[vgsatwork]

Also, We (Retail investors) have always been told that Daum is done deal. Looking at this show cause notice, there is nothing on the ground to indicate that it is moving anywhere close to getting resolved. Infact the Board meeting resolution in Early October last year appears to be an attempt to mislead everyone into believing that Daum is getting closed. In show cause notice, it has been mentioned that auditor interviewed SKR on that topic and he had no documents (signed/dated) to show it to them that there is a settlement deal. It is in the same board meeting resolution they have mentioned that audio company acquistion was close to being signed and SKR has been authorized by board to close the deal. It also never happened. There was no follow through as to why the asset purchase deal became a partnership without any capital investment.

Now at the end of the day, they do not have any justification left to defend all the equity capital that they have raised in the last 2-2.5 years, wherein an LOC would have sufficed. The only intent again is to increase the sharholding of the promoters at the cost of retail investors and use the equity as working capital for day to day operations…

[vgsatwork]

I have gone through the SEBI Show cause notice in Full last night.

What most of us were speculating/Feared is what had come out in the report. That the management mislead investors w.r.t SHP and bumped up their shareholding by issuing PW to themselves. Asset impairment due to GDPR regulations – done AFTER more than a year post the company became GDPR compliant (Meaning – the impairment was done arbitarily on 31st mar 2020) shocking most of us retail investors with the sudden impairment in balance sheet and as a consequence, on the book value. They have been withholding the FA audit initiation from 16th Sep 2021 (That very same day they had a board meeting in which they decided on Preferential share allotment to SEBI approved FPI’s. The intent is clearly to pump the price as the investor sentiment/mood was positive and share prices have risen to around 30 Rs from 4-5 rupees about 9 months back). The intent here is clearly to mislead, raise equity capital in the name of acquisition (which was never meant to happen – Both Mediamint and Consumables Inc) by significantly diluting the ACTUAL holdings of the retail shareholders, while painting the picture to the world that the promoters are not going to participate in the preferential Warrants approved in Late 2020 and the Preferential allotment done in 2021. In both cases, We (retail Shareholders have been lied and mislead that the promoters indeed have 35% shareholding as of Sep 2020, while in reality they had only 1/10th of the same and mislead everyone into getting the voting for preferential warrants passed in Dec 2020) ended up losing and promoters have increased their shareholding.

There is no criminality established. Atleast not just yet. Also, the report is not questioning the Revenue numbers yet. Again, it could be because the revenue number verification may not be in the scope of forensic audit and also this is just an interim order and that the FA is not complete due to non co-operation from the BCG side in terms of not providing the documentation asked for by the forensic auditor.

Despite this damning show cause notice, i do not expect the promotor/Management to become saint/shareholder friendly given that they have been a habitual offenders and it is only a matter a time before they come up with a new trick to hoodwink everyone.

Therefore it is in our own interest that there be shareholder activism against this management and an EGM be called for to throw out the current top brass and install new set of professional managers to run the company adhering to the fiduciary duties that these roles call for.

Else, we may be fooling ourselves again..

[vgsatwork]

@akkithegreat

I could not see any SHP updates in exchanges. May be it was uploaded and deleted immediately. I am assuming that it could be because of some obvious typo mistakes. We have already seen quite a few instances where management before sending a notification does not do sanity checking and often typos shows up.

Hope later tonight or early tomorrow morning we might see an updated SHP. That would help calm the the selling pressure in the counter.

[vgsatwork]

Follow up to my previous msg on Promotor share holding post system driven disclosure w.r.t Sarita CommoSales transaction..

Today this particular report is not showing up in SDD SAST Promoter reports.

Same w.r.t Kalpana Commosales transaction that was showing in NSE.

It appears that these reports are removed by exchanges.

Big relief…

[vgsatwork]

It has been 4 days since the concern regarding the SHP w.r.t Kalpana Commosales and Sarita CommoSales and no notification/official clarification to exchanges to refute the report from the management, despite this issue was raised on the very same day by few investors.

Heartbreakingly one has to assume that the promoter has sold these 10.4 crore shares in Sarita CommoSales, which could mean that the Q4 SHP could have more surprise on the downside w.r.t promoter holding. I don’t understand as to why they are hell bent on keeping the price so low by not using any of the immediately available leverages in their hand..

1. Buy back shares with current cash in hand

2. Close Daum and announce final closure/settlement and publish all subsidiary audited results without any redacting anything

3. Buy from market for ESOP

4. Do reverse merger to reduce the # of free float shares (changing the face value from 2 to 10, which would reduce the total # of shares drastically to 40 crore shares from 200 crore shares)

All these decisions could be taken by them without batting an eyelid and that can help fall the arrest of the share price.

[vgsatwork]

This is link to news item in Business Standard from Last year when SEBI ordered Forensic Audit in BCG.

https://www.business-standard.com/article/news-cm/sebi-orders-forensic-audit-of-brightcom-group-122030100275_1.html

Quoting from the article,

“….The market regulator has said that it found discrepancies in the disclosures by BGL that could be detrimental to the interests of investors and securities markets….”

Given all these seriousness, one would expect BCG Management to err on the side of caution when it comes to disclosing to Shareholders through exchanges. Let us wait and see if we get a clarification (The only other alternative way of getting a confirmation on the shareholding is that we have to wait for the Q4 SHP, which would not be published for atleast another month) in another day or so.

[vgsatwork]

@odysee

Both in the case of Sarita Commosales LLP and Kalpana Commosales LLP transactions that are figuring in the exchange filings, management should come forward with clarification, if they feel that the data reported in the exchange is inaccurate, especially after few people reached out to the management regarding this.

I was hoping to see an official clarification from BCG, but there is none. For all you know, mangement might be thinking that these are small matters that does not require an official clarification and would have left it as is. But it is such neglect from the management that is destroying investor confidence and eroding our wealth in this counter. It wouldn’t have taken more than 15-20 minutes of their time to put out an official clarification, yet they chose not to do and let the uncertainty linger on.

Financial institutions and Mutual Funds that have invested in BCG have primarily done so due to its inclusion in Index and since these passive funds track the index, they are staying on. Because these funds are passive in nature, they are also not questioning the management on transparency/Corporate Governance matters.

[vgsatwork]

@anand84sharma

Based on this filing, Kalpana commosales LLP acquired 31,02,051 and post acquisition, the total # of shares held by Kalpana Commosales is 5,16,79,619 shares. As of Dec 2022 SHP, Kalpana Commosales LLP had 5,20,83,333. Based on this report as of 2nd March, AFTER acquiring 31,02,051 shares, their total # of shares is LESSER THAN WHAT THEY HELD as of Dec 31st 2022 by 4,03,714 share, Whereas it should have been more than what they held as of Dec 2022.

Again, No clarification on this one as well and in absence of any clarification, what do we base our views on??

[vgsatwork]

Thanks @BCGLTI for checking this with the company.

I am not drawing a conclusion that Promotors have sold 10.41 crore shares. Infact, I have left it as a open ended question. But, similar thing that happened in Apr 2022 when we got the notification about the 4 LLP’s acquired by SKR. Everyone was of the view that promotors have increased their stake, whereas it turned out completely different when the SHP came couple of weeks after that. Hence I have mentioned the same saying that it is eerily similar to the same. Promotors are maintaining that they have not sold any shares, but the published SHP showed drastic reduction in promotor holding and we are still trying to figure out how it happened and when did the share transfers happened.

If promotors are shifting their Demat accounts, it would have been prudent for them to disclose in a notification and do the same. As the saying goes, when in doubt, disclose is the mantra as far as corporate governance is concerned. Atleast now that an individual investor has reached out to them, the right thing for them to do would be to clarify through a notification. Let’s hope that we see a clarification on the same from the management.

If such things are not clarified, then what should we base our view on? – System driven disclosure or offline clarification?. Proper thing would be to clarify through notification to exchanges so that we can take that as the official clarification from the management as far as the issue is concerned.

[vgsatwork]

Please find the attached system driven disclosure about promoter acquiring 5,50,000 shares from open market on 1st March 2023. While it seems like a good news, there is an eerie similarity of this with the LLP acquisition notification that came on 4th April last year where SKR acquired 4 LLP’s and classified them under promotor category. In both cases, the news was about acquiring new shares, but the hidden update was that the # of shares held PRIOR to the acquisition. I had raised an alert about reduced promotor shares number (prior to acquisition)and was viewed as scare mongerer. But later in April, when the latest SHP came, promoter had re-stated their promotor shareholding and that remains shrouded mystery till date. This SAST system driven disclosure also has the same characteristics. The # of shares held PRIOR to the said acquisition is stated as ZERO, whereas as per the Dec 2022 SHP, Sarita Commo Sales has had 10,41,66,666 shares. So, if the # of shares prior to this acquisition is ZERO, then what happened to the 10,41,66,666 shares that was held by Sarita Commo Sales LLP as of Dec 31st 2022. There was a trading window closure for Promotors and insiders from 1st Jan 2023 till 48 hours after the publication of Q3 result on 04th Feb 2023. I had searched in exchange notifications and could not find any update w.r.t any selling by insiders. So, what happened to these 10.41 crore shares?

Attachments:

1. 

   IMG-20230313-WA0001.jpeg
   

[vgsatwork]

Follow up to Post #14406 SEBI SCORES complaint on promoters SHP

The case that I had raised got closed today with this closure comment from the case officer

“On the issues of incorrect disclosures of shareholding of promoters, Company replied following i. Prior to January 2021, various of our shares were pledged, and the same was executed through the transfer of shares to the lenders respective accounts. It is pertinent to mention that shares were transferred as per terms of agreement, where the voting rights of the shares were still with the promoters. By virtue of the same, the shares were being disclosed as being held by the promoters in terms of various provisions of SEBI LODR Regulations 2015. ii. Subsequently, in quarter 1 of the year 2022, our legal counsels dealing with Securities Law matters advised us and explained to us that once the shares are transferred from Promoters Demat accounts, the same will be considered as sale as per SEBI Depository and Participants Regulations, 2018. iii. Pursuant to obtaining the said opinion as to the correct interpretation of prevalent regulations of 2015 and 2018, we rectified our records and intimated the stock exchange accordingly as per SEBI LODR Regulations 2015. iv. Hence, we dutifully informed the stakeholders of the compliance with the relevant regulations, as per legal advice received by the Company, as to the correct and lawful interpretation of SEBI regulations related to such matters. It may be noted that the issues are under examination of SEBI and appropriate enforcement action shall be initiated against the Company for the violations of SEBI rules/regulations.”

It appears to be response from the Company forwarded directly to me and the case is closed.

I will leave this to you all for your own interpretation of this response

[vgsatwork]

44 Ventures is not linked to BCG based on the clarification provided by SKR. It is a moonlighting project by some of the original OMS founders who are currently working for BCG. BCG allowed this moonlighting effort because these folks could not be provided with ESOP’s(That is one question that could have been asked as to why ESOP trust has not yet purchased a single share eventhough it has been over a year since the company announced its intent to provide ESOP and created the welfare trust which would procure the share from the market). BCG is OK with this moonlighting effort provided that these people executives do not let that affect their work for BCG.

[vgsatwork]

Follow up to post #14347

I have got response back from the company for the SCORES complaint w.r.t promoter shareholding, which is pretty much copy paste of the pdf that was circulating in the media wherein they had mentioned that they had not sold any shares and the shares that were transferred over to lenders demat account were being shown as promoter held since the terms of the agreement with the lenders gave them voting rights, etc,.

Have reverted back with these specific questions

1. There is no clarity on HOW MANY shares were transferred to lenders demat account prior to 2022 and were still being shown as held by promoters?.

2. From when this practice(of showing non held shares under promoter holding) ?started?

3. On What date this issue was corrected?

4. How many shares were actually held by promoters without being pledged prior to 2022?.

5. why is the SHP not being updated and published back to the exchanges taking into consideration the legal opinion that the company had received?

Let’s see..

[vgsatwork]

@odysee

Promoters could have acquired all the LLP allotted shares just like the way they did acquire four of them in Mar 2022. The fact that it did not happen smoothly in Mar 2022 and subsequent price destruction (from 102 Rs on 01 April 2022 to 31.65 on 30th June 2022), seem to suggest that the remaining LLP’s may not be coming into the fold of Promoters easily and that would keep this uncertainty and price action with downward bias.

If the promoter manages to get these LLP’s back in their fold, atleast price destruction would stop. Corporate governance issue would continue to hang, which would not let the price rise back up.

Regulatory action could bring in lot of negativity in short term, but the pain would be shortlived and the issues would be cleaned up once and for all for long term price stability

[vgsatwork]

Between Dec 2019 SHP and Jun 2020 SHP, The promoter pledged share count had come down by 5.31 crore shares (From 11.53 crore pledged shares in Dec 2019 SHP to about 6.22 crore pledged shares in Jun 2020 SHP). If we assume that the Pledged share count is the only reliable shareholding in the sense that they were still within the demat account of the shareholders, (Given the claims in the investor cell letter in which the shares that were transferred out of the promoters share were also being counted and shown as promoter shares as they had voting rights based on the agreement that the promoters had with the buyers of the share) one can presume that promoters had only about 11.53 crore shares in their demat account as of Dec 2020 and it had further come down by another 5.31 crore shares by June 2020, signifying that the stake they would have had based on their demat holding would have been only about 13% and it had been reducing gradually since then. But due to the supposed agreement that they had on voting rights (Again, assuming that the content of the letter to be authentic), their SHP continued to be shown as 39.14%, that’s a whopping gap of 26%…

That means exercising 3 times the voting rights as opposed to a normal person who would only get voting in propotion to their shareholding in the demat account.

It is in this context, some of the controversial Preferential warrants of 34 crore shares to the LLP’s were approved through shareholder voting in Dec 2020….

[vgsatwork]

For now, what probably keeps any company from making a hostile takeover bid for brightcom is
1. LLP, FPI holdings – If they are proxies of Promoters, then very difficult to acquire bulk stake
2. The fact that there is a cloud around the company’s accounts with the Forensic Audit order by SEBI. Any company that is considering a hostile takeover attempt would have huge challenge in determining the right price to pay without having the clarity on the books of the company.

The moment the FA thing gets cleared, people can value the company properly and hence there would be an attempt for takeover. Promoter has to acquire enough stake to avoid such an issue and whatever time it takes for the same, the smoke around this may not be cleared/clarified.

[vgsatwork]

I was digging through the NSE System driven disclosures – Insider Trading(PIT) report for Suresh Kumar Reddy and Vijay Kancharla. One of the first available record for SKR is as of 5th Nov 2020 and the next record is on 28th Nov 2020 and between these two dates, SKR has sold(or pledge was invoked) 26 lakh shares for 2.11 crores (Average price of 8.11 rs/share) and after this transaction, had shareholding of 1.33 crore shares left with him (including pledged shares). That is the last transaction for that quarter. But the SHP as of Dec 2020 shows SKR’s shareholding as 7.52 crores. That is a gap of 6.19 crore shares between what was being shared with the investors/public as his shareholding and what is available in the system driven disclosure – Insider Trading (PIT) report available in NSE…

Similarly for Vijay Kumar Kancharla(HUF), per this report, shareholding as of 22nd Dec 2020 is 1.89 crore shares, whereas the SHP of Dec 2020 shows the shareholding of Vijay Kumar Kancharla (HUF)as 6.2 crore shares. That is a gap of 4.39 crore shares

So, the case of missing shareholding probably goes long back, but we as shareholders were not aware of the same since the SHP did not reflect this numbers until Mar 2022 SHP that got published on 21st April 2022

[vgsatwork]

People seeing this letter circulating through social media assume what is not being implied in this letter (That the promoters would get these shares back in their demat account). The only thing that promoters are going to get are the shareholding of the LLP’s through indirect acquisition like the one that we saw last quarter.

Also, people are spreading theories that there is 20% shareholding sitting in escrow account due to LODR regulatory requirement and that it would come back once preferential allottees make their payment. If there is such noble reason (regulatory requirement), it would have been the first thing to have been disclosed by the management voluntarily and clarified more than once that it would come back to them and there would not be any change in promoter stake.

Keeping the shareholding as mystery helps the promoters cause in avoiding hostile take over bid of the company, but is destroying shareholder value. But the promoters seems to have set their priorities very clearly to keep this SHP story as grey area as possible and as long as possible giving them time to get their stake through indirect acquisition..

[vgsatwork]

The fact that this letter to investor cell is also not being NOTIFIED through exchanges makes it all the more dubious – the claim of the promoter that the discrepancy was corrected and notified to the exchanges (We as shareholders did not see any exchange updates w.r.t this).

Also, such letter signed by unnamed authority (though it appears like SKR signature, unless it has his name and designation below, you cannot assume it to be him) in BCG letter head, leaves SKR off the hook in case of any legal trouble that arises due to the content of this letter. It’s a smart move considering that they can later on claim that clarification on shareholding were notified to the exchanges (We as shareholders yet to see this letter to notice to exchanges)

[vgsatwork]

I don’t think there is any letter or communication in the recent past from the company that implied that the promoter share holding is around 36%.

Also, the letter that is addressed to the investor cell clearly states that “various of our Shares were pledged and the same was executed through transfer of shares” – This means that an unspecified number of shares from the promoter group that were pledged were sold (No timeline specified, but it appears to be much before Jan 2021 seeing the wording of the letter) with an agreement that the voting rights of the same was retained with the promoters and hence they were being shown as owned by promoter group and not even as Pledged (since it was executed). So, plain and simple truth is that the shareholders were technically being mislead by the promoters till they got the legal opinion sometime in Q1 FY22(just as the preferential warrants were being exercised by the LLP’s and bonus were issued). In other words, the only promoter shareholding number that was reliable was the Pledged shareholding numbers, because those were not executed and continued to sit in the demat account of the promoters. This letter does not mention as to on WHAT DATE this discrepancy was corrected and informed to the exchanges? Atleast I do not remember seeing any update to the exchanges.

It is likely that the promoters were holding only about 11.73% stake (Pledged shared sitting in their demat account) whereas exercising 36.76% of voting rights(via this so called agreement wherein even though the share is not in their demat account, they continue to exercise voting rights – Legality of such move would be very dubious) as of Sep 2020 when all of a sudden they came up with a preferential warrant allotment of about 38 crore shares to all these LLP’s and we, the shareholders were discussing intensely the reason for such mass dilution of equity even as we were all expecting Line of Credit for working capital requirements.

It appears that the whole drama about bringing in additional capital is only to issue warrants to these proxies and later bring them under promoter group through indirect acquisition and shore up their shareholding to a respectable 2 digit number and avoid hostile take over by any other companies.

So, unless they bring in the remaining LLP’s into promoters fold, they are still at risk of losing the company through hostile take over bid. May be that explains the FPI and LLP holding still being significant.

[Author]

Posts