Reports to the Stock Exchange
Additional Information on financial results of quarter 1, 2011 ended on March 31, 2011
Clarification of News or Information
Ref.No. IVL 002/08/2011
August 8, 2011
President
The Stock Exchange of Thailand
Subject: Additional Information on financial results of quarter 1, 2011 ended
on March 31, 2011
This is to provide additional information on the transactions resulting in
recording of gain on bargain purchase of Baht 6,523 million and goodwill of Baht
225 million in the reviewed consolidated financial statements of Indorama
Ventures Public Company Limited ("IVL or the Company or the Group") for the
period ended March 31, 2011.
IVL is in the polyester value chain business with three key product segments of
polyethylene terephthalate ("PET"), polyester fibers and yarns ("Polyester") and
purified terephthalic acid ("PTA"). IVL is a global leader in its business and
has operations through its subsidiaries in Thailand, Indonesia, China, Europe
and North America. IVL has a track record of growth in revenues and earnings
through acquisitions of business and expansions. IVL is a focused operator in
polyester value chain.
IVL has led consolidation in the industry in Asia, Europe and North America. The
acquisition opportunities have been driven primarily by large conglomerates
deciding to exit the business as polyester value chain is a small part of their
total business and return on capital deployed is lower than in their other
business segments. At the same time there are opportunities to acquire
non-performing or distress asset. The sellers at times decide to exit the
business and gives preference to buyers who can purchase multiple facilities at
one time (either the entity or the operating assets) and close the transaction
at the earliest. In Q1, 2011 IVL agreed to purchase two facilities of Invista
one each located in United States of America and Mexico and two facilities of SK
Chemicals one each in Indonesia and Poland and a facility in China from
Guangdong Shinda UHMWPE Co., Ltd. Similarly, in 2008 purchase three plants of
Eastman Chemicals of which two in Netherlands and one in United
Kingdom. IVL with its global presence and healthy balance sheet has been able to
acquire business in the three major continents of Asia, Europe and North
America and arrange financing to fund the acquisitions.
IVL has adopted accounting policy to record purchase of business under Thai
Financial Reporting Standards No. 3, Business Combinations. Business
combinations include acquisitions through purchase of outstanding shares of a
company from the seller and purchase of business including assets from the
seller. Business combinations are accounted for using the acquisition method as
at the acquisition date, which is the date on which control is transferred to
the Group. Control is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. IVL makes a
preliminary assessment of the fair value of the purchased business within a
reasonable time on completion of acquisition by an independent third party
appraiser ("independent appraiser") as per the requirement of IFRS. IFRS
requires that this preliminary assessment of the fair value must be finalized
within twelve months of the acquisition.
IVL has consistently followed the practice of valuation of business by an
independent appraiser and based on the valuation report has recorded the fair
value of the purchased business. If the net recognized amount (or fair value) of
the identifiable assets acquired and liabilities assumed is more than
consideration transferred than the excess is recorded as a gain on bargain
purchase in the statements of income (or income statement). Alternatively, if
the net recognized amount (or fair value) of the identifiable assets acquired
and liabilities assumed is less than consideration transferred than the
difference is recorded as a goodwill in the statements of financial position (or
balance sheet). Transactions similar to quarter 1, 2011 were recorded in year
2008 and year 2010.
The acquisitions completed in quarter 1, 2011 have been appraised by American
Appraisal ("AAA") which is a global organization with offices across the
continents, recognized and approved appraiser and has a track record of
valuation of business in the industry. American Appraisal has appraised each of
the acquired business/assets and has issued a detailed appraisal report for each
business with valuation and valuation methodology for:
Real property - land and buildings
Personal property - plant, machinery and equipment
Intangible assets - intellectual property rights, trademarks and trade names,
customer contracts, supplier contract and licenses
Working capital - inventories, receivables, payables, other current assets and
other current liabilities
The methods adopted in the valuation of tangible and intangible assets were mix
of income approach (for intangibles) and cost approach (for tangible assets such
as personal and real property). In valuating the real property, AAA personally
inspected the designated property and studied market conditions. They considered
three generally accepted approaches to value real property: cost, sales
comparison and income capitalization.
The valuation methods and procedures used to develop the estimated fair values
for the various personal properties varied. However, the methods and procedures
followed the same basic principles of the cost approach: 1) a current cost to
replace the asset new is calculated, and then 2) the estimated replacement cost
is reduced to reflect the applicable decline in value resulting from physical
deterioration (including age and physical wear and tear), functional
obsolescence, and/or economic obsolescence.
Business Enterprise Value (BEV) was calculated from cashflow assumptions used in
the development of each entities projections/budget numbers. Projected numbers
derived after consultation with management at respective sites, IVL's knowledge
of the region, and also analyzing the historical numbers. These projections form
the basis of our budgets. The sales estimates were based on individual
entities capacity utilization with assumption on the market price for future
years. The market price forecast, cost assumptions and hence the P&L estimates
were based on historical data while also taking advantage of IVL's knowledge in
the respective regions. For Spartanburg and Mexico entity, the management
presentation provided by the seller had the historical numbers that formed a
framework for the projections. Inputs were also obtained from the target
companies to ensure accuracy was achieved in the projections. Leaning on the
conservative side, IVL considered a perpetuity growth rate of 1% in USA and
Mexico which was significantly lower than the aggressive forecasts provided by
the seller in their management presentation. On the same principle of
conservatism, 1.5% of perpetuity growth rate was used for the Indonesia and
Poland.
Based on the appraisal reports of the acquisitions completed in quarter 1, 2011
a gain on bargain purchase was recorded for Baht 6,523 million in the statements
of income and goodwill for Baht 225 million in the statements of financial
position. The valuation reports are extensively discussed by the management and
appraiser prior to its recognition.
This is with reference to Note 12, Intangible assets, of quarter 1, 2011
reviewed financial statements wherein Baht 3,862 million has been recorded
towards supplier contract, software licenses, technology licenses and knowhow,
customer contracts and relationships
and trade name and trade marks for the above stated acquisitions. The following
acquisitions in quarter 1, 2011 did result in recording of fair value of
identified intangible assets in the acquisition of;
- Business located at Spartanburg, South Carolina, USA from Invista S.a.r.l.,
USA
- Business located in Queretaro, Mexico from Arteva Latin America B.V., Mexico
(Invista Group)
- Business located in Wloclawek, Poland from SK Chemicals, South Korea
Some of the benefits expected from recording of intangibles include:
- enlarging customer base
- access to the customers and markets in Mexico, Central America, South America,
Poland and Indonesia
- added differentiated and patented product offerings to our existing customers
in PET and Polyester fibres and yarns
- access to a developed and recognized research and development facility and
pool of competent technical talent including scientists which will support in
long term sustainability of the business and increase proximity to customers
through development of new applications
- access to technology, process know how and licenses for benchmarking of our
facility's to improve productivity through process improvement
- contribute to profitable operations to increase earnings and cash flows of IVL
Any contribution in sales from IP, know-how licenses, software, tangible assets
and debt free net working capital were deducted when calculating the earnings
attributable to customer relationships, thereby ensuring no duplication
occurred. A higher risk adjusted WACC was applied for all intangibles. Given
below please find our basis for valuation of the intangibles for the respective
acquisitions.
Business located in Spartanburg, South Carolina, USA, and in Queretaro, Mexico
Customer contracts and relationships: Valuation of customer relationship derived
from the total sales projection of the company. Historical or projected sales
information (customer wise) was provided to AAA. A survivor curve decay factor
was used such that the revenue contribution from the existing customers
(year-on-year) will follow a downward sloping curve
and eventually become negligible. The slope of the curve was estimated by using
an average useful life of customers of 15 years. AAA also used the assumption
that life of customer relationship is estimated to end when the surviving curve
decay factor is less than a certain percentage. With these assumptions, the
revenue contribution from the existing customer relationship at the end of 15
years was around 45%. This was clearly in line with the belief that the
significant portion of Customers will have useful life of 10 to 20 years.
As stated earlier, any contribution in sales from IP, know-how licenses,
software, tangible assets and debt free net working capital were also deducted
when calculating the earnings attributable to customer relationships. This was
done to avoid any double counting of revenue contribution and hence ensuring the
fair value assigned to customer relationship reflected only this asset.
Discount rate used when valuing the customer relationship is the risk adjusted
WACC which is higher by 1-5% from business WACC. This is to incorporate
additional risk associated with nature of intangibles.
IP, know how and licenses: The valuation was based on a variant of income
approach known as relief-from-royalty approach. The Relief from Royalty method
is premised on the royalty that a company would have to pay for the use of the
Intellectual Property Rights ("IPR") if they had to license it. Here, royalty is
expressed as a percentage of sales, for its use. This estimated fair royalty
rate is applied to the appropriate level of net revenue to calculate the royalty
savings attributable to the ownership of the trademarks. In other words,
because it owns the trademark, the company does not have to pay a royalty and,
thus, enjoys a cost savings equal to the foregone royalty expense.
The forecast of revenue from the acquired IPRs was based on the recent years'
sales and assumptions regarding future technology obsolescence factor or IPR
attrition. Based on historical data, the total remaining life is for 20 years in
this industry. This is in line with the estimated period of economic benefit to
be derived from the asset. The present value of the after-tax cost savings
(i.e., royalty relief) at an appropriate discount rate (risk adjusted WACC)
provided the value of the acquired IPR.
Two general sources of data were considered in estimating fair royalty rates.
First, a market-based methodology using publicly available information was
considered. The market approach relies on the existence of identifiable
transactions in the marketplace involving the
exchange of ownership of property, interests, or rights similar to those being
appraised. AAA in their research have found that in the transactions considered
to be largely suitable for comparison with the Invista's IPR, the average and
median of royalties ranged from 2% to 3%.
Second, the earnings split method was considered in estimating where a
reasonable starting point might be for a hypothetical arm's-length negotiated
rate involving the IPR. This method uses the projected pre-tax profitability
rate relevant to the licensed income stream as the profit that would be shared
by a licensor and licensee and, as a starting point, assigns 25% to 33% to the
licensor, with the remaining profit going to the licensee. This method has
frequently been employed in negotiating equitable and reasonable royalty rates
between licensors and licensees with consistent success. The earnings split
method represents a means of estimation by which an element of realism is
introduced into royalty rate deliberations. AAA thus combined the results of the
market-based methodology and the earnings split to conclude a reasonable
royalty rate for use of the Invista's Intellectual Property/ Developed
Technology/ Know-how.
Trade names and trademarks: Similar to IPRs, it was valued using the
relief-from-royalty approach. Thus the present value of the after-tax cost
savings (i.e., royalty relief) at an appropriate discount rate indicated the
value of the trademark. Again both the market based methodology and the earnings
split analysis was undertaken to determine a reasonable royalty range for the
two brands Polyclear and Oxyclear.
Business located in Wloclawek, Poland
Customer contracts and relationships: Poland valuation uses a similar valuation
technique as adopted for business located in Spartanburg, South Carolina, USA,
and in Queretaro, Mexico. Historical or projected sales information (customer
wise) was provided to AAA. The valuation is based on income approach I.e.,
starting from total sales a retention ratio is multiplied to obtain a revenue
contribution from the existing customers (year-on-year)
will follow a downward sloping curve and eventually become negligible. The
methodology adopted here is that the life of customer relationship is estimated
to end when a single year's cash flow present value is less than a certain
percentage of cumulative present value cash flows of all year up to that point.
Any contribution in sales from tangible and intangible (other than customer
relationship) assets and debt free net working capital was deducted when
calculating the earnings attributable to customer relationship. Risk adjusted
WACC, which was higher by 1-5% from business WACC, was used for the valuation to
reflect the risk profile of the intangible. The decision to arrive at the risk
adjusted WACC is purely from AAA's internal analysis taking into account
weighted average return on assets and also the risks factors in respective
countries.
Supplier contract: The plant is co-located to the supplier of purified
terephthalic acid "PTA", main raw material in production of PET. Supplier
contract was provided to AAA, who valued the contract based on income approach.
Quantities of PTA supplied was taken as per the contract with an assumption that
price per ton of PTA would be at competitive prices in comparison to market
prices. A risk adjusted WACC which is 5% higher than WACC was used, reflecting
the risk inherent in an intangible asset. The valuation was performed strictly
on the contract basis and no further upside potential (say potential increase in
off-take from the same supplier in the future periods) was assumed.
The management believes it has reasonable grounds for recording of the gain on
bargain purchase from the acquisition of business in quarter 1, 2011 and it does
review the business and financial performance of its subsidiaries on a
quarterly basis. The actual financial results for year-to-date Q2, 2011 for the
acquisitions have been in line with financial projections for the same period
which have been used in valuation process. We would be happy to provide for
additional information and/or clarification on the subject matter.
Yours faithfully,
(Mr. Aloke Lohia)
Group CEO
______________________________________________________________________
Ref.No. IVL 002/08/2011
August 8, 2011
President
The Stock Exchange of Thailand
Subject: Additional Information on financial results of quarter 1, 2011 ended
on March 31, 2011
This is to provide additional information on the transactions resulting in
recording of gain on bargain purchase of Baht 6,523 million and goodwill of Baht
225 million in the reviewed consolidated financial statements of Indorama
Ventures Public Company Limited ("IVL or the Company or the Group") for the
period ended March 31, 2011.
IVL is in the polyester value chain business with three key product segments of
polyethylene terephthalate ("PET"), polyester fibers and yarns ("Polyester") and
purified terephthalic acid ("PTA"). IVL is a global leader in its business and
has operations through its subsidiaries in Thailand, Indonesia, China, Europe
and North America. IVL has a track record of growth in revenues and earnings
through acquisitions of business and expansions. IVL is a focused operator in
polyester value chain.
IVL has led consolidation in the industry in Asia, Europe and North America. The
acquisition opportunities have been driven primarily by large conglomerates
deciding to exit the business as polyester value chain is a small part of their
total business and return on capital deployed is lower than in their other
business segments. At the same time there are opportunities to acquire
non-performing or distress asset. The sellers at times decide to exit the
business and gives preference to buyers who can purchase multiple facilities at
one time (either the entity or the operating assets) and close the transaction
at the earliest. In Q1, 2011 IVL agreed to purchase two facilities of Invista
one each located in United States of America and Mexico and two facilities of SK
Chemicals one each in Indonesia and Poland and a facility in China from
Guangdong Shinda UHMWPE Co., Ltd. Similarly, in 2008 purchase three plants of
Eastman Chemicals of which two in Netherlands and one in United
Kingdom. IVL with its global presence and healthy balance sheet has been able to
acquire business in the three major continents of Asia, Europe and North
America and arrange financing to fund the acquisitions.
IVL has adopted accounting policy to record purchase of business under Thai
Financial Reporting Standards No. 3, Business Combinations. Business
combinations include acquisitions through purchase of outstanding shares of a
company from the seller and purchase of business including assets from the
seller. Business combinations are accounted for using the acquisition method as
at the acquisition date, which is the date on which control is transferred to
the Group. Control is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities. IVL makes a
preliminary assessment of the fair value of the purchased business within a
reasonable time on completion of acquisition by an independent third party
appraiser ("independent appraiser") as per the requirement of IFRS. IFRS
requires that this preliminary assessment of the fair value must be finalized
within twelve months of the acquisition.
IVL has consistently followed the practice of valuation of business by an
independent appraiser and based on the valuation report has recorded the fair
value of the purchased business. If the net recognized amount (or fair value) of
the identifiable assets acquired and liabilities assumed is more than
consideration transferred than the excess is recorded as a gain on bargain
purchase in the statements of income (or income statement). Alternatively, if
the net recognized amount (or fair value) of the identifiable assets acquired
and liabilities assumed is less than consideration transferred than the
difference is recorded as a goodwill in the statements of financial position (or
balance sheet). Transactions similar to quarter 1, 2011 were recorded in year
2008 and year 2010.
The acquisitions completed in quarter 1, 2011 have been appraised by American
Appraisal ("AAA") which is a global organization with offices across the
continents, recognized and approved appraiser and has a track record of
valuation of business in the industry. American Appraisal has appraised each of
the acquired business/assets and has issued a detailed appraisal report for each
business with valuation and valuation methodology for:
Real property - land and buildings
Personal property - plant, machinery and equipment
Intangible assets - intellectual property rights, trademarks and trade names,
customer contracts, supplier contract and licenses
Working capital - inventories, receivables, payables, other current assets and
other current liabilities
The methods adopted in the valuation of tangible and intangible assets were mix
of income approach (for intangibles) and cost approach (for tangible assets such
as personal and real property). In valuating the real property, AAA personally
inspected the designated property and studied market conditions. They considered
three generally accepted approaches to value real property: cost, sales
comparison and income capitalization.
The valuation methods and procedures used to develop the estimated fair values
for the various personal properties varied. However, the methods and procedures
followed the same basic principles of the cost approach: 1) a current cost to
replace the asset new is calculated, and then 2) the estimated replacement cost
is reduced to reflect the applicable decline in value resulting from physical
deterioration (including age and physical wear and tear), functional
obsolescence, and/or economic obsolescence.
Business Enterprise Value (BEV) was calculated from cashflow assumptions used in
the development of each entities projections/budget numbers. Projected numbers
derived after consultation with management at respective sites, IVL's knowledge
of the region, and also analyzing the historical numbers. These projections form
the basis of our budgets. The sales estimates were based on individual
entities capacity utilization with assumption on the market price for future
years. The market price forecast, cost assumptions and hence the P&L estimates
were based on historical data while also taking advantage of IVL's knowledge in
the respective regions. For Spartanburg and Mexico entity, the management
presentation provided by the seller had the historical numbers that formed a
framework for the projections. Inputs were also obtained from the target
companies to ensure accuracy was achieved in the projections. Leaning on the
conservative side, IVL considered a perpetuity growth rate of 1% in USA and
Mexico which was significantly lower than the aggressive forecasts provided by
the seller in their management presentation. On the same principle of
conservatism, 1.5% of perpetuity growth rate was used for the Indonesia and
Poland.
Based on the appraisal reports of the acquisitions completed in quarter 1, 2011
a gain on bargain purchase was recorded for Baht 6,523 million in the statements
of income and goodwill for Baht 225 million in the statements of financial
position. The valuation reports are extensively discussed by the management and
appraiser prior to its recognition.
This is with reference to Note 12, Intangible assets, of quarter 1, 2011
reviewed financial statements wherein Baht 3,862 million has been recorded
towards supplier contract, software licenses, technology licenses and knowhow,
customer contracts and relationships
and trade name and trade marks for the above stated acquisitions. The following
acquisitions in quarter 1, 2011 did result in recording of fair value of
identified intangible assets in the acquisition of;
- Business located at Spartanburg, South Carolina, USA from Invista S.a.r.l.,
USA
- Business located in Queretaro, Mexico from Arteva Latin America B.V., Mexico
(Invista Group)
- Business located in Wloclawek, Poland from SK Chemicals, South Korea
Some of the benefits expected from recording of intangibles include:
- enlarging customer base
- access to the customers and markets in Mexico, Central America, South America,
Poland and Indonesia
- added differentiated and patented product offerings to our existing customers
in PET and Polyester fibres and yarns
- access to a developed and recognized research and development facility and
pool of competent technical talent including scientists which will support in
long term sustainability of the business and increase proximity to customers
through development of new applications
- access to technology, process know how and licenses for benchmarking of our
facility's to improve productivity through process improvement
- contribute to profitable operations to increase earnings and cash flows of IVL
Any contribution in sales from IP, know-how licenses, software, tangible assets
and debt free net working capital were deducted when calculating the earnings
attributable to customer relationships, thereby ensuring no duplication
occurred. A higher risk adjusted WACC was applied for all intangibles. Given
below please find our basis for valuation of the intangibles for the respective
acquisitions.
Business located in Spartanburg, South Carolina, USA, and in Queretaro, Mexico
Customer contracts and relationships: Valuation of customer relationship derived
from the total sales projection of the company. Historical or projected sales
information (customer wise) was provided to AAA. A survivor curve decay factor
was used such that the revenue contribution from the existing customers
(year-on-year) will follow a downward sloping curve
and eventually become negligible. The slope of the curve was estimated by using
an average useful life of customers of 15 years. AAA also used the assumption
that life of customer relationship is estimated to end when the surviving curve
decay factor is less than a certain percentage. With these assumptions, the
revenue contribution from the existing customer relationship at the end of 15
years was around 45%. This was clearly in line with the belief that the
significant portion of Customers will have useful life of 10 to 20 years.
As stated earlier, any contribution in sales from IP, know-how licenses,
software, tangible assets and debt free net working capital were also deducted
when calculating the earnings attributable to customer relationships. This was
done to avoid any double counting of revenue contribution and hence ensuring the
fair value assigned to customer relationship reflected only this asset.
Discount rate used when valuing the customer relationship is the risk adjusted
WACC which is higher by 1-5% from business WACC. This is to incorporate
additional risk associated with nature of intangibles.
IP, know how and licenses: The valuation was based on a variant of income
approach known as relief-from-royalty approach. The Relief from Royalty method
is premised on the royalty that a company would have to pay for the use of the
Intellectual Property Rights ("IPR") if they had to license it. Here, royalty is
expressed as a percentage of sales, for its use. This estimated fair royalty
rate is applied to the appropriate level of net revenue to calculate the royalty
savings attributable to the ownership of the trademarks. In other words,
because it owns the trademark, the company does not have to pay a royalty and,
thus, enjoys a cost savings equal to the foregone royalty expense.
The forecast of revenue from the acquired IPRs was based on the recent years'
sales and assumptions regarding future technology obsolescence factor or IPR
attrition. Based on historical data, the total remaining life is for 20 years in
this industry. This is in line with the estimated period of economic benefit to
be derived from the asset. The present value of the after-tax cost savings
(i.e., royalty relief) at an appropriate discount rate (risk adjusted WACC)
provided the value of the acquired IPR.
Two general sources of data were considered in estimating fair royalty rates.
First, a market-based methodology using publicly available information was
considered. The market approach relies on the existence of identifiable
transactions in the marketplace involving the
exchange of ownership of property, interests, or rights similar to those being
appraised. AAA in their research have found that in the transactions considered
to be largely suitable for comparison with the Invista's IPR, the average and
median of royalties ranged from 2% to 3%.
Second, the earnings split method was considered in estimating where a
reasonable starting point might be for a hypothetical arm's-length negotiated
rate involving the IPR. This method uses the projected pre-tax profitability
rate relevant to the licensed income stream as the profit that would be shared
by a licensor and licensee and, as a starting point, assigns 25% to 33% to the
licensor, with the remaining profit going to the licensee. This method has
frequently been employed in negotiating equitable and reasonable royalty rates
between licensors and licensees with consistent success. The earnings split
method represents a means of estimation by which an element of realism is
introduced into royalty rate deliberations. AAA thus combined the results of the
market-based methodology and the earnings split to conclude a reasonable
royalty rate for use of the Invista's Intellectual Property/ Developed
Technology/ Know-how.
Trade names and trademarks: Similar to IPRs, it was valued using the
relief-from-royalty approach. Thus the present value of the after-tax cost
savings (i.e., royalty relief) at an appropriate discount rate indicated the
value of the trademark. Again both the market based methodology and the earnings
split analysis was undertaken to determine a reasonable royalty range for the
two brands Polyclear and Oxyclear.
Business located in Wloclawek, Poland
Customer contracts and relationships: Poland valuation uses a similar valuation
technique as adopted for business located in Spartanburg, South Carolina, USA,
and in Queretaro, Mexico. Historical or projected sales information (customer
wise) was provided to AAA. The valuation is based on income approach I.e.,
starting from total sales a retention ratio is multiplied to obtain a revenue
contribution from the existing customers (year-on-year)
will follow a downward sloping curve and eventually become negligible. The
methodology adopted here is that the life of customer relationship is estimated
to end when a single year's cash flow present value is less than a certain
percentage of cumulative present value cash flows of all year up to that point.
Any contribution in sales from tangible and intangible (other than customer
relationship) assets and debt free net working capital was deducted when
calculating the earnings attributable to customer relationship. Risk adjusted
WACC, which was higher by 1-5% from business WACC, was used for the valuation to
reflect the risk profile of the intangible. The decision to arrive at the risk
adjusted WACC is purely from AAA's internal analysis taking into account
weighted average return on assets and also the risks factors in respective
countries.
Supplier contract: The plant is co-located to the supplier of purified
terephthalic acid "PTA", main raw material in production of PET. Supplier
contract was provided to AAA, who valued the contract based on income approach.
Quantities of PTA supplied was taken as per the contract with an assumption that
price per ton of PTA would be at competitive prices in comparison to market
prices. A risk adjusted WACC which is 5% higher than WACC was used, reflecting
the risk inherent in an intangible asset. The valuation was performed strictly
on the contract basis and no further upside potential (say potential increase in
off-take from the same supplier in the future periods) was assumed.
The management believes it has reasonable grounds for recording of the gain on
bargain purchase from the acquisition of business in quarter 1, 2011 and it does
review the business and financial performance of its subsidiaries on a
quarterly basis. The actual financial results for year-to-date Q2, 2011 for the
acquisitions have been in line with financial projections for the same period
which have been used in valuation process. We would be happy to provide for
additional information and/or clarification on the subject matter.
Yours faithfully,
(Mr. Aloke Lohia)
Group CEO
______________________________________________________________________