STAKEHOLDERS EMPOWERMENT SERVICES LTD

SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019

Brightcom Group Ltd NSE Symbol - BCG TABLE 1 - MARKET DATA (STANDALONE) (AS TRADED ON 22ND FEBRUARY, 2019) Sector - IT - Software NSE Market Price (`) 2.90 NSE Market Cap. (₹ Cr.) 138.11 Face Value (`) 2.00 Equity (` Cr.) 95.25 Business Group – N.A. 52 weeks High/Low (₹) 5.90/2.30 Net worth (₹ Cr.)* 582.88 Year of Incorporation - 1999 TTM P/E N.A. Traded Volume (Shares) 6,25,596 TTM P/BV 0.24 Traded Volume (lacs) 18.14 Registered Office - Source - Capitaline, TTM - Trailing Twelve Months, N.A. - Not Applicable, * As on 30th September 2018 Floor: 5, Holiday Inn Express & Suites, COMPANY BACKGROUND Road No 2, Nanakramguda, Brightcom Group Limited provides digital marketing solutions and computer software Gachibowli, Hyderabad, development services to businesses, agencies, and online publishers worldwide. It Telangana – 500 032 operates through Digital Marketing and Software Development segments. It operates a network of community and social sites that include .com, .com, Company Website: .com, and .com. The company was formerly known as Lycos Internet

www.brightcomgroup.com Limited and changed its name to Brightcom Group Limited in September 2018. Brightcom Group Limited was incorporated in 1999 and is based in Hyderabad, India.

rd Surveillance Actions: There was no surveillance action on the Company as on date of this Report i.e. 23 February, 2019.

Revenue and Profit Performance (Standalone) The revenue of the Company increased from ₹ 114.72 crores Quarterly revenue and Profit (₹ CRORE) 150 to ₹ 115.88 crores from quarter ending Sep’17 to quarter 115.88 116.64 114.72 ending Sep’18. The Company made a loss of ₹ 3.19 crores in 100 quarter ending Sep’18 vis-a-vis making a loss of ₹ 1.23 crores in quarter ending Sep’17. 50 -3.19 -0.18 -1.23 0

-50 Sep'18 Mar'18 Sep'17 Revenue Profit

Source: Moneycontrol Performance vis-à-vis Market 1.40 1.20 TABLE 2- Returns 1-m 3-m 6-m 12-m 1.00 Brightcom Group Ltd 0.00% -10.77% -23.68% -44.76% 0.80 Nifty 0.10% 0.59% -7.70% 3.19% 0.60 Nifty IT 4.29% 7.19% 1.03% 22.83%

0.40 Source – Capitaline /NSE Feb 18 Apr 18 Jun 18 Aug 18 Oct 18 Dec 18 Feb 19

Brightcom Group Ltd NIFTY NIFTY IT

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STAKEHOLDERS EMPOWERMENT SERVICES BRIGHTCOM GROUP LTD

SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 TABLE 3 – QUATERLY FINANCIALS (STANDALONE) % Change (₹ Cr.) Sep’18 Mar’18 Sep’17 Sep ’18 vs Mar’18 Mar’18 vs Sep’17 Net Worth 582.88 583.00 585.16 -0.02% -0.37% Current Assets 362.85 358.86 363.69 1.11% -1.33% Non-Current Assets 516.65 518.13 518.29 -0.29% -0.03% Total Assets 879.50 877.00 881.98 0.29% -0.57% Investments 509.03 509.03 508.98 0.00% 0.01% Finance Cost 3.79 5.29 3.39 -28.36% 56.05% Long Term Liabilities 99.81 89.62 90.48 11.37% -0.96% Current Liabilities 196.82 204.37 206.34 -3.70% -0.95% Turnover 115.88 116.64 114.72 -0.65% 1.67% Profit After Tax -3.19 -0.18 -1.23 N.A. N.A. EPS (₹) -0.07 -0.00 -0.03 N.A. N.A. Source - Money Control/Stock exchange filing

AUDIT QUALIFICATIONS

Audit Qualifications in last 3 years: The Statutory Auditors have not made qualification in their Report for FY 2015-16, FY 2016- 17 and FY 2017-18.

Response Comment Frequency of Qualifications No - Have the auditors made any adverse No - remark in last 3 years? Are the material accounts audited by the No - Principal Auditors? The consolidated financial statements contain unaudited accounts of Foreign subsidiaries. The unaudited statements are material (>20% of the assets & revenue) with respect to the consolidated accounts of the Company. As a material part of the consolidated Do the financial statements include financial statements of the Company are unaudited, this raises Yes material unaudited financial statements? concern regarding the fairness of such financial statements. However, the financial statements and other financial information of such foreign subsidiaries have been prepared by management in accordance with accounting principles generally accepted in their respective countries.

TABLE 4: BOARD PROFILE (AS PER ANNUAL REPORT - FY 2017-18) Regulatory Norms Company % of Independent Directors on the Board 50% 60% % of Promoter Directors on the Board - 40% Number of Women Directors on the Board At least 1 2 Classification of Chairman of the Board - Promoter Executive Director Is the post of Chairman and MD/CEO held by the same person? - Yes Average attendance of Directors in the Board meetings (%) - 71.43% Note: Board Composition is as on 31st March, 2018 Composition of Board: As per Regulation 17(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company should have at least 50% Independent Directors as the Chairman of the Board is a Promoter Director. The Company has 60% of Independent Directors and hence, it meets the regulatory requirements.

Board Diversity: The Company has 5 directors out of which 2 are Women Directors.

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SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 Attendance at Board Meetings: During the FY 2017-18, the average attendance of Directors in the Board meetings was 71.43%

TABLE 5 - FINANCIAL RATIOS % Change Ratios Sep’18 Mar’18 Sep’17 Sep ’18 vs Mar’18 vs Mar’18 Sep’17

Inventory Turnover N.A. N.A. N.A. N.A. N.A.

Debtors Turnover 0.51 0.51 0.51 0.08% 0.29%

Fixed asset Turnover 0.22 0.23 0.22 -0.37% 1.70% Ratios

Turnover Turnover Current Asset Turnover 0.32 0.33 0.32 -1.74% 3.04% Total Sales to Total Assets Ratio 0.13 0.13 0.13 -0.93% 2.25%

Operating Profit Margin 3.06% 4.76% 2.42% -35.62% 96.35% Net Profit Margin -2.75% -0.15% -1.07% N.A. N.A. Return on Assets (ROA) N.A. N.A. N.A. N.A. N.A. Return on Equity (ROE) N.A. N.A. N.A. N.A. N.A.

Return Ratios Return Return on Capital Employed (ROCE) N.A. N.A. N.A. N.A. N.A.

Current Ratio 1.84 1.76 1.76 5.00% -0.38%

Quick Ratio 1.84 1.76 1.76 5.00% -0.38%

Cash Ratio 0.69 0.64 0.67 8.35% -4.82% Ratios Liquidity Liquidity Working Capital Turnover ratio N.A. N.A. N.A. N.A. N.A.

Debt to Equity Ratio 0.28 0.26 0.26 6.45% 0.10% Total Liabilities to Totals Asset Ratio 0.34 0.34 0.34 0.61% -0.39% Retained Earnings to Totals Assets Ratio* N.A. 0.08 N.A. N.A. N.A. Long Term Debt to Total Asset Ratio 0.11 0.10 0.10 11.23% 0.08%

Solvency Ratios Solvency Interest Coverage Ratio 0.94 1.05 0.82 -10.72% 27.94%

Market Cap / Sales 1.32 1.88 2.49 -29.98% -24.59%

Market Cap/ Net Worth 0.26 0.38 0.49 -30.42% -23.05%

Market Cap/PAT N.A. N.A. N.A. N.A. N.A.

Ratios Trading Trading Market Cap/EBITDA 42.93 39.47 102.79 8.75% -61.60% Source - Money Control/Stock exchange filing |*Retained Earnings information is not available in quarterly financial results

TABLE 6 - TRADING VOLUME % Change Particulars Sep'18 Mar'18 Sep'17 Sep ’18 vs Mar’18 Mar'18 vs Sep'17 Trading Volume (shares) (avg. of 1 qtr) 391,947 2,422,171 957,862 -83.82% 152.87% Trading Volume (shares) (high in 1 qtr) 1,192,019 25,270,533 9,919,665 -95.28% 154.75% Trading Volume (shares) (low in 1 qtr) 113,948 171,368 182,681 -33.51% -6.19% Ratio - High/low trading volume 10.46 147.46 54.30 -92.91% 171.57% Ratio - High/average trading volume 3.04 10.43 10.36 -70.85% 0.74% Source - Capitaline

TABLE 7 (A): OWNERSHIP & MANAGEMENT RISKS Sep'18 Mar'18 Sep'17 Comments

st Promoter shareholding 39.14 39.11 39.11 • No new equity shares were issued during the period from 1 Oct, th

2017 to 30 Sep, 2018. Public - Institutional 13.30 15.65 20.21 • The Promoter shareholding marginally increased by 0.03%. shareholding • The shareholding of public institution decreased from 20.21% to Public - Others 47.56 45.24 40.68 13.30% and that of public others increased from 40.68% to shareholding

Shareholding (%) Shareholding 47.56% during the same period. Non-Promoter Non- 0.00 0.00 0.00 Public Shareholding • The promoters have pledged 56.67% of their shareholding. Source - NSE

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SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019

MAJOR SHAREHOLDERS (AS ON 30TH SEPTEMBER, 2018) S. No. Promoters Shareholding S. No. Public Shareholders Shareholding 1 M. Suresh Kumar Reddy 15.77% 1 Oak India Investments 7.01% 2 Vijay Kumar Kancharla HUF 13.03% 2 Everest Capital (M) Ltd 5.98% 3 Redmond Investments 5.20% 3 AKG Finvest Ltd 3.88% 4 Geetha Kancharla 1.37% 4 Priya Prakash 3.41% 5 S V Rajyalaxmi Reddy 1.37% 5 Uno Metals Ltd 2.05%

Source – NSE

TABLE 7 (B): OWNERSHIP & MANAGEMENT RISKS Market Activity of Promoters* The shares held by promoters increased by 13,000 during the FY 2017-18. Preferential issue to promoters No preferential issue of shares was made to the promoters during FY 2017-18. Preferential issue to others No preferential issue of shares was made to other shareholders during FY 2017-18. GDRs issued by the Company The Company did not issue any GDRs during FY 2017-18. Issue of ESOPs The Company does not have any ESOP Scheme. Source - Annual Report FY 2017-18 | *Source - As per Form MGT – 9 forming part of Annual Report FY 2017-18

TABLE 8: PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY Sr. No. Name and Description of main products / services % to Total turnover of the Company 1 Software Services and Digital Marketing 100% Source - Annual Report FY 2017-18

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SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 Glossary

Equity: The equity shares capital of the Company

Net Worth: The amount by which the Assets exceeds the liabilities excluding shareholders’ funds of the Company Turnover: The revenue earned from the operations of the Company

EPS: Earning Per Share is net profit earned by the Company per share Profit After Tax 퐸푃푆 = Number of outstanding shares P/E ratio: It is the ratio of the Company’s share price to earnings per share of the Company Price of each share 푃/퐸 푟푎푡𝑖표 = Earnings per share Current Assets: Cash and other assets that are expected to be converted to cash in one year

Fixed Assets: assets which are purchased for long-term use and are not likely to be converted quickly into cash, such as land, buildings, and equipment Total Assets: Current Assets + Fixed Assets

Investments: An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in the future.

Finance Cost: The Financing Cost (FC), also known as the Cost of Finances (COF), is the cost and interest and other charges incurred during the year in relation to borrowed money.

Long Term Liabilities: Long-term liabilities are liabilities with a maturity period of over one year. Current Liabilities: A company's debts or obligations that are due within one year.

Inventory Turnover ratio: Inventory Turnover is a ratio showing how many times a company's inventory is sold and replaced over a period. Sales Turnover 퐼푛푣푒푛푡표푟푦 푇푢푟푛표푣푒푟 푟푎푡𝑖표 = Inventory Debtors Turnover: Accounts receivable turnover is an efficiency ratio or activity ratio that measures how many times a business can turn its accounts receivable into cash during a period Sales Turnover 퐷푒푏푡표푟푠 푇푢푟푛표푣푒푟 푟푎푡𝑖표 = Accounts recievables Fixed Asset Turnover: The fixed-asset turnover ratio is a financial ratio of net sales to fixed assets Sales Turnover 퐹𝑖푥푒푑 퐴푠푠푒푡 푇푢푟푛표푣푒푟 푟푎푡𝑖표 = Fixed Assets Current Asset Turnover: The current-asset turnover ratio is a financial ratio of net sales to fixed assets Sales Turnover 퐶푢푟푟푒푛푡 퐴푠푠푒푡 푇푢푟푛표푣푒푟 푟푎푡𝑖표 = Current Assets Operating Profit Margin: Operating margin is a measurement of what proportion of a Company’s revenue is left over after paying for variable costs of production such as wages, raw materials etc. It can be calculated by dividing a Company’s operating income (also known as “operating profit”) during a given period by its sales during the same period. Operating profit 푂푝푒푟푎푡𝑖푛푔 푃푟표푓𝑖푡 푀푎푟푔𝑖푛 = Sales Turnover Net Profit Margin: Net profit margin is the percentage of revenue left after all expenses have been deducted from sales Net profit 푁푒푡 푃푟표푓𝑖푡 푀푎푟푔𝑖푛 = Sales Turnover

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STAKEHOLDERS EMPOWERMENT SERVICES BRIGHTCOM GROUP LTD

SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 Total Sales to Total Assets Ratio: The total sales to total assets ratio measures the ability of a business to generate sales on assets. Sales Turnover 푇표푡푎푙 푆푎푙푒푠 푡표 푇표푡푎푙 퐴푠푠푒푡푠 푅푎푡𝑖표 = Total Assets Return on Assets: ROA tells you what earnings were generated from invested capital (assets) Net profit 푅푒푡푢푟푛 표푛 퐴푠푠푒푡푠 = Total Assets Return on equity/net worth: return on equity (ROE) is the amount of net income returned as a percentage of shareholders’ equity. Net profit 푅푒푡푢푟푛 표푛 퐸푞푢𝑖푡푦 = Net worth Return on Capital Employed: Return on capital employed (ROCE) is a financial ratio that measures a company's profitability and the efficiency with which its capital is employed. Net profit 푅푒푡푢푟푛 표푛 퐶푎푝𝑖푡푎푙 퐸푚푝푙표푦푒푑 = Total Debt + Equity share capital Current ratio: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. Current Assets 퐶푢푟푟푒푛푡 푟푎푡𝑖표 = Current Liabilities Quick ratio: The quick ratio is a measure of how well a Company can meet its short term financial liabilities. Current Assets − Inventories 푄푢𝑖푐푘 푟푎푡𝑖표 = Current Liabilities Cash ratio: The ratio of the liquid assets of a Company to its current liabilities. Current Assets − Inventories − Account Recievables 퐶푎푠ℎ 푟푎푡𝑖표 = Current Liabilities Working Capital Turnover ratio: The working capital turnover ratio is also referred to as net sales to working capital. It indicates a Company's effectiveness in using its working capital. 푆푎푙푒푠 푇푢푟푛표푣푒푟 푊표푟푘𝑖푛푔 퐶푎푝𝑖푡푎푙 푇푢푟푛표푣푒푟 푟푎푡𝑖표 = Current Assets − Current Liabilities Debt to Equity ratio: The debt-to-equity ratio (D/E) is a financial ratio indicating the relative proportion of shareholders' equity and debt used to finance a company's assets. 푆ℎ표푟푡 푇푒푟푚 퐷푒푏푡 + 퐿표푛푔 푇푒푟푚 퐷푒푏푡 퐷푒푏푡 푡표 퐸푞푢𝑖푡푦 푟푎푡𝑖표 = 푁푒푡 푊표푟푡ℎ Interest Coverage ratio: The Interest coverage ratio is a debt ratio and profitability ratio used to determine how easily a Company can pay interest on outstanding debt. 퐸푎푟푛𝑖푛푔 퐵푒푓표푟푒 퐼푛푡푒푟푒푠푡 푎푛푑 푇푎푥 퐼푛푡푒푟푒푠푡 퐶표푣푒푟푎푔푒 푅푎푡𝑖표 = 퐹𝑖푛푎푛푐푒 퐶표푠푡 Long Term Debt to Total Assets Ratio: The long-term debt to total assets ratio is a measurement representing the percentage of a corporation's assets financed with loans or other debt obligations lasting more than one year. 퐿표푛푔 푇푒푟푚 퐷푒푏푡 퐿표푛푔 푇푒푟푚 퐷푒푏푡 푡표 푇표푡푎푙 퐴푠푠푒푡 푅푎푡𝑖표 = 푇표푡푎푙 퐴푠푠푒푡푠 Retained Earnings to Total Assets Ratio: The ratio of retained earnings to total assets helps measure the extent to which a company relies on debt, or leverage. 푅푒푡푎𝑖푛푒푑 퐸푎푟푛𝑖푛푔푠 푅푒푡푎𝑖푛푒푑 퐸푎푟푛𝑖푛푔푠 푡표 푇표푡푎푙 퐴푠푠푒푡푠 푅푎푡𝑖표 = 푇표푡푎푙 퐴푠푠푒푡푠

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SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 Total Liabilities to Total Assets Ratio: The liabilities to total assets ratio is a solvency ratio that examines how much of a company's assets are made of liabilities. 푇표푡푎푙 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 푇표푡푎푙 퐿𝑖푎푏𝑖푙𝑖푡𝑖푒푠 푡표 푇표푡푎푙 퐴푠푠푒푡푠 푅푎푡𝑖표 = 푇표푡푎푙 퐴푠푠푒푡푠 Market Cap/Sales ratio: Market Cap/sales ratio, Price–sales ratio, P/S ratio, or PSR, is a valuation metric for stocks. It is calculated by dividing the company's market cap by the revenue in the most recent year; or, equivalently, divide the per- share stock price by the per-share revenue.

푀푎푟푘푒푡 퐶푎푝 푀푎푟푘푒푡 퐶푎푝/푆푎푙푒푠 푟푎푡𝑖표 = 푆푎푙푒푠 푇푢푟푛표푣푒푟 Market Cap/ Net Worth ratio: It is a valuation ratio calculated by dividing Company’s market cap to net worth.

푀푎푟푘푒푡 퐶푎푝 푀푎푟푘푒푡 퐶푎푝/푁푒푡푤표푟푡ℎ 푟푎푡𝑖표 = 푁푒푡푤표푟푡ℎ Market Cap/ PAT ratio: It is a valuation ratio calculated by dividing Company’s market cap to net profit.

푀푎푟푘푒푡 퐶푎푝 푀푎푟푘푒푡 퐶푎푝/푃퐴푇 푟푎푡𝑖표 = 푛푒푡 푝푟표푓𝑖푡 Market Cap/ EBITDA ratio: It is a valuation ratio calculated by dividing Company’s market cap to EBITDA.

푀푎푟푘푒푡 퐶푎푝 푀푎푟푘푒푡 퐶푎푝/퐸퐵퐼푇퐷퐴 푟푎푡𝑖표 = 퐸퐵퐼푇퐷퐴 Trading Volume (shares) (avg. of 1 year): Average number of shares/day traded in 1 year Trading volume (shares) (high in 1 year): Highest number of shares/day traded in 1 year

Trading volume (shares) (minimum in 1 year): Lowest number of shares traded on any one day in 1 year

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SECTOR: IT - SOFTWARE REPORTING DATE: 23RD FEBRUARY, 2019 DISCLAIMER

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