APPENDIX 225

GUID'ELINES FOR VALUAT.IO.N or EQUlTY 8HARES OF'COMPANIES A~D THE BUSINlESSAND NEtT ASSETS 'OIF' BRANCHES

F'A.RTI

1. ~~ arc opt.'IaDUggukidJMS fol!' v:aiuati!:m of eqwty shares- ofoompao.:ie.s. 8,rimly. (bey wiD be

~4~1i! ~n a!l"l'a:iWlrurn gpld~1b'Ia. .

2. These ,art purely ,adifilrllisilr.ab",·e illl~tion!l :fol: iIntemal ofrx:ial use and are, tlmref~J\e. :not [10, be q,!!otGd,. cited Q.!" pwbJi*d: 3:>'. ~e, official gu~!iilii(lB: of '!he: ~1mTIem:.

3. 'riley will bf.i, d1k·C'live in;.m the date'" of the:iri~lOl!!e 811ill wiU be appJieab1e to all pend.mg wlIl,'future eiiS~, ansi!)g mroousilkrauon jn tbe Depm1!l!llet!lt oiEooll.Omk Affairs,. MiniSlry 6ffi.illamc~-. -

4. S:pociaJ~. Ol~'.!l,Wdclil1l,os: wi!] 'be apjplicab,le:ro 'nhe''II'~lil(ln'6f:(Gi) eq;I)~~y share-s ·of oompliiDies •. pnv·ale 1md·lloonclimitedl;

(b) [pdi;m b~l:Dcssi'tJ;el·asS'CIll,t)lf 111m ,~h!l- tea ,~anies; ilIlld

,(e) lilldian. bwsmes~iflet ui>el;s: of !!he bnm.tlloes Qf fQfeip oompame$,

PARTU

P,itldples Md .mel'hcdo/wluatiGn

5. Th~ (lIbje,w ... e of !Iibc va!llJati.Ql!!proocss is ~o make a bc.sl fiea:.iODa'bille jl!!lligmc:nt of !he vall1C ,of lhe €qwlY .shoui: o~a crutlpany 01' ,of Ilre b'iilsin.eSil ~Ild ~. ~se;iS.a,~ Oli.br<mC-h .m case.sru'isiog ['OJ] villual2loo ll!!!deE Ule Froo.l8JilJ E:[clha.ngoe R,e;gtiilafu;m Ml, 191.3, aad the CapJt:I'liII lssil~S (CoIlun1)' Mt,. 1947. Tbe be~

reasonable - _l ofl.!he vaLue wmbe refmted to as ~be fair 'V'a1I1E, (W)I and it wilU 'be ar:r-ived at. on the

l'i1iSi1$ of. 'i1g 1n tJie m;l!])m:l doe-scrjl:ioo mihe· s:uhseqycill parag'raphst

0) Net asset v:;due (NAV)i,

(2) PJofi.t,.e~rnpooity ",mile (fIECV);. _

0) M!Ili'kcl vallie (MV) ~DIIit(l:,care of 11~ .sbaJics.

6,] Net Q,mll vql~ (NAV).-Th.e. IDet asset vallilIe, ·IIIS at'!he latesl ill:ldited!baJa11lC~·ilb.GCtt. date. ,will be ~aIol113lsd Sl11lJ!'tiP]: from !he .~ asseUi of file oomf,i<!!1l;:i 'ojf of iihe re,.I'aIlcll Wid ded~lIg: it]uiI\C,from. Wit diililS, dll!:s, bMow.m~ ·ami llB'il]]ities,.irn::llJI.;Jing '~l and nicely o()lu.ingsnl Iiab'ililies :aDd pnife-.re.ru::e C~p'ital. ,if SIiY. . ]11 olber' WM'd.S" ~t st;o~. ~ ~,eseiit. me ~ ·~e'~" m.'_ the.: -.' b." _.11 .. ~~ .. ,. .S ~Iet pIitj) .... id:i.og (!.or all QQtsi~e ~e:~ ~ ~renllL1lIill ]UI~:lIljlles. JiEiJ iliI~ ease 0'[ ~IES, ~e ~e[ ~et value as; ·calcuJared

fiQ'!lihc' as~s sidle of tlie bahl:.ooe--Shecl :i~ ~ above~ammoe~ ~~i![~e eeess cl1ecked. wi~q,~£~y share

~PJlta1Ji1~~SI~~ ~sef"l~"",,a.n~l§,)c;;!l' ,l:bfllil'£1X _9.:!~~~~)I:~.~'!tles~ -.,

6.2. I!ji ~<tlcllWMill:glbe :nel acsset vahle,l!befolillWilDi,8 poiots shaiJl Jlwic.iihn]y be .kep:t m ",.iew:

(l.) If.Ol; .Dew ball~~ !ss'lIe 'ill a ~ issue of ~ml:y cap4mJ ~5 p«tpt:l!i!OO. ~t :SlIlalil. 00 IblelJ jOito

iL'OCQHt.. -~I: .. ,ue 01 dle fi'es:li'li:!i~ue '!I)f equity e~itd will be ~ddnd.!~ dle :~~isting: "twt:

'WQfib" ,as at Ia;test balmc~.N;heet. dalleaml toD reslilItLllIg·''liIcl WOtitib." Win bediVl!11ed by !he ,erilm:ged equi:t.)! capjjtaJ base, ii!lc.lli~og We [1ie·~lll.~llC as: wclJ .!IiS the lJ;~bonu.'S bille.

(ti) ~l1I!tangib!e a~l~tG goodwi~1, patents". if. ~.OOP)'1jgh!ls, ete., wi.U not Irle ~al<.e.ll .into acooUJilt lIllC'aI~l!It,mng ttIic assets,

(iii) :lbvaIJ1il'wmil offilted MSe'i'S, ~fimy, wiU o.rd~mi:I'.iiy n~l;bell!"'e:ii 1:IiI!.O ·aoOOUIBit. BUI: ~f 11i6 re'l!'8luatiDllli 'hadlate-n p]aoe long: ago. nry nearly l5 Y·ilms: ago,. i.t. may notbe m!lSO'llable 1:0 decfuct itfn.'Jm !he·lOU<lJal!IS~I:>.

0''1') AnY' reserve which bas ll.ot ~Ii Cn'latccl, out 'of genuine IlJIofits, erout ,of cash win 110t be bakeD iElw ~OIl1Ilt., ,fl'.g.. amal,glmlilltion ~Pi'e er -~efV'e -CFe;HOOby d!lWl,giD,g tl'iGllielhod of

ileprecia!io.lI or re.serv,e,~ by r..ev.al.mallim of (DiOO wt'lS" ·t:Ie. --

(v) Provisicm for ;grfl:tll~~Y based on aei.ooriilll 'i'ahil.'3lJilin.l:mtootfiar ~.es, as wei]] asprovisoDll fm' :lUIy \lIdle.!' temti!],'l1l~ts .(Ill;!:; '1:0 tbee:lll,pJ.qy~ wi!J. 00 ~''Q'II'idoo fur imdde41llc_iled ~

liJdidll~I:Jj~, -

(wJ . Umilities 1i1:e, arrears ,of !ll1ef~en'Ce dihiidend. liii!'IC~aim.ed, dlivii:leud:i, diyi,'lie:llds Dot provided f'Ol . !>ep:u-ately_ but. prop~ tOo be paid out <Of reserves .• mjs(:eU~l!Is C ',diilm'e to th.e exJ;emoo£ wdlten. off. debit baLilOOe (I'll 'profit, and ~()S;S at.00I!lilt, arrear:s o.f __ . aooo. elC., 'win be PlOll'ided. for and. dooltc~d! h{i[filhc ~taj ,M!~l}tIl, Stl :a]S\lI. ~1fl!I~p.rQl;'~si.o.tl .... [11 00 m~e filL bad :and dMiol1w, debts.

(vi'i) Ill, rhecase ()f oonti!Q!g:emt: 1i.il:bil~bl~:s" :1iI jll~lIt mlilsl be made of r~ nabiYitic$, tl]~_:are HkeJy !111 impair Urm met woolh of liberomp2I1!I)' aI1d il!. ih~d, lllepW\!'.I~d not on !:be liav.ml:l.CS s.ide;_ fu ,ordec to' do; ~dte cJ;aril'i.ciilfoos nccellsary ma!)l' be obtained. '.-om the roIili:pllnyaud !hoir aliwron.-

(yiiQ . Iii. lh~ imlltler ofpoovw()'!l for ,~~reci"'!ii)n, am folln,win,g aw.RIi3.~h. will ~ ad'opkd:

(a)o :~f:tlae,ro.mp!mY hatS: cQ.I;I,ustmrlY beelll :IbUl:iwiq tIl.e: Sltrnigii'll I~De melbtld of dqlret:ia~oll,. the Ikfl~aiiiaD as p.oov.idt.:d for i,1l 'k acc·QU!i~, nJr>lY 'bi ~tedllli.callic11i.18tmlli1\8 tmnm 8:'lS<et '>!alue M.d jt 1-5 Wlt necessary t{l, reCion d!e(ll'~ffilioll. aooorililm!.g .~ IDe WlitoeIldOWI1i v!l!lue meliOOd 'il$ d~d. by tie· ,eompany for illcQJ\le-ti..1t ~l!II'll'o'Se$.

(b) If,. however, wirfblD iIhe prcocdmg; fi'l,l',e yeaJs,lh~ oo!iip3!lit .lias swi'tdrul over fr·om .!lie; wliuen ,down. . vame .ms'mod to dis ~ttai;gb.l IJlle- me'!!h"QiI(, ~lIelil the JPFOvhiulI for

de:predatiool w.ill be rect,o~ ~oodi. e wnUCli. dlo,wlmi value melibod as if ~e

o.owp~ basnot ~c 'nfuc swiftil oilier. :pc' ~.e_ QOI1'l;P:i'ltrIY :iboumd bil. 8!i~e-~

to timfiim fb.e 'Decess:~ ~nt'mmatiQ.ll".~(i'Ilfciaill.y iMc.iiati.O'n, cb~ood for ,iDl:;:Qm~.IM Pll.!fl'O~S. Wb.ere, ~,we.ver, iU!O~Ila1ilYroUo-wS: dg,htfum:i,lihe begi - tD~ stEadigh~ lWe metbod, for Oe.p:ro;::iatioJl of new faef ~e-Gs. rurlholllgh it milt'll. be.illlg ~ Wf.ittm doW!ll il'iiloo m.cm.od ,o:r'vaIUiBtionrOl"!!he older :asse'l!~.UtIi ~'i!C~atioD. as. p:l'ovided for in ~llIe accoWtI1lSof tbe compmy wiU IIIIC iKi~d ~11I fOe !!he 'ol~ aad I!.~WasS~:'l ~au$.e 'Q)~ ~~~~t'be te,S;lfdcd as ~.' SWI. _itch ove.r ~ 'the· !!l1e1i1IDdof ~(leill'eei:a.l:lOfi. 'Ib.eo. a._·.~~rioo (or d,'(:tlermljjJliLtg. whe:drer '!here bas been . a gw,Ml::h ,9l!l!f er tlO'l:I:!i iiM, whe~etr Uirn;G lilias ooelil a change. i'li themeliwd tJf depr~datlo.n. m respet:t ~,f!!he .wme: r~m, :ii.:iisetsWii!lil1UIiJj ibe pJ1e¢edi1l!z "'iii yeats.

(c) III'!he c~ ,oiv,a]uatt().l!l of braoebe!i" tl:teprovisUJoFor dGpreciMion win ~ways be R>f:!k<lned aocon;tip:g w !he w.dlt'OOCOW.il v.M:iiiC .method, If llhe ~~~ .iY'C based ,QD ~he SI!r:.aiiglit 1hlC .me:uaod. then the oom;paDiy IiDust ·btl 3~kcd 'In fl.m!1i£'h tlJe dsprecJkruim pi'O",mon ,~oocdj~g.kI Ilbe W!l'~tte:m dawn ",ruIDii' m.~.

(,,"3 n.e ,~al'\:~~~.QIlQfihe Ti:erassct Vru,llG w~U be- ru-.o.rded, wilb IJhe :!!~essa'lJl' dsmi]s,. ~II, 'O!.e pr.o j(}r1tW s·l!.Qwn i.o.Mni?XUJ!'e l.

1.1 p·'n)flt~ea·m~'ngc,Ql'fj'cily Mlw (P:ECV),__;The '.I'Ofi:[~ilIl(g capacity viiilue wiiIJ be cakubiOO by

c8pill!!1j;s:jDg tile !!iV~e gf th~ aftee-tax. profit<! :atlhe ;[QUow,iog rates:

,( i) l:5% .in. '!he case 'elf mm'Uf<!C't'llU:'~Dg com:p3.lniies.

(Ii) 20% ill ihe ease ofb:'ndliliig ~lI!lljes. '

(it!). li7~<%, jll!'!!he case of "imN~aje: cOOlilpa~".lihat l'5 to say; cwnp;mi.c:l.w~ose tw'OO;ver {i"OOl

l1!'~iDg;u;:ttivity ]:;;. r:nOll'e ~ll'lli. 40%, but. ksll, Iha:n: 6~ of dim; tal:3ltwnovu.. ..'

1.2 ~[e oldirnanI~. mi; C!Lpa,~a1~~i~D ~~Of;a rnmlUr3ct~riD' C!)iiil~Y. W'jih1.be lS% Ih~re~a)' ~ ex(;epuonal cases wbere the ,ea_pnaJllSaUoo fillt$MaY Ilavc.ki ~e lLbewlseQ. III . order to ell~'\D,e fii.1!!' :md

e~iJtable v.ar.luaooQ. Sweh cases, wntte ·ru.~til1)ltl may !DeOOI.O be ,ex,!I;f(:ised" are iLlustmled 'below:: .

r(i) Vii'here,. :in the di.ss 'tj\fili ]~sted !ihare •. the· !!ver.<lg:e of W'l n~~ a.S:!>et \,·.~l:Ie and .~ proflll;eanJ!icg C-3pac4lyval!oe bam! '~J1 t5% capi.tIJlsaliolit rate is less 1h0lln !be :ll.i'II'er.ma!'~t prioe by ~ ~~bsta~li,al mar-gin. ,&"3;)' by 00Ya' .20%. [n. S\!:Ch.C~l .1Jie; <:mneiifi.1 w~~l,i;S.ual~y. ha~~ ~c foUowing CIlru1iC'liel'lSUC'S. vi~.a ti'act J'{l:OQm of Jugb. and OOtmSI:en.t.d!iV1rd.eIi~ paymell~ ~ oonll:!;; ii~~~ e.sulb~~shed pmition as mark,et, Leader in its ti.el!J, <). ~QOd .reputatloll. ro:r!he ,qu;illty and ink.:gr.ity (II iil$ mans'gcme:tl't. eee, aruJ!hes:e wOl!lld be tt.fLcclied Inllhe mflrk:et pric~ of mB ~i'H:t.

(Ii(l Where:a. oompany h,-,u a high [p'J!'~!Fhab.iHl)' 13Ite :II;!j: ~,~Ied. by dl,e. pe'.l'c-el1l!t~¢ O'r rtbe :~d}er tfu'

profits'w; the ,equ.i!ty ,c:apii:llI: ~fme G:lompnllY, .' '

om Where.a C!lJ.I:np.any bas d!iyeP.lmC~ itll ootivilu.es lind is !I IIII)1!til-illiiit compag;y. a!l:l\resl!!l~?i whicil it would be itn a positiol'l to SU-Sitonn ~.ts overaU ~rofilS e\"(:1'1 :if any (IPS pall (If l!ll

o;!)eC3l'irn:!!S runs into' (lim clllltres. . . "

I~ such, Ca!S~Ii~ !he capit~i~atlon ra~ of ]5% cou'd~, Uberaili:sed $uJtab.ly ~p I<J ~ ~,ni1!i!r:Ir.t,!1 '0.1 n~I:~ i'I. v:ttiW !~.o arrJ'vLtl!g, a'~ {i .farif Wl'!:d eqmtable ·vah,JIaUolIl. N~dl!ess, to elnpbaslse, Wilis '~,IIlCiretlOn sil(D1II e~is&<dl with. griat CaFe and rCMlhOn Mle:r talkin.1!! imlito ac<lO'1,li~l all reiJ.e.vant f~l:cirus,.

1,3 fie ~ of eilth~liU1iili.8; ~ prof'ilt-eMWIg ,c;~ly y,aJu-e HC$: ~g 'Idle ~S'eSS.me<Q:l ,of dI:e /Ui,IJl: "t.lfmt4inab,i~ 'eatW~s of Ime \lu',SliDcss., Wii1Iile: IU!eJMIS,'ureW ,~n profits and. ;l.wfitabil!ity wou[d x:-r.te ... 0; , guide. it siloul{lilot beoverookedd-lilt ~ vMltlati~is: for tbe.lli,"r'e' add ~u: it is, Ole fuf~r.e ltt1Iaiiqt:ai'ma'~ smam 011 mmi.ogs dilat.!:s o,f'g.;eater signrJfici'llilCe i~ '!he~oceSIl of vatlUal1on. AU Ullevaat f3~!m$ '~, ha'l'l II bearing ~l!i! llliie r!J'!mleIDai:t1taiiIliable eam.i:og-s of I!b~ bl!!SJl'liC-sS m~t. 'Utewfoo::. be given dne (ioosJd'.e.ra:l:ioo,

1.4 l1n.~ P!'lOv:islon WI' lla:c:a1iou;. tile mea.oo 'm oomplitatioa of the aYeIf. poofiits, ;md, IJItiG lEreatlliK!,lll0 tIi.e., pt'o~J~h.'i]i,tyoft:b.e. ft~~. isstIeof~capibl, i~;an,~~ a!\e. of ,~~lar i~,"~' " .. iili!! the (;;~.cuIlat:iQtl of lim futW'C :maJIntalna:lIe earn~D,8:S. Theslli:me deaJ:'!.wijh ~Illh IoU~w~ll,g PAgmp~ .

']',S ~i!',i$roll_ lor' raxutWn......,f,or .:mputation ,of 'p.rofil'S at'terUl:ll;, lPl0vlsioD, for taxarooo will b

assuml!rl~1'!!1tc,fo]k!,wiDg bMis:' . ..

(a) WI'del,. Ju:,ld public limited crmtp(mia : :Provis.iOI!, for waUon win be, as~ ,at tile (;umn Stat8tOIy rate Il~' lthe' IJ)¢Qme·~ Act. If, IilQweva, ''the OOti!l;'i) tax Hiibiji~" as: ~ ill! tbj iiinl.iw.d a«oo,!I,if5 of (he, compaq,y ;is: fIilO{lC dum 'Ibe CIm',MlIt stat!lltooy ra:te., ~!!; tbe OlClI!ldi'l wi! be iI.ssumOO m,1iJjbc>t to a ~m-um &laWWry limit of j~~~p']Ul'i: SlU11U: 011. oompai~ iI!I1I.d~~c 1l~e-'13X Act, 'I"he exprus.ion·~id '~ 1mblli:fY" will mcm 11m 8ivmg.e ,~ '!be

tax l!;ab.llllty (m ~ !ll)' If:m Ihe: pJCOa:ll,ng Weill years or '!he acWiaW'laX Babmty :In the

Jaws. ~c.cffijl!ifulgycm, . r is iIiIi~r., _

(b) 1'e-acmnptllfle.J': PmVi:s.iOD fer tMaoon wil~ 00 :assumed, at 70-% hi, cot!!dd'eJ!li~n of i:lbefitCl ilba!

Qu,40% .of ~i!; poofib, fuc,yba~ to :P'3¥, CeQwall jli1~ome,tax~ W'ib:ilG 011 .!te remaining ,6(1% OJ the profiu •. they bavie ;10 pa,y lnlle SUliliagriclilllural io.came-tax" awl! ~. 10 :additiOOl,ihey .Bi'U ha,v"e to.pay swtax :a1!go. -

(1:') Bil'Wlc1ic,": :!fi.iJt Ihr_anelle:s: oonvmJllg ll1I~lve:s iuto public '~ pR'V.ate ]jjm]1:Gd. t0m,~ ,l'Q-viSOO.t!LfOf'ta,x8tWI! wiiIl be ~ed!l.t 10% alitboogh ,u Ilr.mehcs" dley may 'be: prtyigg tax a1 Ole, rete ·ofJ3.So%..

(d) _ P:l'iwrI(,~ /Jmi'lfd co'l'l1Pml';e.r ,Md d()$ezy' heI;Jp.r;Wic·c(I'#iPJlRi'u:' :' 1m the case o.f iPriivatt liQ(ljited

,oom,panii.~ wbiCllI]:I s·e .t(lliOfi!tln~ as pDv.ak! limited rompam.~ pro"liiSio.l'l for ~oo. wi.U

be me.ac~lI:l1i1.~, n . own in. l!he- ~lIIDl'$of die ~. :Sll~jc:ct. ~ Oli mimmlUl!l (fiif •

~ stal!l1ltoIy rafe:. . .,.ICVef, (be IlHVatc limiJtodi»IDPlllDY is being c~ ... med ~lC! ,I PlJbJ~

lh-ruitedl ,O(MlliPiUlf, ''_ actwll:!l wilD! be reslfiCkd 'l:Oa~rw; of 70$. This iPC'Iltlion will ihold ~ WI' l;iwsely Iilcld [p"lIblic- limited ocmtpmIie:&wlf) (i.t", publlic 10i1:cdi rompwU~: not ]~ed not propo9¢d.i;Q N Ibted on me: S'td:Id,,~cfi_aDgG).

1,'6, Uelk?d_ Q/~aJion oJaw:m,g~ pr?fltr.~JC.eepiD.g, i!!!Jv:i~ '~l'lhG iOOjecti~, il! to attiYe. at. a lroe andifeal!iS-llc eSl!)lm:atoof'1he fli~e malllt .. ~le.eaIm1Dg;s (I,ftlte b&tnest the f01:Jo~mg, approach wW:

be :adopted! jill oomp1iltbig 'die a'lmlge :pmflts:~ .

(OWl $l!.Q1iI!~ b.roadly. be 'dlooledi W1at tb~ profits ,sh£i;lIq m 91eauditoi aeooulS Qf ~ ,eo:rnpAll'Y ·iR '''InlB'' ~.rofit5 andlhat tbm bas; ken, IlCI ~p! at ·'w,imdow~i'll.i' of llliIe 'atcl)1!(~ w foliate _ ·piWlls. hi pati!kUilar., it is: UnpwtaDt to ~lUde !mD.~:mi~Uaneoti!l. ,imomne of an alm.om1lal! o<!1Wfe or ~tildle. wr.iUog: backof]WViiSl(J.Qs,etc"

J(2) OrdlillUmily., 'me a:y;er~in.g ,oI~ts will be ,dOOG [(If illR f:atelil. thm'tl years: I'm' whicb M!4itcd ~OO'll~ are ,a,vi;tiWl1k. 8m fit app.rnpriallli C3~, e.,r .• wheR :tb.et c!!pitaJ b~, of lit !;,lompWl.y ~oc 'the fresh iSJ>llIe iso! ,!Ii :Sizable ,atder Q!:' wbu-.e the [Ilm.f"Jb; Show malic variatioJl or w'hgre '1Jbe premium. :iilPro'lv,~. is 5Uhsitan;IJ.ia} or' 'W&e1re 'lI,lebildU;stry c~crnoo is SlI~t W cy'cl~ tteDds. ~t,. "'tea industry"', it would 'beadv~ ·tQ·lake ii11QilQOOunt 'lhe~ ,mfits of Ute maiest,Jillffl yem:i im:l cmd«' to iUrirve al 3: fai:r ami!: ~stic

,estimate of lbe futw:e mailil1aiHbit m:mgti.· .

. (3} Itlhe yt.,. car to, , y~. variiatl~m th~ ;profi,·ft'l, of lb. e 13£i 0:Ire~ ~e.atS ~ 'b;o;." ,000. side. rtd.·~.· .'.to be nonml. (:iii !:bomb ru!le fOf detrun:u~ll1g W~I1!cb. ,oould lIelbat, tbe :armwdi "MUIIiCIl does, ·D.ot: ~eed i!00ut 2~ ,00(1 .Ihe.

mtDimum dM.s net vary li1l" mote' '!hm :m% (rom :!he: mirrimllm) the 3!vefi!.Plc iliiUl),be ci'llClJlatelll'mli 1M

bads of a ,s:w-.pk~mcti~al a"ICra,~. Bllt if di.e 'poofits ~ ris.iog i;lQ'DSis{e II'rOIjl ),em' to yew: at ""

~d,y mOO .Dd.1heu :lirJC lCSISOii!: tobe-lli~;e !'bat ilbe lIb~n,g .~!ld wintle: . . ic _. !tho avera;~o ~a_y 00

Cruro-Jal.1::d 011 a, wei.tlbtcd.bas~Sgjili]Dg ilI-wcl.8~ af'3 fur the ~at<m yar,:2 ror~· milJd~c: year alld 1 fib1i

lite, .fMtll. :es.t ,rear,. liiJJ ,.su, ~~ ,e3tl~i, lit,_WiiIl ~ ~ttil!le.' !:t.n.o 1.00k.' . __ , mttl d'le.'': . aceoWfi.'.U ~f die,' ~.; c,., edms two.;. ;~ .. oru:'~,.' a,too to 'cllook: iDat '!he [ismglrGruiI III profits !is stabkl.,Q;m.vmruy. Jflh¢'P«ifits ii!'1l: dechnmg 'Com'l~

fiiOO1\ y~ to- YuaJ'. it wtlUld bc:i\dv'i-sabk tQ assume the (,Vofitsof Mily Ale .lat~ year bec~e :iIIiji' Il¥emgo.---$i:m&ile or wei,ght_iliI~w,ill Slv.e a hlg.beiJ fi,gUI'C' _ Ilbc @100IS: of '!he Jalest )\~. Mti ilL wili! :Di:lt be'f-atWOO lOO ·$~_mc .;'!JijglteL frofi~,.m it siW:ilt1:on of ,OODSi5Ilool!Py deelliQiing pt'Qfl)~ Here,31zo. it. woWd be adv,iJs3bk 'ro look .. iinto tlIeOO~I:s of'me bunfiive yHtlltomakG ajudgowot Of! tb.elreii~:in pitlffris. •

~f abm.incss has :5GSltaill¢~ 1~1l; lili!U the lmili:eyeW':s or 'e'IiIell in die 1<llesl t'WO years, '!be profit·eamtog, t;:ipaci~yvaluo wil!l have .10 'be .~ded as ''miir. because .it. wou~ :got dieJ!! ~ mami_stic to ,assu!!Ilcliha! the b'llsitncss wouM earn pmfits io,!l".!ie ~' Wt\'!tC'. BIl!1! if' iJlIie w~i~,~s:has wstmlieda ]Miiim o.Wy om: (If 91iiii ~ yems (ihelatest year ,ooutld, also 00 Ilbe: ·od\dy:ear oJ kJss) 8oc;t 1b,er:c. arereili.liOIl.!i. to beli~! 'tblI~ ths ~ss in t1!I~ .¥tiIT was :3: ~ lo:ssand docs oot mpIeseot .~ true earning p!)lentilll of die li'itis.ilil'C:SS, it ~.·be a.,pen ~ exdllds .tl!t~ fre.a1: .yew" Wi~ wo.ril!: out aIlI ,avcragebased ,001 Q)c w;ooking msu~u of Ihe,oommwog four of 'lhe ]at~ "ve' ye.u:s, n,ho'w~[. lmat avru-age 'rums ,001: to ~ moM liIm!li the profits ru: chc Ia~ .. t

year. th.ell it, wtQ1d !be advisabl'e ttl ,asmme. 38 a mCilSDI'C ,of ajbuiool!~tcantio1f!!!. dill' profi~:M IDe lares :year. ,

It Wll1 00 evideDt frrom tliie ,ilb!;n,r,e '(h,st I~ the as:sessmimi£ of ~ hll.UIie ,mabnaiMble eMtiln,ss. tfui ~,i:se,or disCfetioo an judgmeru,camiJW.1t a1k1ge'me!" be :ilVQide4im~t>1lH'Ws: and cirtumstances: milS, !be ;iVeD due eOiiJ~d.mli:lo~ beIOUi;iJ, vi~ is ~e:n,

1.7 Trewm:t!'1It of the projllnbiJify ,t?i .fresh: ifJf.fe ,oJ.ccpwt-rn W;;ld~~g upon the profitab.lil:ily of 'ib( add~tiollalll ca,pitm bmiJg. raisro, '!he f'o]Il)Wing .facWIS, ,m1iISl be loolql lo,w, :

(a) The ~~ for whicl1 _ ilbe capit3rn is be:ingraised: wh.elberii i~ 'k! flinaroce a defil!li!:e new ili.J ex,paosiOOI pmj~, for wlliell! (he c~ ooJtI~: a lener ,of :Iutent or 3D: ilnd~i:I'iallictllc:e~

(b) '\Vhcl'l1e.r!!he ,el!Jl'msronor '!heoiZw If:l-m~ct iis "I)~ Ilbe groun1'l" and liiIlgillIe ])).rogress !lias, bw~

ma4'!: m ,imp,lem.entiing the project - -

(c) 'I'M: WreeMt ,of mtW',!!,; prqfits lliidl ~fll:iibility ,of tbe project. _

,~S WIlc.re &.c &es'h j&suew cap:ital ls 'ioo llEiill,)W'pOOiIJ of fiil.ao~~g: and cxpao5.ioo or D.c.w :.;rojeet ;m(j tli.eIG are reasees to kolliev;e tlJaJt,Jfie, :p~jeeuW\lOOli!llMlaimail!L me ,miU:iLbjl!ity ,of dte busm~ Jt t'OI;1!ld be as~~ I!hat.~he mb ca;pjtill WQ1Illd ooRtwihutero lihep,roiits, ~ W. a ,matim'l'fm iIiIfSO%, of the ,existing rate ,of profitaJJUity; ill. ,oilhe!' wonb die ma:rin:mm w.iU be, '~Illated as l~lId~;

',Fresh cap'Ji~, " ,,', .

l4: 'X. , ., .. _ _ • - )( EXl.:SiUJlg pmfiu>mlef laX, lli:!lSJ1i!l!J,J DOC WOI1h

This wi~ De lidded 1:0 awe exiStiii,gP!'fGMls, :~M !:ax. aad the toi.a1wiU be divi~dl by die ooh'll'lloo capital bMe W ~iYG at I!hc fu~ure m.8mminabJs liiammgspet sb~.

Bud, wl:l.«e ~ freSh CIl!,l:I,Ita!: ,is; sm.:I.gbt tQ be raised nnt fN' f.i!lancmg: a. concrete IIDW or ;r;xpanSJOD pmjoot" blilt fm:geolM-aI: reaso.n, s: li,ke, mod, emi~,lil:ol!l,', ;:Ind, ~P,' ID,!Kemc, ',!itt, of ~!!l~ dlihiltlom of fOre, . ' "%In equi~y "cr fo:r!h.e ~, 1i.stEd Ii)!l: '!he stockll::XCrumge, it wQl(td 'oot be ad,!'!WsabJe to ~§:l)Jme; '!hat tl'!elJ'"s]l corm-route '10 '!he profLl1abiUly 'Df l!bc bus.ime:is jll! 3J!.Iy' _ibl!c manu .. hi! dIe· Dcar tu.tJ:ir;e,,, In ,Sll~ c:~cs, wbile ., f~hisme of capital: wD~ 'be iliabo. i!i!1Q accolmt, :00 ~jtiolial profit!! win 'be i.umed.

1 ~9 The ca,lcl1l3lion af pro!it.caming capacii.y vcailne will be'tec,ordeld with dlcilooe5Smy delails io !r.hc pR:I' fQ.l'm!a Shown. ln Anll~re .11.

g,!. ,MQ~t ~l~.--lli qlle;stJa of mfiGt w11l~ :!IGting il.'l it ;BUijd~lftn.e faelm" ;f11'1 vsuailioI!! will ,obv.iolllslyafisl:l o:nl!y in ditose ciiI$¢!! wb.C1te 1h<:snamli bemg ~aJw::d am ijsled on. me :!lroet ,~~hiUklj!;. In

!01dI ~S. ·Ihe nm~l ystlle w~1! be t.mn C{),~!:!moe af iIi!lb.e rtOUowi]!!'g m::w._.J1,;' -

0) 'IDle a-vernge marbt price, wiil] be ·~le.rmined' taking' ~ni:Q ~oowu. ·IM ~k market q, ~~"!Il,'Q, liS :m the. preccc:i.nS three years (aftece I'IltlkiI!J;g app.rop:riate idljl!stmcIlts: far bmms is!llI.CS, !ru.1 d1Vf~en~ pil'ymellt) iiSund,er =

(ii) Ole high;and ]Gwof rue PreQeding two }i'eat!i;. iiIid

(b} ~ mgb 3l:I~ row ;of each IDOIIth mb~di:1I8 ~.2Il'Umtliil.

(2) 'Re illlIiCf3,ge mai1ret price w.i.I ~e ~ m ~.bocqrollild as a rekwant faclol' wlli1e sedlill,8 me, ih-iJ vaJu:e (FV) wiless lheIYe a!'ieil'eOilSOnll to, belfu1i'e9iL!Jl '!:he .mat.ket prlOO i;!~ '\Iitia.tedl boY~JaQ .. ;e transactions Of~ Im.Dilnd!ativc praetKcs.

0) Tb.e' rea.sOMbilene~~ of the f<liii' vill~ will be ,~ 'a.g:ai1liS1J; Ih a~G: mal'ket priceootbe fQU:o'l!i'~~in.es: {a,.

if tbeaJvm,g~ of Iha' ufl!talset vable and.!h,e, p.otU"eaming c~.aclly vme ~. 15% c\i~'tWi:sa[o:i fate .Is,les$ !ibaa '~,ea:vtill1lige Ifiu1rot pli'ice b.¥ ~l :.ro~, rudy. the!! !he avcmge wliU. be regardEd :!he (alit' vahle.

(b) iif~ hQ'W'!'I,¢!'. ·Ihe aVerage of fu;e netiillSse! mu.e ~ 1M prQt1;t-eariliio.g cfitla¢lt,)' val!1.¢ ,is liess than dll'l a'l'elaIgC martet ptice by ,ill s~tlml!ial_mlirgiQ. say ~y O'l'e,[ 20'%,. tk,o,~ profit ' cap~ib' value may be rewQC};Cd by Hbenlli:s:ing SUl.iWlly tile ,eapitai-satlQllD.

:mle ore full(!wing m~OO!'., ' _

:if the average" market ~cci.'S Q)fe iMu .20% to .s0% of ,tlW fai. v.ilillue, 'dlc e"Witaliisatioomt~ wJ.II Wi 9%.1f 1m av'Cr.age l!D;u;bt pri\ie :is .rome lilian 50% to 75% o:f b fafF' vwue, tile oClilpMIi;saoofi. rare~ ~ 10%. H'1he a .... erage marbt prioo, :its lnI»e!than 75% and .wove of !he, mit'o'!liIuc-, tDfl,capit~isaticm ratcwUl, '~.:s%.

The farur vdue wiG! be d~mlim:d Q:IJ the !basi .. of jhc. avera.g~ of the D.ct asset ,,",ilfoo and Iile reWoi~, :p.l'l}fit-eam~ll,g ca.paclty lI'mw:. 'nUJ:!i! whilr: the 1:IUII:t:et~:alile wii!! Dot be a :iIlktct "itliPul;" ~D vah,l~l!tiG'-p' ~t wil'lile :foolil'gQiscil .~ :made ~ClI.f iio ·!he.'~d manlllel' wbrn: de:remlilil!il'i!g 1-1C faW-'Ii'alue ,of iii billEd tih:~re.

g,,:2 1'k demil!s of the martet ,,I'jec and Ute catoola~fum o:f '!ke :l!v(;]';il:g'e 1l1'iil':kel :priioo wlilJ be IiGc~d in

'Ih;e pro. fc.U1Nli sbo~ ill Annexure m~ ,

,g,.1. FatT \lui:ue {FV).--As: ]lIdiieated iII ]llal'11I ,5 abO'l'e, tb~t'il1lru VallUO'ItiOOl based .m:i bdit ~Dahte judgmen~. win Ii!Ie called.m; fair value {pv}.

!l..2. In '!be ease of compimil;S., !he average 'of the net :iiiiset, v,a1UG amlihe profit. ,eam:ing C3pac~ly V;aJw;l 00se.· .. ,d. ~II th~. . •. :,5% Ga,jl;d~ati0l!' r.a!t- ,,!ill ~, .me ~, poinl for de~mirung the .fair vallie. The followifi$ 'P_l'Inclpl!e$wiU be kept m 'l!''IleW l:Dati:'j"'~8: i1t i!i~ fmr vaJ.!!JC :

_ (1) ]DJ I{b,e, case ~~ a listGd sha:JJti"iflhe IIve!~ of ~e net i.Uset ~ ,ad !ileprofit-eill:I'JlliiiliS cilp~cilY ''oi'Wl.IIC CUi, .~ 5% Cill.p.it.mllaJi\\;!..I],rn~ is Jess; llli'IilItlillie i'W«apIDaJb~ p,r]ce by about 2lO% only" ihe-r!l !he avttra,g~ willi be :re:g:axded as IIle fhlr vaJue.

(2) If. bowe;,;e-.r •. die a:vem,ge '(l'f Ute '!let uset vidue ,and ~be proJ'lkarnirng ,c:ap~ly va]lIIe is }less !han. the average mm.-et pri-ce, by 8 SUOOIWlJtiaI ma:r~n, ie .• byQ\I'er in% Ihe~ the profi:l.ewmIlg capacity

vill't!le may berc-wo.tkGd li:1 lih¢railisiOI! !iui~ the capilali!>aUoII! rut'Gi of 15!jli. IUp to' a ' ~~m.uliD. of 8:%"

'Th.e fe' Va]ue wm be deteritnil100, 'OU 1Ik- of die, met ~et vaiJ:le'wlhe, J!ewmGd pmfiHamm.g·

c;ap<J.C~~- v~lIIe. ' -

f:!) As iii matter of prudence, i4 rna, be_des,imlii~ 1:0 dedl.q;(:t Oil ~~ ,on,e )'cac',s dll\':iil~.lId' _pet" ,!ih:n [rpm, doe avera,ge 'M mCllet l'&!iGt and ptofit-Emll~ngalpaci!y values w, ,arrf\i'e at !be, fair VWIle. A ,CIIilWM of this order may 1Iliil: rcq,uDed as a meg!lardi ~gsil. mi!iQfeu!!ec.nailn.tic;s:,

(4-) Where lliepmfil-ear.wmg capacity value IS "'Ildil'" or DGlJ1]igilbllll, the ~value s!OOuJd- be, ]i!miW!J ~. l1i1i1f' o~' 'me !let asset. \'illue. if" bo-wever.l1ie ne'~iiG~S comprise :nws.tl.y liquid a~b lille ~h ;rod 'tiMmk ilJala:ll~!i· ,or- easily rewsahl~ ham dehts,ih.ef~ ""alue: ~'!ii!!Y ~ rlXed CUI ta lWHltilidii mike, ~ asset, 'I'lIlue Oii ,up w 1Ih~ atCWlail ,wb. ,au b •. mb~. ifdle·latter ls e'l"eo, ruig.bCil, Th.a ralil{)loale ro tire pro,po£~1W1i is

!hat .if the busillCss ehoeses tQ li.quri~!.e j~tf. i'l isliik-e'ly to rt.Mis~at '1l1.asi: truls\l'.ailue. .'-

- (5) If Ole mare is oei!lerHsred '!lOf ~sed 110 be !listed,. ill!,) ~\I'~ (lIf the lie--t ,~l"alue lP)d Ihepmfil~!lg CiilJlQiCiry ValllllS ,should be discOunted by a~ lea:.5t 1: 15% to tate aoCOlJnt of the restricted iilo~jj_Jity of the share.

9.3 .mlhe e_ ofiiwrlli!llg tea oompames a.!ildI brallelles;, ·lh.c·.[air 'i,!'ruiJ(lw~l~ 00 d!etmni~ ,omlbc bSisis of'

lime ~cipl~ w~~ined m 'pmas ] I) lilld 11 beiio,\I,I'. -

UU VaIlWti'on oj sterlirtg ,~Q C~4'nt~.f.'-The ·'fID~i.d"v,atllatin {as di!;timgu~ kom the ''JPlilysiciId'' v,a!l.iuaUmi done by the Tea .So<!W) ,orUle hdii!!ll busiiroass of ;s;i:~d~lIg ~ea oompani.c-s iil IbG ton.tltxt of their llldianisa'liun Ufid:er tD~ Fl)roi.gll&.dii~ Replatioo Act, will M dalle fiB me ihMisof

thefo:J!Iow.in:g prijDC,~-pI'c-S: -

(a) "I'henet asset value ,(NA V) 'Wi~ roe caJ.eu~di ~II. diIl6 mllial ~I:!.el ~rd!cd:1IIC-Wiig aU COIJibge'nl _1~ab.iI~lie8 as wdl as ~"';UKailiS-W -and lia\i!1itie1'.- Ill. particmar.libepfufiJ!:S. l!"emiltabJe to [Uri.c paliel'it eompiWy -!lP .lQ ~. dme Q-f -Y.dy,~tiu:1i' &bilIl bL; deducted, as .~. ~w be r'BgaWGd as debu declO the pw:ent company. A:nyuva]uaUo:Q ,of filled assets w.ilIl :a]5(I, '00 d~l,Irted fNm !he total :a:lScct:l as ,c1tplaili.oo :II!! par.a (j;2(iiO OOO"i'C, ullless dI.G rev,aiIll1IDoEl '~: taireo p~ace long ago .. It sllOOld, howevel!',be-ke:pl in view thai: Iibe elQc)usl.oo.·Q!.Jieva]uado:n docs not lead to li.!g_~k; results O!! [to euam 'Vw.ilia.tI.oos, as lJi;dw~1! companies; wiUw simi~lIIi' ~u.

(b) 'Care !lhooJd, be. take:o. to ,~~ ~m aU i!~ooooe-(ar;, ]iabii1.i;~:s am deil~ :~ ·!ibe~eits oofore Driving att'he met asset _cc(NAV).Filr lIrui!i .~se, .: ll!~ Inoo.me4. Dtpat'limnt IiMl'Iil1d ~e c0-lliSu]lCd to ;2$00:11. the illOome---~dQ.es :reeewalhle r-ro.mlh.e sredio! cQmpmlies. (c) 'The profit·cami~g ca:pacII,y viiilli1e (PiECV)wiU be caloPialed by :~ lhe :a.vcmg~ ofliii\;pretaxprofus of the nve yeatS jI'ODfJ W9nJ"' 16, dedlucting 11)% for'~ p,l'6IO'i1SJOi!iJ .aoo cap~tal.ilsjl1g!he- 3fte:r~tax profits to arrive at .W 5%,-

(tf): 1I Iihe net a'>Se;t v,alIne ~N:AV)is 1.eS'~' dnim ftill pFQfiJt_:,~Dg ca_'acity val~(! (PIECV).,llben tbe n~ WiiSC:~ 'iI1~.G w,lliI beliUl~ as .i1h.e :fauY·~lIIe- ~f ~e l!:lidum b~~IieiSS. BUit .nf Ilhe iil-et ,0000set ViIII~ :15

mom OJao iDe pmfi!)-eamwll 'C!I;PQC~~y v.altte il'iien !he ,nV;i'!' (IoF die lWG will be ~.eti as Ilk f.W-

value. 'fbil~ b ~(I' emiIUC that t1:i.c: ruUiI5sc,tvahi.lli is limd:; . .mequate f,I'(!If~L potentfua'l .MIiI .Ihat:

.!h>e val'lJlatloo dlJOs oot in :\1!IIy ,event e<Coeed die ll..et IISsel valJi.ie. , -

10.2 The lima!. vaJuaaU!l will be- del:eJRljlloo Oil file Ii~illi of Ifte: Tea 11I00rd"s l'ePGlit aruJI !b.t; eomments Df !he MiJ-n~try of Commerce Ita,eroon, dOl!' t3l:.iq; JI!lOO, oonsideraU'QQ a!I~ rel:e"limi facl.'Otit

11. V<l'fl~i\Qi;joj b\!'Wlchts.-- Th.eva1uUoll of 'bl·,m--\ihes 'of 'foc-ejgllloo.mpam\e$ iii_ OOJ!!:e.lU of tm:ir lIidia!li83'bOO iIIllide:r ·It>i> Forei;gm E.x.c:b@g¢ RegUt]atioli AOl will 00 doae ,pn Ilhe ~w;i:s of l'be fo]k;wila,g 'priru:;ipl~: _. -

(1) Eacb CMe wnt be considered ,oni"-~ 0Wl1I merits becawse die mil>1boil of IDdi~~goo ma;y differ , fmIiIilI case to case, dellelOOi~g 011 itlS ,cirowmt:mcc~s.

. (2} If '!he .. ~Ild ny' .' ieses to [take- ovct olll), the lbusill.e~ of the flOte:ign !oo'anCili'l 'l:ogmlier

wltlll ,~~r~(!.:assets HOiI,]i 'w.ilfl] '!he fo:l'>eigo. branch ir!.lIl.Ocd Imt. 'b!:;, obJ~w.. lUdeS!! there ;W'·e

~iI\i1SQgS La ji1IiSliii~y a.COIltt-a.--y vjew.

, _ 0) As :far as possible. ~he ir~OO!l!:ie~tax liabUity (J{ lili'Ie ~iW.t:b may be. ~ft to be djsch__a;rged.bYlh~ 1Man~1iI iJtsclfamd tItm'lndilm 'COropIlUY ma.y nO!. be sac.ldloo wUIl !hils ~illibil.ity. "thlis:may K:qWfe tIle lMancllli ~:!t leA; wi1h. sllff.icie!rt ~IS. t!',$1'" the Hililllil~aDCCs to be m;ade all~t of pa:st pr()fi~ and h~ offl~" Ua:bi li,tiI:::;, e-Mn iiliid, b.lm.k balaoces !llut of the ClJXre'Ilt asrelS, -01lC.

(4)Wtboreil:le beigo M!Im:Ch js,aUowed tiel' oo.iiiiioue wijJllij[ podio:n ofitbe a.ssel:s: iiiid Jiiabiil:ilies; tU: (01) fer '!he Pi!irpQSe 00' ilB '''willdiDig ~ ... ~. ~OO'\!'wn,g' me ;8ll~t51 and d~h~ 'jk liaititie& Bilt. i

wiU iifii bel '~ntl1Od, to caIitY 'on aily imami'iflfacnu;ing traOiillg:lOf oo.mm.eJei.iil acl!J . If at 1h_.e time ®.f .tti

w:iin.d]og u~ '!he' as~rs ,excmJ: Ilb:e 1~a,Di.llities. the ,s:urpi'g; w'iiU'oo repama1cd'~ it the appt(li'l'a1o( Itlu

aeSeliye Sank.

(5), As; reg.oos. !;'iil.uation, it may beoone ali. ~ basis ofmeOOo:k v"e ,cr:flilte fi~oo 3SSet5pl:W;. dl( CllI!Tell1 ~!lS, l~; me Cllrri~:t and. cQ,m(' : ,t ~iahiiltu.es ,~bJ8' actUally"aken ffi!i:1'.r b~ me. Illdim €tlltlpi'l'!'Iji' sultj\'l&t :w !)be oolid'ill,Qll tmt il il!; . l)rofit-t3fnjll~poteDliia!l. FbI this p,YQi!ose, ihe: profit~earnillD! ,cap~ty vale .(?E:CV) ",HI be cail~:lli1~_ Oil .'_ba&ii'J ortlne~l'l'efl1g~ p!li'>'It~pmfii:s O'~ 'ike l!asldm~ years. tax. pro:VI!lI(l~ .:U 7'0% and, C;tpltdiSatiOt1l at 15%. If ihe froillt,.earruKl1,y vaJ~ ]8, le.ssMrn:1Ji i1lDl lIeI: asset vafue mnt.il;meil; ;1D&ve.lhm too vai,'Ii!atrol'l win ·rtJoe donel '00. ~. QC '!he avuag:e of 'lhe tw( values. III olh.stWtO ..... ~ v .• ati.oo ;SllIDnM !1otiDiany e:y;~~,~~dl theDet.aslSe~ valUtli oflbc ~1:Ii ooin~ ·..mm ,over by ~ Indian oomp;:m;y. and. shOUild ll'Ot ~G'!j\etlve any paymel!l~ dioooUy er ilid~I~Y ~OJ ,ilLlB.Bilile ·as~ lite goodWill!I. ~tc.

, .. ,<'6,) As;~ ,~eral.pro:posltiQJl, it wo:nllW, be ~!te£oo CJXc!ud'e I.Belimenli~~p«:!fits',~ild,.ilead ?ffioC l,,~b.~li:~lc.s: dQe to !!be (r.DielJll rompa.!!.y as If til.ey are &b~ ,due 'In !~ .rnlherlb!an to JIlCLI:Ide them III die

iCiiiiis:idefatiDD p31yable by m.e Iqd!JjaDI c.omP"f)Y. ..

fiaeb case wi~.I1ow.ever.h.a;v~ ~ be colltiidered 'OBI its ow.!) medtsbecanse i~e coull!! be cases WEe a O'lu~~abte ,capitail b3iSe for IiItfe :~.wan compom}" ami fQreign share w lihal capl!~1 'bas~ Ii!P to IIle leve.l pem1ihlt/d ~ liIle Foreiglil !E!~ban:p :Re.gulatl(llili A,~ W(J;OOd, k '~IL on tlte !ill!l'e'mtfued profi~ iD!iI

;head offi6.~ liiiliml.i~s~Qrm.i1l8l a pm. of t~e t:..ota:lI Co:__nskI«atiOIl. .

n. VahMtion ,on the basil' of «willil'fg b:uyer'--WilUng &ellu" C(Nlcep.r.. VI!W.le. as ~ geuemJrule,tlile ~onceptCif <~w~IUng hy~williiig ~er'~ iB; not oo~tabfu far vanOlUs ~as;.o:llis,lbepricc agreed Wi

bet_n ilIe parties c3J.! bel!.OCtpted~ ill I!ie f6llQwjll.glwo, ,1;ate.~ori!Ml ,~d' C":S i '

1. S7lfflll: valutlSsel: lilUtc tolID.oonsidcrai!iQ:n rnvolYGd~, not ~ Bs . .5 .~:,rmd diIc;s'Rw~ bern,g hD$lUJied 00 notoollStitute mwc lfua:nU)% of hi total ,equity ~~tG!iDZ of ' die oom,<my" '!be UD.saruon, may be ~.~ if !he price !I,greed W 1Kltwe.cn tIm partie5 tloes oot ,~ceed-

0) 1M; m1lin;,gmwke:l price, .if tt .is: a !lisiCd siI;;u:e.

(ir.) IlliG:pfi:Qe .lWcetti~ed iby Ilbc 311d'jttli:!i of:tlle CmDpao)' if .h ls !:WI iiI,:listed shaN.

To ,gulil'd .aia!mt 1Iite; [pCllisibJilruty ·(If ~,llrJiiig.1ihe s.Jrnrt.:'l, ioto, man VallUe llWliOCUo:ns. ,0lliI~'01Ie su.ch 'lrniisaCtio~ in. 1M 8ru1lie :m~s sbauid, Ofdi~-ly be BI(Qm ~Il ll: paiod. of oDe year.

n. C'!ues 'wJI,re tile fair~f#e .is 'f:ID~w ,Me price u,gretd to .bt:~$n d'J;e panles •. -- If die; fmr value a$.le~ m:(l~jog to thesegIDddmes, i:oll~s i1t:;m' . c.e;we-ed 110 l;l~eellilei !parti~ by·a, ii.ieiY small ~ om)!,. s~ 'bydloul H)%~., if. woli1'd ibe..ab<k not 1:0 di&tnrb I[)c pr;iioe a.~ ilbe ,OOiiSi to Ibc l:lilli1~O.D have 1ig000~.aod se~ :amoogsll1l.Cmsclves.

N'1I1rnC 'Gf the cOlll:lllany ••• .,,, _ , ••••••• _ · ••.•..•.

Acc¢Jl1ilimg to rM 3udiled bltmce.sh.ed.3o$ cm ~............... .

/lid ,;;usel ~~~ (Not 'V)

.Ri. Ukh_s. "" ..•..• - ~ .......• , · ..•.... ,.." :R:!i. ~" ~ ~ "' " - ~ -.

Total! a:sseltS .••••••••.••• " " , ,.. ,Sh~h~er~ ii'llIl1d:'l " " ••••• , •... _ ,"

D:eJac.t ,al/.liabilitks;' (I) Eq~' capi.taru ". , " " .

1. ftefefie!DCc' c3pUral ~ , ,.... 1{2.) F-ree; .reS~S"";·H" ' " , .••• " " .. " ••.

2. ~ww'ed aniIl !Jl!!:iecW!td. 'bolrrowm,gs •.•... ~. T0tal1 ~." ~ ,;+ ,; .. +' .. ++·· •. ~.~ ..

He.' worth:

Nctwmtb:

Add : (I.) Resh,eapilil is!>OO (fate valiDe)

Dedu'CJ ,C"9ntu~B'em liahJlit~s: 1,

2.

3,.

4-

.5.

l!hVlW()rih.;

3. Ourrent ]iab~BS .. "" .

To'ta.I .... ,.~+ ...... i!i!ii.~.1I II ••• ".~ ~"'.A. ....... t.,,~ .. II"'" n." ..... ,,·.111',,"'.· .. ~~-,,~ ••• ~"'''.II ........ •

~ of sbim'. iochldingfllash and bOGUS .~ Ket~setvalu.c:{NAV} (i'ltr!Share

Net as~t .~ ()4'A V) ou::omwogll:! tBit: com .. p3_I1y':s ;au.dilOr!l

.. II "'_1, ~ " """,.. ~ .""'11."" ~++~;. !>;;i •• 11,."'''..,.' 1I't-"II ,,;,;;+t~ ,._. .:r""" 'i!'"

Ave~~e 1XQfil:s berQ~ iax {Olli the ~js gr .$'ilD,ll~ at weighted aWl., as the case may be :

IJed#CI' :- PFovisi.OiI!I fOf itaXalro!i! at.., " ' , _._~~,_ ...•. , .. ,., .. .'%

AIfeJ~profirn afl~T tax Dedi.td .. h'qf.t:eI!'Ce dil'idend.

Neiprqpr (1jj~r ItU

,Add: Ci:;wtrimr.i'icn tu p.roPrs by /raJ:! isme, ~"I 4I'!J' form profi~ q/ter t~

N~r:1' qf ~ity .mans, itwl~i",g Jnm ami bo.R.~ ts.illes &m'i¥i;g,~'pt!r sIi'arl'l' {EllS)

PTOjit-eW'rlmg C;!fpoC'lt)' \larlle' (PHCy) at 1'Sf!" capitalisarw.n ,rate I(Le., by mlfl$ryill,r fiPS .~~.),

PE(1f-i:i'c~wlng' to' the' ()t'lmp'flny",ftmditor:r.

1. Y'eait

2. Yew:

3,. 1,4/lfJ,ft yeat' 4, 'ulJtitlHWS?

t 2 .. 3,

'~f.0l PNced~Dg 12lUlCJdtiis)

A:¥Gl'agc rnm:e. price 011 ~ ;IDo'V't b~:i5 ..

13. Gt:m;:nd,.--1Uj~· .~ to S'lteSS '~ fa~ lihat,h.O'WC",e:r ela!bora!e "'00 del:aHed 'ihG ;guideillines: !MI'ay 'be, th,eproo~ of V8iW\ti~ 'carn:J.Ol ])iOiSrubilly be reducedw <lI, uu(orm3iild iiillle:dble mi~Ii~, '~treise. ~ '!he ulli~ a".l~ysjti, vat\)l~tiall!wUllhillye to 'be ~~ bylhei ~Xi6I"dse pf Judido\!is disCl!\~?D ,aruj Judgmeilt ltakillg nil(! llC(:OOIDt aU lIe1evant f;~I'S. "fhett WiLl aJw,IlYs be several fa~OTh" e,g.> ql!lahty and jl!lt>e;gJ.ity of ik m_~Elgc:meDt.p~t, ,and proS'Jl~lliIv'e. cQmpet~ yield O!1 gQl~arnblc; secm:iljes and. mark:eloootimoo4,. ete., w~Jicb, are uot evident D,om d'!-e face 'Il,fdle, ba:llmc[l.iskets but w~jch WJ!I]sltcl!!gb' i'nfiueaee the wool1 ,of II .S!hare, Simi.lai.ylHil.eaecnl!!lil~ migh_t, be "wimdow Wessed" w~1!lt a view to p~G'iI!1:lI8; iI b~i;g:~le:f~pi'Ctl/Jfe?,f tliie,' Ofi'1Q~::S '~ling~l'I.'The ;ggi~i;n.es are :i~telliU~~~ ee pro~ide;"the basic frainewru1:.for valualJIiJ!lJ and to IruDlIlEilI5e; fb,e element of subjctlil'YC OODSlQenl1ilOO. Whsiie, they sb iiedw_dy ;1nd oonsi:stcody ~n <Iln eases, Illit;y :!hallldoot be uga:rded ,ail elffi.-nJ!!aMn,glhe

~i8e of, [cUm! alld i!ldgmenlll~d to ani'l'e!'!rt ill f,ai!f ,im~ eqwlablc: .. all1alWlI.

, 14. llwo!l!Wi be~!lcl'tll to ,eompm tkebui~ of ~e ,valua!ioll areofliDg to ~c; f1'ld.elirn~ wi.th ~Qf tnel~y'ii, 3tl!ilIN,s,. On ~ one IJ~, 'Ibis W.ln bdp redlllCll1! mots iii. calel.ll]IttJO~ as weI] asa lOO~ter WMlenlaodhlgQf 1!bie fuels o:f (]we case, altd, go !he omer e. tills 'Win trn!!ble us to expJaiill!he ibasis, of OW" 'vl'llm'ilWn to 'Uii;e COD1J.1~Y ~oorn.e~l