9.M/s. S.M. Pradhan & Co submitted their report dated 18th
December 2013. That report shows that M/s. S.M. Pradhan & Co
called for additional documents. In their report, M/s. S.M. Pradhan &
Co examined the accounts for the years ending 31st March 2013,
2012, 2011, 2010 and 2009. They found that the entire expenditure
of Rs. 96.27 lakhs incurred by SKS Ispat was on tangible assets, capital
work in progress and intangible assets under development. The
expenditure, M/s. S.M. Pradhan & Company reported being told,
consisted of mining rights and other licenses, and certain legal and
professional fees. It was only the initial expenditure in relation to the
development of limestone mines in Bilaspur in the Bilaspur of
Chhattisgarh, in the nature of geological reports, acquisition of mining
rights and other pre-operative related expenses that was attributable to
the cement division. On this basis, given that there was no further
expenditure incurred by SKS Ispat and since the cement division was
still in its formative stages, M/s. S.M. Pradhan & Co concluded that
the only viable valuation method was the actual expenditure incurred,
i.e., the net asset method. This was the very method that M/s. S.B.
Wakharkar & Co, too, had adopted. In their report, M/s. S.M.
Pradhan & Co listed the various other valuation methods available. In
particular, I must note their comments on the P/E valuation Method,
one most energetically propounded by the remaining objector, Tata
Capital, as more realistic and accurate. M/s. S.M. Pradhan & Co
concluded that since the cement business would take some time to
shape up, the future price ratio could not be ascertained. SKS Ispat’s
investment in the cement division was limited only to the mining
rights. SKS Cements had incurred expenses only on acquisition of
freehold land and other pre-operative expenses. Therefore, using the
P/EMethod was unviable. On the other hand the Net Asset Value, or
NAV, method was one that took into account assets less liabilities at
book value. This, in the opinion of M/s. S.M. Pradhan & Co, was the
only suitable method. As a result of their assessment, M/s. S.M.
Pradhan & Co concurred with the view taken earlier by M/s. S.B.
