 million)

For these companies the fines are peanuts and they don’t affect stock prices but for smaller companies the impact on business and perception will be high. Criteo was once valued more than all the other ad-tech companies combined (excluding giants) but it crashed 80% because of impact of cookies, redirecting, GDPR etc. The technology keeps changing and companies have to be very attentive to the changes happening.

[Logan]

BCG is lying to everyone and we’re all being misguided by the management. BCG has debt of 867crs but they are saying they have zero debt.

We’re all idiots to think that BCG doesn’t have debt, ask the self proclaimed expert/analyst that Morning Context consulted to know about how liability is debt only for BCG but for all the other companies it isn’t actually debt.

All the accounting experts are all idiots because they don’t think liability as debt.

The whole world knows that liability doesn’t mean debt but our expert just to show his hatred towards BCG and to bring negative sentiment is saying that liability is debt. God help his thousands of followers. I can’t understand how that genius got more than 3k followers.

Even a non accounting guy like me knows the basic difference between liability and debt.

All debts are liabilities but all liabilities aren’t debt. That’s the basic thing that you can expect someone to know but it’s an exception for genius people.

People should let him know that he can’t fool everyone and there’s a thing called the internet and because of ads and adtech companies he can go check the difference between liability and debt for free. That way atleast he can stop lying to people and stop misguiding them and stop his shenanigans.

[Logan]

I think it’s after the second bonus issuance that we are seeing more volume everyday. It has become easy for operators to manipulate prices. Management people have to look into it. The second bonus was unnecessary and the supply it created has been so huge.

Adtech industry is very unpredictable, and the Adtech companies stocks more so. Today TTD is up more than 34% just because it did better than expected. PubMatic went up more than 25% after it’s results. Roku, snap crashed 30-40% after their results were published.

[Logan]

@odysee, most of the self proclaimed experts don’t have a clue about the adtech industry. Most of them are either jealous that they missed out on the rally or too rigid to accept that they can be wrong. Like I mentioned in one of my previous posts, for them if any stock goes up that they were negative on then that company is fake and everything is fraud.

If I miss out on any stock that went up, I’ll blame myself for not studying it properly. I won’t go and say that company is fake/fraud etc just because I didn’t buy that stock. I’ll check where I was wrong and why I couldn’t grasp the things that others did.

Mr.Sharma has studied the company, industry and that’s why he has invested his money. He knows well about the industry and he said he had also invested in TTD. A real analyst like him will check everything (industry, peers, past, future, challenges etc) before commenting but as mentioned above, our self proclaimed experts don’t have a clue about the industry but make the most noise.

Self proclaimed experts get access to most of the content on the net because of ads and the adtech industry (technological innovation). Social media and browsing is free because of ads and the adtech industry. If ads were not there, people would have to pay for most of the stuff on the internet. The people who copy paste from many websites and write big threads pretending to be theirs get access to that content only because of ads. Netflix didn’t run ads for many years but now even they are changing their approach.

So a real analyst will check all these and many other important things before coming to judgement. They’ll talk to the management, company’s clients, try to verify the books, accounts before influencing others and making loose comments.

On the other end, the company should also become more transparent and should improve a lot in corporate governance. It’s not a small company anymore and scrutiny will be more as it grows both in business and Market cap.

[Logan]

Does anyone have the recordings of the webinar of Mr.Shankar Sharma which was held on Sunday? People in mmb wrote that he talked about BCG and forensic audit.

If anyone has that please share it here so that it’ll benefit all the investors.

[Logan]

Thanks @odysee.

Not even a single self proclaimed expert on social media has explained why BCG is a bad company. Top 3 reasons they give is name changes, high receivables and low dividends but every serious investor knows about these and in fact if someone goes to some of these adtech and other tech companies and asks them to pay dividends, people will laugh at them. A typical “expert” on social media thinks that all tech companies are IT companies and they should pay most of the profits as dividend. They don’t understand the difference between product and services, seasonality/cyclical nature of the business and they can’t understand the challenges all the companies are facing in the industry. To know about all these, the best investors can do is to follow all the adtech companies regularly and read reports and commentaries by the management of those companies.

Yesterday PubMatic reported it’s earnings. It’s revenue grew 27% but the net profit decreased because of few things like stock compensation, loss in equity investments etc. There was a growth in CTV business. If PubMatic hadn’t invested in CTV business but paid dividends it would’ve suffered. Some people think investing in technology as a red flag. I don’t know what “tech” companies have to invest in other than in technology. What’s the point of being a tech company if you don’t invest in technology?

[Logan]

Thanks @odysee. I usually check published results by companies and then if I get time I’ll go through earnings transcripts. Big channels like CNBC, CNN etc may not cover all the adtech companies but some websites like Motley Fool, Seeking Alpha etc do and though they’ll be biased sometimes (because they’ll have shares in those companies) they still provide proper information and even discuss about the earnings calls which will be very useful. These days because of my health issues I’m not going through each and every transcript so I just check the results and check these websites for commentary.

For data you can check this very informative website called “macrotrends” which provides all the important information about all the US listed equities. They provide data about stock price history, each and every quarter, yearly, revenue, EBIDTA, net income and other important stuff. For bigger companies they provide data of 20-30+ years also. Only thing you’ve to be aware is the GAAP and non-GAAP earnings. Sometimes because of this the net income/PAT may go up or down drastically and people may assume wrongly so that time it’s better to check the published results.

Few years back I was very frustrated with BCG for not providing proper details and for not responding to my emails and calls and I’d have to wait till conference calls to get any information and sometimes I couldn’t attend the call and there was no updates also after the call but thankfully I started following other adtech companies and the whole industry and I understood things better. I got to know the challenges the industry was facing and most importantly I got to know how the real peers of BCG were doing. Because of the vast size of the industry we get required information and also because big players like google, Facebook, Amazon, Microsoft are involved there’ll be more coverage.

Regarding cash flows, most of them have good amount of cash and they are cash flow positive. One reason is their payable days are also more so they’ll have cash with them for more time. And for other things like salary some companies give stock options instead of paying in cash so in that case the earnings may get impacted but they’ll save cash. TTD, Magnite, PubMatic have very high payables which if our experts had seen would’ve called these companies fake.

Affle declared very good results and it’s good to know that not every company will suffer in this tough environment. Other important thing wrt adtech companies is that people have to check Y-o-Y instead of Q-o-Q. Q1 and Q3 will always be better than Q2 and Q4. You must’ve seen bad comments about this topic when BCG reported Q4 results and I guess that’s why the company shared that seasonality of the business presentation.

[Author]

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