Report on Valuation of Equity Shares – Om Pharma Private Limited

1. Executive Summary
 In accordance with your instructions, we have undertaken the
Business valuation of Om Pharma Private Limited (OM).
 OM is engaged primarily in manufacturing and marketing of
pharmaceutical and health care products.
 OM manufactures formulation in therapeutic segments like Fertility,
contraception and Anesthesia.
Shareholder’s Value
Based on the assumptions put forth in para 10 , read with the limitations
mentioned in point no.11 and subject to confirmation of key factors,
Shareholders’ value of OM is calculated under three approaches- Income
,Market and Asset. Fair Value per share is in range of Rs. 148 to 271 per
share as mentioned below:
Income Market Asset
Approach approach approach
DCF Method Market Equity Book
Multiple Value method
Shareholders’ Value from operating 151.48 117.89
asset Rs. In Crore
Add: Non Operating assets Rs. In 72.68 72.68
Crore
Value available to shareholders from 224.16 190.57 124.96
total assets Rs. In Crore
Less: 4.96 4.96 4.96
Crystallization of Contingent liabilities
Rs. In Crore
219.20 185.61 119.65
Number of shares 60,76,160 60,76,160 60,76,160
Value per Equity share in Rs. 361 305 197
Less: Illiquidity Discount 25% 25% 25%
Fair Value per equity share 271 229 148

2. Introduction
We refer to our engagement letter dated ….. confirming our appointment as
independent valuer of Om Pharma Pvt Limited (OM) . In the following
paragraphs, we have summarised our Valuation analysis of the business of OM.
Page 1 of 26
 Report on Valuation of Equity shares- Om Pharma Private Limited

3. Purpose of Valuation:
Based on discussion with the management, we understand that the OM’s
promoters are evaluating the possibility of divesting their stake in OM. In this
context , the management requires our assistance in determining the fair
value of equity shares.

4. Valuation Date :
The Analysis of Fair value of the equity of OM has been carried out as on 30th
November 2008.

5. Work Methodology

Our review has been solely made on the basis of following information/records
available to us.
• Annual reports of OM as on 31st December 07.
• Leading database sources, market research reports and other published
data

6. Industry Scenario

Indian Pharmaceutical Market

Report on Valuation of Equity shares- Om Pharma Private Limited

The Indian pharmaceutical market is small, both by Western standards and in

terms of per capita consumption. Although India is the world’s leading producer
of generic drugs, its annual per capita consumption of pharmaceuticals is
among the lowest in the world at approximately $4.50 per person, as compared
with $820 in the United States and $13 in China in 2006.

The value of India’s pharmaceutical industry nearly doubled from $3.2 billion in
2000 to more than $6.2 billion in 2005, or by an average of 12 percent annually
. According to the Associated Chambers of Commerce and Industry of India
(Assocham), the Indian pharmaceutical market is expected to grow at an
average annual rate of 13.6 percent during 2006-2010 to reach $9.5 billion in
sales by 2010.51 This growth is expected to be driven by:

• access to low cost, high volume generic drugs;

• mergers and acquisitions: industry consolidation; and

• India’s growing importance as a pharmaceutical contract manufacturing

and services location.

Approximately 80 percent of domestic industry production consists of

formulations, with the remainder consisting of bulk drugs.

Currently , healthcare access is estimated to be less than 40% of the population

with 88% and 24% of urban and rural population respectively having access to
healthcare. The current spending on healthcare ( Public and Private) is
estimated at USD 41 billion ( 6% of GDP) and expected to increase to USD 159
billion (10% of GDP) by 2016. Government healthcare expenditure accounts for
19% of the total healthcare expenditure, which is 1.14% of GDP and which is
expected to increase 2-3 % of GDP during next 5 years. Private insurance
penetration is expected to increase in the mid to long term.

The Indian Pharmaceutical market is 4th in volume and 13th in values globally .
The current size of the Indian Pharma market is reported to USD 7 billion and
has registered a growth of about 12% in 2007 ( IMS MAT Dec 07) . The market
is expected to witness accelerating growth , making India among the top 10
global market by 2015-16, with estimated market size of USD 20 billion. The
market remains dominated by acute therapies; however chronic segment like
cardiovascular, diabetes, central nervous system and especially segments like
oncology are growing faster than the market.

In the post-product patents era, India’s domestic market is changing, reflecting

rising disposable incomes in urban areas and changes in India’s demographic
profile. Leading drug companies are putting more emphasis on meeting a
growing demand for high value low volume, Western-style “lifestyle”drugs for
wealthy urban customers who make up approximately 12 percent of the
market.

This highly lucrative market segment includes drugs for “chronic” or “lifestyle”
diseases have grown from 10 percent to 20 percent of the market in the mid-
1990s to between 25 and 35 percent of the market today. The demand for
these drugs is growing at a faster rate, at 18 percent, than domestic demand
Report on Valuation of Equity shares- Om Pharma Private Limited

for the acute drug segment (12 percent). India has often been called the
world’s diabetes capital and the rates of aliments like hypertension and high
cholesterol are increasing annually.

Key Growth Drivers:

Intense domestic competition, a growing reliance on exports by the largest
producers, and India as a growing market for contract manufacturing, contract
research and development, and clinical trials, were among the forces behind
the industry’s growth. Further growing income levels, increasing disease
burden of both acute and chronic diseases , better healthcare access with
improved infrastructure, penetration of private insurance, emergence of large
corporate health care establishments and changing regulatory landscape
including Patent Laws are key growth drivers for Indian Pharma Industry

Strengths and weaknesses of India’s pharmaceutical industry:

Strengths
• Cost advantages (development, manufacturing, R&D, clinical trials, and
labor).
• Large pool of highly trained manpower.
• 2nd largest number of U.S. FDA approved facilities.
• TRIPS compliance.
• Lower operating margins.
• Drug cost a fraction of the cost in the West.
• Growing biotechnology industry.
• Reverse engineering skills.
• Largest number of DMFs.
• Bio-diversity.
• FDI up to 100 percent.
• Strong IT skills for research data management.
• Political stability.
• Strong marketing and distribution network.
• Well established network of laboratories.
• Low level of investment in R&D.
India’s comparative advantages lie in its cost competitiveness, its reverse
engineering experience, its large pool of less expensive English-speaking
scientific and engineering workers, and its well-developed chemical industry
infrastructure. India’s pharmaceutical companies can also operate at much lower
profit margins that their Western counterparts. Today, India produces some of
the cheapest drugs in the world, especially because labor costs are 50 to 55
 Report on Valuation of Equity shares- Om Pharma Private Limited

percent cheaper than in the West. Industry experts indicate that infrastructure
costs are 40 percent lower and fixed cost are estimated to be 12 percent to 20
percent less that in the United States and Western Europe. Consequently, India
can produce bulk drugs that cost 60 percent less that in the West and can open
a production plant in India 40 percent cheaper than in developed countries.
Because of this, India has become a hub for pharmaceutical research and
development and clinical trials for many leading foreign pharmaceutical
companies.

Weaknesses:
• Highly fragmented industry.
• Pending clarity in area pf patent with respect to data exclusivity and
compulsory licensing.
• Government price controls.
• Low margins.
• High tariffs and taxes.
• Substandard drugs and counterfeiting.
• Most Indian companies are small by world standards.
• High logistics costs.
• Lack of experience in drug discovery.
• Industry concentrated at lower end of value chain.
• Corruption.
• Weak domestic market.
• Low levels of per capita medical expenditure.
• High logistics costs.
• Lack of experience in drug discovery.
Source: CII, Intec.net, Financial Express, Bain & Company.

Government Policy:

The new Pharmaceutical policy has been pending for approval for last two years.
The draft policy has recommended price control for all medicines featuring in
Report on Valuation of Equity shares- Om Pharma Private Limited

the WHO list of essential medicines. If implemented, this will significantly

increase the span of price control. Currently , 74 active pharmaceutical
ingredients and formulations based on these APIs are under price control.
Increase in span of price control is contrary to the overall economic policy of the
Government. Expansion of span of price control could adversely impact the
industry as well as Fulford.

Source: Leading database sources, market research reports and other

published data.
Report on Valuation of Equity shares- Om Pharma Private Limited

7. Company Background and Present Status:

7.1 Background of The Company:

OM is incorporated in year 1980 and promoted by Mr. X. It is primarily
engaged in therapeutic areas like fertility, contraception and anesthesia , with
strong support from Anabolics and certain gynecological products.

OM has its registered office located at Kolkotta and corporate office at Mumbai.

OM does not have its own manufacturing facilities . It has outsourced its
manufacturing operations to third parties.

7.2 Present status :

Present sales dispersion ( for CY 2007) of OM by therapeutic area are as
follows:

Therapeutic areas % of sale

Anabolics 22%
Hormone therapy 11%
Contraception 15%
Infertility 14%
Gastroenterology 9%
API chemicals 16%
Other Products 8%
Anesthesia 5%

7.3 Strategies :
• OM continues its focus on improving work processes and investing in human
resources. A new web based Field force Automation system was successfully
introduced for assisting the sales team in timely collating relevant
information and improving field efficiency and productivity.
• OM is presently pursuing number of options to strengthen further its product
portfolio in its different niche and speciality segment.

8. Summarized Financials

8.1 Summarized Balance Sheet of FIL for the latest available two years is given
below:
Report on Valuation of Equity shares- Om Pharma Private Limited

Rs. In Crore.
Particulars 31- Dec 07 31-Dec 06

Sources of Funds
Share Capital 6.08 6.08
Reserves & Surplus 118.93 104.06
Shareholders funds 125.00 110.08
Secured Loans 0.18 0.25
Un Secured Loans 0.19 0.60
Deferred Tax Liability 0 0.12
Total Liabilities 125.37 111.04

Application of Funds 125.37 111.04

Fixed Assets – Gross 14.43 13.41
Accumulated Depreciation 7.11 6.05
Fixed Assets - Net 7.33 7.36
Capital Work in Progress 3.78 3.75
Investments 3.00 0.05
Deferred Tax assets
Current Assets, Loans & Advances
Inventories 24.70 18.80
Sundry Debtors 24.11 17.89
Cash & Bank balances 43.32 65.85
Other Current assets 0.68 0.54
Loans & Advances 42.51 13.51
Total Current Assets 135.32 116.59
Current Liabilities & Provisions 24.46 16.70
Net Current Assets 110.86 99.88
Report on Valuation of Equity shares- Om Pharma Private Limited

Source: Audited statement for 31st March 2007, 31st March 2006 and 31st March
2005

8.2 Summarized Profit & Loss of FIL for the latest available two years is given
below:
(Rs. in Crore)

Particulars CY 2007 CY 2006

Sales ( net of excise) 146.06 119.23

Other Income 5.42 3.86
Total Income 151.48 123.08
Expenditure

(Increase)/Decrease in stock in trade

Materials 62.68 51.64

Manufacturing, distribution and selling and
administration 58.22 49.65
EBDITA

Financial Charges 0.14 0.24

Depreciation 1.19 2.03
Exceptional items 0 2.53
Net Profit / Loss For The Period 29.24 22.05
Tax for the current year

Prior Period Items (Net)

Tax For Earlier Year

Net Profit / Loss After Tax 18.41 14.32

Report on Valuation of Equity shares- Om Pharma Private Limited

Source

SSSource: Audited financials for CY 2007

Report on Valuation of Equity Shares – Om Pharma Private Limited

9. Valuation Techniques

By its very nature, valuation work cannot be regarded as an exact science and
given the same set of facts and using the same assumptions, expert opinions
may differ due to the number of separate judgment decisions, which have to be
made. There can therefore be no standard formulae to establish an
indisputable value, although certain appropriate formulae are useful in
establishing reasonableness.

The basic valuation methodologies adopted can be classified as:

a) Asset based approach;
b) Market based approach; and
c) Income based approach.

A) Asset Based Approach

The Asset Based approach considers the cost of replacement, Equity book
value or liquidation value of an asset as an indication of the fair market
value of that asset.

We have adopted Equity book value method under this approach to

have idea of minimum value of shares.

Under this method book value of total assets and total liabilities as per
latest Audited Financial statement are considered for arriving at Equity book
value of the company. Adjustments are done for contingent liabilities which
might crystallized in future.

B) Market Based Approach

The market approach involves identifying comparable companies (usually

publicly-listed) within the same segment of the industry and uses the
comparable companies' financial information to derive various pricing
multiples. These multiples are then used in calculating the fair market value.

C) Income Based Approach

The Income Approach recognizes future earnings by calculating the present

value of projected cash flows at a present value discount rate. The income
approach includes a number of valuation methods all of which convert
anticipated economic benefits into a present single amount.

The method used is the discounted cash flow ("DCF") model. Using this
model, projected future cash flows are converted to a capital value at the
valuation date using a discount rate that reflects the inherent risk related to
the business operations and the industry.

The DCF model is considered to most accurately account for the magnitude
and timing of projected revenue growth and the capital additions required to
support that growth.
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Report on Valuation of Equity shares- Om Pharma Private Limited

The advantage of using the DCF approach is that the resulting valuation is
based on the Company's own expectations of future economic performance.

The problem is that there is usually little to support the Company's

projections. Despite reliance on the Company's projections, the DCF method
tends to be the primary method of valuing companies, as it is the only
approach based solely on future economic performance.

Discounted Cash Flow method (DCF)

The DCF method is based on the premise that the value of a business is a
direct function of its cash generating ability. The DCF method values a
business by discounting its Free Cash Flows (“FCFs”) for a pre-determined
forecast period to the present value using a suitable discount rate.

The DCF method involves the following steps:

A financial model of the business is prepared for a specific forecast period.

The period of the forecast should take into account obsolescence of
technology and balance economic life of the intellectual property after
considering the risk of obsolescence.

FCFs projections for each year are derived from the financial model as
follows:
FCFs = after tax operating earnings of the Company + non-cash charges –
investments in working capital, capital equipment, property or any other
assets.

In the instant case, company does not have history of debt. Balance sheet
indicated very negligible amount of debt. In view of this we have selected
cah flow to equity model . Cah flow to equity model incorporate financing
related cashflow such as interest expense. Cashflow to equity reflects free
cashflow to equity shareholders.

The present value of this stream of FCFs is calculated by discounting the

FCFs at using the Discount Rate (which has been derived using the Captial
Asset Pricing Method - CAPM). Since in the given case we have considered
cashflow to equity , discount rate used is cost of equity.

The value of the business in segregated into two time periods, for the
explicit forecast period and thereafter.

Therefore:

Value = Present value of cash flow during explicit forecast period + Present
value of the cash flow after explicit forecast period.

The value after the explicit forecast period is referred to as the Terminal
Value or sometimes the Residual Value. The Terminal / Residual Value of a
Company as a going concern can be calculated in one of the following ways:
Report on Valuation of Equity shares- Om Pharma Private Limited

a. A perpetuity at assumed growth and discount rates;

b. An Annuity for a period of say 5 to 10 years after which a compete
replacement of the facilities will be necessary;
c. The net realizable value of the fixed assets and the net current assets at
the end of the period of projections;
Report on Valuation of Equity shares- Om Pharma Private Limited

10. Assumptions underlying Valuation

We have valued OM by using all the three approaches of valuation. Key

assumptions common to all the approaches is that OM is going concern and
will run on perpetual basis.

Adoption of Asset approach is mainly to get idea about minimum value per
share of OM. Income approach and market approach were used to identify
the range within which value of OM lies.

We have arrived at value using three approaches and applied Illiquidity

discount of 25% to the values arrived under three approaches
because OM is unlisted company.

Other assumptions specific to the approaches of valuation are as under.

Income approach- DCF Method:

a) Profitability Projections for “OM”:

The profitability projections of “OM” for the five years ending 31/12/2008 to
31/12/2012 have been taken considering analysis of past two years Audited
Financials of OM and Industry scenario of Pharmaceutical sector.

The outflow on account of incremental Net Working Capital (“NWC”) and

additions to fixed assets for the aforesaid period have also projected on the
basis of analysis of past trend of OM It is assumed that there will be no
capacity expansion in the future.

Since OM have hardly any debt in its Balance sheet, we have adopted
Valuation model of Cashflow to Equity and outflow of Interest and tax has
been projected in cashflow after analysing past trend.

Certain basic assumptions while projecting profitability of OM are:

• Variable and semi variable cost are projected by considering latest two
years average percentage of expense to sale or latest year’s expense %
to sale.
• Fixed Expenses like Personnel Cost and Rent are considered by adding
10% increase in expense level of previous year. Audit fee is projected
by considering 5% increase in expense level of previous year.
• Depreciation is assumed at 15% on Net block
• Tax rate is assumed at 33.33%
• Working capital level is projected by considering Debtors , Inventory
and Creditors level as on 31st December 2007.
• Capex is projected at Rs. 1 Crore each year.
• It is assumed that Capex and incremental working capital will be funded
by internal accrual of the company.
Report on Valuation of Equity shares- Om Pharma Private Limited

b) Growth Rate
Explicit period growth rate:
In absence of information related to financials of company for last three to
five years, we could not arrived at historic growth rate. In view of this we
have taken inflation rate of 5% as growth rate for explicit period

Since Pharma industry is expected to grow at 12 to 15 % in next 5 years, we

feel growth rate of 5% as reasonable

Perpetual Growth rate:

A perpetual growth rate of 2 % is considered because OM has stabilized
business.

c) Discount Rate
Since company has very low debt history as well as low level of current
debt , we have decided to adopt cashflow to Equity model. Since cashflow to
equity model is adopted for valuation, we have taken cost of equity as
discount rate.

Generally, for determining the cost of equity, the Capital Asset Pricing Model
(“CAPM”) can be employed. CAPM postulates that:

The return on a stock = Risk Free Return + Beta x Equity Risk Premium of
the Market + Company specific risk premium

d) Risk free Rate of Return: 8.50%

Interest rate of 8.50% taken as risk free rate of return – 10 years long term
govt bond.

e) β Beta: 0.70

The beta coefficient (or “beta”) essentially represents the relative volatility of
returns on the stock vis-à-vis returns on the market. Beta measures a
stock’s systematic market risk, i.e. sensitivity of the scrip to the market,
which cannot be diversified away. A beta greater than one implies that any
change in the market index results in a greater percentage change in the
market price of the Company.

Since OM is Unlisted company, we have taken median beta of seven

Pharmaceutical companies dealing in formulation and having relatively same
size of turnover and share capital.

f) Equity Risk Premium: 8.58%

8.58% As per IIM- Ahmedabad Research paper issued in 2006.

g) Company specific Risk Premium: 2%

Report on Valuation of Equity shares- Om Pharma Private Limited

Discount rate increased by 2% to factor company specific risk premium.

Since Annual report for CY 2007 indicated that on finalization of new
Pharmaceutical policy, many drugs will come under price control and it will
have adverse impact on OM, we have added additional discount of 2% for
arriving at cost of equity.

Market approach- Market multiple Method:

In absence of detailed information about Income , expense, asset and

liabilities of comparable listed companies identified for valuation of OM, we
have assumed as follows:

a) It is assumed that Seven comparable companies identified for this approach

of valuation have same growth expectation, historical growth, business
strategy and profitability as of OM.

b) It is assumed that all the comparable companies and OM are exposed to

same level of Operational and financial risk.

c) It is assumed that no adjustments are required on account of following in

OM as well as comparable companies

• Non Operating income

• Owners’ compensation
• Inventory accounting
• Extra Ordinary items
• Construction in progress
Report on Valuation of Equity shares- Om Pharma Private Limited

11. Opinion on Value of Shares:

The valuation of OM has been carried out by adopting all the three
approaches of Valuation
• Income approach
• Market approach
• Asset Approach

Income approach:
Under Income approach we have adopted DCF method. This method adopts a
financial model of business for a specific forecast period. Based on the
assumptions contained in Para 10 above, a normative Profit & Loss account
has been projected on the basis of which the Discount Cash flow model has
been evolved. (Exhibit II)

The Free Cash Flow is calculated for two time periods i.e. specific forecast
period (also called the primary period) and thereafter (also called the
Residual Value). The Residual value gives recognition to the fact that after
primary period considered in the forecast period, the FCF do not reach an end
because the business will continue to be available for exploitation even after
the primary period.

Shareholder’s Value
Based on the assumptions put forth in Exhibit I, read with the limitations
mentioned in point no.12 and subject to confirmation of key factors,
Shareholders’ Value of OM at a perpetuity growth rate of 2% and calculated
considering discount rate of 16.10% is Rs. 219.20 Crore
Rs. In Crore
Particulars Value
Shareholders’ Value 151.48
Add Non operating assets
Add: Investments as on 31st Dec 2007 72.68
Less: Crystallisation of contingent liability 4.96
Shareholders Value 219.20

Value Per Share:

Report on Valuation of Equity shares- Om Pharma Private Limited

Particulars
Shareholders Value Rs in Crore 219.20
Equity Share 60,76,160

Share Value per share 361

Less: Illiquidity discount 25%
Fair value per equity share post illiquidity discount 271

Market approach:
 Report on Valuation of Equity shares- Om Pharma Private Limited

Under this approach we have selected seven listed Pharmaceutical companies

dealing in formulation having relatively same size of turnover and EBITDA
margin from fortnightly magazine – Capital Market – issue November 08.
Following Price multiples were analysed for arriving at value of OM .
• Price earning
• Market Capitalisation to sale
• Enterprise Value to EBITDA

Price multiples having lesser co-efficient of variation and pertaining to

comparable company which is very near to OM with respect to Size of
Turnover and EBITAD margin was applied to financial of OM to arrive at final
valuation.

Value as per above methodology comes to Rs. 229 per share.

Sr. Comparable companies Price Price Sales EBITAD

No based based on Rs. In Margin
PE EV/EBITDA Crore
multiple
1 Albert David 118 101.21 175 11.5%
2 Alpa Lab 164 213.36 130 3.4%
3 Arvind remedies 0 79.02 176 9.10%
4 Bliss GVS Pharma 82 131.83 102 37.30%
5 Kilitch Drug 170 194.02 117 19.50%
6 Parentral Drug 109 87.38 210 18%
7 Venus Remedies 97 126.48 213 25%
Co-efficient of Variation 0.54 0.39
OM Pharma Pvt Ltd 146 20%
Value per share of OM 194.02
Total Number of shares 6,076,160
Total value from operation 1,178,920,288
add: Non Operating assets 726,800,000
less: Crystallization of Contingent liabilities 49,556,000
Total Value available to Equity shareholders 1,856,164,288
Value per Equity share 305
Less: illiquidity discount 25%
Fair Value per share in Rs. 229
Report on Valuation of Equity shares- Om Pharma Private Limited

Asset approach:
Under this approach we have calculated value of OM by considering total
assets and liabilities as per Audited Financials of the company as on 31st
December 2007. The Balance sheet values are adjusted for contingent
liabilities.
Value per Equity share comes to Rs.148

Assets Book Value as on 31st

December 2007

Fixed Assets ( Net Block) 73,227,546

Capital Work in progress 37,791,434
Investment 30,014,600
Current assets 928,073,539
Loans advances 425,170,361
Total assets 1,494,277,480
Long term Liabilites 3,639,523
Current liabilities 244,589,370
Total Liabilities 248,228,893

Net Assets Value 1,246,048,587

Less: Crystallization of contingent liabilities 49,556,000
Value available to shareholders 1,196,492,587
Number of Equity shares 6,076,160
Value per Equity share 197
Less: illiquidity discount 25%
Value per share 148

12. Disclaimer

a) OM Pharma Pvt Limited (“OM”) has requested us to carry out a valuation of

“OM”. In preparing this valuation Report (“the Report”), we have relied upon
Report on Valuation of Equity shares- Om Pharma Private Limited

and assumed, without independent verification, the accuracy and completeness

of all information (including the Management estimates for its future projected
operations) available on the website of company and other databases.

b) The Report is being provided solely for the benefit of “OM” and is not on behalf
of, and shall not confer rights or remedies upon, any other person other than
“OM”. The Report may not be used or relied upon by, or disclosed, referred to,
or communicated by “OM” (in whole or in part) to any third party for any
purpose whatsoever except with the prior written consent of us in each
instance.

c) In furnishing the Report, we reserves the right to amend or replace the Report
at any time. Our views are necessarily based on economic, market, and other
conditions currently in effect, and the information made available to us, as of
the date hereof. It should be understood that subsequent developments may
affect our views and that we do not have any obligation to update, revise, or
reaffirm the views expressed in the Report. Nothing contained within the
Report is or should be relied upon as a promise or representation as to the
future.

d) The pro-forma and estimated financial information contained herein was

provided by “OM” and our Report is based on certain assumptions, analysis of
information available at the time of Report preparation.

e) While the information provided to us is believed to be accurate and reliable, we

does not make any representations or warranties, express or implied, as to the
accuracy or completeness of such information. Part of this information is
based, inter-alia, on published / private reports or research studies carried out
by other agencies. The information provided there has not been verified by us,
though we are not aware nor has reason to believe that the information is
otherwise unreliable in any material aspect. No representations expressed or
implied are made in that behalf.

f) The valuation contained herein is purely for discussion purposes and is not
intended to be the price with which OM should approach prospective sellers/
buyer of shares of OM. Our analysis are not and do not purport to be appraisals
or otherwise reflective of the price at which the Shares could actually be
bought or sold.

12. Acknowledgement
We are thankful to the Management & Staff of OM for their kind co-operation
extended to us during the course of our assignment.

Yours faithfully,