Okay what happens if we add the several billions difference made by BUKI and CARS ?
Will the whole market situation change?
1. Not all exchange losses are alike ! when companies operating in Sri-Lanka borrow dollars, they have to repay with rupees converted to dollars at higher amount. Then it is an actual forex loss. The forex losses incurred by Buki/Cars are not actual losses but notional losses only. they have no cash flow impact and are due to translation of their U.S dollar debt to Sri-Lankan rupees. they borrow in U.S Dollars to fund their Indonesian & Malaysian operations in rupiah's and ringitt. it is only when these currencies devalue against the dollar that an actual loss is created. Unlike companies operating in Sri-Lanka, they do not have to depend on Sri-Lankan rupees to settle their U.S. dollar debt.
2. The actual profit Buki / Cars made in the June 2012 quater is much higher than presented due to following factors
A. Forex loss - Rs 455,321,000 - notional loss - add to profit
B. Fair value gain in biological assets - refer page 15 pt 6 of of interim statement = Rs 1,100,955,000
C- Inventory increased by Rs 2 Bill from 31st March quater. In the Palm oil business, the fresh fruit bunches have to be converted to CPO in 24 hours or they spoil. all direct operating costs are expensed as they go. thus what remains in inventory is pure profit. as at a particular date, it can be in inventory or go directly to revenue when sold. all associated costs are already expensed. now the Rs 10 Bill they show in inventory consists of CPO, maybe some FFBB, Oils and Fats and Beer. going by past quater inventory levels, perhaps their is additional Rs 1-2 Billion is CPO stock as at quater ending date which was captured in inventory and which should have flowed to revenue.
When you add all this up, you will get an approximate actual profit for the quater (Rs 3-4 Billion).
3. When you compare with corresponding 1st quater in 2011, approx Rs 3.8 Billion profit were for one off items.
- BUKI/CARS Share swop for malaysian plantation shares - Rs 2.4 Bill Profit
- CINV / GUAR - Selling Aitken Spense shares @ 140 - Rs 1.4 Bill Profit
Thus you have to keep these two factors in mind when you compare Buki / Cars result Q on Q.