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Friday, April 16, 2010

Compact Disc India:-Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Compact Disc India

Story:This is another company which seems to be shrouded in secrecy and working behind closed doors. The company recently announced a big-ticket deal worth $82 million (around Rs370 crore) with UK-based BBC Films, for working on an animation film on Adolf Hitler. Close on the heels of this news, came another announcement that the promoter had increased stake in the company.In a filing to the Bombay Stock Exchange (BSE), the company announced that it will become the largest animation company in Asia, once this film is completed. Currently, it claims to be the largest in South Asia.Compact Disc India (CDI) announced recently that Seengal Capital Advisors Pvt Ltd, New Delhi, a promoter group company, had purchased 4,50,000 equity shares of the company. With this, the promoters' shareholding has increased from 20.01% to 24.69%. It is incredulous how the promoters are trying to play the company’s stock price in the markets.It appears to be another dubious attempt of the promoters to drive up the stock price of the company. The shareholding pattern of the company (for December 2009) shows 80% of the shares as being held by the public. Our guess is that a large chunk of these are ‘benami’ holdings of insiders who offload shares once the price takes off.An aggrieved investor, Santosh Mhamunkar, said, “After seeing the chairman’s interview on, I thought to myself, nobody could lie in such a big manner. After seeing its market capitalisation of Rs70 crore and new order (book) of about Rs400 crore, I thought that I had found a great deal. But its price movement was honest. The stock did not show any attraction for the next few days. Then came the news that the promoter had increased holding to 24% by open market purchase. But volumes on that very day itself accounted for less than 4% of the equity.Apparently the company also has other big projects in the pipeline. However, there is a dearth of information about the same. In an interview with CNBC TV18, the company’s chairman, Suresh Kumar, claimed that his company had 400 animators working with it and that CDI was also in the process of setting up a new animation studio in Chandigarh. Last year’s annual report also claims that is planning to set up a pre-production animation studio facility at Los Angeles.CDI’s two animated feature films, ‘Eternal Love’ and ‘Futebol’ (supposedly with legendary Brazilian football king, Pele) are said to be progressing well. The demo-reels of the two feature films are slated to be ready by May 2010. Once the promos are ready, the company will enter into distribution agreements for worldwide territories. These films are slated to be released in theatres during 2011.

The company, under the first generation of management, had faced a lot of difficulties in the 1990s. It floated several companies and announced various projects which never happened to see the light of day. These included an LPG-related business, a hotel company and at least three more ventures. However, everything was kept in the dark. It seems the second generation of management currently in charge is only carrying its legacy forward.Astonishingly, the company only features two directors on its board, Suresh Kumar and Rashmee Seengal—and does not have a single independent director. We wonder how the company is getting by the SEBI listing norms with such ease.Last year too, the company had apparently held an annual general meeting (AGM) regarding which the shareholders of the company still have no clue as to when and what happened. A forum on the Internet was abuzz with discussions between unaware shareholders regarding the nature and whereabouts of the meeting. The company also failed to release the annual report after the AGM. The document was released on the website much later.One of the comments read, “The AGM was so secretive that not even the company's corporate office was able to disclose the venue and time of meeting. My repeated calls to the company were handled at (the) reception, transferred to (the) investor cell and hung up. (The) company was not able to provide (the) annual report in advance. I still was at the company's registered office around 12 PM to be told that the meeting was already over. They did not have any answer as to why I never received the annual report and neither were they able to provide one then and there. There were no visible signs at the venue that the meeting ever took place.”The comment goes on: “I was finally able to see the 17th annual general report on the company website only on 4th October evening. Till the date of meeting no communication about AGM date time and venue was on the company website. The company had not mentioned the venue and time of meeting in its communication to the BSE.”

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