Unlike previous issues this time I too got allotment and as expected and
pre-decided I booked profit in Shemaroo @ 172. Some nimble-footed people claim to
offload their stake @ 180.
The company was facing a damn working-capital (WC)
mismanagement problem and to cope- up with this problem, this issue was floated.
For a sales-figure of Rs. 264 crore, there is
cash-in-hand of meager Rs. 0.9 crore, while Accounts receivable (AR) is as high
as Rs. 140.
Inventory days too were as high as 275 and AR
collection period was almost 5 months.
A higher AR collection period makes a company prone on
the solvency frontin case a few of its debtors default.
The OCF of the company was negative and the only hope
was the re-rating of the company in future due to the proceeds of this issue
which was supposed to rectify the WC mismanagement.
Apart from the financials, the company is having
perpetual-rights mostly for older titles and limited rights for newer titles.
The co. should concentrate on the streaming business
and should not rely heavily on sites like YouTube which gets banned in various
countries especially in those of Indian-sub-continent where piracy too is at its
pinnacle.
If this company wants to flourish in future then the best way is
to concentrate on the streaming business model.
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