Modelling Fundamentals

Learning Outcomes

1.0 Integrating Income Statement, Balance Sheet and Cash Flows

2.0 Building Cash Flow Statement
3.0 Cross sheet formulas
4.0 Integrity and efficiency tips
5.0 Dealing with circularities and a circularity switch
6.0 Operating cash and Excess Cash
7.0 Financial Ratios

Circularity Switch 1.0

Currency INR
unit Crores
Marico Hist Hist Hist Hist
Calculations (INR crores) 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19
Net PP&E
Capital expenditure % of sales 1.0% 1.7% 2.0% 2.2%
Depreciation % of beginning PP&E 14.8% 16.6%

Beginning PP&E
Capex 59.1 100.7 127.0 162.0
Depreciation
Ending PP&E 617.0

Equity
Beginning balance
Net income
Dividends paid
Ending balance 3,010.0

OWC
Inventories 1,411.0
Trade receivables 517.0
Other current assets 325.0
Trade payables 944.0
Provisions 57.0
Employee benefit obligations 68.0
Current tax liabilities (Net) 61.0
Other current liabilities 218.0
Operating working capital 905.0
 Proj Proj Proj Proj Proj Proj Proj Proj
31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27

3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%

16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6% 16.6%

617.0 751.8 890.2 1,032.1 1,177.0 1,324.5 1,473.6 1,625.6

237.0 263.1 289.4 316.0 342.6 368.6 396.3 426.0
(102.3) (124.6) (147.6) (171.1) (195.1) (219.6) (244.3) (269.5)
751.8 890.2 1,032.1 1,177.0 1,324.5 1,473.6 1,625.6 1,782.1

3,010.0 3,307.3 3,627.2 3,981.4 4,364.3 4,779.6 5,225.2 5,704.5

959.1 1,031.8 1,142.8 1,235.0 1,339.7 1,437.3 1,546.4 1,663.2
(661.8) (711.9) (788.6) (852.2) (924.4) (991.7) (1,067.0) (1,147.6)
3,307.3 3,627.2 3,981.4 4,364.3 4,779.6 5,225.2 5,704.5 6,220.1

1,402.5 1,569.3 1,719.3 1,881.2 2,037.2 2,193.1 2,357.0 2,534.1

522.2 579.6 637.6 696.2 754.7 812.1 873.0 938.4
328.3 364.4 400.8 437.7 474.4 510.5 548.8 589.9
938.4 1,049.9 1,150.3 1,258.7 1,363.1 1,467.4 1,577.0 1,695.5
57.6 63.9 70.3 76.8 83.2 89.5 96.2 103.5
68.7 76.2 83.9 91.6 99.3 106.8 114.8 123.4
61.6 68.4 75.2 82.1 89.0 95.8 103.0 110.7
220.2 244.4 268.8 293.6 318.2 342.4 368.1 395.7
906.5 1,010.3 1,109.1 1,212.4 1,313.6 1,413.7 1,519.6 1,633.7
 Proj Proj
31-Mar-28 31-Mar-29

3.2% 3.6%
16.6% 16.6%

1,782.1 1,942.5
455.8 541.1
(295.4) (322.0)
1,942.5 2,161.5

6,220.1 6,772.4
1,781.4 1,906.4
(1,229.2) (1,315.4)
6,772.4 7,363.4

2,711.4 2,901.2
1,004.1 1,074.4
631.2 675.4
1,814.1 1,941.1
110.7 118.5
132.1 141.3
118.5 126.8
423.4 453.0
1,748.0 1,870.3
 679635036.xlsx Debt

Marico Hist. Hist. Hist. Hist. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj. Proj.
### 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29

Interest rate on short term debt/revolver 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5% 7.5%
Interest rate on long-term debt 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Interest rate on cash 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0% 5.0%

Issuance of long-term debt 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Repayment of long-term debt 3.0 3.0 3.0 3.0 2.0 0.0 0.0 0.0 0.0 0.0

Cash flow from operations 1,063.2 1,059.1 1,198.2 1,309.5 1,440.3 1,563.2 1,691.6 1,825.7 1,969.6 2,113.4
Cash flow from investments (237.0) (263.1) (289.4) (316.0) (342.6) (368.6) (396.3) (426.0) (455.8) (541.1)
Less Dividends (661.8) (711.9) (788.6) (852.2) (924.4) (991.7) (1,067.0) (1,147.6) (1,229.2) (1,315.4)
Cash flow generated to service debt 164.4 84.1 120.3 141.3 173.3 202.8 228.3 252.1 284.6 256.9

Beginning cash balance 947.0 1,111.1 1,233.3 1,356.7 1,481.5 1,605.9 1,728.0 1,857.6 1,996.9 2,246.1
Less operating cash required (1,111.1) (1,233.3) (1,356.7) (1,481.5) (1,605.9) (1,728.0) (1,857.6) (1,996.9) (2,136.7) (2,286.2)
Cash availaible to repay debt 0.3 (38.2) (3.1) 16.4 48.8 80.8 98.7 112.7 144.8 216.8

Issue/(repayment) of long term debt (3.0) (3.0) (3.0) (3.0) (2.0) 0.0 0.0 0.0 0.0 0.0
Surplus cash/(revolver) requirement (2.7) (41.2) (6.1) 13.4 46.8 80.8 98.7 112.7 144.8 216.8

Short term debt

Beginning balance 338.0 340.7 381.9 387.9 374.5 327.6 246.8 148.1 35.4 0.0
Issue/(repayment) 2.7 41.2 6.1 (13.4) (46.8) (80.8) (98.7) (112.7) (35.4) 0.0
Ending balance 338.0 340.7 381.9 387.9 374.5 327.6 246.8 148.1 35.4 0.0 0.0

Long term Debt

Beginning balance 14.0 11.0 8.0 5.0 2.0 0.0 0.0 0.0 0.0 0.0
Issue 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Repayment (3.0) (3.0) (3.0) (3.0) (2.0) 0.0 0.0 0.0 0.0 0.0
Ending Balance 14.0 11.0 8.0 5.0 2.0 0.0 0.0 0.0 0.0 0.0 0.0

Interest expense calculation

interest expense on short term debt 25.5 27.1 28.9 28.6 26.3 21.5 14.8 6.9 1.3 0.0
interest expense on long term debt 1.0 0.8 0.5 0.3 0.1 0.0 0.0 0.0 0.0 0.0
Total interest expense 26.5 27.9 29.4 28.9 26.4 21.5 14.8 6.9 1.3 0.0

Interest income 51.5 58.6 64.7 71.0 77.2 83.3 89.6 96.4 106.1 118.7

© Adkins Matchett Toy 2010 Page 5 of 30

Marico Hist Hist Hist Hist
Income Statement (INR crores) 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19
Assumptions
Growth in sales (1.7%) 7.0% 15.8%
Cost of sales as a % of sales 51.0% 47.8% 53.0% 54.8%
Employee Benefit expenses as a % of sales 6.2% 6.8% 6.7% 6.4%
Other expenses as a % of sales 25.3% 25.7% 22.3% 21.4%
Amortization amount (INR crores) (4.1) (4.0) (3.0) (3.0)
Non recurring income/(expense) (14.5) (50.9) (41.0) (44.0)
Other income (expense), amount 26.0 (4.2) (7.0) (13.0)
Effective tax rate 30.0% 29.7% 26.3% 25.4%
Marginal tax rate 34.6% 34.6% 34.6% 34.6%
Dividend payout ratio 70.6% 63.7% 78.1% 61.0%
Basic WASO 128.7 128.7 128.8 128.9
Diluted WASO 128.7 128.9 128.9 129.0

Income statement
Net revenues 6,017.3 5,917.8 6,333.0 7,334.0
Cost of sales (3,070.6) (2,831.0) (3,359.0) (4,017.0)
Employee Benefit expenses (373.4) (404.2) (422.2) (466.0)
Other expenses (1,522.0) (1,523.4) (1,414.0) (1,570.0)
EBITDA 1,051.4 1,159.3 1,137.8 1,281.0

Depreciation (82.6) (85.3) (82.8) (93.0)

Amortization (4.1) (4.0) (3.0) (3.0)
EBIT 964.7 1,069.9 1,052.0 1,185.0

Non-recurring income/(expense) 14.5 50.9 41.0 44.0

Other income (expense) 26.0 (4.2) (7.0) (13.0)
Interest income 32.4 36.3 34.0 54.0
Interest expense (20.6) (16.6) (16.0) (24.0)
Profit before tax 1,016.9 1,136.3 1,104.0 1,246.0

Tax expense (305.4) (337.7) (290.0) (128.0)

Profit for the year attributable to owners 711.5 798.6 814.0 1,118.0

Add /(Subtract) back after tax non-recurring char (9.5) (33.3) (26.8) (216.8)
Recurring profit for the year 702.0 765.3 787.1 901.2

Dividends (502.3) (508.8) (636.0) (682.0)

Shareholder information
Basic WASO 128.7 128.7 128.8 128.9
Diluted WASO 128.7 128.9 128.9 129.0
Basic earnings per share 5.46 5.95 6.11 6.99
Diluted earnings per share 5.45 5.94 6.11 6.99
Dividend per share 3.90 3.95 4.94 5.29

NOPAT
Invested capital
ROIC
 Proj Proj Proj Proj Proj Proj Proj Proj
31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27

1.0% 11.0% 10.0% 9.2% 8.4% 7.6% 7.5% 7.5%

53.9% 54.3% 54.1% 54.2% 54.2% 54.2% 54.2% 54.2%
6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4% 6.4%
21.4% 21.4% 21.4% 21.4% 21.4% 21.4% 21.4% 21.4%
(3.0) (3.0) (3.0) (3.0) (3.0) (3.0) (3.0) (3.0)
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%
69.0% 69.0% 69.0% 69.0% 69.0% 69.0% 69.0% 69.0%
128.9 128.9 128.9 128.9 128.9 128.9 128.9 128.9
129.0 129.0 129.0 129.0 129.0 129.0 129.0 129.0

7,407.3 8,222.1 9,044.4 9,876.4 10,706.1 11,519.7 12,383.7 13,312.5

(3,993.0) (4,467.8) (4,895.0) (5,356.1) (5,800.2) (6,244.1) (6,710.8) (7,215.0)
(474.1) (526.2) (578.8) (632.1) (685.2) (737.3) (792.6) (852.0)
(1,585.2) (1,759.5) (1,935.5) (2,113.6) (2,291.1) (2,465.2) (2,650.1) (2,848.9)
1,355.1 1,468.5 1,635.0 1,774.7 1,929.6 2,073.1 2,230.3 2,396.6

(102.3) (124.6) (147.6) (171.1) (195.1) (219.6) (244.3) (269.5)

(3.0) (3.0) (3.0) (3.0) (3.0) (3.0) (3.0) (3.0)
1,249.8 1,340.9 1,484.4 1,600.6 1,731.5 1,850.5 1,983.0 2,124.2

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0
51.5 58.6 64.7 71.0 77.2 83.3 89.6 96.4
(26.5) (27.9) (29.4) (28.9) (26.4) (21.5) (14.8) (6.9)
1,278.8 1,375.7 1,523.8 1,646.7 1,786.2 1,916.4 2,061.8 2,217.6

(319.7) (343.9) (380.9) (411.7) (446.6) (479.1) (515.5) (554.4)

959.1 1,031.8 1,142.8 1,235.0 1,339.7 1,437.3 1,546.4 1,663.2

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

959.1 1,031.8 1,142.8 1,235.0 1,339.7 1,437.3 1,546.4 1,663.2

(661.8) (711.9) (788.6) (852.2) (924.4) (991.7) (1,067.0) (1,147.6)

128.9 128.9 128.9 128.9 128.9 128.9 128.9 128.9

129.0 129.0 129.0 129.0 129.0 129.0 129.0 129.0
7.44 8.00 8.86 9.58 10.39 11.15 11.99 12.90
7.44 8.00 8.86 9.57 10.39 11.14 11.99 12.89
5.13 5.52 6.12 6.61 7.17 7.69 8.28 8.90
0.05
 Proj Proj
31-Mar-28 31-Mar-29

7.0% 7.0%
54.2% 54.2%
6.4% 6.4%
21.4% 21.4%
(3.0) (3.0)
0.0 0.0
4.0 4.0
25.0% 25.0%
25.0% 25.0%
69.0% 69.0%
128.9 128.9
129.0 129.0

14,244.4 15,241.5
(7,719.5) (8,260.2)
(911.6) (975.5)
(3,048.3) (3,261.7)
2,564.9 2,744.2

(295.4) (322.0)
(3.0) (3.0)
2,266.5 2,419.2

0.0 0.0
4.0 4.0
106.1 118.7
(1.3) 0.0
2,375.2 2,541.9

(593.8) (635.5)
1,781.4 1,906.4

0.0 0.0
1,781.4 1,906.4

(1,229.2) (1,315.4)

128.9 128.9
129.0 129.0
13.82 14.79
13.81 14.78
9.53 10.20
Marico Hist Hist Hist

Balance Sheet (INR crores) 31-Mar-16 31-Mar-17 31-Mar-18

Assumptions
Operating cash % of sales
Inventory days 161.6 164.2
Receivable days 15.2 19.6
Other current assets as a % of sales 2.0% 4.0%

Investment in Properties ($ amount) 30.0 30.0

Goodwill 479.5 486.0
Equity method and non current investments 94.2 72.0
Deferred tax assets and non current tax assets (INR) amount 35.0 46.0
Other non current assets (INR) amount 18.2 32.0

Days payable 89.8 89.3

Provisions as a % of sales 1.0% 0.9%
Current Employee benefit obligations as a % of sales 0.8% 0.9%

Current tax liabilities as a % of sales 1.0% 0.8%

Other current liabilities as a % of sales 2.5% 2.8%
Long term Employee benefit obligations as a % of sales 0.4% 0.3%
Deferred tax liability as a % of sales 0.4% 0.5%

Balance sheet
Cash and cash equivalents 772.6 689.0
Inventories O 1,253.4 1,511.0
Trade receivables O 247.0 340.0
Other current assets O 116.5 254.0
Total current assets 2,389.5 2,794.0

Property, plant & equipment, net O 558.4 561.0

Investment in Properties NOA 30.0 30.0
Goodwill O 479.5 486.0
Other intangible assets O 28.1 60.0
Equity method and non current investments NOA 94.2 72.0
Deferred tax assets and non current tax assets O 35.0 46.0
Other non current assets O 18.2 32.0
Total non-current assets 1,243.2 1,287.0

TOTAL ASSETS 3,632.8 4,081.0

Short-term borrowings F 238.8 292.0

Trade payables O 696.6 822.0
Provisions O 56.4 57.0
Employee benefit obligations O 50.0 56.0
Current tax liabilities (Net) O 57.1 52.0
Other current liabilities O 150.3 179.0
Total current liabilities 1,249.2 1,458.0

Long-term borrowings F 0.0 20.0

Employee benefit obligations O 22.5 19.0
Deferred tax liabilities (Net) O 22.0 29.0
Total non-current liabilities 44.5 68.0

Equity including Minority interest F 2,339.0 2,555.0

TOTAL LIABILITIES & EQUITY 3,632.8 4,081.0

Balance check 0.0 0.0

Market value of equity

Total Assets = Total Liabilities+Equity

Total Assets - Total Liabilities = Equity

Operating assets+Non operating asse

(OA-OL)+Non op assets -FL = Equity

Market value of OA -OL

Market value of net operating assets i

Invested Capital is the book value ver

OA-OL =Equity+FL-Non operating ass

Inventory of 1000, on credit, and you

What is the invested capital?

 Hist Proj Proj Proj Proj Proj Proj Proj

31-Mar-19 31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26

15.0% 15.0% 15.0% 15.0% 15.0% 15.0% 15.0%

128.2 128.2 128.2 128.2 128.2 128.2 128.2 128.2
25.7 25.7 25.7 25.7 25.7 25.7 25.7 25.7
4.4% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4% 4.4%

17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0

503.0 503.0 503.0 503.0 503.0 503.0 503.0 503.0
84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0
231.0 231.0 231.0 231.0 231.0 231.0 231.0 231.0
35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0

85.8 85.8 85.8 85.8 85.8 85.8 85.8 85.8

0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%
0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9% 0.9%

0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8% 0.8%

3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%
0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3% 0.3%
0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%

947.0 1,111.1 1,233.3 1,356.7 1,481.5 1,605.9 1,728.0 1,857.6

1,411.0 1,402.5 1,569.3 1,719.3 1,881.2 2,037.2 2,193.1 2,357.0
517.0 522.2 579.6 637.6 696.2 754.7 812.1 873.0
325.0 328.3 364.4 400.8 437.7 474.4 510.5 548.8
3,200.0 3,364.0 3,746.5 4,114.3 4,496.6 4,872.3 5,243.7 5,636.3

617.0 751.8 890.2 1,032.1 1,177.0 1,324.5 1,473.6 1,625.6

17.0 17.0 17.0 17.0 17.0 17.0 17.0 17.0
503.0 503.0 503.0 503.0 503.0 503.0 503.0 503.0
55.0 52.0 49.0 46.0 43.0 40.0 37.0 34.0
84.0 84.0 84.0 84.0 84.0 84.0 84.0 84.0
231.0 231.0 231.0 231.0 231.0 231.0 231.0 231.0
35.0 35.0 35.0 35.0 35.0 35.0 35.0 35.0
1,542.0 1,673.8 1,809.2 1,948.1 2,090.0 2,234.5 2,380.6 2,529.6

4,742.0 5,037.7 5,555.8 6,062.4 6,586.6 7,106.8 7,624.2 8,165.9

338.0 340.7 381.9 387.9 374.5 327.6 246.8 148.1

944.0 938.4 1,049.9 1,150.3 1,258.7 1,363.1 1,467.4 1,577.0
57.0 57.6 63.9 70.3 76.8 83.2 89.5 96.2
68.0 68.7 76.2 83.9 91.6 99.3 106.8 114.8
61.0 61.6 68.4 75.2 82.1 89.0 95.8 103.0
218.0 220.2 244.4 268.8 293.6 318.2 342.4 368.1
1,686.0 1,687.1 1,884.7 2,036.5 2,177.2 2,280.4 2,348.8 2,407.3

14.0 11.0 8.0 5.0 2.0 0.0 0.0 0.0

20.0 20.2 22.4 24.7 26.9 29.2 31.4 33.8
12.0 12.1 13.5 14.8 16.2 17.5 18.8 20.3
46.0 43.3 43.9 44.5 45.1 46.7 50.3 54.0

3,010.0 3,307.3 3,627.2 3,981.4 4,364.3 4,779.6 5,225.2 5,704.5

 4,742.0 5,037.7 5,555.8 6,062.4 6,586.6 7,106.8 7,624.2 8,165.9

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Market value of equity

otal Assets = Total Liabilities+Equity

otal Assets - Total Liabilities = Equity

Operating assets+Non operating assets-Operating liabilities-Financial Liabilities =Equity

OA-OL)+Non op assets -FL = Equity

Market value of OA -OL

Market value of net operating assets is called Enterprise Value

nvested Capital is the book value version of Enteprise Value

OA-OL =Equity+FL-Non operating assets

nventory of 1000, on credit, and you have to pay a year later

What is the invested capital?

 Proj Proj Proj

31-Mar-27 31-Mar-28 31-Mar-29

15.0% 15.0% 15.0%

128.2 128.2 128.2
25.7 25.7 25.7
4.4% 4.4% 4.4%

17.0 17.0 17.0

503.0 503.0 503.0
84.0 84.0 84.0
231.0 231.0 231.0
35.0 35.0 35.0

85.8 85.8 85.8

0.8% 0.8% 0.8%
0.9% 0.9% 0.9%

0.8% 0.8% 0.8%

3.0% 3.0% 3.0%
0.3% 0.3% 0.3%
0.2% 0.2% 0.2%

1,996.9 2,246.1 2,503.0

2,534.1 2,711.4 2,901.2
938.4 1,004.1 1,074.4
589.9 631.2 675.4
6,059.4 6,592.8 7,154.1

1,782.1 1,942.5 2,161.5

17.0 17.0 17.0
503.0 503.0 503.0
31.0 28.0 25.0
84.0 84.0 84.0
231.0 231.0 231.0
35.0 35.0 35.0
2,683.1 2,840.5 3,056.5

8,742.5 9,433.3 10,210.6

35.4 0.0 0.0

1,695.5 1,814.1 1,941.1
103.5 110.7 118.5
123.4 132.1 141.3
110.7 118.5 126.8
395.7 423.4 453.0
2,464.2 2,598.8 2,780.7

0.0 0.0 0.0

36.3 38.8 41.6
21.8 23.3 24.9
58.1 62.2 66.5

6,220.1 6,772.4 7,363.4

8,742.5 9,433.3 10,210.6

0.0 0.0 0.0

Marico Hist Hist Hist Hist Proj

Cash Flows (INR crores) 31-Mar-16 31-Mar-17 31-Mar-18 31-Mar-19 31-Mar-20

Net income 959.1
(Inc)/dec in OWC (1.5)
Depreciation 102.3
Amortization 3.0
Inc/(dec) in employee benefit obligations 0.2
Inc/(dec) in deferred tax liabilities 0.1
(Inc)/dec in deferred tax assets 0.0
(Inc)/dec in non current assets 0.0
Cash flow from operations 1,063.2

Capex (237.0)
(Inc)/dec in investment properties 0.0
(Inc)/dec in equity method and non current investments 0.0
Cash flow from investing (237.0)

Inc/(dec) in short term borrowings 2.7

Inc/(dec) in long term borrowings (3.0)
Dividends paid (661.8)
Cash flow from financing (662.1)

Net change in cash 164.1

Ending cash balance 947.0 1,111.1
 Proj Proj Proj Proj Proj Proj Proj Proj Proj

31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26 31-Mar-27 31-Mar-28 31-Mar-29

1,031.8 1,142.8 1,235.0 1,339.7 1,437.3 1,546.4 1,663.2 1,781.4 1,906.4
(103.9) (98.8) (103.3) (101.2) (100.2) (105.8) (114.1) (114.3) (122.4)
124.6 147.6 171.1 195.1 219.6 244.3 269.5 295.4 322.0
3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0 3.0
2.2 2.2 2.3 2.3 2.2 2.4 2.5 2.5 2.7
1.3 1.3 1.4 1.4 1.3 1.4 1.5 1.5 1.6
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
1,059.1 1,198.2 1,309.5 1,440.3 1,563.2 1,691.6 1,825.7 1,969.6 2,113.4

(263.1) (289.4) (316.0) (342.6) (368.6) (396.3) (426.0) (455.8) (541.1)

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
(263.1) (289.4) (316.0) (342.6) (368.6) (396.3) (426.0) (455.8) (541.1)

41.2 6.1 (13.4) (46.8) (80.8) (98.7) (112.7) (35.4) 0.0

(3.0) (3.0) (3.0) (2.0) 0.0 0.0 0.0 0.0 0.0
(711.9) (788.6) (852.2) (924.4) (991.7) (1,067.0) (1,147.6) (1,229.2) (1,315.4)
(673.8) (785.5) (868.6) (973.2) (1,072.5) (1,165.7) (1,260.4) (1,264.6) (1,315.4)

122.2 123.3 124.8 124.4 122.0 129.6 139.3 249.2 256.9

1,233.3 1,356.7 1,481.5 1,605.9 1,728.0 1,857.6 1,996.9 2,246.1 2,503.0
679635036.xlsx DCF

Marico Hist

DCF (INR crores) 31-Mar-16

Free cash flows
Sales
EBIT

NOPAT
(Inc)/dec in OWC
Depreciation
Amortization
Inc/(dec) in employee benefit obligations
Inc/(dec) in deferred tax liabilities
(Inc)/dec in deferred tax assets
(Inc)/dec in non current assets
Capex
Unlevered free cash flows

Key ratios
Revenue Growth
NOPAT Growth
EBIT margin
EBITDA Margin
OWC to sales
Capex/Sales
Net PPE/Sales
Invested capital (book value version of EV)
Return on Invested Capital
Reinvestment rate
Cash conversion rate
implied growth rate

Weighted average cost of capital (WACC)

Marginal tax rate
Risk free rate
Market risk premium
Levered beta
Cost of equity

Credit rating (for long-term capital structure)

Credit spread over risk free rate
Cost of debt pre-tax
After tax cost of debt using marginal tax rate

Share price
Diluted number of shares (in crores)
Market capitalization (INR crores)
Total debt
Total capital
% equity capital
% debt capital

Weighted average cost of capital

© Adkins Matchett Toy 2009 17 30

679635036.xlsx DCF

Terminal value
Long-term growth rate
Terminal EBITDA multiple

Terminal value using growing perpetuity (mid year)

Implied EBITDA multiple

Terminal value using multiple (year end)

Implied LT growth rate

Discounting model
Year count
Discount factor
Present value of free cash flows

Value calculation
Total present value of free cash flows
Present value of terminal value
Enterprise value
Implied 2019 EBITDA multiple

Cash and cash equivalents

Investment in properties
Non current investments
Total debt
Other claims
Preference shares
Minority interest
Equity value

Implied share price

Sensitivity analysis

Discount rate variance

Terminal value multiple variance
Implied growth rate variance

Share price

Discount rate
10.85%
10.65%
10.45%
10.25%
10.05%

Discount rate

© Adkins Matchett Toy 2009 18 30

679635036.xlsx DCF

10.85%
10.65%
10.45%
10.25%
10.05%

Options information
Scheme 1
Scheme 2
Scheme 3 Part 1
Scheme 3 Part 2
Scheme 3 Part 3
Scheme 4 Part 1
Scheme 4 Part 2
Scheme 4 Part 3
Scheme 5
Scheme 6 Part 1
Scheme 6 Part 2
Scheme 6 Part 3
Scheme 7 Part 1
Scheme 7 Part 2
Scheme 7 Part 3
Scheme 8
Scheme 9
Scheme 10
Total New shares

© Adkins Matchett Toy 2009 19 30

679635036.xlsx DCF

Hist Hist Hist

31-Mar-17 31-Mar-18 31-Mar-19

=$IS.G18 7,334.0
=$IS.G26 1,185.0

884.5
=$'Cash Flow'.G4
=$'Cash Flow'.G5
=$'Cash Flow'.G6
=$'Cash Flow'.G7
=$'Cash Flow'.G8
=$'Cash Flow'.G9
=$'Cash Flow'.G10
=$'Cash Flow'.G13
=SUM(G7:G15)

=G4/F4-1
=G7/F7-1
=G5/G4
=(G5+G9+G10)/G4
=$Calculations.G27/$DCF.G4
=-G15/G4
=$BS.G31/$DCF.G4
=$BS.F55+$BS.F50+$BS.F42-$BS.F25-$BS.F32-$BS.F35 2,076.0
=G7/F26
=1-G16/G7
=1-G28

34.60%
6.50%
8.00%
0.50

AA+ by Crisil
0.60%

295.00
129.14

© Adkins Matchett Toy 2009 20 30

679635036.xlsx DCF

7.5%
23.0

Perpetuity

0.0
0.0
11.0

0.2%

0.5%

LT growth rate
6.5% 7.5% 7.5%

Implied share price

Implied terminal value multiple

© Adkins Matchett Toy 2009 21 30

679635036.xlsx DCF

Options IN crores Strike Price Net new shares

0.0 1.0 0.008
0.1 280.2 0.005
0.0 1.0 0.005
0.0 1.0 0.001
0.0 1.0 0.000
0.0 256.8 0.005
0.0 302.3 0.000
0.0 307.8 0.000
0.0 1.0 0.007
0.0 1.0 0.007
0.0 1.0 0.000
0.0 1.0 0.000
0.0 307.8 0.000
0.0 316.5 0.000
0.0 346.5 0.000
0.0 1.0 0.002
0.0 1.0 0.008
0.1 346.5 0.000
a 0.049

© Adkins Matchett Toy 2009 22 30

679635036.xlsx DCF

Proj. Proj Proj Proj Proj Proj Proj

31-Mar-20 31-Mar-21 31-Mar-22 31-Mar-23 31-Mar-24 31-Mar-25 31-Mar-26

7,407.3 8,222.1 9,044.4 9,876.4 10,706.1 11,519.7 12,383.7

1,249.8 1,340.9 1,484.4 1,600.6 1,731.5 1,850.5 1,983.0

937.4 1,005.7 1,113.3 1,200.5 1,298.6 1,387.9 1,487.2

(1.5) (103.9) (98.8) (103.3) (101.2) (100.2) (105.8)
102.3 124.6 147.6 171.1 195.1 219.6 244.3
3.0 3.0 3.0 3.0 3.0 3.0 3.0
0.2 2.2 2.2 2.3 2.3 2.2 2.4
0.1 1.3 1.3 1.4 1.4 1.3 1.4
0.0 0.0 0.0 0.0 0.0 0.0 0.0
0.0 0.0 0.0 0.0 0.0 0.0 0.0
(237.0) (263.1) (289.4) (316.0) (342.6) (368.6) (396.3)
804.4 769.9 879.3 958.9 1,056.6 1,145.2 1,236.2

1.0% 11.0% 10.0% 9.2% 8.4% 7.6% 7.5%

6.0% 7.3% 10.7% 7.8% 8.2% 6.9% 7.2%
16.9% 16.3% 16.4% 16.2% 16.2% 16.1% 16.0%
18.3% 17.9% 18.1% 18.0% 18.0% 18.0% 18.0%
12.2% 12.3% 12.3% 12.3% 12.3% 12.3% 12.3%
3.2% 3.2% 3.2% 3.2% 3.2% 3.2% 3.2%
10.1% 10.8% 11.4% 11.9% 12.4% 12.8% 13.1%
2,314.0 2,446.9 2,682.7 2,916.7 3,158.3 3,400.3 3,643.0
45.2% 43.5% 45.5% 44.7% 44.5% 43.9% 43.7%
14.2% 23.4% 21.0% 20.1% 18.6% 17.5% 16.9%
85.8% 76.6% 79.0% 79.9% 81.4% 82.5% 83.1%

© Adkins Matchett Toy 2009 23 30

679635036.xlsx DCF

0.5 1.5 2.5 3.5 4.5 5.5 6.5

% EV Multiple % EV

0.0
0.0
11.0

0.2%
1.0

Terminal multiple
22.0x 23.0x 24.0x

Implied share price

Implied LT growth rate

© Adkins Matchett Toy 2009 24 30

679635036.xlsx DCF

Proj Proj Proj

31-Mar-27 31-Mar-28 31-Mar-29

13,312.5 14,244.4 15,241.5

2,124.2 2,266.5 2,419.2

1,593.1 1,699.9 1,814.4

(114.1) (114.3) (122.4)
269.5 295.4 322.0
3.0 3.0 3.0
2.5 2.5 2.7
1.5 1.5 1.6
0.0 0.0 0.0
0.0 0.0 0.0
(426.0) (455.8) (541.1)
1,329.6 1,432.2 1,480.3

7.5% 7.0% 7.0%

7.1% 6.7% 6.7%
16.0% 15.9% 15.9%
18.0% 18.0% 18.0%
12.3% 12.3% 12.3%
3.2% 3.2% 3.6%
13.4% 13.6% 14.2%
3,894.1 4,157.7 4,425.3
43.7% 43.7% 43.6%
16.5% 15.7% 18.4%
83.5% 84.3% 81.6%

© Adkins Matchett Toy 2009 25 30

679635036.xlsx DCF

7.5 8.5 9.5

© Adkins Matchett Toy 2009 26 30

679635036.xlsx DCF

At Maturity
1. ROIC is stable
…this implies
i) profitability is stable
ii) Asset efficiency is stable

ROIC = NOPAT/Invested Capital

EBIT/Sales *Sales/Invested Capital*(1-tax)

1. EBIT/Sales Profitability
NOPAT/Previous Years IC 2. Sales/Invested Capital Asset Efficiency
3. (1-tax)
Any investment in the current year, starts producing a NOPAT
only in the next year
Growth in NOPAT
1. Profitability improvement
2. Efficiency improvement
3. Actual business growth (company is selling more products

© Adkins Matchett Toy 2009 27 30

 679635036.xlsx DCF

apital*(1-tax)

Profitability
Asset Efficiency

mpany is selling more products)

© Adkins Matchett Toy 2009 28 30

High fixed cost

Low fixed cost

Cyclical Non cyclical
Airlines Industry/Auto Utlities/Power
Real Estate Builders

Investment Banking Consumer goods, FMCG

IT Services