1 Sahel yang Pramod Ram Ujagae tenet (Ait te iyo Mam Saket Vidyungt "ttt! Managemen state Wyanapart Man Chinchpada Rond, Katemanivali, Kalyan i) + Question number 1 is compulsory + Solve any four from Question number 2 to°7 Section 1 CASE STUDY: au ___ IBM Acquisition of Daksh e-services ‘The U.S. $.89 billion IBM proposes to buy 100% stake in Daksh e-services.Daksh is one of the leading independent third party BPO services providers in India and ranks among the top three.Daksh was estimated to have revenues of about U.S $ 50 million and net profits of USS 10 million for FY 2004. The deal is expected to be completed by May 2004 and the value of the deal is estimated to be between US $130 to 170 million. ‘This works out a sales multiple of 15, While the valuation could typically be considered to be on the higher side (smaller firms in the space would command a revenue multiple of | to 1.5) several factors have made the deal worth its premium. These include the larger size of Daksh the fact that it was IPO ready and customer synergies (IBM has several existing contracts wwith the two large customers of Daksh—Sprint and Aetna) Also, IBM has recently increased its India focus and it currently has 4500 people working in the software services and BPO areas. ‘The deal proves beneficial for Daksh as well considering that it is now stronger to face the stiff competition from not only Indian third party players, but large multinational players as ‘well. Also, the deal would provide reasonable retus for its current financial investors and it opportunities. 1. Explain the process of merger. 2. What are the advantages as received by Daksh from this M &A.? Section 1 Q2.Discuss the reasons for Demerger. Q.3. Profits ofa firm for the last five years were as follows: YEAR 2008 2009 2010 2011 2012 PROFIT(rs) | 50,000 60,000 48,000 43,000 35,000 ‘The Capital employed in the firm was Rs.8, 00,000t, assuming th Purchase of super profit, 8 the Caleutate the value of goodwill on the basis aft Ys. Purch Normal rate of return on capital employed to be 10%. Q ””, Comment. Q:5. “Mergers and Acquisitions do not always generate value’ ‘plain Leverage Buy out. cd? Q6 Define intangible assets? What do you mean by value of a bran ; its share for each Q7A" ltdis planning to acquire “B” Id.. For exchange ratio of 0.8 ofits eo Pena Share of “B” ltd. The relevant ata is given below.CalculateI.EPS after merger: io after merger PARTICULARS D BLID ead Aun Rs.6,00,000 Rs.16,00,000 NO.OF EQUITY 4,00,000 2,00,000 EPS = Rs4 PE RATIOCTIME) 7 10 MPS Rs.40 Rs.180