Lets start tackling companies listed by Donald…
I start with Tanla Solutions as I had myself invested in this after it had crashed but got out with some losses before it continued its crash journey.
The stock price journey was spectacular after IPO it went to 465 and now in single digits… all the time there were buy recommendations on the stock.
From a BS report…
For this mobile value added service (MVAS) player, which gets over three quarters of its revenues from UK and Ireland, the recession in these markets have dampened the business outlook in the near term.
The company offers telecom infrastructure solutions through its four segments—products, network aggregation (SMS, MMS), professional services (infrastructure management) and mobile payments (smart phones) in about 28 markets around the world. Though the UK market is growing at just 10 per cent, VAS contributes to nearly a fifth of total mobile usage. With a shift to higher usage of 3G and mobile internet on the rise, Tanla with a 5 per cent market share in the UK market should benefit. For Q3FY09, except for the mobile payments segments, all others reported a decline of over 20 per cent q-o-q (sequential) due to a combination of slowing growth, regulatory changes in UK and weakening of the British pound.
The company is expanding into the Indian market and has deployed the 3G platform for MTNL and launched the missed call alert for Aircel among other projects. While Tanla is debt free and sitting on a cash of about Rs 150 crore, its debtors at Rs 278 crore and an increase in debtor days to 119 days in Q3 are causes for concern. The management, however, believes that this will come down going ahead and Ebidta margins, which have dropped (768 bps q-o-q) to 38 per cent, should stabilise on higher transaction volumes and cost cutting efforts. The stock which has corrected substantially over the year and on the back of robust growth prospects should fetch returns of about 40 per cent over the next one year
This was attractive because the company had shown very high growth in the past.
Was operating on the technological edge
Was debt free.
Employed IIt, IIM guys
Had top clients in UK mobile industry.
Could replicate the succes in UK to other markets as well as in India.
Some dose of reality…
Company was initially a dairy company… changed name to tanla Solutions
Acquired businesses in UK, Finland which possibly showed the huge growth until 2008-09
Low promoter holding
Had cash on Balance sheet, but it was raised in IPO and over time this was goin on reducing due to negative cash flows… this realisation was my reason for exit
Had rumoured links to pliticians in Andhra… once politicians out of favour… it became the end of the story.
Employee feedback (or curse actually)
Customer feedback (or complaints actually)
Links to politician
The story is also well covered on TED as it unravelled.