PROJECT ON

ACQUISITION OF
DABUR BY NESTLE

SUBMITTED TO:
RIDHI BHATIA
SUBMITTED BY
AMIT RAWAT
RAJESH KUMAR
RISHABH WADHWA
FMCG SECTOR – An Introduction
The Indian FMCG sector is the fourth largest sector in the economy with a total
market size in excess of US$ 25 billion (Rs. 120,000 cr.). It has a strong MNC
presence and is characterized by a well established distribution network, intense
competition between the organized and unorganized segments and low operational
cost. Availability of key raw materials, cheaper labor costs and presence across the
entire value chain gives India a competitive advantage.

It has grown consistently over the last 3 – 4 years. India‟s FMCG sector is
fragmented and substantial part of sector comprises of unbranded and unpackaged
products.

Based on latest trend, a report on FICCI and Technopak project a growth of 10 –

12 percent for the next 10 years, reaching a size of US$ 43 billion (Rs. 206,000 cr.)
by 2013 and US$ 74 billion (Rs. 355,000 cr.) by 2018. Implementation of the
Goods and Service Tax (GST) and opening up of Foreign Direct Investment (FDI)
in retail can accelerate this growth.

FMCG comprises of following segments:

Personal Care:

Oral care, hair care, skin care, personal wash (soaps); cosmetics and toiletries;
deodorants; perfumes; feminine hygiene; paper products.

Household :
Fabric wash (laundry soaps and synthetic detergents); household cleaners
(dish/utensil cleaners, floor cleaners, toilet cleaners, airfresheners, insecticides and
mosquito repellents, metal polish and furniture polish).

Food & Beverage :

Health beverages; soft drinks; staples/cereals; bakery products (biscuits, bread,

cakes); snack food; chocolates; ice cream; tea; coffee; soft drinks; processed fruits,
vegetables; dairy products; bottled water; branded flour; branded rice; branded
sugar; juices etc.

Tobacco
Lighting

SWOT ANALYSIS OF FMCG SECTOR

STRENGTHS WEAKNESS
 Low operational costs  Lower scope of investing in
 Presence of established technology and achieving
 distribution networks in both  economies of scale, especially in
  urban and rural areas
Presence of well – known brands in
FMCG Sector
OPPORTUNITIES
 Untapped rural market
 Rising income levels, i.e. increase
in purchasing power of
consumers
 Large domestic market – a
population of over one billion
 Export potential
 High consumer good spending
small sectors.
 Low export levels
 “Me-too” products, which
illegally mimic the labels of the
established brands, these products
narrow the scope of FMCG
 products in rural and semi- urban
market.
THREAT
 Removal of import restrictions
resulting in replacing of domestic
brands.
 Slowdown in rural demand

SOCIO - ECONOMIC CONTRIBUTION

SECTOR’S CONTRIBUTION
Employment:
It is amongst the largest employers in India. With about 9 million “kirana” stores
selling FMCG produces, it supports livelihood of 13 million people. Another 2
5
million people are employed at wholesalers, distributors, stockist, etc
Intake of Agricultural Output:
US$ 2 billion (Rs. 9600 cr.) of agricultural produce is purchased by the FMCG
sector,
processed and converted into value added products.

Consumption of Media and Advertising:

40% of media earnings from advertising come from the FMCG sector, contribution
of
US$ 2 billion (Rs. 9600 cr.).

Contribution to Contract Manufacturing:

About 10 percent of FMCG production is outsourced to contract manufacturing
units,
with ancillary industry contribution at about US$ 1.5 billion (Rs. 7200 cr.).

Fiscal Contribution:
The FMCG sector contributes US$ 6.5 billion (Rs. 31,000 cr.) through direct and
in
direct taxes to the exchequer. Indirect taxes are about 30 percent of MRP, while
direct
tax includes corporate income tax.

KEY DRIVERS OF FMCG SECTOR

Key Growth Drivers

The FMCG industry has undergone substantial growth on account of the following
reasons:
 Favorable Indian Economy & Demographics: 45% people in India are under
20 years of age. Per capita disposable income has increased from $550 to
$600 in 2007 (9% increase). GDP is growing at a CAGR between 8 to 9%.In
the next five years, affluent and aspirers as a total will supersede strivers and
will be dominated by aspirers, as per NCAER.
 Large Domestic Market: Increasing disposable income has resulted in a rise
in the domestic market size. Increasing income has translated into higher
consumption levels.
  Disposable Income: There is increase in disposable income, observed in
both rural and urban consumers, which is giving opportunity to many rural
consumers to shift from traditional unorganized unbranded products to
branded FMCG products and urban fraternity to splurge on value added and
lifestyle products.
 Buying Pattern Shift: The crisis of declining FMCG markets during 2001-04
was driven by new avenues of expenditure for growing consumer income
such as consumer durables, entertainment, mobiles, motorbikes etc. Now, as
many consumers have already upgraded, their income is being directed
towards pampering themselves.
 Presence across value chain: Indian FMCG firms have a presence across the
entire value chain of the industry, from raw material supply to final
processed and packaged goods, both in the personal care products and in the
food processing sector. As a result firms located in India have become more
cost competitive.

TECHNOLOGY
 Growing share of organized retail: The modern trade format provides a
wider visibility to the FMCG products. Organized retail has led to a boom in
consumption by generating wide spread employment opportunities.

Key Trends
 Underpenetrated Growth Categories: Within the Indian FMCG industry,
there are few categories that grew more than 20% during 2008-2009, like
shaving cream, skin/fairness cream, shampoos, skin care & cosmetics, tooth
powder. Some other growth categories were hair color, skin care, anti-aging
solution, deodorants and men‟s products.
 Penetrated Growth Categories: Even mainstream categories with high
penetration levels such as washing detergents, soaps and hair oils have
shown strong underlying volume growth, despite sharp inflation led price
increases in FY08. This is partly related to the growth in organized retail (3-
5% of turnover for most FMCG players) that gives more visibility to
national brands with strong brand equity.
 Health Food Categories: FMCG majors are widening their health food
portfolio to cash in on the rich, urban, health conscious Indian. Sugar free
Chyawanprash, organic spices and multi grain pastas and biscuits are few
examples. Urban India is high on health and FMCG majors are cashing in on
the opportunity. Also, with the Indian consumer becoming increasingly
health conscious, the demand for juices has witnessed rapid growth.
  Impact on sector due to economic slowdown:o During economic slowdown,
consumer expenditure of a household has declined more than decline /
slowdown in their income. This suggests a decline in the share of
consumption in income and a greater weight given by consumers to the
precautionary motive of saving. Also, Indian consumers have reduced their
expenditure share on Durables and Semi- durable goods.

TECHNOLOGY
 In many parts of rural India, we found consumption increasing due to
growing incomes led by rising food price realizations and Government
schemes like the National Rural Employment Guarantee Scheme (NREGS).
 Simultaneously, there are some signs of down trading in urban homes with
fixed incomes given the more direct impact that such consumers have
experiences due to the downturn.
 Most FMCG products (non durables) are necessities, and therefore their
volume consumption has been largely unaffected in the current economic
slowdown. A report by FICCI and Technopak states that the sector has
coped well with recent challenges and grew by 15 percent in 2009.

Major Challenges to the Indian FMCG sector

 Highly unorganized: Although the organized market is gaining strength,
majority of the share is still captured by the unorganized market. Rising
income levels and a growing middle class allows players selling branded
products to push consumers towards branded products.
 High competition between large and small players: Rise in disposable
incomes and more young population have spruced up demands for products
in the personal care,
 processed food etc segments This has led to competition among the FMCG
PEST ANALYSIS OF FMCG SECTOR
Political factor
1. GST regime
2. Transportation and infrastructure development in rural areas helps in
distribution network
3. Restrictions in import policies
4. Help for agricultural sector

Economical factor
1. GDP rate increase along
2. Increase in disposable income at 10% annually for next 8 year
3. Indian FMCG recorded 16% sales growth in last fiscal
4. The FMCG sector is a 4th largest sector in india

Social factor
1. Rural employment
2. Volume driven growth in rural market
3. Major young population can increase revenue
4. The Indian culture, social and life styles are changing drastically

Technology factor
1. Technology has been simplified and available in the industry
2. Foreign players helps in high technological development.
Introduction of Acquirer (NESTLE LTD)
Introduction
Nestlé India is a subsidiary of Nestlé S.A., headquartered at Vevey, Switzerland.
Globally, Nestlé (website:www.nestle.com) is a leading nutrition, health and
wellness company. The original parent company was founded in 1905 as a result of
a merger of two companies namely – ‘Anglo-Swiss Milk Company’ for milk
products and the ‘Farine Lactée Henri Nestlé Company’. The former of the two
was established in 1866 by the Page Brothers in Cham, Switzerland and the later
was established in 1866 by Henri Nestlé to provide an infant food product. Even
during the early 1900s ‘The Nestlé Anglo-Swiss Condensed Milk Company
(Export) Limited’ used to import products to India but the formal journey of Nestlé
India started only in 1959. Today with popular brands like NESCAFÉ, MAGGI,
MILKYBAR, MILO, KIT KAT, BAR-ONE, MILKMAID and NESTEA under its
belt Nestlé is a well known name in India.

Fact File

Founded 28th March, 1959

“To rapidly build Nestlé India as the Respected and
Trustworthy leading Food, Nutrition, Health and
Wellness Company ensuring long term sustainable
Vision and profitable growth”
Revenue from operations
(2007-08) Rs. 43,351 million
Profit After Tax (2007-08) Rs. 5,340 million
Chairman & Managing
Director Martial G. Rolland
Headquarters Gurgaon, India
Website www.nestle.in
(Source: Company Website and Presentations)
 Brands
Nestlé India has many brands mostly in the food and beverages segment – many of
its brands are household names in India. The several brands of Nestlé India can be
divided into four categories. Please find below a list of main Nestlé India brands
under corresponding categories.

1) Milk Products & Nutrition

 NESTLÉ EVERYDAY
 NESTLÉ Milk
 NESTLÉ NESVITA
 NESTLÉ Fresh ‘n’ Natural
 NESTLÉ CEREVITA
 NESTLÉ MILKMAID
 NESTLÉ NIDO

2) Coffee and Beverages

 NESCAFÉ
 NESTLÉ MILO
 NESTEA

3) Prepared Dishes & Cooking Aids

 MAGGI

4) Chocolates & Confectionery

 NESTLÉ KIT KAT
 NESTLÉ MUNCH
 NESTLÉ MILKYBAR
 NES
 TLÉ BAR-ONE
 NESTLÉ Milk Chocolate
 POLO
 NESTLÉ Eclairs

Nestlé has two popular brands – Cerelac and Lactogen – in infant food category
but advertisement for them is banned in India as per law. An important thing to
note is Nestlé follows an umbrella branding strategy where most of its brands have
the name ‘Nestlé’ associated with it and the same is true with its sub-brands as
well.

Nestle - A SWOT analysis

Nestle India Limited is the Indian arm of Nestle SA, which holds a 51% stake in
the company. It is one of the leading branded
processed food companies in the country with a large market share in products like
instant coffee, weaning foods, instant foods,
milk products, etc. It also has a significant share in the chocolates and other semi-
processed foods market.
Nestlé's leading brands include Cerelac, Nestum, Nescafe, Maggie, Kitkat, Munch
and Milkmaid. To strengthen its presence, it
has been the company's endeavor to launch new products at a brisk pace and has
been quite successful in its launches.

Strength
Parent support - Nestle India has a strong support from its parent company, which
is the world’s largest processed food and
beverage company, with a presence in almost every country. The company has
access to the parent’s hugely successful global
folio of products and brands.
Brand strength - In India, Nestle has some very strong brands like Nescafe, Maggi
and Cerelac. These brands are almost
generic to their product categories.
Product innovation - The company has been continuously introducing new
products for its Indian patrons on a frequent basis,
thus expanding its product offerings.

Weakness
Exports – The company’s exports stood at Rs 2,571 m at the end of 2003 (11% of
revenues) and continue to grow at a decent
pace. But a major portion of this comprises of Coffee (around 67% of the exports
were that of Nescafe instant to Russia). This
constitutes a big chunk of the total exports to a single location. Historically, Russia
has been a very volatile market for Nestle, and
its overall performance takes a hit often due to this factor.
Supply chain - The company has a complex supply chain management and the
main issue for Nestle India is traceability. The
food industry requires high standards of hygiene, quality of edible inputs and
personnel. The fragmented nature of the Indian
market place complicates things more.

Opportunities
Expansion - The company has the potential to expand to smaller towns and other
geographies. Existing markets are not fully
tapped and the company can increase presence by penetrating further. With India's
demographic profile changing in favour of theconsuming class, the per capita
consumption of most FMCG products is likely to grow. Nestle will have the
inherent advantage ofthis trend.
Product offerings - The company has the option to expand its product folio by
introducing more brands which its parents are
famed for like breakfast cereals, Smarties Chocolates, Carnation, etc
Global hub - Since manufacturing of some products is cheaper in India than in
other South East Asian countries, Nestle India
could become an export hub for the parent in certain product categories.

Threat
Competition - The company faces immense competition from the organised as well
as the unorganised sectors. Off late, to
liberalise its trade and investment policies to enable the country to better function
in the globalised economy, the Indian
Government has reduced the import duty of food segments thus intensifying the
battle.
Changing consumer trends - Trend of increased consumer spends on consumer
durables resulting in lower spending on FMCG
products. In the past 2-3 years, the performance of the FMCG sector has been
lackluster, despite the economy growing at a
decent pace. Although, off late the situation has been improving, the dependence
on monsoon is very high.
Sectoral woes - Rising prices of raw materials and fuels, and in turn, increasing
packaging and manufacturing costs. But the Companies may not be able to pass on
the full burden of these onto the customers
INTRODUCTION OF ACQUIRING
COMPANY(DABUR INDIA)
Dabur India Limited has marked its presence with significant achievements and
today commands a market leadership status. Our story of success is based on
dedication to nature, corporate and process hygiene, dynamic leadership and
commitment to our partners and stakeholders. The results of our policies and
initiatives speak for themselves.

 
 Leading consumer goods company in India with a turnover of Rs. 2834.11
Crore (FY09)

 3 major strategic business units (SBU) - Consumer Care

Division (CCD), Consumer Health Division (CHD) and International
Business Division (IBD)

 3 Subsidiary Group companies - Dabur International, Fem Care

Pharma and newu and 8 step down subsidiaries: Dabur Nepal Pvt
Ltd (Nepal), Dabur Egypt Ltd (Egypt), Asian Consumer Care
(Bangladesh), Asian Consumer Care (Pakistan), African Consumer
Care (Nigeria), Naturelle LLC (Ras Al Khaimah-UAE), Weikfield
International (UAE) and Jaquline Inc. (USA).

 17 ultra-modern manufacturing units spread around the globe

 Products marketed in over 60 countries

 Wide and deep market penetration with 50 C&F agents, more than 5000
distributors and over2.8 million retail outlets all over India

Consumer Care Division (CCD)

adresses consumer needs across the entire FMCG spectrum through four distinct
business portfolios of Personal Care, Health Care, Home Care & Foods

 Master brands:

 Dabur - Ayurvedic healthcare products

  Vatika - Premium hair care

 Hajmola - Tasty digestives

 Réal - Fruit juices & beverages

 Fem - Fairness bleaches & skin care products

 9 Billion-Rupee brands: Dabur Amla, Dabur
Chyawanprash,Vatika, Réal, Dabur Red
Toothpaste, Dabur Lal Dant
Manjan,Babool, Hajmola and Dabur Honey

 Strategic positioning of Honey as food product, leading

to market leadership (over 75%) in branded honey
market 

 Dabur Chyawanprash the largest selling Ayurvedic

medicine with over 65% market share.

 Vatika Shampoo has been the fastest selling shampoo

brand in India for three years in a row

 Hajmola tablets in command with 60% market share of

digestive tablets category. About 2.5 crore Hajmola
tablets are consumed in India every day

 Leader in herbal digestives with 90% market share

Consumer Health Division (CHD)

offers a range of classical Ayurvedic medicines and Ayurvedic OTC products

that deliver the age-old benefits of Ayurveda in modern ready-to-use formats

 Has more than 300 products sold through prescriptions

as well as over the counter

 Major categories in traditional formulations include:

- Asav Arishtas
- Ras Rasayanas
 - Churnas
- Medicated Oils

 Proprietary Ayurvedic medicines developed by Dabur

include:
- Nature Care Isabgol
- Madhuvaani
- Trifgol

 Division also works for promotion of Ayurveda through

organised community of traditional practitioners and
developing fresh batches of students 

International Business Division (IBD)

caters to the health and personal care needs of customers across different
international markets, spanning the Middle East, North & West Africa, EU and the
US with its brands Dabur & Vatika 

 
 Growing at a CAGR of 33% in the last 6 years and contributes to about 20%
of total sales

 Leveraging the 'Natural' preference among local consumers to increase share

in perosnal care categories

 Focus markets:
- GCC
- Egypt
- Nigeria
- Bangladesh
- Nepal
- US

 High level of localization of manufacturing and sales & marketing

BCG Matrix
MARKET SHARE
HIGH LOW
M HIGH STAR Question
A  DABUR Glucose  Dazzl
R  DABUR Honey  New U
K  Meswak
E
T
LOW COW DOG
G  Fem
R  Chyawanprash
O  Hajmola
 Real
W
T
H
REASONS FOR ACQUISITION
Robust Distribution Network of dabur
 Research & Development Strengths of dabur
 Strong Presence in Food Categories
 Powerful brand image of dabur
 All india coverage of market
 Expeansention of product line
 Since Dabur is a good brand with a good amount of its product range. So
Nestle found it feasible to acquire Dabur.
 Nestle has a good marketing presence which can be seen by us consumers. It
is present across all corners of the nation. So adding products of Dabur
would be an added advantage to them and products of Dabur can also be
seen across all corners which was earlier not possible before the Merger.
 Dabur had a weak management. Because of this they could not flourish as a
company and there product range was only limited over the years. Only
 chawanprash and real juices are hot selling items. So Nestle found it a good
opportunity to acquire Dabur.
 Nestle has a strong base in the country. So acquiring Dabur and increasing
their product range is an advantage which would not only increase their
turnover but also increase the productivity.
 Nestle will have an advantage that they can use their existing team to market
the products of merged Dabur. The company will not have to recruit new
salesforce but would have to impart extensive training to them

SWOT Analysis

The following is the SWOT analysis of Nestle on acquiring Dabur

Strengths

 Nestle is the Global food producer, located in over 100 countries.

Consistently one of the world's largest producers of food products, with sales
in the USA in 2008 of $10 billion; sales and earnings in 2008 were better
than expected, even in a downturned economy. Global sales in 2008 topped
$101 billion.

 In 2008, Nestlé was named one of "America's Most Admired Food

Companies" in Fortune magazine for the twelfth consecutive year.

 Nestlé provides quality brands and products and line extensions that are
well-known, top-selling brands including:

Maggi, Boost, Maggi Ketchup, Polo, Toffees, Everyday Dairy Whitener, Milk,
Curd, Coffee Chocolate and Candy: Kit Kat, Toll House, Butterfinger, Baby Ruth,
Crunch Bar, the Willy Wonka Candy line.

On acquiring Dabur it has broadened its product mix and it has included
Chawanprash which is a hot selling item. It has also included Real Juices also a hot
selling item. Dabur Honey, Vatika coconut Oil are also some of the products
included in the product mix.

 General Mills: subsidiary which makes Betty Crocker, Bisquick, Hamburger

Helper, Pillsbury, Old El Paso, cereals, fruit snacks, frozen pizza, canned
soups, frozen vegetables, ready-made frozen meals.

 Gerber: baby formula, prepared baby foods, baby cereals, water, juice,
yogurt, foods for infants, toddlers and preschoolers.

 Professional brands sold to restaurants, colleges, hotels, and food

professionals including Jenny Craig meals, Impact liquid meals for trauma
patients, liquid meals for diabetics, and OptiFast weight loss products.

 Successful due in part to their unquestionable ability to keep major brands

consistently in the forefront of consumer's minds (and in their shopping
carts) by renovating existing product lines, keeping major brands from
slipping into saturation/decline and having superior access to distribution
channels.

Weaknesses

 Their LC-1 division was not as successful as they thought it would be in

France. In the late 1980s, Dannon entered the market with a health-based
yogurt, and become the top selling brand of yogurt; Nestlé's 1994 launch
was behind the product life cycle curve in an already mature market and
could not compete against a strong, established brand.

 Growth in their organic food sales division was flat in 2008, even though the
industry grew 8.9%.

 Since 2004 the breakfast cereal industry has been under fire from the FDA
and the American Medical Association, both of which say that false claims
of "heart healthy" and "lower cholesterol" need to be removed from
packaging and advertising. They have also been forced to reduce the amount
of sugar in their products, as parent's advocates groups claimed they were
contributing to the diabetes epidemic among American children.
  General Mills is an experienced, established brand and are the market leader
in the USA, however, they have been lacking in innovation, have not cashed
in on the booming health food craze and have been behind in creating new,
niche products, especially in their yogurt division, where Yoplait is the only
brand making a profit.

 In 2008, although their products did not carry the recalled pistachios, several
of their ice cream brands, Dryer's, Edy's and Haagen-Dazs, were still
plagued with bad PR and loss of sales.

 Since Dabur is an Indian brand it has a weakness that there products are
accepted only within the geographical boundaries of the country.
Chawanprash being a health supplement is widely accepted by the Indians.
So the company should introduce the new added products in the
international markets by educating the people of foreign countries about the
benefits of chawanprash.

Opportunities

 In today's health conscious societies, they can introduce more health-based

products, and because they are a market leader, they would likely be more
successful. Thus by introducing Chawanprash under their umbrella it will
sell like hot cakes.

 Provide allergen free food items, such as gluten free and peanut free.

 They launched a new premium line of higher cacao content chocolates

dubbed Nestlé Treasures Gold, in order to cash in on the "recession
economy" in which consumers cut back on luxury goods, but regularly
indulge in candy and chocolate. Americans want luxury chocolates, and
high-end chocolate is immune to the recession (so far), because it is an
inexpensive indulgence.

 Opened Nestlé Café's in major cities to feature Nestlé products.

 They can enter the international markets since chawanprash is a health

supplement made up of herbal products and can be widely accepted.
Threats

 Any contamination of the food supply, especially e-coli. Their Toll House
brand cookie dough was recalled in March of 2009 because of e-coli.
Outbreaks were linked to 28 states and the product had to be recalled
globally. Nestlé has yet to find out how this happened, and is still
investigating.

 They were affected by the pet food recall in 2007, in which 95 different
brands of dog and cat food were recalled due to contamination with rat
poison. Also in 2007, FDA learned that certain pet foods were sickening and
killing cats and dogs. FDA found contaminants in vegetable proteins
imported into the United States from China and used as ingredients in pet
food.

 Raw chocolate ingredient prices are soaring; dairy costs alone rose 50% in
2008, this cuts heavily into their profit margins and often gets passed on to
consumers, by shrinking the packaging in a way that is almost unnoticeable-
therefore the consumer is paying the same prices for less product.

 They have major competitors, like Hershey's, Cadbury-Schweppes (owned

by Pepsi), Lindt, Kellogg's, Starbucks, Quaker, Kraft Foods, Dannon, Del-
Monte, Heinz, Frito-Lay (owned by Pepsi).

 Another threat which the company can come across is that there are many
other players operating in this competitive world and many other companies
selling chawanprash. So to counter this competition the company needs to
maintain the quality of Dabur Chawanprash and enter the for

VALUATIONS
   
 Output
Enterprise value  
Present value of Free Cash Flow 2,612

   
Terminal Value 32,866
Discount Factor 0.51
Present Value of Terminal Value 16,742

% of Enterprise Value 87%

   
Enterprise value 19,354

68% OF 19354 = 13161CR

ASSUMPTION & SOURCES

FOR VALUATION
1. SALES IS GROWING WITH SYNERGE
 2. COST IS REDUCING WITH THE BENEFIT OF ILIMINATING
DOUBLE DEPARTMENT
3. BALANCE SHEET DATA TAKEN FROM ANNUAL REPORT OF
COMPANY
4. BETA AND OTHER PERSENTAGE TAKEN FROM MONEY
CONTROL AND YAHOO FINANCE
5. WE TAKING 68% STAKE WHICH IS HOLD BY PERMOTERS

MODE OF PAYMENT
50% SHARE OF NESTLE(6580CR)
30% DEBT(3948CR)
20% CASH(2632CR)

SWAP RATIO
 DABUR OUTSTANDING SHARE ARE TOTAL OF 174CR
 17078000 SHARE OF NESTLE
  FOR EVERY 70 SHARE OF DABUR THEY WILL GET 1 SHARE OF
NESTLE

POST MARGER OBSTACLES

 COORDINATE WITH ALL INDIA MANUFACTURING PLANTS
 DEAL WITH OTHER MAJOR SHARE HOLDING PARTY
 CALCULATE THE TAX FOR DEAL