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Copyright 2001 by the Trustees of the University of Virginia Darden School Foundation.

Page 1
Model Facts

Page 2
Exhibit 1
KOTA FIBRES, LTD.
Summary of monthly sales: Actual for 2000 and Forecast for 2001

2000 2001
(historical) (forecast)

January 2,012,400 2,616,120

February 2,314,260 2,892,825
March 3,421,080 4,447,404
April 7,043,400 8,804,250
May 12,074,400 13,885,560
June 15,294,240 17,588,376
July 14,187,420 16,315,533
August 7,144,020 8,572,824
September 4,024,800 5,031,000
October 3,421,080 4,447,404
November 2,716,740 3,531,762
December 2,213,640 2,767,050

Year 75,867,480 90,900,108

Supporting Calculations for Exhibit 1

HISTORICAL CYCLE 100 115

FORECAST CYCLE 130 125

TOTAL
2000 (historical) 75,867,480 2,012,400 2,314,260

2001 (forecast) 90,900,108 2,616,120 2,892,825

GROSS UP RATIO 1
 170 350 600 760 705 355 200 170 135
130 125 115 115 115 120 125 130 130

3,421,080 7,043,400 12,074,400 15,294,240 14,187,420 7,144,020 4,024,800 3,421,080 2,716,740

4,447,404 8,804,250 13,885,560 17,588,376 16,315,533 8,572,824 5,031,000 4,447,404 3,531,762

 110
125

2,213,640

2,767,050
Exhibit 2
KOTA FIBRES, LTD.
Historical Annual Income Statements ( in Rupees)

1999 2000 2001

(Actual) (Actual) (Forecast)

Gross Sales 64,487,358 75,867,480 90,900,108

Excise Tax 9,673,104 11,380,122 13,635,016
Net Sales 54,814,254 64,487,358 77,265,092
Cost of Goods 44,496,277 53,865,911 66,993,380
Gross Profits 10,317,978 10,621,447 10,271,712
Operating Expenses 3,497,305 4,828,721 5,454,006
Depreciation 769,103 908,608 1,073,731
Interest Expense 910,048 1,240,066 1,835,620
Profit Before Tax 5,141,521 3,644,052 1,908,355
Income Tax 1,542,456 1,093,216 572,506
Net Profit 3,599,065 2,550,837 1,335,848
Exhibit 3
KOTA FIBRES, LTD.
Historical Balance Sheets (in Rupees)

2000 2001
(Actual) (Forecast)

Cash 762,323 750,000

Accounts Receivable 2,672,729 3,715,152
Inventories 1,249,185 2,225,373
Total Current Assets 4,684,237 6,690,525
Gross PP&E 10,095,646 11,495,646
Accumulated Depreciation 1,484,278 2,558,009
Net PP&E 8,611,368 8,937,637
Total Assets 13,295,604 15,628,161

Accounts Payable 759,535 1,157,298

Notes to Bank (Deposits at Bank) 684,102 3,463,701
Accrued Taxes 0 (180,654)
Total Current Liabilities 1,443,637 4,440,345
Owners' Equity 11,851,967 11,187,816
Total Liabilities and Equity 13,295,604 15,628,161
EXHIBIT 8
KOTA FIBRES, LTD.
Monthly Forecast of Income Statements (in Rupees)
Pro Forma

January February March April May June July August September October November December The Year

Gross Sales 2,616,120 2,892,825 4,447,404 8,804,250 13,885,560 17,588,376 16,315,533 8,572,824 5,031,000 4,447,404 3,531,762 2,767,050 90,900,108
Excise Taxes 392,418 433,924 667,111 1,320,638 2,082,834 2,638,256 2,447,330 1,285,924 754,650 667,111 529,764 415,058 13,635,016
Net Sales 2,223,702 2,458,901 3,780,293 7,483,613 11,802,726 14,950,120 13,868,203 7,286,900 4,276,350 3,780,293 3,001,998 2,351,993 77,265,092
Cost of Goods Sold 1,928,080 2,132,012 3,277,737 6,488,732 10,233,658 12,962,633 12,024,548 6,318,171 3,707,847 3,277,737 2,602,909 2,039,316 66,993,380
Gross Profit 295,622 326,889 502,557 994,880 1,569,068 1,987,486 1,843,655 968,729 568,503 502,557 399,089 312,677 10,271,712
Operating Expenses 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 5,454,006
Depreciation 84,130 84,130 87,047 87,047 87,047 89,964 89,964 89,964 92,880 92,880 92,880 95,797 1,073,731
Interest Expense (Income) (1) 11,058 24,825 70,867 158,210 268,352 362,187 363,212 259,568 145,898 80,686 50,025 40,731 1,835,620
Profit Before Taxes (254,068) (236,566) (109,858) 295,123 759,168 1,080,835 935,979 164,697 (124,776) (125,510) (198,317) (278,352) 1,908,355
Income Taxes (76,220) (70,970) (32,957) 88,537 227,751 324,251 280,794 49,409 (37,433) (37,653) (59,495) (83,506) 572,506
Net Profit (177,847) (165,596) (76,900) 206,586 531,418 756,585 655,185 115,288 (87,343) (87,857) (138,822) (194,847) 1,335,848

(1) Interest expense = Notes Payable * 14.5%/12 months.

Forecasted Monthly Balance Sheets for 2001 (in Rupees)

January February March April May June July August September October November December
Assets
Cash (1) 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000
Accounts Receivable (2) 2,773,349 3,291,542 5,012,144 10,301,737 17,997,155 24,748,757 25,697,603 17,191,189 9,003,739 6,295,049 5,029,249 3,715,152
Inventories (3) 2,308,135 5,850,125 11,855,841 17,637,315 19,666,227 14,469,652 6,815,272 3,883,970 2,950,257 1,854,837 1,639,892 2,225,373
Total Current Assets 5,831,484 9,891,667 17,617,985 28,689,052 38,413,382 39,968,409 33,262,875 21,825,159 12,703,996 8,899,886 7,419,142 6,690,525
Net Prop. Plant & Equip. (4) 8,527,237 8,443,107 8,706,060 8,619,013 8,531,966 8,792,002 8,702,038 8,612,075 8,869,194 8,776,314 8,683,434 8,937,637
Total Assets 14,358,721 18,334,774 26,324,045 37,308,065 46,945,348 48,760,411 41,964,914 30,437,233 21,573,190 17,676,200 16,102,575 15,628,161

Liabilities and Owners' Equity

Accounts Payable (5) 1,614,553 4,010,818 6,805,539 8,842,088 8,142,024 3,883,534 1,935,531 1,614,553 1,110,950 690,358 1,039,007 1,157,298
Note Payable- Bank (6) 1,146,268 2,962,622 8,767,030 17,419,379 26,997,556 32,950,665 27,167,192 15,795,793 8,352,899 5,002,010 3,278,054 3,463,701
Accrued Taxes (7) (76,220) (147,190) (180,148) (91,611) 136,140 0 280,794 330,203 0 (37,653) (97,148) (180,654)
Total Current Liabilities 2,684,601 6,826,250 15,392,421 26,169,856 35,275,720 36,834,199 29,383,517 17,740,548 9,463,849 5,654,715 4,219,913 4,440,345
Shareholders' Equity (8) 11,674,120 11,508,524 10,931,623 11,138,209 11,669,627 11,926,212 12,581,397 12,696,685 12,109,341 12,021,484 11,882,662 11,187,816
Total Liabilities & Equity 14,358,721 18,334,774 26,324,045 37,308,065 46,945,348 48,760,411 41,964,914 30,437,233 21,573,190 17,676,200 16,102,575 15,628,161

(1) See Exhibit 9.

(2) See panel 1, Exhibit 10.
(3) See panel 2, Exhibit 10.
(4) See panel 6, Exhibit 10.
(5) See panel 3, Exhibit 10.
(6) Plug figure.
(7) See panel 5, Exhibit 10.
(8) See panel 4, Exhibit 10.
EXHIBIT 9
KOTA FIBRES, LTD.
Schedule of Cash Receipts and Disbursements (in Rupees)

January February March April May June July August September October November December January February

Assume: Sales 2,616,120 2,892,825 4,447,404 8,804,250 13,885,560 17,588,376 16,315,533 8,572,824 5,031,000 4,447,404 3,531,762 2,767,050 3,400,956 3,616,031
Purchases (1) 2,446,072 4,842,338 7,637,058 9,673,607 8,973,543 4,715,053 2,767,050 2,446,072 1,942,469 1,521,878 1,870,526 1,988,817
Debt Outstanding 1,146,268 2,962,622 8,767,030 17,419,379 26,997,556 32,950,665 27,167,192 15,795,793 8,352,899 5,002,010 3,278,054 3,463,701

Receipts: Accts Rcvble Collected 2,515,500 2,374,632 2,726,802 3,514,657 6,190,142 10,836,774 15,366,686 17,079,239 13,218,449 7,156,094 4,797,562 4,081,147
New Borrowings (Repayments) 462,166 1,816,354 5,804,408 8,652,349 9,578,178 5,953,108 (5,783,473) (11,371,400) (7,442,894) (3,350,889) (1,723,956) 185,647

Disburs.: Accounts Paid (2) 1,591,054 2,446,072 4,842,338 7,637,058 9,673,607 8,973,543 4,715,053 2,767,050 2,446,072 1,942,469 1,521,878 1,870,526
Capital Expenditures 0 0 350,000 0 0 350,000 0 0 350,000 0 0 350,000
Interest Payments 11,058 24,825 70,867 158,210 268,352 362,187 363,212 259,568 145,898 80,686 50,025 40,731
Excise Tax Paid 392,418 433,924 667,111 1,320,638 2,082,834 2,638,256 2,447,330 1,285,924 754,650 667,111 529,764 415,058
Operating Expenses 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501 454,501
Accrued Income Tax Paid 0 0 0 0 0 460,390 0 0 292,770 0 0 0
Wages 540,958 831,665 1,646,395 2,596,600 3,289,026 3,051,005 1,603,118 940,797 831,665 660,439 517,438 635,979
Dividends 0 0 500,000 0 0 500,000 0 0 500,000 0 0 500,000
Subtotal: Disbursements 2,989,989 4,190,986 8,531,210 12,167,005 15,768,320 16,789,882 9,583,214 5,707,839 5,775,555 3,805,206 3,073,606 4,266,794

Receipts - Disbursements (12,323) 0 0 0 0 0 0 0 0 0 0 0

BOP Cash Balance 762,323 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000
EOP Cash Balance 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000 750,000
(1) Equal to 55 percent of sales in period (T+2).
(2) Equal to purchases in period (T-1).
Exhibit 10
KOTA FIBRES, LTD.
Forecasted T-Accounts Supporting Financial Statements (in Rupees)

January February March April May June July August September October November December
1. Schedule of Accounts Receivable
Beginning of Period 2,672,729 2,773,349 3,291,542 5,012,144 10,301,737 17,997,155 24,748,757 25,697,603 17,191,189 9,003,739 6,295,049 5,029,249
Plus Sales 2,616,120 2,892,825 4,447,404 8,804,250 13,885,560 17,588,376 16,315,533 8,572,824 5,031,000 4,447,404 3,531,762 2,767,050
Less Collections, Last Month (1) 885,456 1,046,448 1,157,130 1,778,962 3,521,700 5,554,224 7,035,350 6,526,213 3,429,130 2,012,400 1,778,962 1,412,705
Less Collections, Month before Last (2) 1,630,044 1,328,184 1,569,672 1,735,695 2,668,442 5,282,550 8,331,336 10,553,026 9,789,320 5,143,694 3,018,600 2,668,442
End of Period 2,773,349 3,291,542 5,012,144 10,301,737 17,997,155 24,748,757 25,697,603 17,191,189 9,003,739 6,295,049 5,029,249 3,715,152
(1) 40% of sales in period (T-1).
(2) 60% of sales in period (T-2).

2. Schedule of Inventories
Beginning of Period 1,249,185 2,308,135 5,850,125 11,855,841 17,637,315 19,666,227 14,469,652 6,815,272 3,883,970 2,950,257 1,854,837 1,639,892
Plus Purchases (1) 2,446,072 4,842,338 7,637,058 9,673,607 8,973,543 4,715,053 2,767,050 2,446,072 1,942,469 1,521,878 1,870,526 1,988,817
Plus Labor 540,958 831,665 1,646,395 2,596,600 3,289,026 3,051,005 1,603,118 940,797 831,665 660,439 517,438 635,979
Less Shipments (COGS) 1,928,080 2,132,012 3,277,737 6,488,732 10,233,658 12,962,633 12,024,548 6,318,171 3,707,847 3,277,737 2,602,909 2,039,316
End of Period 2,308,135 5,850,125 11,855,841 17,637,315 19,666,227 14,469,652 6,815,272 3,883,970 2,950,257 1,854,837 1,639,892 2,225,373
(1) Equal to 55 percent of sales in period (T+2).

3. Schedule of Accounts Payable

Beginning of Period 759,535 1,614,553 4,010,818 6,805,539 8,842,088 8,142,024 3,883,534 1,935,531 1,614,553 1,110,950 690,358 1,039,007
+ Purchases (1) 2,446,072 4,842,338 7,637,058 9,673,607 8,973,543 4,715,053 2,767,050 2,446,072 1,942,469 1,521,878 1,870,526 1,988,817
- Payments (2) 1,591,054 2,446,072 4,842,338 7,637,058 9,673,607 8,973,543 4,715,053 2,767,050 2,446,072 1,942,469 1,521,878 1,870,526
End of Period 1,614,553 4,010,818 6,805,539 8,842,088 8,142,024 3,883,534 1,935,531 1,614,553 1,110,950 690,358 1,039,007 1,157,298
(1) Equal to 55 percent of sales in period (T+2).
(2) Equal to purchases in period (T-1).

4. Schedule of Shareholder's Equity

Beginning of Period 11,851,967 11,674,120 11,508,524 10,931,623 11,138,209 11,669,627 11,926,212 12,581,397 12,696,685 12,109,341 12,021,484 11,882,662
Plus Net Profit (177,847) (165,596) (76,900) 206,586 531,418 756,585 655,185 115,288 (87,343) (87,857) (138,822) (194,847)
Less Dividends 0 0 500,000 0 0 500,000 0 0 500,000 0 0 500,000
End of Period 11,674,120 11,508,524 10,931,623 11,138,209 11,669,627 11,926,212 12,581,397 12,696,685 12,109,341 12,021,484 11,882,662 11,187,816

5. Schedule of Accrued Taxes

Beginning of Period 0 (76,220) (147,190) (180,148) (91,611) 136,140 0 280,794 330,203 0 (37,653) (97,148)
Plus Monthly Tax Expense (@ 30%) (76,220) (70,970) (32,957) 88,537 227,751 324,251 280,794 49,409 (37,433) (37,653) (59,495) (83,506)
Less Quarterly Tax Payments 0 0 0 0 0 460,390 0 0 292,770 0 0 0
End of Period (76,220) (147,190) (180,148) (91,611) 136,140 0 280,794 330,203 0 (37,653) (97,148) (180,654)

6. Schedule of Property, Plant and Equipment

Beginning Gross PP&E 10,095,646 10,095,646 10,095,646 10,445,646 10,445,646 10,445,646 10,795,646 10,795,646 10,795,646 11,145,646 11,145,646 11,145,646
Plus Capital Expenditures 0 0 350,000 0 0 350,000 0 0 350,000 0 0 350,000
Ending Gross PP&E 10,095,646 10,095,646 10,445,646 10,445,646 10,445,646 10,795,646 10,795,646 10,795,646 11,145,646 11,145,646 11,145,646 11,495,646
Monthly Depreciation Expense 84,130 84,130 87,047 87,047 87,047 89,964 89,964 89,964 92,880 92,880 92,880 95,797
Less Cumulative Depr'n. 1,568,408 1,652,539 1,739,586 1,826,633 1,913,680 2,003,643 2,093,607 2,183,571 2,276,451 2,369,332 2,462,212 2,558,009
Ending Net PP&E 8,527,237 8,443,107 8,706,060 8,619,013 8,531,966 8,792,002 8,702,038 8,612,075 8,869,194 8,776,314 8,683,434 8,937,637
Exhibit 11
KOTA FIBRES, LTD.
Assumptions

Debt Balance Summary

Jan '01 1,146,268
June '01 32,950,665
Dec '01 3,463,701
Ratio of:
Income Tax/Profit Before Tax 30%
Excise Tax/Sales 15%
This Month Collections of Last Month's Sales 40%
This Month Collections of Month-before-Last Sales 60%
Purchases/ Sales two months later 55%
Wages/Purchases 34%
Annual Operating Expenses/Annual Sales 6.00%
Capital Expenditures (every third month) 350,000
Interest Rate on Borrowings (and deposits) 14.5%
Minimum Cash Balance 750,000
Depreciation/Gross PP&E (per year) 10%
(per month) 0.83%
Dividends Paid (every third month) 500,000
Exhibit 12
KOTA FIBRES, LTD.
Trend of Certain Financal Accounts by Month

January February March April May June July August September October November December
35,000,000 Sales 2,616,120 2,892,825 4,447,404 8,804,250 13,885,560 17,588,376 16,315,533 8,572,824 5,031,000 4,447,404 3,531,762 2,767,050
A/R 2,773,349 3,291,542 5,012,144 10,301,737 17,997,155 24,748,757 25,697,603 17,191,189 9,003,739 6,295,049 5,029,249 3,715,152
30,000,000 Inv 2,308,135 5,850,125 11,855,841 17,637,315 19,666,227 14,469,652 6,815,272 3,883,970 2,950,257 1,854,837 1,639,892 2,225,373
A/P 1,614,553 4,010,818 6,805,539 8,842,088 8,142,024 3,883,534 1,935,531 1,614,553 1,110,950 690,358 1,039,007 1,157,298
25,000,000 n/p 1,146,268 2,962,622 8,767,030 17,419,379 26,997,556 32,950,665 27,167,192 15,795,793 8,352,899 5,002,010 3,278,054 3,463,701
Sales
A/R
20,000,000 Inv
A/P
15,000,000 n/p

10,000,000

5,000,000

0
January February March April May June July August Septemb October Novemb Decemb
er er er