Securekloud Technologies Ltd (was 8k Miles Software Ltd), Cloud Computing

I believe that this company has real employees, clients, projects and does work in the cloud migration field and pertaining to that field, has rudimentary automation tools (but has nothing to do with AI/ML/Blockchain etc.). There is a big difference in terms of competency between the former and the latter although to the general populace, they are all buzzwords to look out for and the company likes feeding it to them (8k miles is not alone in this aspect).

With that said, I think the company might at most make real profits of about 30 Cr or less - This is purely based on subjective, speculative guesstimate based on my exposure to other companies in this field. I reserve the right to be wrong. I do not think the numbers reported by the company are true because I do not think such growth is plausible in this field.

3 Likes

Both the directors (until yesterday) of the media co. are promoters of the software co. with one being the CEO of both entities. It is difficult to appreciate that the director/ceo may have been unaware of the auditorā€™s resignation and the reasons for it, as you suggest.
The clarification provided yesterday is sketchy - not sure why they chose to mention that the issues at 8K Media are being looked into, when the purpose of the note itself was to delink the director of 8K Soft from 8K Media.
Selling equity of a booming business to fund an acquisition or extend a loan is hardly the best route that a promoter can take. Pledging shares for cash is a better route even if interest costs are high.

Yes, you are right. That is where the problem lies. The CEO is a tech guy. He should speak plain truth to the market, instead of giving non-sense.

What is your estimate of revenue?

Okay letā€™s clear some doubts here ! Ramani sold the stake as he wanted a build a trust (After the demise of his father). It was a spiritual reason for selling the stake ! On an average he mustā€™ve received around INR 120 cr from the stake sale.

Out of that amount, if he gives 37.5 cr back to the company then I donā€™t consider it a red flag ! Why? 8K India business hardly has any net worth so borrowing money here is difficult and if they do they will have to borrow at a higher interest cost of 11.5% minimum. Last time they went out to borrow money, Suresh (CEO) had to pledge his shares ! So it is much better to borrow from promoter ! Issue wouldā€™ve have there if the loan was interest free (Like in the case of Jindal Stainless & Jindal Stainless Hisar). Here all the interest is getting paid and also the 8K India lending to 8K US is receiving interest ! Everything is crisp and clear in the Annual report. I suggest that one reading is not enough of the Annual Report. Try reading 3-4 times and if doubt persists, ask the management !

And the CEO is not someone who has tasted money for the first time and got greedy etc. Look at his background. He had past 4-5 highly successful ventures. Even he has listed few of his previous companies as well. Headed Electronic Banking division of Deutsche Bank Singapore. May not be a great communicator with all the stakeholders but he has great brain that we canā€™t deny nor ignore ! He is pure-pure techie not a finance wizard like us !
And look at 8K Miles performance viz a viz Cloudera or 2nd watch ! See how this guy is generating CF, investing money and improving margins as compared to its competitors who are lavishly spending on sales, marketing, advertisement and other expenses !
Are there issues ? Perhaps ! But is it a fraud and the entire book is cooked? I donā€™t think so ! Time will tell, i maybe right i maybe wrongā€¦ I ll lose my money or it will be a mega multibagger for meā€¦ Till then iā€™ll prefer staying with stated facts and not on opinions !

2 Likes

Intersting discussion !! Why ppls here are supporting this company so much when so many negatives are in public domain now and stock is going LCs every day.

I read employees comment on Glassdoor and it seems they are not offering even salary on time and other issues related to HR:

https://www.glassdoor.co.in/Reviews/8KMiles-Software-Services-Reviews-E651296.htm?sort.sortType=RD&sort.ascending=false&filter.employmentStatus=REGULAR&filter.employmentStatus=PART_TIME&filter.employmentStatus=UNKNOWN

I am working in Tech domain and companies working in such niche technologies ā€œTake careā€ their employees very well and pamper them, as " they are the real asset" of the companyā€¦ Really surprised to see why ppls are so emotional about this company, I learned one things in stock investing in last decade and half, dont marry your stock and if you see any negatives get out and you can re-enter when things become clearā€¦ I also feel 8K miles is another Satyam Computersā€¦

1 Like

Pledging listed co. shares with audited financial statements is not a difficult thing. It isnt clear what you mean when you say no net worth.

Fraud or not is an exercise left to individual analysis and judgement. A healthy debate around some of the nos. (specifically changes over time) and quality of mgmt is a good thing.

1 Like

Standalone business (Which is India business with reference to my comment) has a net worth of only INR 78 crs as on FY18 (Which was only INR 59 crs as on FY16) as compared to ~INR 500 crs net worth of the consolidated entity as on FY18.

How did you get to know this?

As we speak there is ~ 7% of the total outstanding public shares offering the lowest possible price for the day at NSE and ~ 4% offering the lowest possible price for the day at BSE. These are disclosed quantities. Less than 0.001% of the lowest price offered have been bought at NSE, equally bad at BSE.

This, even as there is an arbitrage opportunity between NSE and BSE prices of around 50bps, just buy in NSE and sell in BSE and make Rs 1.05. This can be done on 491,000 shares that are offered for sale at that price, in other words Rs 4.9 lakhs for free. Yet there is no one.

At NSE a while ago:
image

At BSE a while ago:

In other words there is an overwhelming rush to sell even though there are hardly any takers, not even for risk less arbitrage. This was true yesterday and today.

There are really no takers at all.

A year back would be sometime around September 2017, but he had sold the biggest chunk in May 2017 (well before that). Disclosing after the sale is not quite meaningful (you can as well know it within a few days in the filings). And how do you know what he is saying is true? Selling 120 crores worth of stock of which 37cr is lent and a large chunk goes into somewhere else, means that a far smaller portion went into the Trust, if at all. Typically it makes sense to set up a Public Trust (where beneficiaries are the public at large) only if you get an exemption, and it usually takes more than a year to get an 80G exemption, and for a corpus of say greater than 10 cr, it will take much longer. So you generally apply for the exemption and only over a period of time infuse capital. And, very very few people, in my experience, load it with capital that you cannot take out easily later.

In any case I donā€™t attend analyst meets so that that was sold as fact was not known to me.

Why not? I will be happy to learn. As for DHFL, there would have been which is why it gets closed out soon. As long as there are market makers, these gaps get closed out. In this case there is no one to close this, which is surprising.

Finally, just so I am reassured, can I assume that you are not directly or indirectly connected / commercially interested in 8K Miles, other than as an investor? A LinkedIn profile would really help. Mine is here

5 Likes

How can one sell in BSE when there are no visible buyers (and practically no buyers otherwise either)?

Yes, you are right, I did not think through that!! At best 3000 odd shares if you wait and were at the top of the queue.

What he did with the money after the stake sale is beyond me or you or anyoneā€™s understanding. Just like we buy and sell shares ā€¦ he did the same ! We canā€™t control such things ! I guess youā€™ll agree to me on this ! I told you what he had stated publicly. Just like you even I have many doubts which I wish to clear ā€¦ but it doesnā€™t look like a completely fraud company with cooked books & that is something I am thumping my base on.
And yes I am an investor in this company just like many others. Other than that I have no other relation or interest in/with the company.

1 Like

@Funda_Buffett

Appreciate your strong conviction on 8k miles, which could turn out to be the best possible bet for you!

I would really like to know from your point of view, what could be the things that is of concern or needs to be checked at 8k-miles?

There is one review which says salary was late! You canā€™t generalize by picking one out of 26. Overall, CEO has 72% approval which is so much better than many IT companies.

I spoke with two mid-level tech employees and they are very happy with their salaries and job. They are not plugged into investing and are not even aware of the Dstreet turmoil. In their offices, work is as usual. And the two are pretty good in AI. I come from AI background and was not expecting the level of expertise they have.

They have 500 head count with 200 in India and 300 in US. USD 100 million revenue with 500 head headcount means 200K USD per person which is very realistic and actually the norm in this kind of industry. They are not doing anything spectacular here except for the growth both organically and inorganically.

3 Likes

How recently did you talk to them? Which office? Can they connect you with someone one level-up and you could get some understanding about companyā€™s revenue and margins?

Thanks

yes i also connected with some ppl . Their response was also same. There are some obvious corporate governance issue , which have been highlighted by fellow members. Lets see if they answer those in AGM. I am disappointed by how they have handled things in past. May be i am emotionally attached and may lose all my money invested in it but I still think it is good company somehow :stuck_out_tongue:

In AGM one of their agenda is to raise money. Have anybody thought in this context, they are artificially trying to suppress price so that they can issue equity to themselves/friends at low price. Just came to my mind. Even then they are not minority shareholder friendly but can we discuss in this context.

actually not just one review mentioned about salary NOT on time issue, but 5 6 reviews out of 26. Thatā€™s a lot!

In fact few positive reviews seemed to be fake one as well, which mentioned pros as salary on timeā€¦ I mean I donā€™t understand, salary on time is a basic thing and not a luxury item to be mentioned in the pros unless you want to counter some other views in the public which mentions the otherwise.

2 Likes

Its not just one review, it many reviews mentioned that their salary is not PAID on TIME !!

So, I am not saying you to believe me or Glassdoor and if you ppls in company personally then its good, I just share what I see in public domain and ppls specially ppls who are interested in job with come company look at glassdoor (at me ) and I find these comments on Glassdoor more and less reality, as Nobody who is working with company will write such things, like salary not paid time or few things about their CTOā€¦ anyway its your money.

Disclaimer: Not invested in 8K miles, so no more post on 8K miles from me :slight_smile:

so if it is negative review, it is genuine, if positive fake review is it ?