I got another shock by digging deep into Mudajaya's annual report. (Previous shock from Maybulk)
Out of 1.1b total asset, Mudajaya has spent 362m investing in India's company.
Out of 362m investment cost, only 45m accounted for the net asset of the companies and Mudajaya is paying 7 times of the price tag as goodwill!
Actually, paying 7 times premium isn't a big deal if the company has crazy earning such as BAT, which reports more than 150% Return on Equity.
The problem is that these companies has almost no profit and I suspect whether they have operation at all.
To add more epicness into this story, I also noticed that Mudajaya has reported big jump of Revenue and Gross Profit straight after the acquisition of these companies.
*Note that the profit from the invested companies which Mudajaya doesn't have control, and the profit from Mudajaya's own business are two different profit.
The first one is noted under "Share of results of associates" and another is recorded under "Revenue, Operating Expenses and hence the Gross Profit".
In short, Mudajaya has paid 7 times premium to acquire some share in lousy Indian companies and gain a sharp increase of Gross profit in their own construction business.
Ring some bells?
I have a theory, but it's not convenient to expose here.