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LoganRegistered Boarder
I saw that too, there was some 16-17 lakh sell order before and after the 25 lakh buy order was executed these operators suddenly put more than 24 lakhs for sale. They are desperate to bring the price down. It would’ve come out of LC and maybe traded in green.
Increasing the free float by giving bonus has made manipulation easier.
LoganRegistered Boarder@brightspot, I just shared some information on forensic audit. I didn’t defend the CEO or the company and in fact I’ve been very critical of the company about the topics you’ve mentioned. If you check the queries that I sent, I have asked every critical question that investors may have. As investors we can’t do more than this.
In the recent conference call that Man Industries conducted, they just said that there’s nothing more to discuss as there was no update after the May 12th call (Man Industries had held a call on 12th to discuss FA).
What I’ve understood from seeing all the companies that were asked to undergo FA, once the audit is initiated, everything will be in SEBI’s hands and companies can’t do much about this.
Transcript of the recent conference call held by Man Industries (only this much was discussed about the FA)
Caller : And finally any update on the forensic audit after the last call that we had any reply or revert
from SEBI till date?Ashok Gupta (Man Industries): No further updates after that call of 12th May, nothing is there.
This is similar to what Sun Pharma people had said in one of the conference calls when people asked about FA.
LoganRegistered BoarderThere’s this company called Man Industries and sebi has initiated forensic audit of that company too. Sebi sent notice to the company in October or November but the company informed the market last month (May 9th or 10th).
There’s no news about this and nobody is writing anything negative about this company and this news didn’t have much impact on the stock price too. It fell from 85 to 75 and then there was not much fall and it went straight back to 84-85 and is now trading at 81.
Man Industries management have said that they have given the auditors and sebi every available document, information and that they don’t have anything more to share as they’ve shared everything.
So it’s clear that sebi is okay with companies not informing the markets immediately and it will give companies time to give explanation. Companies will have to inform the market only when the audit is initiated. I don’t think sebi will reverse it’s decision and not do the audit and I guess once they send notice they will conduct the audit even if companies provide all the information.
LoganRegistered BoarderAs they say “if it ain’t broke, don’t fix it” – the bonus issue is a very good example of this. From the day the bonus was announced there was some pressure on the stock. If the price was maybe more than 500 or 1000 it would’ve made more sense but I think the CEO and the management team went with the previous winning formula but it backfired this time. They wanted to give bonus and also make the FPIs pay their money sooner. Hit two birds with one stone worked last time but this time not quite so well.
There were other reasons as well for this negative trend – like FA, delay in crediting bonus shares, Ukraine war, global tech sell-off and later SHP confusion. Even after FA when Mr.Sharma converted his warrants to shares, the stock rallied from 80-odd to 160-odd levels (pre-bonus) but the delay in crediting bonus caused the most negativity. It even brought media’s attention and even after that they took a little more time to credit the shares. Maybe if they had credited at the right time or with a delay of maybe 1 or 2 weeks, the stock wouldn’t have performed this badly.
Last time too after crediting bonus shares there was similar kind of a sell-off as the stock corrected/fell 25-30%. Last time people tried to sell 1 bonus share but this time it is 2 shares so the volume and pressure both are more. Add to that the increase in the number of shareholders too.
Coming to the fundamentals, the performance of the company is improving and they are acquiring 2 companies (3 if you include Lycos) to grow even more. Last time when outstanding issues happened the company’s hands were tied because there was pressure on the financials (high working capital requirements and cash flow issues) and they couldn’t announce any dividend or other things to bring any confidence but this time they have increased the dividend amount 6 times. Paying 60crs is not a joke. Some people want dividends similar to IT companies but the fact is BCG is not an IT company (it never was). It is in a growing industry which has both tailwinds (positives) and headwinds (negatives) and you have to make investments to grow and to survive. Even giants like Facebook are pivoting to a different business. They started focusing on hardware for their Metaverse plans. 2012-13 to 2019 were very horrible for many ad-tech companies and many went bust. Today’s winners like Criteo, Magnite, Perion etc struggled a lot in that period. Since the whole industry faces receivable issues, you have to be very careful about your finances and you have to do the right moves. I really liked their plans to acquire audio ad company (or it’s assets). Diversification in the same field/industry is a good move.
The management people have no choice but to improve corporate governance and investor relations. There was a massive improvement in the last 2 years but that also was not always 100%. From day one I have always been critical of this and I have asked the CEO about this in almost every conference call even though I look like an idiot asking the same question every time and not getting proper answers.
I have said this many times and I’ll say it again – If any investor has any complaints then they have to contact the company/management and if they don’t respond then they’ll have to go to the authorities. It’s your hard earned money.
LoganRegistered Boarder@Admin, these are my queries, please check them once and send it to the IR.
Congrats on a great year. We hope to see similar growth rates in the coming quarters.
Queries
1) Update on forensic audit initiated by SEBI.
2) In one of the articles in The Morning Context, it is mentioned that the audit was initiated because of lack of disclosure by the company on impairment of assets. You did disclose about it to the shareholders through the exchanges but the same details were not reported in the annual report. Was this the reason for SEBI to initiate the audit?
3) Did the promoter group (which includes the CEO) sell their stakes in the company? If so then why didn’t they (you) disclose it to the shareholders? SEBI can take further actions against the company/promoters because of this and will have a negative consequence later. This will impact all the stakeholders (management, shareholders, promoters etc).
4) Why was there a delay in crediting bonus shares? This time crediting of bonus shares took more than 2 months but last time there was no delay and you credited the shares within time. Was the delay because of the absence of company secretary who’d have handled these tasks properly?
5) Why is the company secretary position vacant since many months? Why didn’t you appoint anyone till now?
6) The same with the position of CFO, you knew that Mr.YSR would retire in March but still you haven’t appointed anyone to that position yet. You said that you have shortlisted few candidates for the position and also said that the position would be filled in April, now it is June and still the position is vacant. What is the reason for this delay?
7) All the good work done by the company/management all these years will be forgotten because of few actions like promoters selling their stakes without informing the market and also if the communication with shareholders/market is not transparent.
Regarding communication, we feel that the company does not take shareholders seriously and you provide details only when you feel like doing so. One example is delay in crediting bonus shares and not updating the shareholders about it even after many days. You decided to update only when there was a pressure from the media. We have to wait till the conference call to get clarity and all our mails and calls will not be answered by your IR department.
8) We request you to take the initiative to talk to more analysts and the media. Since the company is not covered by many analysts and since it also doesn’t have a proper peer trading in our markets, people assume many things wrongly. For example, in a recent article in the Economic Times (ET Prime) they have written about receivables, loans and advances and that the revenues seem inflated etc without talking to you and getting any clarification from you. They have compared BCG with random companies which is very inaccurate. These can be solved to an extent if you give more interviews and talk to more analysts and institutions.
9) We have requested you many times to provide complete details of few items on the balance sheet in the annual report but you haven’t taken our request seriously. You have explained in conference calls about those items but still people will have doubts because most of them will read annual reports and only a few will attend conference calls. How will analysts and new investors know what those items are if they’re not mentioned in the annual report? Giving information on those items in investor presentation also won’t matter much because people will always prefer to have those details in the annual reports (items like loans and advances, other current assets, other receivables, other liabilities etc)
10) The news of forensic audit, reduction in promoters’ stake, delay in crediting bonus shares has brought a huge negative press about the company and also the company is losing credibility. How do you plan to change that?
11) In the last conference call you said that there’ll be a change in the accounting policy of the company and that we’d get an update in the month of March about it but we still haven’t got any update yet.
12) Can you share annual reports of the company’s subsidiaries? Since BCG is a mid/large cap now, people will expect more from you and uploading annual reports of subsidiaries will bring more transparency.
13) When will the acquisition of MediaMint be completed?
14) We see reports of other ad-tech companies saying that inflation, supply chain issues, Ukraine War are affecting their businesses. How do these impact BCG’s business? Will it lead to a cut in ad spend by most of the advertisers?
15) Since Netflix has announced that it would start an ad based plan in the near future, what is the impact of that on BCG and MediaMint?
16) Can you appoint Mr.Arjun Malhotra (who is on an advisory role) as a board member?
17) Update on Lycos-Daum issue. When do you plan to close this? It would be better for all the stakeholders if this long pending issue is cleared. It’ll bring more credibility to the company.
18) The money raised from issuing preferential shares for the acquisition of MediaMint is with a subsidiary of BCG. What is the reason for this? Shouldn’t it be with the parent company?
19) Regarding acquisition of Audio Ad company, what payment options are you considering? Will you again do a preferential offer or do you have plans to raise any debt?
LoganRegistered BoarderI guess people are selling bonus shares which they recieved yesterday. I don’t understand the concept of selling bonus shares as I don’t know what you’ll get from doing that but that’s what people do when companies issue bonus. Last time also we saw similar thing happen. The stock was under pressure for some time after the bonus shares were credited and then the news of Mr.Sharma investing in BCG took that pressure off.
This time the total number of shareholders has also increased and the ratio is also more (2 for every 3 but last time 1 for every 4) so the selling pressure is more (as people may sell those 2 extra shares). FA, promoter SHP confusion and pressure on tech companies’ shares are also playing a role.
(Tanla, Affle also had great quarters but even their shares were under pressure after their results)
LoganRegistered BoarderYearly results are very good as it matched the guidance given by management but quarterly results missed the guidance (net profit not total comprehensive income).
I guess like other ad-tech companies, BCG too faced issues with clients having to deal with supply chain issues, high inflation and the war in Ukraine (war started in Feb so applies to Q4). These things will lead to a cut in ad spend which affects ad-tech companies.
Rs 0.30 dividend was a big surprise for me as I was expecting dividend to be max 0.10 or 0.15.
Good to see progress in audio ad acquisition and singing more publishers, ad agencies and advertisers.
I’ll share my queries for the conference call by EOD.
LoganRegistered BoarderI think we should appreciate Zee Business channel for getting the management people to act quickly. Though this bonus issuance incident should not have gone this far in the first place. Hope this will make them to avoid these kind of things in the future.
LoganRegistered BoarderI don’t think it’s because of the FA as FA doesn’t interfere with the operations and corporate actions like results, bonus, buyback, dividend etc. In the channel also they mentioned that the delay is because of the extra preferential shares (and the lock in periods that those shares have)
There’ll be some confusions and one example I can give is – even though Mr.Sharma paid money for warrants conversion before the record date, they got approval to list those shares after the record date. So will they consider allotment from the company or listing approval by the exchanges? Maybe same with the shares for MediaMint people. If these people don’t get bonus shares then that’ll cause problems. If everyone remembers, last time they made plans to give bonus to FPIs and the issue price was set at a different price but later they changed it.
My understanding is that they rushed this bonus issuance as they were not prepared to handle it and were too careless or negligent. I guess higher stock prices makes people lazy.
In other companies that I have invested which have given bonus, no company had done any preferential allotments or warrants and the issuance went smoothly. (Even BCG’s last bonus went smoothly without any problem)
LoganRegistered BoarderIt’s clear that the delay is because of the extra preferential shares and more clear than that is that the company was not prepared to handle this properly. They anticipated more business so they’re acquiring MediaMint but why can’t they hire people to handle the bonus issuance? Temporary hiring would’ve worked. Even the CS (who’d have handled this properly like he did the last time) left and they didn’t hire anyone to replace him.
Now this issue is on national media and an embarrassment for the company/management/promoters and also for shareholders like FPIs, Mr.Shankar Sharma, MediaMint people and us retail investors.
They should hire a consulting firm which gives advice on these things. The CEO can’t handle all these things alone.
LoganRegistered BoarderIt’s good that people brought the bonus issue to Zee channel’s notice. This will make the management people to act quickly and will make them to avoid these type of mistakes in the future.
It’s sad to know that they are not picking the calls of even business channels. From now on at least they should act like a large cap company, hire people for specific roles and reply to each and every call or mail.
If they commit to something they should execute it. No one asked for bonus but they declared it. It’s clear that (as others have pointed out too) bonus was issued to make FPIs and other people to pay faster. They should’ve prepared properly to handle these things.
LoganRegistered BoarderThat is their problem, I don’t know whether it’s laziness or negligence or carelessness but this has to stop. As everyone points out every time, this is not a smallcap anymore and they have to take things seriously.
FPIs should appoint someone to the board and they should make the company take market related things seriously. Maybe all retail investors should write to them (FPIs) and request them to nominate someone to the board. Like me, I’m sure all the investors are tired and frustrated of calling the company or mailing them and not getting a reply.
Management people are like Kumbakarna, 6 months they’ll be very active and do things very quickly without any delay but the other 6 months they’ll be too lazy. On corporate governance related things there should a Lakshman Rekha, they should be very strict with it.
Last bonus issuance went smoothly and no one had any problem but this time it’s going horribly. Last year dividend payment didn’t go well but this year there was no problem.
LoganRegistered BoarderIn January, February we had many topics to discuss like MediaMint acquisition, results, conference call, audio ad acquisition etc. In March we talked about FA and now there isn’t much to talk about as there are no fundamental developments. We’ll have to wait for the results and then the conference call.
MMB is completely different from a forum like ours. Whether there’s any fundamental development or not they’ll keep having discussions there.
LoganRegistered BoarderLast time when they announced bonus they had the CS, Mr.Manohar, who’d have handled these things properly but this time there’s no one. Like others have guessed maybe the bonus was declared to make FPIs and other people to pay their money faster and having to deal with extra shares may have taken longer this time and that too without the CS.
They are not ready to invest money in areas that improve corporate governance and investor relations. No one replies to our mails and we’ll have to wait till the conference call to talk to the management. Now the CEO is signing all the documents which are supposed to be signed by the CS and he has to handle bonus shares also. It’s not like they don’t have money to invest in these areas but they are careless. Replying to investors’ mail and addressing their concerns should never be neglected. We have raised this issue in almost every conference call and I stopped doing that because I don’t want to look like an idiot repeating that again and again and not getting any proper answer.
MediaMint people have BCG’s shares now and after the next acquistion, Audio Ad company people will get shares of the company and it’ll be embarrassing for them if the company continues to make these kind of mistakes (or are this careless).
When things are going well these things may not look important but in tough times these are what makes the difference and makes you stand out and as a result the market gives you a premium valuation. Look at turnaround companies like Tanla and other smaller companies, not just business but they have improved a lot in corporate governance and investor relations too and it is helping them in tough times.
LoganRegistered BoarderSince early 2020 there’s an improvement in the way the company communicates but there were also few issues in that period. Last year’s delay in paying dividend, this year it’s with the delay in crediting bonus shares and now the SHP confusion. For some events we can understand that things will not be in their control like the FA, Axis case etc but at least they should inform on things that they have control of like bonus, SHP confusion etc.
They paid more than 250crs to banks, grew the business, acquired a good company like MediaMint but corporate governance issues will overshadow these important things. FPIs, MediaMint people, Mr.Shankar Sharma all have shares now and at least they should guide the management properly on these things. No matter how much ever good suggestions we give, most of the companies will not take small retail investors like us seriously.
(Copy pasting the morning context article in my mobile phone is hard and tiresome and I’ll share the article whenever I get time to use my PC)
LoganRegistered BoarderAs someone pointed out in MMB, the total traded shares from Jan 25th till March 31 was some 10-12cr (rough estimate). In the SHP promoters holding has come down by 18cr shares. Even if we take till this Thursday the total traded shares won’t be more than 18crs.
All the shares traded from that period can’t be of promoters because we had the forensic audit news also because of which many people sold shares. Maybe the reduction is because of off market transfer or an error from the company’s side.
The company is no longer a micro or a smallcap and the management people have to take things seriously. Sometimes it seems like they have a careless attitude towards the market/shareholders.
LoganRegistered BoarderThese type of actions by the company/management is the reason investors give complaints to sebi. The management/promoters are negligent or careless or too lazy.
In the conference call and even on live TV the CEO said that the promoters haven’t sold a single share but in the SHP it’s looks like that’s not the case. Individual shareholders’ holdings have also increased.
This is really bad governance.
LoganRegistered BoarderThere’s an article on BCG in the morning context website. In that they’ve given some details about the forensic audit and why it was initiated by sebi. I read it today and will share the article by this evening or tomorrow or by the weekend. To read it you’ll have to subscribe to it (399 per month which is a total waste of money). It was actually published in March but I came across it only yesterday. I’ll copy paste it when I get time (as I’m too busy now) and will share it with everyone.
LoganRegistered BoarderNetflix may introduce lower-priced ad-supported plans, marking big shift
Netflix will work on creating an ad-supported version of the service over the next year or two, Reed Hastings said
It’s good news for Ad-tech companies like BCG that most of the streamers will start putting ads on their platform. I knew these companies will start ads in the future but didn’t expect it to happen so soon.
Netflix tanked 35% today because it lost subscribers for the first time in a decade. Raising subscription prices doesn’t change the trend and adopting ads supported plans is the better option. Last quarter also the stock tanked 20% or more. It’s 52 week high price was $700 and now it’s price is $225.
The industry trends are changing, some are favourable and some are not. There are both tailwinds and headwinds. Don’t know when something will change (People are already buying real estate on Metaverse). Next is the phasing out of 3rd party cookies on Chrome. Don’t know whether there’ll be write offs/impairment for this.
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