I want to highlight couple of items in FY20 AR that caught my eyes. FY2020 would had been even more bumper year from PAT standpoint had the company not taken below mentioned two hits in the P&L totaling 97.36cr:
1) Exceptional Loss of 43.65cr
2) Impairment of Goodwill of 53.71cr
Company did a good job to to explain the exceptional loss of 43.65cr, i.e. fully provided for diminution in value of investment in JV - Alembic Mami SPA discontinued recognition. Below is the screenshot from AR (page 161). This was shared with Q1FY20 results.
But I wasn’t able to find any details in the FY20 AR of 53.71cr hit that company took by reducing Goodwill. Screenshot below:
Major reduction coming from intangible assets. I wasn’t able to find any details that management has shared in the AR. If anyone finds anything that I missed, please share here.
Since its a goodwill item, its good to be vigilant and be top of the movement within Goodwill calculation.
I feel they have possibly taken this GW hit against Alembic Global Holding SA. Below is possibly why I feel so:
Screenshot from FY19AR:
Alembic Global Holding SA had Total assets worth 225cr.
Screenshot from FY20AR:
There is reduction of total assets of about 65.33cr. And if you notice this subsidiary made profit of 43.56cr for FY20. And this was the only subsidiary which had less total assets compared to FY19. Hence, there is a good chance that GW was charged against this subsidiary.
It would had been good if management had provided few lines somewhere in AR explaining this hit in Goodwill.
If this has already been covered in any of the existing con-calls, please let me know. I have not read any transcripts so far. But if it hasn’t been, then I will try to jump on the next earnings con-call and will try to find out the details.
Disc: initiated a starting position in last 30 days