Brightcom Group Ltd

NSE:BCG

Earnings Call Transcript 2023-Q4

[Operator]

Good evening, ladies and gentlemen. I'm Vidya, moderator for the conference call. Welcome to Brightcom Group Limited investors conference call. The duration of the call will be for 1 hour. We have with us today Mr. Suresh Reddy, Chairman and Managing Director; Mr. Narayana Raju, Chief Financial Officer; Mr. Peshwa Acharya, Resident Group Strategy, Brightcom Group Limited.

[Operator Instructions] Please note, this conference is recorded.

Before we go ahead with the conference, Brightcom Group would like to mention that during the conference call, certain statements in this call, reflecting Brightcom's future growth prospects, are forward-looking statements, which involve a number of risks and uncertainties that could cause results to differ materially from those in such forward-looking statements. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

Now I hand over the floor to Mr. Suresh Reddy, Chairman and Managing Director. Thank you, and over to you, sir.

[Muthukuru Reddy, executive]

Thank you, Vidya. [Technical Difficulty] my honor and pleasure to welcome you to this financial review and future outlook update from the company for the fiscal year 2022-'23. As we gathered here, I want to start off by expressing my heartfelt gratitude to each one of you for your continued support and trust, which are absolutely invaluable to us and the company.

Today, here in front of all of you, I'm not here just as a Founder and Chairman of Brightcom, but as a representative of an extraordinary team of dedicated, resilient and passionate team. We have a team that is backing us up on things that they have been committed and providing the service to the market needs.

This financial year was undoubtedly a very challenging one for not just for us, for the world at large. The industry was no exception, especially the ad tech industry had its own challenges this year. Despite these challenges, our team has demonstrated a terrific commitment to our mission and vision of satisfying our customers to the greatest extent. Their determination and dedication have not only allowed us to weather the storm, but have also helped us deliver [indiscernible] financial performance.

With the support of our teams, we have navigated the complexities of this uncertain environment. Together, we achieved significant strides in this year. One of our proudest accomplishments is the growth of total income of the operation. We saw a substantial increase from INR 5,000-odd crores to INR 7,396 crores, a growth of more than 40% in 1 year.

This is just not a growth of statistical number. It's a manifestation of relentless pursuit of our goals and effective execution of our strategy and consistent striving for excellence across all business groups. So business-wise, this has been a phenomenal year for all of us.

Each number in our financial report is a [indiscernible] team's effectiveness of our strategic plans have come to fruition. [Audio Gap] Our relationships with our partners have gone up in a very, very big way. So these are all the results of a lot of planning and tactical decision making by the guys on the ground. The teams have done their jobs. I just want to dedicate this to the team. However, these numbers are just part of our journey. Behind these figures is a detailed and a strategic road map that led to the financial success this year.

And each strategic plan we implement is carefully designed to ensure that we remain competitive, continue to provide excellent products and services to our end customers and partners. So I'm excited to dwell deeper into our future plans as well, their execution and impact that they can have on the business.

But I will let Mr. Raju and Mr. Peshwa go deeper into our financial -- nuances of our financial performance plus our strategic directions of the business going forward.

So with this, I will hand the floor to Mr. Raju and then I'll come back to answer other questions that have been posed to us through email.

So with that, I hand this off to Mr. Raju. Raju-garu, please take over.

[Singaraju Lakshmi Raju, executive]

Thank you, sir. Thank you very much. Good evening, everyone. Thank you very much for taking time out of your busy schedule to join our today's call and I really appreciate your interest in understanding our company financial results for the quarter ending 31 March '23 and for the financial year ending 31 March '23 as well.

I'm excited to share the quarterly results of our company. Our company for the quarter ending 31 March '23 has achieved a 10% increase in revenue and a 3% rise in profit after tax compared to the quarter ending March 31, 2022. So our EBITDA too grew by around 3%.

For the quarter ending March 31, 2023, our company has reported a consolidated revenue of INR 1,367.93 crores and a profit after tax of INR 329.15 crores.

Coming to the segment specific information. During this quarter, we have achieved a turnover of [ INR 1,262.23 crores ] from our ad tech Digital Marketing segment and which amounts to about 9.99% increase year-over-year.

The Software Development segment achieved a turnover of INR 105.07 crores and a year-over-year increase of 3.91%. On the ROE front, I'm happy to inform you that we continue to be committed on improving the ROE. The annualized ROE after the current quarter has reached to about 19.53% compared to about 17.23% for the year ending March 31, 2022. We are focused on improving our capital efficiency constantly to take this much higher.

We have achieved a cash flow of INR 436.76 crores during this quarter. As informed during our investor call in the month of February for the quarter ending 31 December 2022, we have focused on the receivables. And as a result of which, our collections have improved, helping us to increase our free cash flow to about INR 437 crores compared to about INR 92 crores for the quarter ended December 31, 2022.

Our continued effort to invest time and money in building various subsidiary businesses and ensuring that there is continuous growth have resulted in our subsidiaries generating adequate cash flows. We have been maturing the businesses of subsidiaries for some time, and most of the subsidiaries are now generating sufficient cash and are now able to see cash that can be written to the parent company.

We felt this is appropriate to put across the plate to dividend this extra cash every quarter based on the available amount every quarter. As many of you know, for quarter ending December 31, 2022 and for the quarter ending March 31, '23 also, we have received a dividend of about INR 5.09 crores from our subsidiaries. Coming to tax rate. Approximate tax rate for the quarter in March 31, 2023, is coming to about 28.96%.

About the consolidated figures for the financial year ending March 31, 2023. Our company has reported a consolidated revenue of INR 7,396.77 crores.

We have achieved about 47.36% increase in revenue and approximately 50.3% increase in profit after tax. Coming to subsidiary contribution, as always, the Online Media Solutions has been the major contributor for the revenue, again, contributing about 43% of the revenue.

This is followed by Dream ad Group, which is contributing 18% and Frontier Data Management contributing to 13% of revenue. The Indian operations have contributed to about 5.87%.

When we look at the regional contribution, North America has contributed 52%; South America region has contributed 21%; Europe and Middle East have contributed 17%; Australia has contributed 4% and Asia has contributed 6%.

About the [indiscernible] division. Our continued efforts have helped us reduce the number of days outstanding and total receivables to about 148 days compared to 173 days as of 31 December 2022. For the Digital Marketing division, the current days outstanding is about 146 days compared to 152 days as of December 31, 2022. For the Software Division, it is about 176 days compared to 168 days as of March -- December 31, 2022.

Now I'd like to provide some guidance around targeted revenue and profit of tax for the year 2023-'24. So for the financial year '23-'24, we aim to achieve a revenue between INR 9,196 crores to INR 9,668 crores, which would make us a $1 billion company and that would be an increase of about 24% to 31% in -- around that particular thing.

The targeted PAT or profit after tax is between INR 1,659 crores to INR 1,744 crores coming to about 21% to 27% increase. Please note that these numbers are based on the current visibility of the organic growth opportunities and we did not consider any additional revenue or [indiscernible] in our inorganic growth opportunities.

Let me spend a little bit more on the inorganic growth plans. So we will be taking a 3-pronged approach for this inorganic growth. Firstly, we have adopted a hybrid growth model, our HyGrowth model as we call it. This is a capital-light model wherein we will be funding the regular working capital requirements of the joint venture partner and some minimal amount for fixed assets.

And we will be working on sharing the top line and the bottom line as well [indiscernible] offering the technology and network of B2B to speed up the growth of the JV. Secondly, we will remain open to full acquisition opportunities where appropriate. Typically our mantra is companies offering new geos to deep reach and killer technology.

Thirdly, the consumer data analysis segment, which is core to our business model and which -- and is currently with a huge disruption with the evaluation of artificial intelligence and more importantly, the generative artificial intelligence. While artificial intelligence has helped us to improve our data analytical and personalized marketing capabilities by enhancing the customer interactions, the generative AI will be great help to address our requirements related to the content generation and I know most of you have used ChatGPT by now and you would have been amazed by the -- at the rate at which the suggestions are provided with the ChatGPT or other generative AI tools, and the kind of a crisp content it provides. Generative AI, [indiscernible] social media uploads, product descriptions and more and in [indiscernible] movie also. So automation leads time savings because AI can work around the clock and the content produced [indiscernible].

About the personalization of advertisements for our customers. Generative AI's ability to analyze vast amount of data will help us to tailor the content to the media users based on the behaviors, preferences and previous interactions. The personalized approach enhances the user engagement and can lead to improved conversion base.

When it comes to the design part of it, most of you might have already seen ChatGPT generating various [indiscernible] using artificial intelligence. This will be of huge help. And -- in speeding up our creative design content.

We can do all these and much more as generative AI evolves and matures. Let me put an end to the technical briefing here and talk about the financial aspect of it.

As you all are aware, there are a few thousand of start-ups that were being floated across the globe in this spectrum. By this spectrum I mean artificial intelligence and generative AI-related spectrum. Additionally, some of the existing organizations are planning to use generative AI to [indiscernible] their opportunities. This will provide us a huge window of opportunity to help them meet their financial needs and in turn help us improve our revenues and profitability with minimum investment.

The key here is to keep looking for suitable partners with [indiscernible] business and technical requirements and at the same time, they are like-minded. Once we find a suitable partner, we'll be funding them to meet their working capital needs and speed up the product development activities for huge, already existing developed products to improve our performance.

Another point to keep in mind is we need to hold sufficient cash to help us close the deal [indiscernible] towards dynamic and competitive market space where there is a huge demand for goods, products, related companies with good offerings. We need to take timely decisions and quickly close the deal.

We are confident of achieving our organic growth targets mentioned above. At the same time, we are also confident that we will continue to grow inorganically through valuable partnership with -- as mentioned in the artificial intelligence or generative artificial intelligence space or other organizations in the digital ad tech space. So this is what I'd like to bring to you all.

I now hand over to Mr. Peshwa Acharya, our President, Group Strategy, to tell you more about our company's strategy. Thank you. Over to you Mr. Peshwa.

[Peshwa Acharya, executive]

Hello. Thank you, Mr. Raju. Good afternoon, everyone, and I would like to thank each of you for sparing time and participating in this call. And I'll start once again by thanking Mr. Raju, our CFO, who has really taken us in detail through the financials and also given a fairly good idea about our strategic outlook and how we -- a little bit of strategic growth outlook.

You would have gone through the financial figures already what has been published. And the stellar performance of your company comes out very clearly. I would like to really express my deep gratitude to all the team members, all our team members who have put in a tremendous effort for achieving this stellar performance.

Today, what I will try to do is essentially discuss a bit in detail some of our strategic levers, which has really driven this performance and also build and give an idea on our future strategy to growth.

If you see over the past years, we have taken several initiatives, strategic and tactical, that have really helped us achieve our goals and drive growth. Your company has shown a CAGR revenue growth of more than 37% over the last 3 years and a CAGR revenue growth of around 24% over the past 5 years. And our yearly revenue has been growing continuously every year, year-on-year for the past 5 years. And in fact, last year, year-on-year revenue growth has been more than around 50% -- 47%, 48%, which is, I think, highly commendable.

So at this stage, I just want to state some of our strategic levers of growth. So first one, constant improvement of client satisfaction levels for all our businesses across the world have led us also to new client acquisitions. This, I think, is very important.

Number two, your company has also been expanding its presence across new geographic locations all over the world globally. For example, like our Berlin office, which we had mentioned. Thankfully, and we are really very happy and delighted to be in a growing industry, which is the world of ad tech and digital marketing. This is a growing industry and the global ad tech industry is projected to have a 15%-plus CAGR growth and it is slated to go to around $2 trillion in the next few years. So this is a very important one that we are in a growing industry.

Next point I would like to mention is, really our long-term robust client relationships, which have been fostered over the years. This is actually very important and has to be done in a very effective manner over the years.

Next, fifth point, really taking advantage of the increasing digitalization across all industries and verticals, which really also drives the ad tech growth. So the combination of this drives the final ad tech growth.

And next, we have constantly added new products, which gives us a higher wallet share even within our existing clients, not only new clients. And examples of these are things like Brightcom player, video player and B-local Exchange, et cetera.

Now coming to a little bit of the future strategic road map. One of the things which I -- Hello? Hello?

[Operator]

Sir, please go ahead, sir.

[Peshwa Acharya, executive]

Yes. Are you able to hear me? Was there a call drop?

[Operator]

No, sir. You can go ahead.

[Peshwa Acharya, executive]

I will continue. I will continue. Okay. Sorry, I'll once again come back, there was a little bit of technical snag at my end possibly. So our strategic growth road map actually can be called something called concentric diversification, which essentially means launching new products and services, expanding into new markets, applying new partnership strategies and investing in future technologies and future businesses. So this is what we are wanting to do. And our CFO, Mr. Raju, has actually articulated a bit of it.

Let me try to build a little bit on that. So there are 3 really aspects, which I would like to state. First one is we intend to really harness the potential of what we have already articulated this high-growth model of ours, which entails identifying a pre-existing company organization, enterprise worldwide that is profitable and operates within our industry sphere or adjacency and engaging through a joint venture methodology with them. And just to corroborate and substantiate, we've already forged the JV with consumables incorporated in the domain of audio advertising.

If you ask me personally, audio -- digital audio advertising is one of the things which is really the growth drivers. It has become a big segment over the next few years. And we aspire to forge similar collaborations with other effective and suitable organizations in the foreseeable future. So this is our kind of a first peg of the strategy of growth, if you may call.

Second one is, your company will also proactively [indiscernible] inorganic growth through effective organizations with the right businesses. These acquisitions, we will ensure that all of them are revenue accretive and will add to the profitability of your company in the long run, okay? So this is our second peg, which is inorganic growth.

Third peg and this, I think, is very important. One of our major strategies is, we would effectively capitalize on new technologies like generative AI, which essentially happens to something called GANs, generative adversarial networks, not very important for investors to know that this is the technology behind it.

All of you are now familiar with this world of AI and generative AI, courtesy products like ChatGPT, Bard, Valley, et cetera. And I think this is what we will really look at and this will enable us to stay ahead of the curve in this ever-changing and disruptive tech domain. And we will be constantly looking at opportunities in this disruptive area of generative AI for future investments.

Again, I will quickly try to in a short sentence or 2 talk a bit about generative AI. Generative AI is nothing but artificial intelligence that uses generative techniques that can create a variety of content, including text, images, audio and synthetic data. And this leveraging of the data and creating customized ads that resonate with specific individuals, what in the marketing term is called hyper-personalization, can actually optimize at targeting and customization leading to increased engagement, conversion rate, effectiveness and efficiency.

And all these can convert into financial KPIs also for the company and the clients. Additionally, generative AI can also automate a number of steps in the whole process of advertising, digital advertising development process, which includes writing ad copy, creating images and all that. So this is a very interesting area, both for our industry and across industries really what is called generative AI.

Finally, I would also like to bring to your notice some of the positive global trends, which we would and are using purposefully to ride on for our business growth. For example, one of them is the overall digitalization, e-commerce increase and digital marketing spend increase happening across the globe.

Number two, new technologies are actually creating favorable tailwinds for our business. Specific things like connected TV; AVOD, and there has been a lot of discussion on this AVOD, courtesy some of these OTT players across the world; programmatic advertising, of course, all of us know; digital media; contextual advertising; digital audio -- sorry, digital OOH and digital audio. So these are some of the new technologies, which are actually driving our growth, and we will capitalize on this.

And the third one, of course, is building new technologies through our innovation labs, like q-labs, quantum labs. So this is one of the technologies which we are kind of want to invest in and move forward.

So this is an overview of our strategic framework. I'd really like to thank all of you for your attention, and let's continue to work together towards the successful and profitable future for Brightcom Group. Thank you once again. Yes. Thanks, Suresh. Thank you.

[Muthukuru Reddy, executive]

Hello? Hello?

[Peshwa Acharya, executive]

Hello. Yes, please go.

[Muthukuru Reddy, executive]

Okay. So thank you, Raju-garu and Peshwa. I think, a great summary of what we are thinking, how we performed and what were the drivers. I think it's a good overview. With this, I would like to bring it out to the -- we've got a lot of questions this time.

I think innumerable number of questions. And I think I will first try to answer them before we open up for Q&A. So let me just [indiscernible] the questions here and try to see how best we can answer given we have situations that we have to be careful of.

[Muthukuru Reddy, executive]

I think the first question was about interim order and show-cause notice that came on March 13 and there are a lot of questions regarding that. Whether we have responded to it. Are we going to securities appellate tribunal, what actions SEBI might take against the company, should we be worried about the future, things of this nature.

I can tell you, yes, we got the show-cause notice. We have responded. And there is an ongoing back and forth questionnaire that we have to work with. And we will be given a full opportunity by the regulator to present our version of their observations.

With respect to the -- see, there are 2 parts to it. One is the interim order where they are directions. And then there is a show-cause notice where we have to respond to the observations made by the regulator. In terms of the directions, we didn't find anything that we had to appeal. So we have just decided to comply with the directions part, so which is why you might have seen that we did that 7-day, 14-day and 21-day meeting of the directions given by the regulator. There is one more left with respect to the audit committee reviewing past financials and potentially recasting them in case there are some changes. So that is work in progress. We are working. We are complying and we are working very closely with the regulator on that.

Coming to the show-cause notice, you cannot appeal a show-cause notice. You have to respond and you have to clarify. So which is what we are doing now. And in terms of what actions SEBI may take and what should we be worried?

There is, see, very hard to tell what would come out. But somewhat we have seen in order adjustment and things like that. We are ready for all kinds of situations. We have completely -- we have a full plan in place. Nothing should impact the company. We are a debt-free company. We have cash in the company. So company will continue to function, businesses will continue to function, and we will have full business continuity no problem whatsoever. So I don't think one needs to worry about it. It's just clarifications that we have to give. The explanations that we have to make to the regulator and see where it goes that is how we are approaching this.

Coming to the second part, are we doing any remedial measures with respect to the order? Yes, upon receiving this. We have done a full internal review. The view is still ongoing. We've looked at our policies, processes controls to address any sharp coming, we are still identifying the revenue model. And this would be a subject of intense interest personally for me to make sure that we don't get into any further trouble in the future. So it's important to improve the compliance with our regulatory aspects.

Then there is a question regarding the JV with consumables, how is it going? How much money has been made, how much have we invested and such?

The joint venture is progressing as planned. We are investing as we go into the company, into the joint venture. And the potential is pretty large. We have not -- this quarter has not seen the benefit of that yet. And we don't want to jump as well or make any assumptions as of now, since it's a new part. So hence, even the projections made by my CFO is also we've been very conservative with respect to the year at this point. So you will see how it plays out. We are definitely very thoughtful. We are working with some of the best in the world with respect to the technology and the business acumen that they have. But it's all about how this partnership will work and how the JV will look like going forward.

That's where we stand. And there is a certain question about MediaMint. Is there an impairment of the money and what is the roadmap of bringing the money back?

See, we did not pay any cash component. There was INR 396 crores, which is supposed to be paid, that was not paid. And with respect to the shares allotted, we are in the process of [ annulling ] it. They add about 1.4 crore equity shares that were allotted plus with bonus, I think that comes to about 2.3 or something to that nature. All those shares will be [indiscernible]. And so the process is a little unclear and a few things took a little more time than we expected. You will see those shares go away from the system.

And there is a question, did the forensic audit play a role with respect to not acquiring MediaMint or audio assets of the U.S. company. These decisions definitely were not a consequence or related to the forensic audit. They were just prudent business decision based on market development and how things evolve. So it's absolutely no connection whatsoever.

Who initiated the plan? So there's a lot of questions like that. So this is a lot of these are looked at from both parties and then it's always a joint decision that we come to.

Then there are a few questions with respect to -- yes, there's a question about how about consolidating subsidiary and do a global exchange listing and such?

Definitely, it's a thing that we have been looking at for a few years, but this may not be the right time. We have few more things clear. We have to clear the air before we even think about all those things. So that process will take at least 4, 5 months. In the meanwhile, the foreign subsidiaries for [ continuity ] of operations, we will try to consolidate, and we have engaged a firm. It's in early stages to restructure this. We see how -- what kind of suggestions will come through.

Then the question about Daum settlement. Yes, this has been ongoing. I mean, we have been saying it's going to be done quick settlement but could be in 3 years and it's still taking time.

So that's a thing that we have to work through. It's a complex situation there. So we expect to see a faster closure there because we -- I personally jumped a gun and made an announcement earlier than I should have. And this is a process that will happen. We are 100% sure that the settlement and the final closure will happen. It's just the time I'm not able to comment on at this point. So -- but it does not impact anything about the business at this point. And so I would like to put that out there, we'll inform the market the moment that settlement is complete. We continue to work on it.

And then there have been questions regarding the warrants and shares that were allotted and why we allotted and kind of firms and people that we allotted that. So these are all allotted as the regulatory guideline keeping the company's best interest at that time. We do understand the retail shareholders concerns. We've got a lot of questions on that. So we will continue to endeavor to ensure the interest of everybody's protected going forward as well.

Coming to Corporate governance, there are a couple of questions on this. Can we be more transparent, more proactive towards market and shareholders? And then a lot of questions regarding stability of the stock price, buyback and such. We are working on a robust plan to improve corporate governance and to enhance transparency.

We are also considering all kinds of strategies to provide stability to the perception of the company. So this is a slow process because building credibility is the long run process. You have to keep in mind, we are a company that has been in business since 1998. We have a 25-year-old company, and we know, certain things take time and especially when turbulent quarter happen, we have to put all the more effort to stabilize it. And that's what we're trying to do right now.

Then there are questions about SSP. There are a lot of questions on SSP as well. See, with respect to SSP and promoter disclosures, any inaccuracy in the shareholding pattern is absolutely not intentional or to mislead anybody just it's been given as per the guidelines as per the consultants who have given us advise at that point. There's no reason to doubt that. So whatever changes that have been told by the regulator, we have now made those things and whatever you see. This is the final what you are able to see.

And any changes going forward, we'll communicate appropriate channels. Now we are very clear on how to handle that part of it. And if it has led to any confusion, we were not able to talk about this still certain clarities given by the regulator on that. Now that is all clear. This is where it stands.

And there is a question regarding growth and future plans. What steps management is taking to [ provoke in ] big investors primarily, I think, institutions. And I think internationally, we have quite a few funds that have come through, either through the index or otherwise. But with respect to domestic, I think there is work to be done. And again, this is a process that will kind of takes center stage in this financial year.

And just as informed by our CFO and Mr. Peshwa in the presentation, we would need to hold sufficient cash to start looking at the changes that are happening. You take any digital company or any tech company, product company across the world. Everybody is coming off with their own versions of new products with respect to generative AI-related block. It's almost like the dot com all over again. So very exciting times. At the same time, we have to tread very carefully with respect to what we need to invest in and what we should not and we need to be prepared to take this opportunity on. So that's where our mind is with respect to how we would like to invest going forward.

And question regarding Qulabz what is our idea with that? We are optimistic about our ventures with Qulabz. We are in the process of setting up a lab in Hyderabad, I think the cleaning room is already done by the Qulabz's people, and a lot of details are still to be put in together. With respect to revenue and profit, it may take some more time. But the bang for the buck impact that it can bring by a small change in what we are doing by using the quantum-based technologies it can make a huge difference. So that is something that is like a ace in the pack something that we'll see how that plays out.

There are questions about shares to the current auditors and such. There were no shares allotted to current auditors. We have responded to the observations made by this to SEBI. There's definitely no conflict of interest with respect to [indiscernible].

And then there is a question regarding having internationally reputed auditors. Yes, we do have internationally reputed auditors on the subsidiary level. We have, I think, we've said a couple of time -- a number of times in the past about OMS being audited by EY, which is almost I think now 46% this year. So that said, we are in the process of looking at everything. And if any developments there, we will inform the market.

This is broadly the question-and-answer, I think have covered majority of them. Like and I think now we can open up to Q&A. I can take the questions and the team can take the questions, and we can respond to them.

[Operator]

[Operator Instructions] The first question comes from Prakash Kumar, an individual investor.

[Unknown Attendee]

Hello? Hello? Can you hear me?

[Muthukuru Reddy, executive]

Yes, sir. Please, go ahead, sir.

[Unknown Attendee]

Yes. Sureshji, I had 2 queries, okay? Please, the first query I have is, since you said that last few financial years audit, audit financial is with audit committee. And thereafter, maybe you publish. So I might -- should I expect that after that audit committee approval, we should expect subsidiary financial -- audit financials of subsidiary or subsidies to be published for FY '23? Is a first question.

Second question. While going through all the financials of OMS subsidiaries for last year, I found that a lot of subsidiary names were written in the notes already in ink, Ybrant Digital, Ybrant Digital France, Ybrant U.K., OnoMagic. But I don't find those names in the annual report of the Brightcom Group. So can you tell us who are the -- what is the major shareholding of this OMS into all these subsidiaries and who are the other shareholders? And in brief, I just want to understand from you what is the exact contractual relationship of 44 Ventures, Mr. Jacob Nizri with OMS? Are they involved into business operations or what kind of relationship is there? That's it.

[Muthukuru Reddy, executive]

Perfect, perfect. Okay. So your first question with respect to post the audit committee review, definitely, we will -- I think we will see the audited statements of all the subsidiaries will be published on the website as directed by the regulator, and we will do it as soon as it is feasible and done. So that is number one. There's no question there. So there's nothing to ask, we have to do it, we will do it.

Now to your question with respect to OMS. Yes, see, what happens is you have to understand. When we -- what we published in our annual report, we published the subsidiary as we have bought them and then everything that goes into it. So that is how it is published. Now for example, OMS has a presence -- see, when we bought OMS, OMS was in 13 countries. This was in 2008 we bought the company. They were already in 13 countries, and then that has grown from there.

So when let us say OMS is an Israeli entity. Let say, they have an entity in France, so it will be named as OMS France and it will be an entity which comes under OMS Israel. So with respect, if I start putting together all these individual names, individual entities in each of these countries, it gets very, very large. There are a lot of entities like that are under each of our subsidiaries. I mean, of course, OMS, especially. Now all of them except OnoMagic are 100% owned by OMS. Okay? Then OnoMagic, I think we owned 51%, OMS owns 51%, 49% is held by 44 Ventures. So that is number one.

Now let us talk about the 44 Ventures group. The 44 Ventures has primarily 4 people there. They have Jacob Nizri, We have Shirley Lowenstein, then we have the CFO of the group, and we have the CTO. These 4 people as a service -- see, what happened is we were not able to provide for whatever reason, there are a lot of issues between issuing shareholding and such. So then we provided them flexibility where they can do things beyond OMS operational duties so that they have opportunity to take part in other small things, which is how 44 Ventures was put together.

So there is absolutely no conflict there. They are the operational guides for OMS, while we do have -- inside OMS, we do have people who do different aspects of it. So it is an arrangement where it has worked for us over the years. It works very well because we don't have to -- there is mutual benefit in terms of understanding what are the new technologies that are happening because they are participating in some very interesting new things, which are more content-related where we don't participate.

And we also understand what are the other areas that they are doing. What's happening within the Israeli ecosystem. On the other side, they have opportunity to be part of the large OMS operations, which works globally to give access to -- so there is some mutual benefit. And so hence, that is how it was set up and it has worked for us. So over the years, it has only become stronger. And it has been one of our core base groups that has helped us survive through all kinds of ups and downs there. This is broadly the understanding. I'm happy to answer any more questions on that, sir.

[Unknown Attendee]

Sir, just last question is I would like to understand more on this. Since you said that now the [ symbiotic ] relationship between 44 Ventures and OMS, okay? Now what I understand, 44 Ventures is a private equity firm, and they have invested in lot of -- lot many adtech latest start-ups, okay? lot of literally mediate there, lot many are there, If you go to the website, a lot many are there. I would like to understand is there any business dependency of OMS on those start-ups, which are owned by 44 Ventures, part A. Part B, tomorrow if...

[Muthukuru Reddy, executive]

Okay. Now let's take a moment. Now, let me explain. The point here is we have -- OMS is the mother is the biggest one and these -- all these companies are doing all kinds of things. So they are like, for example, literally media or whatever they are in the front end. There's really no conflict. Now coming to is there a direct flow of revenue between this? It is very, very small. You can probably see it in the -- so the business is primarily -- OMS has got all these relationships with ad agency, relationships with publishers. The strength of the OMS it's an old business that has been around for a long time. There is absolutely nothing to be concerned with respect to the dependency on the small entities. There is absolutely no dependency. Yes, there may be some revenue or there may be some vendor relationships or some technology we use. Like anybody else in the market, there is just no, what you call, dependency per se. But please continue, I didn't want to cut you off. And please tell me...

[Unknown Attendee]

No, you have answered most of the queries. So just one small part of this. What if tomorrow Mr. Jacob Nizri or the other colleagues who are like integral part of OMS business operation. Tomorrow, if at all, they decide to separate from OMS or from Brightcom Group itself completely, how does impact -- how does it impact the revenue and profitability for BCG Group as a whole?

[Muthukuru Reddy, executive]

It's like any other employee leaving the company, sir. For example, if you have some very important players in a large company and the head of sales and if he leaves, there will be some impact. But the impact is not like it is going to disrupt in any which way. And to cover that, we also have counterparts within OMS. We also have a CEO of OMS, we have our CTO of OMS, we have a CFO of OMS, who work with these guys. So there is -- so we have ensured that the dependency is minimal. That said, they have a lot of deep relationships into the industry. So it always helps to have them work with us. So that is how it is. It will not currently drop by a real significant difference in terms of the revenue of the business. So it's like any employee leaving a business. I wouldn't be too worried about that.

[Operator]

[Operator Instructions] The next question comes from Viraj Mahadevia from individual investor.

[Unknown Attendee]

Sir, this is Viraj here. I had a question Sureshji, I didn't want -- in your share price both in terms of volatility and the severe undervaluation if we have self confidence in our numbers, is INR 700 crores of free cash flow generated, why don't you consider a company buyback? It could be a nominal amount, it could be INR 50 crore or even INR 100 crores, but the signaling effect to The Street, that #1, Brightcom is open for business; #2, the cash is real; and #3, we have confidence in our business; and finally, we think our share price is cheap, we'll have immense value. Is that something you have considered?

[Muthukuru Reddy, executive]

We have looked at it. This has been brought to us a number of times. I think there is no -- and yes, there was a question with respect to the credibility of the numbers and things like that in the past. But I think we have passed that stage and things will start improving now.

See, we can't keep doing buybacks to make a point. It's not the right approach. That is a massive opportunity in terms of where the business has to go. So we'll have to always balance both sides. So that is the approach we have taken. And it's not that everything -- nothing is ruled out. I'm not saying it's ruled out. It's definitely under consideration. We'll see how it plays out. So that's how...

[Unknown Attendee]

I get your point, sir, but I'm saying INR 700 crores is generated last year. This year, we're probably going to generate INR 1,000 crores of cash flow. I mean setting aside INR 50 crores or INR 100 crores is not jeopardizing that situation, right? You still have 90% of the cash flow reserved for all your other strategic agendas. But the signaling effect of the INR 50 crores or INR 100 crores will be tremendous to The Street.

[Muthukuru Reddy, executive]

Yes. So we have given -- last year, we have given INR 60 crores as a dividend, okay? So the choices we could have done a buyback or a dividend, but we felt we had to give a dividend. So every company has their own way of doing it. This is what we felt right at...

[Unknown Attendee]

Right. okay. All right. I mean at this price, you could -- your technically ROI on your buyback would be more than 2x within a year, right? And maybe even 3x within a year if things with SEBI check out. So the return for promoters and shareholders is far greater through a buyback than through a dividend. Just a point from my side, sir, all the best.

[Muthukuru Reddy, executive]

Thank you very much, sir. I appreciate your point.

[Operator]

The next question comes from Rajan Bawe, an individual investor.

[Unknown Attendee]

Sir Suresh Reddy, congrats on wonderful results. My first question is regarding corporate governance side. Show-cause notices how we have several corners issues. What's your take and how like full management take on the corporate governance, like still, we are getting shareholding patterns on the last stage of filing. What's your take on these things?

[Muthukuru Reddy, executive]

Like I said -- well, I was explaining well I was answering the question. I have had answered the question, but I will answer it again to you. We are evaluating all the processes that we have. And you will see improvement. That's all I can say right now. And you will see improvements as we go forward. I don't want to make tall claims or anything like that, you'll see distinct changes as we go forward. And definitely, this was a jolt for us. So we have also taken it very seriously. And we will make sure things are much more corporate governance centric in terms of dealing with such situations.

[Unknown Attendee]

Okay. Sure. I have a question regarding Brightcom Israel website. They have mentioned that Brightcom owns Clarin.com and eBaum's Media, which is actually a part of Literally Media. So does it mean Brightcom is the owner of Clarin.com, Literally Media?

[Muthukuru Reddy, executive]

See, there is partial ownership there from OMS through -- though I think that is all part of Literally Media. I mean just in terms of marketing and -- in terms of marketing, I think they do it for the sake of showing that it is all part of the same group, which helps them do better marketing with the clients.

[Unknown Attendee]

Okay. Sure. I just have one more question. The promoter holdings side, I guess there is some arbitration is still going on. And also, there are some pleasure issues, and it has been like a lot of time has been gone, in fact. And the market is really looking at an increase of your holding, any take on the shareholding, promoter holding...

[Muthukuru Reddy, executive]

I've already answered that promoter holding. This -- I mean, what you see is what it is today. I don't want to comment anything beyond it. If something comes that is a bonus. But as of today, what you see is what it is. There's no reason to have any other expectations on this point.

[Unknown Attendee]

Okay, sure. It's really fantastic results. We just expect a bit of more governance and like -- from your side.

[Muthukuru Reddy, executive]

Thank you. Yes, sir. Thank you very much, sir. thanks for your support.

[Operator]

The next question comes from Shahid Choudary, an individual investor.

[Unknown Attendee]

First of all, congrats to your team, sir, for these results.

My questions related to some balance sheet asset items. One is intangible assets and intangible asset under development, which is approx about INR 937 crores or other one is short-terms loans, what is about INR 1,459 crores. Sir, I wanted to know what type of this intangible asset is as you are in the advertisement market? And the second one is, loans given is about INR 1,459 crores, but no other income. Are you taking any interest on other sort of income out of that loans because I didn't find any other type of -- other income in your balance sheet. These are the 2 discussions. And third one is just fact I heard there is INR 395 crores in OCA. What is this OCA? Over to you, sir.

[Muthukuru Reddy, executive]

Yes, sir. Thanks very much. I will just give an overview and then I will request my CFO, Mr. Raju, to explain a little more on how this is done. So I'll give you a very high level overview and these are details within the balance sheet, that he'll be better person to explain.

So let me first give you a sense here sir. You have to understand, yes, we are an advertising company, but we are tech-based advertising company. So we are actually a platform or a product company at the core of it. So we build software. So when you say advertising, I'm not just advertising on a physical basis, this is all through Internet, through mobile, through different parts -- different [indiscernible] within the online.

So to do that, we need to have a lot of things and move to it, in what we specialize. So we are in business for 25 years. And for that, we have built this technology, which is adtech they call it sir. To do ad -- that is any project that goes into it. For you, for example, if you want to build a product that can target somebody who is...

[Technical Difficulty]

[Operator]

Sir, sorry for interrupting, sir. Suresh sir, your voice is breaking sir.

[Muthukuru Reddy, executive]

One second, are you able to hear me?

[Operator]

Yes, sir. Now it is audible.

[Muthukuru Reddy, executive]

Yes. Okay. Sorry. So I'm saying that -- so these are the things that actually capture that. So that is why you have such huge numbers because it's a product company and the asset sits in -- short-term loans are also related to these activities, and I'll let Mr. Raju explain more.

[Singaraju Lakshmi Raju, executive]

Sir, as you know, our product life cycle, if I take into the consideration, there are currently 3 [indiscernible] which are quite iterative. The first one is where in the basic [indiscernible] or the initial figure is I would put it like which includes contract, I mean, once our marketing team comes with a requirement. And then our IT team will build some of a context around it and there will be some kind of the technologies that we use in kind of the manpower that we need and the tools that we need. And we especially [indiscernible] intend of what will happen. We need to come up with -- the buying hardware and software are two relevant step, which is of a high level configuration as we are doing a vast amount of data needs to be analyzed.

So what or tends to be have [indiscernible] and using obviously as a particularly, what happens is the design -- we'll refer on the concept, we will design, and we will prefer a prototype. Then we can move into the second stage wherein as the testing will be done. And our top launch item with our longstanding customers, which we will test how the portal or the tool or the data collection and the data analysis working whether it maybe lack standards or not, it still need to increase the speed or not?

There a lot of things that will go into that. So that's the soft launch part of it. And then the final stages, we will do a commission launch. We capture the data analyzed and so to conduct the targeted advertising to people in there. So we are broadly doing these stages. So you just see what happens when we are designing like let me give you 1 more thing. Once the commercial launch is complete and what will happen is we will capitalize all the expenditure related to that particular activity. And we will write it up over a period of 6 years that we have been following since inception of our organization.

Coming to the first process, like where we do concept design and prototype. At this particular stage, we are not too very clear as to whether it should be a current asset should be capitalized because it's still at an evolving stage. We're not sure whether we'll capitalize it or not and how long it will take for us. So that's the reason why any expenditure including software, purchase of software licenses, purchase of hardware kind of a thing and any infrastructure that is required to create -- we need to create for this particular stage, all those things we will be -- we will not be able to capture because we unclear as to how it goes.

The content itself -- still it is going -- we're going to scrap it. We will definitely charge it to the P&L account. Otherwise, we'll capitalize it. So this is the reason why we keep it as under other current assets. Normal time under review for this particular as the entire process is around 9 to 12 months because the data is always not small, right? So we usually take around 9 to 12 months cycle time and then decide at the end of the year whether we need to charge it to the P&L account or we can keep it in current assets. So this is the place where the amount will be classified as a other current assets.

Coming through your question about intangible assets under development because once, the prototype has been move to testing and all, and I have assets -- intangible assets that is under development, which is almost 40% complete. All we need to do is, do a testing part of it and if there are no bugs found, I can go for a soft launch and afterwards it will go for a commercial launch. So around 40% to 60% complete, depending on the stage of the project.

So that's the reason why we keep intangible assets or these [ classified ] expenditure in that particular stage as intangible assets under development or capital work in progress. Once the top line is complete and we, as I said, commercial launch is done, which is definitely an intangible assets. And all the expenditure related to [indiscernible], software and others will be classified as intangible assets and anything related to the infrastructure and computers and laptops or whatever hardware things that will be classified as fixed assets. So broadly that's what it is. That's how we do the accounting treatment part of it. And at the end of the year, what we do is we will assess each and every product and then we classify the expenditure accordingly, okay?

[Muthukuru Reddy, executive]

I hope you got it is. As it is complex, sir, because it is a software company at the core of it, the product company at the core of it. It is not an outsourcing company. It's a product company. So how product covers the asset within the balance sheet is this is the nature which we are doing right now. That's the broad idea. I hope that answers your question.

[Unknown Attendee]

Sir, what about OCA, that is about INR 395 crores.

[Muthukuru Reddy, executive]

Yes, that is what...

[Singaraju Lakshmi Raju, executive]

OCA is other current assets.

[Unknown Attendee]

Sorry, sir?

[Singaraju Lakshmi Raju, executive]

OCA means other current assets.

[Muthukuru Reddy, executive]

Okay. Can we go the other question, please?

[Unknown Attendee]

No, no, no, I'm not I am talking about other current assets, I'm talking about other comprehensive income, INR 395 crore into financials. What is the nature of the other comprehensive income?

[Singaraju Lakshmi Raju, executive]

Other comprehensive income is related to any -- at the end of every year, there is a lot of exchange fluctuation these days. I mean on some day it will be around 78 and this year it's 82-plus. So we need to revalue each and every asset outstanding amount because we have multinational presence and most of the countries we need to take care of the exchange-related adjustments.

Once we revalue the assets in the balance sheet of those subsidiaries, and we convert them to INR. What will happen is there is some amount reserve or surplus that generated. And that is to compare to other comprehensive income because based on the -- like conversion rate, if is it increases like 78,000 to 82,000, for example, I've got a 1,000 [ for this year effect ] in one of our subsidiary balance sheet, then I'll convert to as of 31 March '22, we knew it is 78, but it is 78,000. And when it comes to 31 March '23, if it is becoming 82,000, that 4,000 is my other comprehensive income.

[Muthukuru Reddy, executive]

It is due to the currency difference between the countries. That's what it is.

[Singaraju Lakshmi Raju, executive]

Exchange rate fluctuations.

[Operator]

That will be the last question for the day. Ladies and gentlemen, this concludes your conference call for today. Thank you for your participation and for using Door Subha's conference call service. You may disconnect your lines now. Thank you, and have a pleasant evening, everyone.