Lady M Case_08.07.2016

Fixed Cost Rent Utility Labour Contribution / unit BEP units Selling Price BEP Sales

Y1 310600 38644 594750 40 23600 Cash BEP 80 ###

Including setup cost 5 yrs depreciation Depreciation 200000 Non cash item New fixed cost 1143994 BEP units 28600

20% sales growth Revenue CoGS Rent Utility Labour Profit Initial investment uncovered

5% sales growth Revenue CoGS Rent Utility Labour Profit Initial investment uncovered

Y1 1888000 944000 310600 38644 594750 6 999994

Y2 2265600 1132800 319918 39803 624488 148591 851403

Y3 2718720 1359360 329516 40997 655712 333135 518268

Y4 3262464 1631232 339401 42227 688497 561106 -42839

Y5 3914957 1957478 349583 43494 722922 841479 -884317

Y1 1888000 944000 310600 38644 594750 6 999994

Y2 1982400 991200 319918 39803 624488 6991 993003

Y3 2081520 1040760 329516 40997 655712 14535 978468

Y4 2185596 1092798 339401 42227 688497 22672 955795

Y5 2294876 1147438 349583 43494 722922 31438 924357

Required growth rate

13.19% Using Goal Seek

Sales growth reqd Revenue CoGS Rent Utility Labour Profit Initial investment uncovered

Y1 1888000 944000 310600 38644 594750 6 999994

Y2 2137038 1068519 319918 39803 624488 84310 915684

Y3 2418924 1209462 329516 40997 655712 183237 732447

Y4 2737994 1368997 339401 42227 688497 298871 433576

Y5 3099150 1549575 349583 43494 722922 433576 0

Q3 Sales Revenue Growth rate

2012 4132517 81.27%

2013 7491187

So the shop should be opened because our required growth rate to recover initial investment is 13.19% only against observed growth of 81.27%

Q4 FCFF Opt 2 Opt 3

EBIT*(1-t)+D&A-Del Capex-Del NWC PAT+D&A-Del Capex-Del NWC Line by line projections in IS

2012 Sales 4132517 (-)CoGS 1303416 Gross Profit 2829101 (-)SGA 2449200 (-)R&D 0 EBITDA 379901 (-)D&A 41800 EBIT 338101 (-)Tax 4421 PAT 333680 %Change in Sales CoGS SGA Capex Depreciation 5% rise in Depreciation Delta Sales Delta NWC

EBIT*(1-t) (+)D&A (-)Del Capex (-)Del NWC FCFF

A

Terminal Value perpetuity method DCF discount EV (taking PV of cashflows) Investor investment %stake Debt Equity Value %stake

B

EBITDA multiple

Year 2014 Terminal Value PV EV Debt Equity Value %stake

2013 7491187 1632722 5858465 4342500 0 1515965 149007 1366958 74191 1292767

Financial Projection - IS projections - FCFF 2014 2015 2016 11000000 13200000 18480000 2397476 2876971.353138 4027759.8943932 8602524 10323028.64686 14452240.105607 6376493 7519791.364973 10342907.910963 0 13200 18480 2226031 2790037.281889 4090852.1946442 24750 800000 47124 2201281 1990037.281889 4043728.1946442 770448 696513 1415305 1430833 1293524 2628423 0.4684 0.2000 0.4000

% of Sales 21.80% 57.97%

57.97%

56.97%

55.97%

33000 24750 75

1000000 800000 80

55440 47124 85

3508813 68000 1.94%

2200000 42636

5280000 102325

1293524 800000 1000000 42636 1050889

2628423 47124 55440 102325 2517782

g=4% WACC = 12% 12%

Rs. 938,293.51 Rs. 2,007,160.49 Rs. 53,269,243.90 10000000 18.8% 1017615 52251628.8963779 19.14% 12

26712372.818887 Rs. 15,157,317.72 Rs. 26,476,036.19 1017615 Rs. 25,458,421.19 39.28%

ns - FCFF 2017 2018 2019 23100000 28875000 36093750 5034699.8679916 6293374.8349894 7866718.5437368 18065300.132009 22581625.165011 28227031.456263 12697634.888703 15583293.610879 19118179.513599 23100 28875 36094 5344565.2433052 6969456.5541316 9072758.1926644 62370 82293.75 108281 5282195.2433052 6887162.8041316 8964476.9426644 1848768 2410507 3137567 3433427 4476656 5826910 0.2500 0.2500 0.2500

54.97%

53.97%

52.97%

69300 62370 90

86625 82294 95

108281 108281 100

4620000 89535

5775000 111918

7218750 139898

3433427 62370 69300 89535 3336962

4476656 82294 86625 111918 4360406

5826910 108281 108281 139898 5687012

73931159.578054 Rs. 2,375,183.89 Rs. 2,771,117.09 Rs. 3,226,963.49

Rs. 41,950,525.42