So, how can they state that all their subsidiaries would be audited by Deloitte in the AGM? And it is also mentioned that their US subsidiary would publish its results in 2 weeks. So this could also be unaudited?
@pravindran and @phreakv6 This link will help clarify your questions on audit requirements for ODI. You can directly go to Section B - Annual Performance Report point 4 then read up the remaining for more context.
Also read points 4 through 6 in this link
Bottom line is, all subsidaries are required to be audited as per local law but it is not mandatory to attach accounts of the foreign subsidaries to the holding companies consolidated results.
With regards to deloitte auditing all subsidaries… 8k miles US will be audited by Deloitte US (which is a legally separate entity from Deloitte india) Deloitte US may subcontract some portion of the work to Deloitte India if they so desire. Ditto for 8k miles UAE etc…
In the AGM I think they said that they will now make public, detailed audited accounts of subsidaries which is not mandatory as per law. @udayp can you please confirm this…
Couple of things to clarify on the discussions above and some more information:
- On the question of subsidiary financials, CEO stated that he was hearing this concern from many investors (including large investors) and they have already formed a team working out a plan to make the subsidiary financials more transparent (making Deloitte sole auditor for all subsidiaries is an option they are looking into). I don’t think they are at a stage where they figured out the exact legal structure.
- On 2 week time line for publishing subsidiary accounts: My understanding is that they will upload FY2017-2018 reports of the subsidiaries in two weeks. These were audited by Venkataramana associates an audit firm in US. For the current quarter and coming quarters, they will announce the plan in the coming days.
- They hired Adfactors to handel investor relations. This is one of the largest PR firm in India with clients including Tata group and TCS. My perception is that Adfactors will have done some due diligence before accepting 8K miles as their client. PR firms don’t take any random company as their client because their USP is their reputation.
- On the 100 cr loan given to 8K miles media: CEO stated that more than 50cr was already paid back in this year and by December, whole amount will be paid back. They won’t make any related party transactions going forward. He also explained why the loan was given in the first place. Couple of years back, he thought Media could be a potential vertical of 8K miles similar to Healthcare, Fintech etc, but he later realized that healthcare is growing fast and media will be tangential and a distraction.
- CEO has also clarified on “infrastructure cost being less in US than India”: 70-80% of US employees work at client locations and they don’t own “server” like infrastructure as the infrastructure is mainly Amazon and Google Cloud so they are opex not capex.
- They are looking at tax efficient ways to bring profits back to India including the option of consolidating the business in Singapore and not US as Singapore has better tax treaties with India. They are in initial discussions with Singapore govt which includes a corporate tax rate of 8% for the company (this is far less than US corporate tax rate).
I read the dropping criteria for trade to trade segment and the the first line says the dropping criteria apply if market cap is above 500cr. The rate at which 8k miles price is dropping, its mcap is going to be much lower than 500cr on the review date which is 11th october.
Does this mean that 8k miles does not qualify for dropping and will be up for review on only in jan19, till then it remains in t2t?
Also, does anyone have a gut feel on what bottom the share might reach?
It seems that it will take time.
I compared the shareholding pattern of June with that in the September agm voting disclosure and here are my findings, please share your thoughts.
- Promoter - 17516066 (57.39%)
- Public Institutions - 1677489 (5.49%)
- Public Non institutions - 11324050 (37.1%)
Shareholding in AGM voting disclosure -September
- Promoter - 14936066 (48.94%, decrease of 8.45%)
- Public Institutions - 4099175 (13.43%, increase of 7.94%)
- Public non institutions - 11482364 (37.62%, increase of 0.52%)
Looks like the promotots have sold stake to institutions…
Good observation @siddharthadhamankar it seems it is Suresh Venkatachari who has offloaded. These raise some important Q’s:
- What could be his pressing motive behind this share sale?
- Institutional investors still see value in buying a substantial chunk of the 8K Miles Software business. And also remain invested as institutional holding is still intact. Should this evoke trust?
Was there a book closure announced for AGM?These are holdings as of what date?
The decrease in promoter share might be because of pledging. I think Banker will have voting rights.
More shares pledged by SV
His stake has indeed down to 47%, which includes earlier pledged shares.
There has to be some value for someone to accept the pledge of another banking fraud .
In AR 17-18 his holding was 17029533.Yesterdays pledge disclosure says his holding to be 14459533.
So did he sell some shares between April and Sep’18.Every sale by a promoter has to be disclosed to stock exchanges as per listing requirement.Did anyone see disclosures of sale in the above period?Was there a violation of listing agreement?
These are additional pledge created for the existing loans availed from IFCI & Indian Bank
Maybe due to price correction the banks would have liquidated the pledged stocks. Now he has pledged additional stocks against the loans.
Any idea about the loan amounts from IFCI and Indian Bank?
Does liquidation of pledged stocks required to be informed to the exchanges?
Promoter share sales have to be notified to stock exchanges by the promoter.Rs 15 crs borrowings from Indian Bank and Rs20 crs from IFCI as of Mar31.
I have bought 8k all the way from 700 down to 190 with an avg of [email protected] 342. many boarders in this forum have provided various opinions and vast amount of knowledge and news. In fact my worry for the stock is what led me to hunt for any such forum that may shed some light. I am a technical trader who uses fundamentals to enter good companies at best possible technically low levels . I never buy anything without a 40-50% correction. At 706 in April when i bought the stock had corrected from 1000-600 and looked sound to proceed to 1200. Though i expected 183 major support to hold; it failed. Indicators are now aligning for a base to be formed and upmove to start. I am not expecting worse than 117-121. But since the fall was so drastic and rumours(reality) are still much around with no clarity; i have paused on any further buys as I do not want to exceed 10% of portfolio in any one given stock. A bounce above 235 will bring back the accumulation phase in the stock for sure.
@P-Shekhar this price crash in 8k miles software has been unprecedented and deeply painful for many, including large investors and institutions as well. Corporate governance is a strange animal and valuations hold little meaning when there is a threat to the integrity of the management. When trust is lost in a specific area, the impact is extrapolated and people start disbelieving anything and everything. So people have justifiably started distrusting the annual report, the audit opinion, and the growth story in general, and everything that 8k miles software does and discloses to the exchanges is now seen as a complete lie. My investment rational like your is also primarily based on valuation and I believe in this particular case there is a lot of irrationally in this blanket distrust and hence I am continuing to accumulate albeit in small quantities; though I will not advise anyone to accumulate at this point. It’s a very personal call based on personal conviction.
I have exchanged some emails with the company and the responses that I received inspire hope and confidence for me atleast. I suggest you converse with with the company to get a first hand perspective yourself before making a decision. However note that there is a much higher probability of getting a quick and insightful response if your communication is constructive as opposed to hostile and aggressive.
Pl share some highlights of those emails. What did I ask and what was their response that evoked hope and confidence?
@siddharthadhamankar I absolutely agree about not being hostile in letters. Main reason i found this forum (by fluke) was bcos i couldn’t get any email ID for grievance cell. My trading methods may be vastly different from yours. I see that you are very knowledgeable with reading P/L, BS,etc. Since as a TA, i feel that price itself factors in most news and all other events; just the same i use basic parameters from Fundamentals such as 4 year, growth in Topline and PAT, possibly Q-o-Q growth too. But growth may be hampered as I pick stocks which have been battered quite a bit which can be direct result of poorer earning compared to past and not necessarily a bad company. I look for zero debt, ROE and ROCE above 9, zero shares pledged by promoter or at least nominal pledging which sounds reasonable enough to possibly be used back into the company growth. As such, returns border between 40-80% per annum, maybe barring deep bearish cuts in market. Would like your feedback on ISFT if you dont mind as it too has taken the same battering as 8k and charts look identical . My entries and exits are purely technical. FA is just a feelgood factor for me to buy correct stocks and not just any illiquid garbage that may seem to have decent charts