What I heard and saw at Geodesic AGM Feb 11, 2013

I attended the Geodesic AGM today (Full Disclosure:I own shares of Geodesic in my personal and family portfolio).Here is what I heard and saw:

  1. The AGM was well attended
  2. The management troika-Pankaj,Kiran and Prashant-understood the extent of investor angst and anger.
  3. In his opening remarks,Pankaj Kumar mentioned that Geodesic may go for restructuring and spin offs to unlock value for its investors.This was not taken up for further discussions
  4. Some attendees raised questions about various aspects of the accounts.They were answered by Prashant
  5. One Chennai investor raised the topic of perception-why Geodesic management are considered crooks etc.Also, why the management did not address the exchanges when the stock price was falling.Kiran’s response to this was that his coming on TV would not have helped etc.This did not go down well with attendees.They felt it is the management’s duty to communicate often and well
  6. Kiran and Prashant explained how the FCCBs were to be paid.It involves transferring funds from the subsidiaries to Geodesic Ltd .Its fairly complex but necessary from a legal,tax and compliance angle.Only, investors felt they should have been doing this in Sept-Oct 2012, instead of Jan-Feb 2013.By delaying this process, the management goofed up.
  7. One person from the audience shouted “There are no funds.The management has pilfered them.”The Chairman Pankaj Kumar got visibly anguished at this.The management reassured investors again and again that they had the money for the FCCBs.
  8. The management gave a commitment that it will send out a communique to the exchanges that the FCCBs will be repaid in full by March 5, 2013
  9. The management explained to investors that dividend will be paid to investors only after FCCBs are repaid due to certain covenants.As such, this resolution was not taken up.
  10. The management assured the investors that as soon as FCCBs are repaid, dividends will be paid out to eligible investors by March 2013.
  11. The issue of buyback (max price Rs.75/share) was discussed.Investors expressed their ire that buyback was first discussed in Aug, 2012 and still no progress was made.Management assured investors that buyback will happen 100% in 2013.Many investors expressed the desire that the buyback be a tender one instead of open market.
  12. Kiran Kulkarni assured investors that Geodesic will be a debt free company by March 2013.When asked where the funds for the buyback will come from, he mentioned it will come from the free cash flows of the company.
  13. Spoke to a few investors after the AGM.Many were perplexed at the low market cap of the company.In 2008, the company had revenues of 330 Crores,PAT of 148 Crores and Market Cap of 1700 Crores.In 2012 (15 months),the company had revenues of 1302 Crores,PAT of 260 Crores and a market cap of 200 Crores !So even though the business has grown considerably, the market cap has eroded by around 90% !!
  14. Many investors expressed the fear that this scrip may become a penny stock used by day traders to make a few bucks.
  15. The last words belong to Kiran Kulkarni who said “Give me a few months to make things right”