Case study 1Valuation of a Private Company

ABC1, a leading player in waste water treatment segment in India. ABC has executed close to 45 projects in almost all popular technologies in waste water treatment in past 4 decades. The company has also acquired one patent and is in the process of acquiring another patent for its in-house developed efficient technologies to treat waste-water. ABC was incorporated in 1970s as a turnkey civil contractor and gradually started operations as a full service provider in WSS (Water Supply and Sanitation) segment. In mid 80s, ABC started focusing only on waste water treatment projects and has been able to carve a niche for itself. Presently ABC is one of the reputed EPC players in Waste water segment. ABCs strength lies in providing complete solution for waste water treatment including designing, civil, mechanical (consists manufacturing of pollution control equipment and non-clog and process pumps) and electrical & instrumentation equipment. Expertise and Patents ABC Ltd holds expertise in aerobic waste treatment technologies. The company is equipped with superior and up-to-date technology driven by the promoters thrust for innovation and quality. ABC is the first company to use the SBR technology in India and implemented it successfully during 2003, executing a 12.5 mld plant in Goa. Following is the financial information of ABC: Rs Million Sales Income from Operations STP & Related O&M Other Income Total Income Contract Cost & Expenses Employee Remuneration And Benefits Administrative and Other Expenses EBITDA less: Interest Depreciation Transferred From Revaluation Reserve Add: Profit on Sale of Land Profit before tax Less: Income Tax Profit After Tax 2013 167.1 154.4 12.7 2.2 169.3 114.2 10.9 3.5 40.8 4.6 0.9 35.2 11.7 23.5

Prepare a valuation model for ABC based on the following info: ABCs key competitors are: Ion Exchange Ltd, SPML, VATech Wabag, Triveni Engg and Thermax Ltd ABCs net debt is Rs -16 million

To preserve confidentiality of the concerned company, ABC has been used as a reference in this document.