Lycos internet – way to digitalization

I am seeing a few things that un-settle me when it comes to their books and management:

1. There is a new entry under the head intangibles under development in 2014. The head had relatively small amount allotted to it in 2014 … around 19 cr. In 2015 this entry has been deleted and a new entry created under same head. This time this entry is for 164 cr. Any idea what this head is and why was it created in 2014? In absence of clarity on this new entries like these should be considered a red flag. It probably relates to point 3 I am mentioning regarding employee costs being capitalized.

2. CFO changed in FY 2015 . Auditor remuneration going up from 14L to 20L and as per the concall they mentioned that they are going to change the auditor. Isn’t this just too many changes too soon? Is there a reason mentioned in previous con calls?

3. They are capitalizing employee costs and consultant expenses related to research. These should not be capitalized. They talk about listing in U.S., but as per their accounting standard and my limited knowledge .. they are not allowed to capitalize these expenses. In such a scenario their earnings are over-stated. This I guess to relates to point 1 I mentioned.

4. Mr. Suresh Kumar Reddy receives zero remuneration. This is a bit odd considering this company doesn’t even pay dividend.

5. To some extent their business model does explain their high accounts receivable, but there should be a comparative business elsewhere (if not in India), any idea on how I can compare their levels of receivable to a similar company in another country.

Thanks