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What are the qualitative considerations that must be taken

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Reference no: EM133158000

Question - FGV sugar business have been in a lot of debate lately. The group have taken over the business from the sugar king and carry on the business of processing sugar cane into refined sugar for Malaysian market.

The business is quite substantial accounting for over 11% of the group revenue. Nevertheless, the segment only contributed about 5% of the group's profit before zakat and tax. The profit margin is rather low - at less than 10% compared to the palm oil and the operating overheads is rather high, Finance costs at RM 47.348,000 and Depreciation and amortization at RM 81,716,000 are the two major operating costs component.

Required -

1. There was a suggestion by a turnaround manager to just sell the sugar business and concentrate on the palm oil business. There is an offer to buy the sugar business for RM10 billions. Evaluate the proposal and justify your opinion?

2. What are the qualitative considerations that must be taken into account in the decision?

Reference no: EM133158000

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