business Valuation Report-30.01.2010

7/17/2019 business Valuation Report-30.01.2010

http://slidepdf.com/reader/full/business-valuation-report-30012010 1/34

Business Valuation Report 2010

1 Confidential and for private circulation only

BUSINESS VALUATION REPORT

OF

ABC PHARMACEUTICALS PRIVATE LIMITEDREGD OFFICE: 1205, GLOBAL BUSINESS PARK,

OKHLA INDUSTRIAL AREA,

PHASE‐II, NEW DELHI

As on 30.01.2010

Prepared by:

NSGSK & Associates1502/17, DLF Mega Plaza, Connaught Circus, New Delhi-110001

011-23418000-07, Fax No.011-23418008E-mail: [email protected]





Table of contents

S. No. Particulars of the Report Page No.1.0 Introduction 42.0 Sources of information 6

2.1 External sources of information 62.2 Internal sources of information 63.0 Analysis of the subject entity and related non financial information 83.1 About company 83.2 Mission and vision 83.3 History of the company 83.4 Manufacturing locations 93.5 Organisational structure 93.6 Management team 93.7 Shareholding pattern 103.8 Product profile of the company 113.8.1 Products 11

3.8.2 APIs 123.8.3 List of Products launched both in Domestic & International Market Annex-1

Annex-24.0 Economic Environment 134.1 GDP Growth 134.2 Industrial Production in H2 FY 10 144.3 Bank credit 154.4 Stress on BOP 155.0 Key policies & regulations 165.1 National Pharmaceutical Policy 2002 165.2 An overview of pharmaceutical industry in India 175.3 Financial performance of pharmaceutical industry in India 18

5.3.1 Value of total pharmaceutical industry in last 5 years 185.3.2 Value of exports from India 195.3.3 Value of imports in India 195.4 Geographical markets and segment wise sale of the company 205.5 Strategy and future plans 205.5.1 API division 205.5.2 Products 215.5.3 Finished dosage formulation division 216.0 Business risk and their management of risk at ABCPL 226.16.26.3

6.46.56.66.76.86.96.106.11

AssetsGlobal and Environmental RisksHuman Resources

Products / MarketsCompetitionPrice ControlsLitigationsRegulatory ObservationsForeign Currency transactions and associated RisksEconomic and Financial RisksOther Risks

222222

2222232323232323

7.0 Financial statements and information analysis 25





7.1 Summarised balance sheets (both audited and projections) 257.2 Summarised profit & loss account (both audited and projections) 268.0 Valuation approaches and methods 278.1 Asset approach 278.2 Income approach 27

8.3 Market approach 309.0 Representation of the valuer 3110. Conclusion 3211. List of assumptions and limiting conditions 33





1.0 Introduction

1.1 ABC Pharmaceutical Private Limited (ABCPL) is the flagship company of the

Delhi based ABC Group. The Group is having interest in pharmaceutical and

drug manufacturing, retail chains, hospitals and diagnostic centres in Northern

India.

ABCPL is a professionally managed pharmaceutical company, manufacturing a

wide range of innovative specialty medicines for domestic and international

markets. ABCPL was established in March 2001. Its product portfolio consists of

pharmaceutical specialties in various dosage forms, herbal remedies,

diagnostics, generic drugs, active pharmaceutical ingredients (APIs). Some of

the products within these categories enjoy good positions in the Indian and

foreign markets. The Company is strategically focused on R&D and totally

committed to respond promptly to market needs by developing quality products

at affordable prices for the masses. With a strong base of 3 state-of-the-art

manufacturing units and one DSTC approved R&D centers, the company has

entered a dynamic phase of expansion into newer and faster growing therapeutic

segments such as anti-diabetics and Respiratory. ABCPL is a customer driven,

financially sound company, consistently enhancing value for its shareholders by

rewarding them with healthy dividends year after year. 47% of the Company’s

revenue comes from exports to USA & Europe. To further enhance its strength in

foreign markets, ABCPL has also entered into joint venture and strategic tie ups

with key partners in USA etc.

1.2 Purpose of the engagement:

The purpose of the business valuation engagement is to ascertain its’ enterprise

value and value of its equity share (range) so that it can be used to raise

resource for its future expansion of its operations in South Asia, Africa and Latin

America through private equity investor/venture capitalist etc.

1.3 Premise of value:

ABCPL was promoted by Dr. A.B. Chaturvedi in the year 1991. The entire 100%

equity share capital of the company is being hold by Dr. A.B. Chaturvedi and hisfamily through investment companies promoted by him and entire shareholding

of ABCPL is free from all encumbrances and lien. Further promoters have all

rights to take all decisions with this respect.

1.4 Our opinion with respect to determination of enterprise value (EV) of the

company is based on going concern basis since the company is carrying out its

operations in a professional manner with an objective to achieve its’ targets of





becoming a prominent player in the pharma sector so that wealth can be created

for all its stakeholder including its employees, dealers, associates, promoters etc.

We have done the valuation of the company keeping in view the economic/non-

economic conditions and circumstances prevailing on the date of valuation i.e.

31st

December 2009.

1.5 Standard of value:

We have used “fair market value” (FMV) as a standard of value for ascertaining

the EV of ABCPL. FMV is the price, expressed in terms of cash equivalents, at

which property would change hands between a hypothetical willing and able

buyer and a hypothetical willing and able seller, acting at arms’ length in an open

and unrestricted market, when neither is under compulsion to buy or sell and

when both have reasonable knowledge of the relevant facts.

1.6 Valuation approach:

We have considered the following valuation approaches for arriving at FMV of

ABCPL after considering the appropriate discounts and premiums for

determining or estimating the EV:

a. Asset-based approach b. Market approach c. Income approach

1.7 We have prepared this detail BV report on the basis of certain assumptions and

limiting conditions which are given below in details in Appendix-

1.8 We have only compiled and reviewed the financial information (both audited andunaudited) provided to us by the management of the company and assumes noresponsibility for the financial information.





2.0 Sources of information

We have used information obtained by us both from the internal and externalsources in evaluating and for arriving at a FMV of the company, which are givenbelow:

2.1 External Sources of information:Organisation of Pharmaceutical Producers of India.Indian Drug Manufacturers AssociationBulk Drug Manufacturers Association

All India Small Scale Pharmaceutical Manufacturers AssociationFederation of Indian Chambers of Commerce and IndustryConfederation of Indian IndustryResearch Reports of Leading Brokerage HousesInterviews of the few prominent wholesalers, doctors and Chemists in

Metro cities to understand the market position of the company products. Analysis of the information available in public domainReview of Government Policies and regulationsComparable financial data from the available databases likeprowess/capital market etc.MCA website

2.2 Internal sources of information: The management of the company has provided us the following information:

• Background of the company• Details about the promoters

• Audited Financial statements of the company for the last 5 years i.e. from1st April 2005 to 31st March 2009 and unaudited results upto 31st December 2009 duly attested by the management. We have not carriedout any verification and certification and attestation of the financialinformation provided to us and we assume no responsibility for theiraccuracy, though we have reviewed the basis of preparation of the sameand cross checked with the various statutory records in a broad manner.

• Internal audit report for the last 8 quarters i.e. upto 30th September 2009.• Business plan and financial projections of the company for the next 5

years i.e. from 2010 to 2015.• Income Tax/VAT Assessment orders for the last 3 years and details about

all the appeals and their present status made by the company with incometax authorities, excise authorities and VAT authorities.

• Shareholding pattern of the company• CMA data furnished with the bank and loan agreements.• Sales and marketing plan of the company• Future plans of the company and strategy to achieve the same• Data about its competitors both in domestic and international market





• Interview of the top management team like Managing director and CEO,marketing heads both domestic and international markets, R&D head,Finance Head, production head, HR head etc.

• Inspection and visit of all the 4 manufacturing locations and corporateoffice of the company.

• Review and inspection of the requisite statutory registrations like pollutioncertificate, factory licenses, license from explosive department etc. andtheir validity, long term supply agreement entered into with major rawmaterial suppliers and R&D laboratories for trials.

• Review of the fixed asset register• Review of the secretarial records of the company• We have obtained all the relevant information and necessary clarifications

and explanation which we required for understanding of the variousinformation and data provided to us and which we believe was necessaryfor carrying out this valuation exercise.





3.0 Analysis of the subject entity and related nonfinancial information

3.1 About Company

ABC Pharmaceutical Private Ltd. (ABCPL) is a company registered with

Registrar of Companies, Delhi & Haryana. ABCPL is one of India’s fastestgrowing, professionally managed pharmaceutical company, manufacturing a

wide range of innovative specialty medicines for domestic and international

markets. ABCPL was established on 15th March 2001.

Its product portfolio consists of pharmaceutical specialties in various dosage

forms, herbal remedies, diagnostics, generic drugs, active pharmaceutical

ingredients (APIs). Some of the products within these categories enjoy good

positions in the Indian and foreign markets.

The Company is strategically focused on R&D and totally committed to respondpromptly to market needs by developing quality products at affordable prices for

the masses. With a strong base of 2 state-of-the-art manufacturing units and one

DSTC approved R&D centers, the company has entered a dynamic phase of

expansion into newer and faster growing therapeutic segments such as anti-

diabetics and Respiratory.

ABCPL is a customer driven, financially sound company, consistently enhancing

value for its shareholders by rewarding them with healthy dividends year after

year. 52% of the Company’s revenue comes from exports to USA & Europe. To

further enhance its strength in foreign markets, ABCPL has also entered into jointventure and strategic tie ups with key partners in USA etc.

3.2 Mission & Vision:

Integrity, Industry, Innovation these are the core values, which the mission of ABCPL imbibes.

Over the years, ABC has persistently endeavoured to impart the highest qualityof life to its consumers and the hard-working field force of the organization.

3.3 History:

• Incorporated - 1991 for manufacture of pharmaceutical formulations.• Started Parenteral Manufacturing facility at Manesar, Haryana, India - 1992.• First full year in Operations - 1994 - sales Rs. 0.5 million.• Established bulk drug and Intermediate facility at Ankaleshwar, Gujarat, India.

This facility is TGA approved, and certified for its environmental managementsystems (ISO-14001). (Today its a US-FDA approved plant).





• State of the art manufacturing facilities - cGMP, ISO 9001:2008 certified dosagefacility.

• A wide distribution network, Indian & International.• Granted US Patent for its manufacturing process of Omeprazole.• Launched anti-cancer drug-Imatinib Mesylate 100 mg capsules under the brand

name - VEENAT, Process developed in-house.

3.4 Manufacturing Locations:

1. Plot No.B-12, Phase-II, Manesar,Gurgaon, Haryana.

Bulk drug and formulations (R&DBulk drugs). Approved by US FDA(for bulk drugs), WHO

2. Plot No. 105, Ankaleshwar IndustrialPark, Ankaleshwar,Gujarat.

Bulk drug and formulations (R&DBulk drugs). Approved by DSTCapproved R&D centre.

3.5 Organisational Structure:

CFO HR Head

Ankaleshwar

Plant

Manesar

Plant

Domestic

Market

International

Market

Production Head Marketing Head

Board of Directors

Managing

Directors

&

CEO

3.6 Management Team:

Dr. A.B. Chaturvedi, aged 54 years, who is the Managing Director and CEO ofthe company is an MBBS, MD (Medicines) and is a first generation entrepreneurand is the founder of the ABC Group. He has wide interest and experience inbusiness.

Dr. Sushila Chaturvedi, Director, is a prominent gynaecologist and is runningher Nursing home in New Delhi.

Mr. Suresh Choudhary, Director, is a commerce graduate and an MBA fromIIM, Kolkata. He is the ex- President of FICCI (the Federation of Indian





Chambers of Commerce and Industry) and serving on the Board of severalIndian companies.

Mr. Dinesh Gupta, Director cum Chief Financial Officer, is a commerce graduateand a member of the Institute of Chartered Accountants of India. He joined the

services of the Company in 2001. He has 18 years of experience in accounts andfinance including 12 years of experience in the pharma industry.

Mr. Bhupender Kumar Gupta, IAS, an independent professional Director, joined the Indian Administrative Service in 1960. He held many posts inGovernment of India and Government of Punjab. He was also Finance Secretaryand Chief Secretary to the Government of Punjab.

Mr. M.P. Tyagi, is an Engineer in Chemical Engineering and MBA from FMS,New Delhi. He is the Production Head of the company and is responsible for theplant operations at Manesar and Ankaleshwar.

Dr. Alok Sinha, Head Quality & Research & Development, is M.Sc, Ph.D.(Chemistry) and having specialization in Industrial Chemicals and a fellowmember of the Institute of Pharma Chemicals from Horst, Holland. He has wideexperience of 34 years and is associated with the Company since 2004. He heldpreviously prestigious position in various organizations and was also associatedwith Scientific and research activities.

Mr. Bijoy Krishna Murthty, Head Marketing, an MBA from IIM Ahmedabad andis looking after the marketing operations of the company. He is associated withthe company since from 2002.

Mrs. Bimla Singh, Head HR is a graduate from Harward University and she islooking after the HR in the company. She is associated with the company in2006.

3.7 Share holding pattern:

S.No. Name Number of

Shares of

Rs.l0/-cach

Share holding (%)

i) Dr AB Chaturvedi 367092 1.31%

ii) Dr. Sushila Chaturvedi 200928 0.72%iii) Mr. Mahesh Chaturvedi 200928 0.72%

iv) Ms. Sarita Chaturvedi 200928 0.72%

v) Ala Mode Investments Pvt. Ltd. 1025540 3.66%

vi) ABC Advertising & Hospital Pvt.

Ltd. 1044584 3.73%

vii) Leaf Investments Pvt. Ltd. 5000000 17.83%

viii) ABC Securities Pvt. Ltd. 20000000 71.33%

Total 28040000 100.00%





3.8 Products Profile of the Company:

3.8.1 Products:

"These products are not offered in countries where valid patents exist. However,

final responsibility with respect to third party's patent rights in a specific countrylies exclusively with the user."

The 3 distinct brands of ABC Pharmaceutical are a product of constant

innovation, expertise and dedication. The superior quality, effectiveness and

affordability are aspects that are in sync with the patient needs.

Recently, ABCPL became only the second company in India to receive DCGI

permission to market Ofloxacin, Once-Daily 400mg & 800mg formulations.

Hence, we expect significant growth for this brand in the coming year.

Top three brands of ABCPL are:

Doktor MomDoktor Mom is a purely herbal product. It comes in the form of syrup, rub and

lozenges (5 flavours- pineapple, strawberry, raspberry, lemon and orange).

Doktor Mom is widely marketed by ABCPL in USA through our own sales

representatives. Doktor Mom has been awarded "Most Trusted American Brand

Award" by Readers Digest in the cough and cold segment. This award was given

to ABCPL by Readers Digest for the last 5 consecutive years (2004, 05, 06, 07,

08). This is a household brand in USA.

MetrogylMetrogyl, ABCPL s biggest brand is the Metronidazole molecule. The company

has also introduced a plethora of variations to this brand for convenient patient

use. Some of the variations like palatable, suspended, large volume topical,

dental and combinations with norfloxacin also capture high prescription rate.

Metrogyl has been tried and tested since last 7 years and is still going strong.

This exhibits its excellent therapeutic value to its users. Metrogyl IV,is an

important brand extension of Metrogyl. Today Metrogyl IV is being exported to

several countries. This is a clear indication of the acceptance and trust in

Metrogyl IV of doctors.

OF The Company has its presence in the antibiotic segment through OF, a brand ofthe molecule Ofloxacin. OF is the third largest brand of the Company havinggrossed sales of 10 crore in 2007-08.





3.8.2 Act ive Pharmaceutical Ingredients (API):"These products are not offered in countries where valid patents exist.However,final responsibility with respect to third party's patent rights in a specificcountry lies exclusively with the user."

• Ciprofloxacin Hydrochloride UPS(U.S.DMF No. 17786)

• Diclofenac Acid(U.S.DMF No. 15366)

• Diclofenac Potassium BP/EP(Plant approved by FDA, U.S.A. - U.S.DMF No. 15074)

• Diclofenac Sodium BP/EP/USP also Injectable Grade

• Diclofenac Sodium BP/EP/USP(Certicate of Suitability No. R1-CEP-1997-041-REV 00) dtd. 18th March, 2003

• Metronidazale BP/EP/USP(Plant approved by FDA, U.S.A. - U.S.DMF No. 3675)

3.8.3 List of the products launched in the domestic and international market are

enclosed as per Annexure-1 and Annexure-2.





4.0 Economic Environment:

In the past year, the Indian as well as the global economy has witnessed a very

high degree of uncertainty and volatility. The outlook for the global economy

continues to remain bleak. IMF has estimated that world economic growth will fall

to 0.5% in 2009, which is the lowest rate since World War II. The global economy

is expected to experience gradual recovery in 2010, when growth is estimated at

3%, as the impact of expansionary fiscal and monetary policies starts to set in.

It is inevitable that the fortunes of the Indian economy will be impacted by the

growth prospects of the world economy as export demand continues to fall, and

external financing becomes progressively constrained. However, there are some

inherent strength within the Indian economy, which have spawned the idea of its

'decoupling' from the global economy. While it is debatable whether economies

such as India will remain completely insulated from the negative growth

prospects of the global economy, there are some factors that might play a

mitigating role in the face of the spreading contagion.

o The presence of a large domestic population, along with the increase

in its per capita income.

o Further, a strong saving and investment rate.

The Indian economy registered around 9.0% growth during FY04-FY07 and this

growth rate gave rise to hopes of structural shift in economic growth.

Real GDP, which witnessed substantial moderation during Jan-Dec'08, is one of

the key indicators of an economy that is losing steam. During Jan-Dec'08, India's

GDP growth averaged 7.4% as compared with 9.2% during the corresponding

period of the previous year.

4.1 Real GDP to grow by 6.7% in FY10

D&B believes the economy would pick up in the medium to long term period,when lagged effects of aggressive policy response by the Government and bythe RBI. D&B believes that the strong fundamentals of the Indian economy are a

key to early reversal. D&B expects GDP growth to bottom out during H1 FY10,see a reversal by H2 FY10 and average at 6.7% for FY10.





D&B expects the industrial sector growth to average at 4.6% during FY09,

significantly lower than 8.1 % in FY08. Further, on account of improvement indemand during H2 FY10, industrial sector growth is expected to improve andaverage at 5.5% during FY10.

4.2 Industrial production to pick up in H2 FY10

D&B expects growth in industrial production to be around 3.5% during FY09 ascompared with 8.5% during FY08. However, industrial production is expected toimprove during H2 FY10 and register an average growth of 5.3% during FY10 onaccount of:

▪ Rise in domestic demand

▪ Stability in export demand

▪ Faster implementation of infrastructure projects that are in pipeline and increase in thdevelopmental expenditure by the Government in FY10.





4.3 Bank Credit to Moderate:

D&B forecasts the bank credit growth to moderate to around 21.5% by end of

FY09 and then to 20.0% by end of FY10.

4.4 Stress on External Balance Likely to Increase

D&B expects exports to be around US$ 178 bn in FY09, which is approximatelyUS$ 22 bn lower than the Government's target, owing to economic downturnwitnessed in India's key export markets. D&B, however, expects exports towitness some revival during the second half of FY10, when the world economybegins to stabilise. D&B expects exports to grow around 14% to US$ 203 bnduring FY10.

Imports, on the other hand, are expected to be around US$ 300 bn in FY09 andare likely to increase further to US$ 353 bn in FY10, as demand will pick up inthe Indian economy during latter part of FY10. Imports are expected to grow at17.7% during FY1 0, which is lower as compared to 25.0% (estimated) duringFY09.

D&B expects the trade deficit to increase to US$ 122 bn in FY09 and further toUS$ 150 bn in FY10, as growth in imports is expected to be greater than exports.D&B expect the current account deficit to be around 2.2% of GDP in FY10 asinvisible receipts are expected to pick up once the external environmentstabilises by the latter half of FY10.





5.0 Key Policies & Regulations:

At present the following Acts and Rules made thereunder that govern themanufacture, sale, import, export and clinical research of drugs and cosmeticsin India.

• The Drugs and Cosmetics Act, 1940• The Pharmacy Act, 1948• The Drugs and Magic Remedies (Objectionable Advertisement) Act, 1954• The Narcotic Drugs and Psychotropic Substances Act, 1985• The Medicinal and Toilet Preparations (Excise Duties) Act, 1956• The Drugs (Prices Control) Order 1995 (under the Essential Commodities

Act)

Some other laws:There are some other laws which have a bearing on pharmaceuticalmanufacture, distribution and sale in India. The important ones are given below:

1. The Industries (Development and Regulation) Act, 19512. The Trade and Merchandise Marks Act, 19583. The Indian Patent and Design Act, 19704. Factories Act

5.1 National Pharmaceutical Policy 2002:

Steps taken by Government:

• Industrial licensing for the manufacture of all drugs and pharmaceuticals has

been abolished except manufacturing of bulk drugs by using certainprocesses.

• Reservation of 5 drugs for manufacture by the public sector only wasabolished in Feb.1999, thus opening them up for manufacture by the privatesector also.

• Foreign investment through automatic route has been raised to 100%.

• Automatic approval for Foreign Technology Agreements is being given inthe case of all bulk drugs, their intermediates and formulations.

• Drugs and pharmaceuticals manufacturing units in the public sector are

being allowed to face competition including competition from imports.• Extending the facility of weighted deductions of 150% of the expenditure on

in-house research and development to cover as eligible expenditure, the

expenditure on filing patents, obtaining regulatory approvals and clinical

trials besides R&D in biotechnology.

• Introduction of the Patents (Second Amendment) bill in the Parliament. It,

inter-alia, provides for the extension in the life of a patent to 20 years.





• To qualify as R&D intensive company in India, the PRDC has suggested

following conditions (gold standards) :-

a. Invest at least 5% of its turnover per annum in R&D,

b. Invest at least Rs.10 Crore per annum in innovative research includingnew drug development, new delivery systems etc. in India,c. Employ at least 100 research scientists in R&D in India,d. Has been granted at least 10 patents for research done in India,e. Own and operate manufacturing facilities in India

5.2 An Overview of Pharmaceuticals Industry in India

• The Indian pharmaceutical industry, now an over Rs. 89,000 crores (US$18 billion) industry.

• The country now ranks 3rd worldwide by volume of production and 14th by

value thereby accounting for around 10% of world’s production by volumeand 1.5% by value.• Globally, it ranks 4th in terms of generics production and 17th in terms of

export value of bulk actives and dosage forms.• Indian exports are destined to more than 200 countries around the globe

including highly regulated markets of US, West Europe, Japan and Australia.

• The total employment is about 340,000 in the sector and an estimated400,000 doctors and 300,000 chemists are serving an over 1 billioncustomers market.

• The Pharmaceutical sector is one of the major export revenue earners of

Indian economy. During 2007-08, Indian pharma exports were USD 7.24billion, recording a growth of 8.34% in rupee terms and 21.91% in dollar termscompared with the previous year.

• India is a globally acknowledged source of high quality affordable genericmedicine with rich vendor base.

• India has the highest number of USFDA approved plants outside USA.• India offers skilled scientists/ technicians/ management personnel at affordable

cost.• An estimated US$103 billion of generic products are at risk of loosing patents

by 2012. Even at a conservative estimate there is a huge opportunity for India.• In July 2008, GOI, has created the Department of Pharmaceuticals, to deal

with issues relating to policy, planning, development and regulation ofPharmaceuticals Industries.

• The following attributes constitute the basis of the technological strengths ofthe Indian Pharmaceutical Industry:a. Self-reliance displayed by the production of 70% of bulk drugs

and almost the entire requirement of formulations within the country.b. Low cost of production.c. Low R&D costs.





d. Innovative Scientific manpower.e. Excellent and world-class national laboratories specializing in

process development and development of cost effective technologies.f. Increasing balance of trade in Pharma sector.g. An efficient and cost effective source for procuring generic drugs

especially the drugs going off patent in the next few years.h. An excellent centre for clinical trials in view of the diversity in population.

5.3 Financial Performance of the Pharmaceutical Industry:Financial performance of the Drugs and Pharmaceutical Industry for the year 2008-09 is given in Table below. The figures given in the Table are on quarterly basisshowing the percentage increase/decrease with the same quarter of the previousyear.

in %

Particulars June'07 Sept'07 Dec'07 Mar'08 June'08 Sep'08 Dec'08 Mar'09

Income 15.5 18.5 18.1 13.9 18.5 14.4 9 11.8Net Sales 12.2 20.8 19.5 15.7 22.1 15.2 10.6 14

Total Expenses 15.3 20.5 16.5 14.8 22.8 23 28.7 21.9

Raw Material 16.5 23 15.3 15.2 19.9 16.5 13.6 15

Salaries & wages 19.2 19.1 19 20.5 22.5 21.3 16 18

Power & fuel 62.2 17.4 7.2 0 -1.5 1.5 3 18

Depreciation 12.6 12.3 11.7 15.6 17 17.3 18.5 18.2

Interest Exp. 19.4 37.4 29 69.6 34.8 37 70.1 59

PBDIT 24.1 16.1 14.7 6.9 -3.7 -13.4 -52.4 -15.8

PAT 26.5 12.2 11.7 -2.1 -6.2 -27.6 -88.1 -49.8

Drugs and Pharmaceuticals: Growth and Profitability (for the quarter ending)

Source: Center for Monitoring Indian Economy (CMIE)

• Despite global recession and financial crises, the Drugs and

Pharmaceuticals sector could maintain its positive growth in sales volume.• The sector’s profitability was affected with the expenses increasing at a

faster pace as compared to income.• The increase in expenditure was mainly on account of the increase in the raw

material cost, wages and salaries, depreciation and interest expenses.• With AS11 no longer mandatory, drug makers are not expected to report

MTM loss on their foreign exchange borrowings. • Domestic growth is also expected to remain healthy and the Government’s

decision to open more Jan Aushadhis stores will support this trend.

5.3.1 The Value of Total Domestic Indian Pharmaceutical Market for the last 5

years:

Rs. in cr.

Apr'2005

MAT Apr'2006

MAT Apr'2007

MAT Apr'2008

MAT Apr'2009

MATRetail Market at MRP 24807 28692 32764 37619 41383Generic plus companies nottracked by us 1985 2295 2621 3010 3311





Hosp & Institutional sales(except Govt.) 2977 3443 3932 4514 4966Direct Doctor Purchase 744 861 983 1129 1242Pharmaceutical OTC products 496 574 655 752 828

Diagnostics 2233 2582 2949 3386 3725Total Indian Pharmaceutical Mkt.

33242 38447 43904 50410 55454

5.3.3 Imports in India: As per the D.G.C.I.S. statistics, imports of medicinal and pharmaceuticalproducts for the last three years have been as under:

Year Amount

2005-06 Rs. 4515.2 crores

2006-07 Rs. 5866.37crores

2007-08 Rs. 673415 crores

2008-09 Rs. 8552 (Provisional)

5.3.2 Exportsfrom India: Rs. In Cr.

Year 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Exports (INR) in Crore 12826 15213 17857 22216 26895 30759 38433

Growth % - 23.87 50.31% 93.90 140.69% 179.33% 256.07%





5.4 Geographical markets of the company:

Segmentwise Revenue composition of Sales:

5.5 Strategy and Future Plans:

5.5.1 API division:

ABCPL continues to strive to develop niche products and capture niche markets

and efforts aimed at product registrations in some South American countries are

in an advanced stage of completion. The Division continues to concentrate on





high value, low volume specialty drugs, which result in reasonably good value

addition.

Status relating to filing of Drug Master Files is given below.Therapeutic

segment

No. of Products USA Rest of

World

Total No. of

DMF Submitted

Filed InProcess

Filed Inprocess

Filed Inprocess

Filed Inprocess

BenignProstaticHypertrophy

1 0 1 0 0 0 2 0

Bronchodilator 1 0 1 0 0 0 2 0

Urinaryincontinence

1 0 1 0 0 1 2 1

Anxiolytics 0 1 0 1 0 1 0 3

Boneresorptioninhibitor

2 0 2 0 0 0 4 0

Hyperphospha-taemia

1 0 1 0 0 0 2 0

Antiparkinsonism

1 0 1 0 0 0 2 0

TOTAL 7 1 7 1 0 2 14 4

5.5.2 Projects:

A new production block is being planned in the Manesar facility to expand thenumber of products that could be produced at a time.

5.5.3 Finished Dosage Formulations Division:

In FY 2009-10, the company's application for abbreviated new drug application

(ANDA) in respect of Anastrazole 1 mg. and Granisetron 1 mg. tablets has been

approved by the US FDA authorities. The company is exploring various avenues

available to it for launching this product in USA and / or Europe.





6.0 Business Risks and their Management of Risks at ABCPL:The company has a policy of evaluating various risks that the Company is proneto from time to time. Wherever feasible, remedial measures are initiated andsuitable follow-up action is taken.

We have been provided a gist of the various risks involved in the conduct of theaffairs of the Company by the management, and how the Company proposes todeal with these risks:

6.1 Assets: All the fixed assets of the Company, including stocks of finished goods, rawmaterials, packing materials and work-in-process are adequately insured, atreplacement values and employees are covered by health insurance.

6.2 Global and Environmental Risks:The Company aims to keep itself insulated from these risks by entering into

strategic alliances with partners in other countries. In case of such tie-ups, thecost of litigation and the cost of regulatory filings, wherever applicable, would beto the account of the partner.

6.3 Human ResourcesThe Company believes in its human capital as one of the important assets andtherefore, has taken steps to retain talent by providing reasonably appreciableavenues of growth, along with suitable compensation structures. The Companyhas recently concluded a Employee Stock Option Plan.

6.4 Products / Markets:

While it is inevitable to depend on a single market, product or customer in certaincircumstances, efforts are made by the Company to reduce such dependence, tothe minimum. Invariably in such cases, attempts are made to widen the businesshorizon and simultaneous efforts are made to enter niche markets and introduceniche products.

6.5 Competition: After the company's successful foray into oncology segment in 2003, severalcompanies have followed suit, resulting in severe competition at the marketplace. However, the company has been able to neutralize the competition byincreasing its rapport with the medical profession and generally spreading the

knowledge about the company's products by organizing continuous knowledgeprograms for the medical profession.

The company continues to pursue a very aggressive pricing policy for some of itsproducts, and continues its drug donation program.

Standards of manufacture and quality play a vital role in managing competitionand retaining and developing customer base, By maintaining its facilities at world





standards, and continuously upgrading them to suit international standards andUS FDA requirements, ABCPL is able to not only retain but widen itsinternational customer base. Regular audits are undertaken by customers andthe observations made in these audits are duly taken care of.

For the domestic markets, a majority of the products are made from themanufacturing facilities located at tax-free zones and the Company has beenable to pass on at least a part of these benefits to the customers.

6.6 Price Controls:The pharmaceutical industry in India is subject to price controls and the prices ofsome products are determined by the Government. Though only some productsmanufactured by ABCPL are likely to be a subject matter of price controlmechanism under the Indian law, nevertheless, governmental compulsions forreduction in the prevailing prices remains a risk.

6.7 Litigations:Efficient and effective management of the business reduces the risk that thecompany's products face in terms of litigation. Being a company which isenthused to launch new products, sometimes first time generic introductions inthe world, the company is aware of the risks that its products and activities aresubject to. Most of these risks are neutralized by a unique system of tie-upswhere the litigation risks are taken-up by the partner rather than the Companyitself. In addition, suitable product liability insurance is also obtained.

6.8 Regulatory Observations:Regulatory approvals form the basic strength of the Company and utmost care is

taken to ensure that these approvals are valid, in full force and are renewed fromtime to time. To this end, all observations made by the Regulatory Auditors andCustomer Auditors are taken seriously and immediate action is initiated to rectifythe lapses.

6.9 Foreign Currency transactions and associated Risks:The company continues its policy of not hedging any of its import / exporttransactions. It has been the company's experience that such a policy, over aperiod of time, neutralizes the risks associated with foreign currency transactions.

6.10 Economic and Financial Risks:

The company is operating in an environment where, as of now, financial costsare rising. The company is attempting to reduce the financial costs by contractingnew loans and swapping them with the old loans. Wherever possible, attemptsare made to enhance the product pricing to cover rising costs.

6.11 Other Risks:In addition, the Company faces distribution, storage, contamination, counterfeitand risks associated with patents and intellectual property rights which the





company faces. The company is in the process of evolving a strategicmechanism which will enable it to deal with these risks in course of time.





7.0 Financial statement/information analysis

• We have obtained the audited financial statements of the company for the

last 5 years i.e. 2005 to 2009. The company accounting year is 31st

December 2009.

• The management has also provided us the financial projections for the

next 5 years.

• Management has also provided us the historical data of the competitors

and companies of similar size.

• The company has provided us the income tax returns along with

computation for the last 3 years. But we have not been provided us the

depreciation schedule as per Income Tax Act.

• We have been informed and certified by the company that the financial

statements does not personal expenses of the promoters and their family

members.

• We feel that the management has provided us all the relevant financial

information which is required to form an opinion about the valuation of the

company.

Summarised balance sheet both audited and projected is being given below:

ABCPL RsBalance Sheet

Year ended 31 December 2005 2006 2007 2008 2009 2010 2011 2012 2013

Equity Share Capital 26.16 27.17 27.64 28.04 28.04 28.04 28.04 28.04 28.04

Reserves 87.48 120.51 152.5 191.16 229.86 295.22 372.41 461.80 564.25

Networth 113.64 147.68 180.14 219.2 257.9 323.26 400.45 489.84 592.29

Secured Loans 85.09 63.44 64.86 88.55 120.81 110.03 99.24 88.46 77.68

Unsecured Loans 26.13 16.62 11.58 5.58 5.53 5.53 5.53 5.53 5.53

Total Debt 111.22 80.06 76.44 94.13 126.34 115.56 104.77 93.99 83.21

Total Liabilities 224.86 227.74 256.58 313.33 384.24 438.82 505.23 583.83 675.49

Gross Block 135.18 164.56 190.64 235.31 273.07 303.17 320.03 340.03 370.03

Less: Accum. Depreciation 39.01 45.58 53.06 61.59 71.92 82.99 95.17 107.93 121.55 Net Block 96.17 118.98 137.58 173.72 201.15 220.19 224.86 232.11 248.48

Capital Work in Progress 8.9 15.46 20.14 28.57 46.96 16.86 0.00 0.00 0.00

Total CA, Loans & Advances 165.5 144.36 163.46 181.53 225.79 320.71 408.80 491.27 579.23

Total CL & Provisions 66.58 70.22 83.08 91.28 110.45 118.93 128.44 139.55 152.22

Net Current Assets 98.92 74.14 80.38 90.25 115.34 201.77 280.36 351.72 427.01

Miscellaneous Expenses 6.15 2.54 0 0 0 0.00 0.00 0.00 0.00

Total Assets 224.87 227.74 256.56 313.34 384.25 438.82 505.22 583.83 675.49

Sources of Funds

Application Of Funds

Audited Projections





Summarised profit and loss account both audited and projected is also given below:

ABCPL Rs in cr.

Profit & Loss account

Year ened 31 December 2005 2006 2007 2008 2009 2010 2011 2012 2013 201

Export sale 25.67 35.32 52.89 82.89 99.12 125.00 145.00 190.00 225.00 260.0Domestic Sale 145.93 134.80 141.44 154.86 176.81 192.32 211.98 202.68 206.95 215.1

Sales Turnover 171.60 170.12 194.33 237.75 275.93 317.32 356.98 392.68 431.95 475.1

Excise Duty 5.61 7.63 8.45 6.87 4.10 4.72 5.30 5.83 6.42 7.0

Net Sales 165.99 162.49 185.88 230.88 271.83 312.60 351.68 386.85 425.53 468.0

Other Income 3.13 19.84 15.90 13.01 9.35 10.75 12.10 13.31 14.64 16.1

Stock Adjustments -0.85 1.60 6.25 4.05 7.10 8.98 8.24 8.19 9.01 9.9

Total Income 168.27 183.93 208.03 247.94 288.28 332.34 372.02 408.34 449.18 494.1

Raw Materials 69.45 75.08 83.36 96.42 101.31 116.51 131.07 143.13 157.45 173.1

Power & Fuel Cost 6.41 7.74 10.13 11.02 15.24 17.53 19.72 21.69 23.86 26.2

Employee Cost 18.57 23.49 25.30 30.48 37.17 39.03 40.98 43.03 45.18 47.4

Other Manufacturing Expenses 4.33 3.96 4.68 5.65 6.98 8.03 9.03 9.93 10.93 12.0

Selling and Admin Expenses 39.59 24.52 23.36 28.17 38.86 44.69 50.28 55.30 60.83 66.9Miscellaneous Expenses 3.50 4.39 5.02 6.31 8.92 10.26 11.54 12.69 13.96 15.3

Preoperative Exp Capitalised 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0

Total Expenses 141.85 139.18 151.85 178.05 208.48 236.04 262.61 285.78 312.21 341.1

Operating Profit 23.29 24.91 40.28 56.88 70.45 96.31 109.41 122.56 136.97 152.9

PBDIT 26.42 44.75 56.18 69.89 79.80 107.06 121.50 135.87 151.61 169.0

Interest 13.40 8.03 6.61 9.73 15.05 14.29 12.83 11.38 9.92 8.4

PBDT 13.02 36.72 49.57 60.16 64.75 92.77 108.67 124.49 141.68 160.5

Depreciation 5.84 6.64 7.61 8.59 10.35 11.06 12.18 12.75 13.63 15.0

Other Written Of f 7.32 3.61 2.54 0.00 0.00

Profit Before Tax -0.14 26.47 39.42 51.57 54.40 81.71 96.48 111.74 128.05 145.5

Extra-ordinary items 1.41 -0.25 0.19 -1.65 -1.01

PBT (Post Extra-ord Items) 1.27 26.22 39.61 49.92 53.39 81.71 96.48 111.74 128.05 145.5

Tax -0.88 2.43 9.15 9.86 10.63 16.34 19.30 22.35 25.61 29.1

Reported Net Profit 1.56 23.79 30.46 40.05 42.74 65.36 77.19 89.39 102.44 116.4

Audited Projections

Income

Expenditure





8.0 Valuation approaches and methods considered:For the purpose of valuation of the Company, we have used all three recognizedvaluation methods:

• Asset Approach• Income approach (DCF method)• Market approach (Average P/E multiple of the listed companies reduced by

30% and price to sales multiple methods)

8.1 Asset ApproachThe Asset Based approach considers the cost of replacement or liquidation valueof an asset as an indication of the fair market value of that asset.

Under this method realizable value of total assets and total liabilities as per latest Audited Financial statement are considered for arriving at the net asset bookvalue of the company. No adjustments for contingent liabilities, which mightcrystallize in future and no discount has been given on Sundry Debtors and Loanand advances in view of the information from management that it may expectssuch default in future since we are of opinion that the replacement value of theassets will be much more than these discounts and contingent liabilities. Hencewe considered the net worth as per last audited balance sheet on 31.12.09 asbasis for calculation of per value share. Details are given below:

Rs in Cr.

Net worth 257.9

No of shares 28040000

Value per share (in Rs.) 92

8.2 Income Approach:

Under the Income approach, we have used the Discounted Cash Flow (“DCF”)

method. This method is also called the “multiperiod income discounting model”.

The discounted economic income method is based on the premise that a

financial investment is worth the sum of all of the future benefits it will provide to

its owner, each discounted to a PV at the discount rate that reflects the time

value of money and the degree of risk of receiving the benefits when and in the

amounts expected. It requires:

DCF analysis is based mainly on the following elements:• Projection of timing and amount of future expected cash flows;• A discount rate that reflects the cost of capital for the type of investment

and returns contemplated.





Projection of financial statements

Based on historical analysis of past five year (2005 to 2009), we have projected

the future free cash flows which will be available to the company. The detailed

workings are enclosed in the excel spreadsheet attached with this report.

(Annexure 3).

Discounted factor

The Discount Factor (also termed as the Discount Rate) is the most challenging

task in the mathematical calculation of Valuation. For calculating the Net Present

Value of cash flows the Discount Rate has been calculated by the Capital Asset

Price Model (‘Expanded CAPM’), which is:

Discount rate = Risk Free Return Rate + β (Market Return – Risk Free Return) +

Risk attributable to the specific company

Cost of Equi ty (as per Modified CAPM):

Risk free rate 6.90%

General equity risk premium 10.00%

Times beta 0.86

Equity risk premium 8.6% (Including company specific premium)

Equity risk premium attributable to the specific company 5.00%

Cost of equity capital 20.5%

GOI security bond matured on 2019 on 31.12.09

as per rates appearing in WDM in NSE.

Beta for Pharma & drug companies as per

Aswath Damodaran webiste

Computation of WACC

Capital conponents Amount Cost in % % of capital

components in

capital structure

Effective

rate of tax in

the explicit

forecast

period

Effective

rate of tax

in the

terminal

period

Cost of

Capital

We

cos

we

cap

Debt:

Term Loan 53.9162 13.50% 38% 20% 0.33 10.800% WC Loan 55.93 12% 39% 20% 0.33 9.600%

Unsecured Loan 5.53 12% 4% 20% 0.33 9.600%

Equity 28.04 21% 20% 20.500%

Total 143.4162 100%





growth rate (g) 2%

Free cash Flows of the Firm (FCFF)

Rs in C

Year ended 31 December 2009 2010 2011 2012 2013 2014 2

EBIT 68.44 96.00 109.32 123.11 137.98 153.97 153

Tax (19.20) (21.86) (24.62) (27.60) (30.79) (50

NOPAT 68.44 76.80 87.46 98.49 110.38 123.18 103

Depreciation as per IT Act 26.58 26.37 24.93 24.74 25.84

(Increase)/Decrease in WC (14.51) (19.07) (17.80) (21.78) (18.17)

CAPEX (20.00) (30.00) (30.00)

Net FCF 68.44 88.86 94.76 85.63 83.34 100.85 889.7

Discounting @WACC 12% 0.89 0.79 0.71 0.63 0.56 0

DCF 79.21 75.29 60.65 52.62 56.76

Terminal value 446

FCF 770.95

Less: Debts 115.3762

Equity Value 655.58

No of shares 28040000


Terminal value=NOPAT*(1-g/r)/(WACC-g)r= Return on equityg= perpetuity growth

Based on the above factors, the value of equity per share is is determined as Rs.

234 per share





8.3 Market approach

Market Approach refers to the notion of arriving at the value of a company by

comparing it to the market value of similar companies. The comparison is based

on certain financial ratios or multiples, such as the price to book value, price to

earnings, price to sales, EV/EBITDA, etc., of the equity in question to those of its

peers. This type of approach, which is popular as a strategic tool in the financial

industry, is mainly statistical, based on historical data, and current market

sentiments.

We have calculated the value of equity by using the P/E multiple and price to

sales multiple method. Detailed working is given below:

P/E Ratio mul tiple

Name of the companies Price on

31.12.09

EPS P/E

Ajanta

Pharma 205 18.26 11.23

Neuland

Lab 187 21.59 8.66

Natco

Pharma 145 12.25 11.84

Venus

Remedies 478 53.86 8.87

Granules

India 115 2.54 45.28

Total 85.88

Average P/E 17.18

Discount due to non listed company 30%

EPS of ABCPL 15.24

Market value per share (in Rs.) 183.25

Sales to Market Multiple

Rs in Cr

Sales 271.83

Multiple 1.91

Value of Equity 519.1953

No of share 28040000


(as per Aswath Damodaran price

to sales multiple for India)

By using the above two referred methods we have arrived the value of Rs. 183

per share and Rs 185 per share.





9.0 Representation of the ValuerWe are summarizing below the factors which guided us in carrying out thisbusiness valuation engagement:

a. The analyses, opinions, and conclusion of value included in this valuation

report are subject to the specified assumptions and limiting conditions,and these are the personal analyses, opinions, and conclusion of NSGSK& Associates.

b. The economic and industry data included in the valuation report havebeen obtained from various printed or electronic reference sources that webelieves to be reliable (any exceptions should be noted) and NSGSK &

Associates has not performed any corroborating procedures tosubstantiate that data.

c. This valuation report is being made for the specific use of our client andthe valuation report is not intended to be and should not be used byanyone other than our client or with his permission.

d. NSGSK & Associates has no obligation to update the report or the opinionof value for information that comes to our attention or notice after the dateof the report.

e. NSGSK & Associates has done the valuation.f. NSGSK & Associates confirm that:

The statements of fact presented in the report are correct to the best ofknowledge of NSGSK & Associates.

The reported analyses, opinion and conclusions are limited only by thereported assumptions and limiting conditions.

NSGSK & Associates have no bias with respect to the subject of thisreport or with this assignment.

NSGSK & Associates have no present or prospective interest in thesubject business or has no personal interest in the parties involved.

NSGSK & Associates fee is not contingent upon an action or eventresulting from the analyses, opinions or conclusions in, or the use of,this report.

The valuation engagement was performed in accordance with theIndian Institute of Chartered Accountants Business ValuationPractise Standard.

NSGSK & Associates have necessary skills and competence toperform the engagement to estimate value.





10. Conclusion:We hereby conclude that the value of the equity share of the company i.e.

ABCPL should be in the range of Rs 180 per shares to Rs 235 per shares on31.12.09 and this value may increase or decrease on the basis of the marketconditions prevailed at the time of making the deal.





11. List of Assumptions and Limiting Conditions

1. The conclusion of value arrived at herein is valid only for the stated purpose as of the date of the valuation

and may not be used out of the context presented herein.

2. Public information, estimates, industry and statistical information contained in this report have been obtained

from sources considered to be reliable. However, we independently did not verify such information and

make no representation as to the accuracy or completeness of such information obtained from or provided

by such sources.

3. The company and its representatives warranted to us that the information supplied to us was complete and

accurate to the best of their knowledge and that the financial information properly reflects the business

conditions and operating results for the respective periods in accordance with generally accepted accounting

principles. Information supplied to us has been accepted as correct without any further verification. We have

not audited, reviewed, or compiled the financial information provided to us and, accordingly, we express no

audit opinion or any other form of assurance on this information.

4. Financial information of the subject company is included solely to assist in the development of a value

conclusion presented in this report and should not be used to obtain credit or for other purpose. Because of

the limited purpose of the information presented, it may be incomplete and contain departures from

generally accepted accounting principles. We have not audited, reviewed or compiled this information and

express no assurance on it.

5. We do not provide assurance on the achievability of the results forecasted by the client because events and

circumstances frequently do not occur as expected; differences between actual and expected results may

be material; and achievement of the forecasted results is dependent on actions, plans, and assumptions of

management.

6. The conclusion of value arrived at herein is based on the assumption that the current level of management

expertise and effectiveness would continue to be maintained, and that the character and integrity of the

enterprise through any sale, reorganization, exchange, or diminution of the owners’ participation would not

be materially or significantly changed.

7. Possession of this report, or a copy thereof, does not carry with it the right of publication of all or part of it nor

may it be used for any purpose by anyone other than those enumerated in this report without the written

consent of the DSGSK & Associates. This report and the conclusion of value arrived at herein are for the

exclusive use of our client for the sole and specific purposes as noted herein.

8. The report and conclusion of value are not intended by the author and should not be construed by the

reader to be investment advice in any manner whatsoever. The conclusion of value represents the

considered opinion of DSGSK & Associates, based on information furnished to them by the client and other

sources.

9. Neither all nor any part of the contents of this report (especially the conclusion of value, the identity of any

valuation specialist(s), or the firm with which such valuation specialists are connected or any reference to

any of their professional designations) should be disseminated to the public through advertising media,public relations, news media, sales media, mail, direct transmittal, or any other means of communication

without the prior written consent and approval of DSGSK & Associates.

10. This valuation reflects facts and conditions existing or reasonable foreseeable at the valuation date.

Subsequent events have not been considered, and we have no obligation to update our report for such

events and conditions.




11. The analyst, by reason of this valuation, is not required to give further consultation, testimony, or be in

attendance in court with reference to the property in question unless arrangements have been previously

made.

12. Our engagement for this valuation consulting work does not include any procedures designed to discover

any defalcations or other irregularities, should any exist.

13. DSGSK & Associates is not an environmental consultant or auditor, and it takes no responsibility for any

actual or potential environmental liabilities. Any person entitled to rely on this report, wishing to know

whether such liabilities exist, or the scope and their effect on the value of the property, is encouraged to

obtain a professional environmental assessment. DSGSK & Associates does not conduct or provide

environmental assessments and has not performed one for the subject property.

14. DSGSK & Associates has not determined independently whether the client is subject to any present or

future liability relating to environmental matters nor the scope of any such liabilities. DSGSK & Associates’

valuation takes no such liabilities into account, except as they have been reported to DSGSK & Associates

by the client or by an environmental consultant working for the client.

15. No change of any item in this valuation/conclusion report shall be made by anyone other than DSGSK &

Associates, and we shall have no responsibility for any such unauthorized change.

16. It is assumed that there is full compliance with all applicable central, state, and local environmental

regulations and laws unless noncompliance is stated, defined, and considered in the report.

17. If prospective financial information approved by management has been used in our work, we have not

examined or compiled the prospective financial information and therefore, do not express an audit opinion or

any other form of assurance on the prospective financial information or the related assumptions.

18. We have conducted interviews with the current management of the client concerning the past, present, and

prospective operating results of the company. Except as noted, we have relied on the representations of the

owners, management, and other third parties concerning the value and useful condition of all equipment,

real estate, investments used in the business, and any other assets or liabilities, except as specifically stated

to the contrary in this report.

19. We have made no investigation of title to property, and assume that the owner’s claim to the property is

valid. We have not attempted to confirm whether or not all assets of the business are free and clear of liens

and encumbrances or that the entity has good title to all assets.

Documents

business Valuation Report-30.01.2010