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Presented by

Anil Nandyala (B11005)


Asish Ghosh (B11011)
Binayak Das (B11014)
Somaditya Baral (B11044)

AGENDA
Assumptions
Balance Sheets
Profit & loss Account
Revenue Drivers
CAPM
WACC
FCFF

ASSUMPTIONS
The Red coded figures are the actual values from previous years and the projected values are in blue colour
All the figures are in lakhs

Balance Sheet
Increase in Gross block is projected based on increase in number of health clubs
Increase in Debt is taken as 80% of increase in gross block

Profit & Loss Account


Operating Margin is taken as 40%

Revenue Drivers
2012 income projected based on first 3 quarters
The ratio of Owned : subsidary : Franchise i.e 73: 9:18 remains constant
All HIFI Gym's are franchise woned

CAPM
Market Returns are found by taking 15 years annual returns from Sensex
Risk Free taken as 8.24%, 10 years Govt bonds coupon rate
Cost of equity is found by CAPM
Returns from HIFI Gym's was projected based on franchise fees of health clubs

FCFF
Terminal value is taken as 10%

re in blue colour

2008-09
Sources Of Funds
Share Capital
Reserves And Surplus

2009-10

Deffered Tax Liability

196.69
1859.2
2055.89
0

1806.57
2398.89
4205.46
482.09

Loan Funds
Secured Loans
Unsecured Loans
Total Debt

5092.77
3033.39
8126.16

6285.56
3434.52
9720.08
19.61%
1593.92
14407.63

Increase in Debt
Total
Application Of Funds
Fixed Assets
Gross Block
Growth %
Growth in Rs
Less: Accumulated Depreciation/Amortisation
Depreciation as % of assets
Net Block
Capital Work In Progress
Investments
Current Assets, Loans And Advances
Sundry Debtors
Cash And Bank Balances
Loans And Advances
Less: Current Liabilities And Provisions
Current Liabilites
Provisions
Net Current Assets
Working Capital Required
Working Capital as % of sales
Miscellaneous Expenditure
Additional W.C Required
Total

10182.05

11088.62

1009.72
9.11%
10078.9
176.06
10254.96
409.75

13219.23
19.21%
2130.61
1608.16
12.17%
11611.07
1301.87
12912.94
494.02

59.65
75.94
884.34
1019.93

328.73
1248.71
1087.21
2664.65

1262.62
239.97
1502.59
-482.66
-558.6
-4.86%
0

1182.3
562.15
1744.45
920.2
-328.51
-2.23%
80.47

10182.05

14407.63

2010-11

AVERAGE

EXPECTED

2011-12

2012-13

2411.57
10066.43
12478
1048.42

10211.59
926.47
11138.06
14.59%
1417.98
24664.48

18904.01
43.00%
5684.78
2416.12
12.78%
16487.89
2742.54
19230.43
969.14

11.35%

11.35%

4.07%

10%

15510.94368

19009.28768

4372.88368

3498.344

24370.1146

28743.0446

5466.1046
2766.187681

4372.93
3262.547477

1148.856276

1470.450423

-520.9237245

321.5941472

1443.74
2795.13
2224.07
6462.94
881.68
1116.35
1998.03
4464.91
1669.78
19.30%
0
24664.48

2013-14

2014-15

2015-16

25131.3584

33177.5024

44377.5024

6122.07072

8046.144

11200

36395.633

46453.313

60453.313

7652.5884
4131.172681

10057.68
5272.793513

14000
6861.896731

1862.353311

2496.65299

3531.744172

391.9028881

634.2996787

1035.091183

Income
Income From Operations
Other Income
% increase in profit
Expenditure
Personal Cost
Administrative and Other expenses
Selling And Marketing Cost
Service Tax Collected And Paid
Total Expendiature
Expendiature as percent of income
Profit before Interest , Deprecistion , Extraordinary Items and Taxes
Finance Cost
Interest rate for Total Debt
Profit Before Depreciation, Extraordinary Items And Taxes
Depreciation/ Amortisation
Profit Before Extraordinary Items And Taxes
Profit/ Loss on sale of asset
Compensation for loss of Business Received
Profit Before Tax
Taxation
Defferd Tax Liability / Asset
Total Tax
Income tax %
Profit After Tax
Balance Brought Forward
Profit Available for Appropriation
Appropriations
Effects on Change in AS 11
Effect on Previous Year's DTL
Proposed Dividend on Equity Shares
Tax On Dividend
Debenture Redemption Reserve
Balance carried To Balance Sheet

2008-09

2009-10

2010-11

5951.85
22.41
5974.26

6611.55
38.29
6649.84
11.31%

8652.04
189.42
8841.46
32.96%

1601.84
1717.35
272.45
623.58
4215.22
70.82%
1759.04
799.96
9.84%
959.08
458.29

1568.32
1731.12
146.69
605.82
4051.95
61.29%
2597.89
808.76
5.61%
1789.13
608.9

1775.72
2169.96
271.95
786.31
5003.94
57.84%
3837.52
735.95
6.61%
3101.57
833.36

500.79
270.35
10

1180.23
-21.32
0

2268.21
-36.44
0

781.14
108.1
0
108.1
13.84%
673.04
852.12
1525.16

1158.91
212.31
152.9
365.21
31.51%
793.7
1522.86
2316.56

2231.77
447.2
261.88
709.08
31.77%
1522.69
1822.44
3345.13

0
0
1.97
0.33

23.86
329.19
120.58
20.49

1522.86

1822.44

0
0
241.16
40.03
22.6
3041.34

AVERAGE

63.31%

7.36%

25.71%

EXPECTED

2011-12

2012-13

2013-14

11488.56276
14704.50423 18623.53311
234.4604644
300.091923 380.0721043
11723.02322 15004.59615 19003.60521

7033.813932

9002.75769

11402.16313

2014-15

2015-16

24966.5299 35317.44172
509.5210183 720.7641168
25476.05091 36038.20584

15285.63055

21622.9235

60%
4689.209288
1140.839977

6001.83846
7601.442085 10190.42037 14415.28234
1398.145449 1848.427725 2440.226839
3263.99411

7.36%
3548.369311
350.0676813

4603.693011
496.3597954

5753.01436
868.6252039

7750.193526
1141.620833

11151.28823
1589.103218

3198.30163

4107.333216

4884.389156

6608.572694

9562.185007

3198.30163

4107.333216

4884.389156

6608.572694

9562.185007

1012.027766

1299.669556

1545.550739

2091.128303

3025.729856

2186.273864
3041.34
5227.613864

2807.66366
0
2807.66366

3338.838418
0
3338.838418

4517.444391
0
4517.444391

6536.455151
0
6536.455151

31.64%

Projections are based on the following data


FICCI E&Y 35% Growth rate for the next 5 years, 2009
As per current Census there are 39% of the population between the ages 20 -44
By 2016 40% of the population will be aged between 20 - 44

Franchise fee
No Of Franchise
Round off values

No of HIFI Gym's
Gross income

Gross Fees
Franchise Fess
Franchise Fess for HIFI Gym
Input Credit
Total Income

Health Club's
Owned
Joint Venture
Franchise
HIFI Gym's

Talwalkars Health & Fitness Centres


2011-12
2012-13
126
150
73%
91.98
109.5
9%
11.34
13.5
18%
22.68
27
10
45

HEALTH CLUB

Gross income
No of health clubs
Round off values

2008-09
5724.86
40

Franchise fee
No Of Franchise
Round off values

2009-10
6356.26
52

2010-11
7779.17
77

129.8
6

641.18
19

HIFI GYM'S

No of HIFI Gym's
Gross income

Gross Fees
Franchise Fess
Franchise Fess for HIFI Gym
Input Credit
Total Income

2%

2011-12
10356.786
863.0655
38.94
229.7712551
11488.56276

2012-13
12566.17114
1084.951
759.292
294.0900845
14704.50423

es
2013-14
180
131.4
16.2
32.4
75

2014-15
225
164.25
20.25
40.5
150

2015-16
300
219
27
54
250

2011-12
10356.786
97.65
98

2012-13
12566.17114
116.25
116

2013-14
15512.018
139.5
140

2014-15
19685.301
174.375
174

2015-16
27049.91819
232.5
234

863.0655
22.68
23

1084.951
27
27

1362.307875
32.4
32

1861.55025
40.5
41

2582.678125
54
54

10
38.94

45
759.292

75
1376.736571

150
2920.348

250
4978.496571

2013-14
15512.018
1362.307875
1376.736571
372.4706622
18623.53311

2014-15
19685.30105
1861.55025
2920.348
499.3305979
24966.5299

2015-16
27049.91819
2582.678125
4978.496571
706.3488344
35317.44172

HEALTH CLUB

HIFI GYM'S

Regression Analysis
Health Clubs woned
S.No
1
2
Total
n
X
Y

No.of Health Clubs (x)


77
98
175
2
87.5
9067.978

b
a

122.743619
-1672.088667

Income (y)
7779.17
10356.786
18135.956

xy
598996.09
1014965.028
1613961.118

Health Clubs Franchises


S.No
1
2
Total
n
X
Y
b
a

No of Franchises (x)
19
23
42
2
21
752.12275

Income (y)
641.18
863.0655
1504.2455

xy
12182.42
19850.5065
32032.9265

55.471375
-412.776125
HIFI Gym's Franchises

S.NO
1
2
Total
n
X
Y

No of Franchises (x)
10
45
55
2
27.5
399.116

b
a

20.58148571
-166.8748571

Income (y)
38.94
759.292
798.232

xy
389.4
34168.14
34557.54

x^2
5929
9604
15533

x^2
361
529
890

x^2
100
2025
2125

TALWALKARS
Month
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12

OPEN
138
182.5
180
173.4
202
232.9
237
264.9
272.75
181
194
219.1
225.65
233.15
252
244.2
190.15
177.15
172.8
143
119
141.75

CLOSE
183.75
179.45
170.8
200.1
229.25
237.35
261.4
269.85
225.9
192.35
218.5
224.05
230.05
251.1
241.3
191.95
177.15
174
138.5
119.05
140.55
162.1

AVG Return
Standard Deviation

COVARIANCE

Risk free return (Rf)


Market Return (Rm)
Return on equity (Ke)

% (GAIN/LOSS)
-1.67%
-5.11%
15.40%
13.49%
1.91%
10.30%
1.87%
-17.18%
6.27%
12.63%
2.26%
1.95%
7.70%
-4.25%
-21.40%
-6.84%
-1.78%
-19.85%
-16.75%
18.11%
14.36%
0.54%
11.94%

0.53%
covariance/variance of market
8.24%
16.33%
Rf + (Rm-Rf)
18.62%

1.283298487

SENSEX
Month
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11
Feb-11
Mar-11
Apr-11
May-11
Jun-11
Jul-11
Aug-11
Sep-11
Oct-11
Nov-11
Dec-11
Jan-12
Feb-12

OPEN
17,536.86
16,942.82
17,679.34
17,911.31
18,027.12
20,094.10
20,272.49
19,529.99
20,621.61
18,425.18
17,982.28
19,463.11
19,224.05
18,527.12
18,974.96
18,352.23
16,963.67
16,255.97
17,540.55
16,555.93
15,534.67
17,179.64

CLOSE
16,944.63
17,700.90
17,868.29
17,971.12
20,069.12
20,032.34
19,521.25
20,509.09
18,327.76
17,823.40
19,445.22
19,135.96
18,503.28
18,845.87
18,197.20
16,676.75
16,453.76
17,705.01
16,123.46
15,454.92
17,193.55
17,752.68

AVG Return
Standard Deviation

% (GAIN/LOSS)
4.47%
1.07%
0.33%
11.33%
-0.31%
-3.71%
5.01%
-11.12%
-3.27%
8.14%
-1.68%
-3.75%
1.72%
-4.10%
-9.13%
-3.01%
8.91%
-8.08%
-6.65%
10.68%
3.34%
0.01%
6.45%

MARKET RETURNS
Year
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

OPEN
3,114.08
3,096.65
3,658.34
3,064.95
5,209.54
3,990.65
3,262.01
3,383.85
5,872.48
6,626.49
9,422.49
13,827.77
20,325.27
9,720.55
17,473.45
20,621.61
15,534.67
AVG Return

CLOSE
3,085.20
3,658.98
3,055.41
5,005.82
3,972.12
3,262.33
3,377.28
5,838.96
6,602.69
9,397.93
13,786.91
20,286.99
9,647.31
17,464.81
20,509.09
15,454.92
17,503.24

% (GAIN/LOSS)
-0.93%
18.16%
-16.48%
63.32%
-23.75%
-18.25%
3.53%
72.55%
12.43%
41.82%
46.32%
46.71%
-52.54%
79.67%
17.37%
-25.05%
12.67%
16.33%

Market Capitalization
MPS
No of Shares
M Cap
M cap Rs in Lakhs

150
24115672
3617350800
36173.508

Cost of Debt (Kd)


Year
2009
2010
2011

Debt
8126.16
9720.08
11138.06

Interest
799.96
808.76
735.95
Avg Kd
Kd(1-t)

Cost of Equity (Ke)


Ke
Tax rate

18.62%
31.64%

Kd
9.84%
8.32%
6.61%
8.26%
5.64%

WACC
WACC=[(D/D+E)*Kd(1-t)]+[(E/D+E)*Ke]

C
15.56%

PAT
Interest
Interest (1-Taxrate)
NOPLAT
Depriciation
Additional capital through debt
CAPEX
W.C Requirement
FCFF
Terminal Value
Years
Discount Factor (WACC)
Present Value of FCFF
Out standing Debt
Equity Value
No of Shares

2012-13
2186.273864
1140.839977
779.8478421
2966.121706
350.0676813
4372.88368
5466.1046
-520.9237245
2743.892192

2013-14
2807.66366
1398.145449
955.7350141
3763.398674
496.3597954
3498.344
4372.93
321.5941472
3063.578322

2014-15
3338.838418
1848.427725
1263.535992
4602.37441
868.6252039
6122.07072
7652.5884
391.9028881
3548.579046

10%
15.56%
2374.336163

2293.925529

2299.217064

2015-16
4517.444391
2440.226839
1668.074115
6185.518506
1141.620833
8046.144
10057.68
634.2996787
4681.303659

2016-17
6536.455151
3263.99411
2231.179495
8767.634645
1589.103218
11200
14000
1035.091183
6521.646681

117198.7498

2624.626242 3163.975294

PERPETUITY

49201.00336

Fair Value

TOTAL
61957.08365
27568.71961
34388.36404
24115672
142.5975774