CESC ventures AGM 2020, Not SO ~ YUM

Cesc ventures AGM 2020

Article published as on Tuesday, 4^th August, 2020 at 7:00 a.m.   

3/8/20, Monday 3:00p.m. (Kolkata/online)

3^rd AGM of Cesc ventures was held through Cisco WebEx, yet the connection at times was very poor.

Some speakers were not present and those who were present, were not audible enough.

This is the reason why online AGM should be held but physical AGM should be mandatory as well.

I expressed concerns & asked some interesting questions 

Here are my concerns & questions

Q1) I expressed my concerns over massive losses in the “too yum” business, as the reason was heavy advertisement and marketing expenses, also I expressed my concern of 231 crores of debt on the books of Guiltfree industries.

Q2) Quest mall, I asked whether rental collections were impacted or not? And the debts on the books of quest are also high, so does the management plans to reduce these debts?

Q3) investment of 21 crores in peel works pvt ltd, I asked for rational for this investment, as the company shall utilise its resources for supporting its FMCG business “Too YUM” or support its falling share price through buybacks.

Q4) my last query was regarding the cash and bank balance on books of CESC ventures (which is almost 100 crores+), I suggested management to use this extra cash for share buyback or invest in Guiltfree Industries so it can help reduce its debt!

The reply I got was that debt equity is very healthy at 0.33 and that FMCG business takes time to generate profits. And spending’s on advertisements are actually going towards building long term brand.

Answers to my other questions were ignored.

(This was due to network issue or he was just stunned and confused on how to answer my question, I haven’t figured it out yet!)

(I even e-mailed the company secretary Sudip Kumar Ghosh and requested to kindly provide the recordings of proceedings of AGM, to understand if I had missed anything, this will be updated once the reply comes) 

Another person suggested revenue sharing model for quest mall and asked for the residential projects in Haldia.

Again Sanjiv Goenka said it was interesting to think about revenue sharing model and said 3 out of 5 projects at Haldia were completed.

Also it was mentioned that from the existing products range of Too yum few variants and flavours will be discontinued as there is too much of variety and it could be confusing to consumers now.

AGM concluded in 23 minutes. At 3:23 p.m.

My understandings

Pros:

 Holding company, having high growth business under its roof, undervalued right now.

They say they have professionals running for each business type (next time I would prefer a bit more professionalism in the AGM conduct as well)

Cons

Invest only if you are confident about capabilities of management.

Conclusion: in the current scenario I feel like.

Bullish on business,

Bearish on management quality.

Stock Name: CESCVENTURE          stock price: 174.20

Stock code: 542333                            market cap: 467.13 (crores)

(Opinion: My views have changed since writing this research report, I stay optimistic about the future of CESC ventures, but the level of optimism has fallen.)

(here is the youtube link for the proceedings of the AGM click here for video)

With this I end my part on 3rd AGM of Cesc ventures, 2020.

This AGM had me thinking the need and importance of physical AGM

Groups like BBTC, reliance and Cesc are promoter led, they work and run business in their own ways, this is the biggest risk and you have to trust the promoters in good faith as corporate governance is usually weak in these companies.

Wealth creation is different aspect. If the management is capable, it will create wealth for itself as well as shareholders.

Some Managements will now advocate online and online only citing things like cost benefits, attendance through any geography, comfort of home etc.

In online meeting the remote control is in the hand of management also no follow up questions can be asked.

(In India we still have every speaker ask their questions first and then the management will answer them all together)

Online mode shall be used as complementary and not as substitute.

Compromising corporate governance citing cost benefits does not seem right from the view point of minority shareholder.

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