EQUITY VALUATION REPORT Valuation Date- 19' May 2023 FOR: - LARKAI HEALTHCARE PVT LTDTo The Director Larkai Healthcare Pvt Ltd CIN-U85200WB2020PT Bhubaneswar, Odisha 5633 Sub: -Valuation Report Dear Sir/Madam, This is in accordance with the terms of reference set out in your letter of request letter wherein CA Abinash Parida has been requested to render services to entity Larkai Healthcare Private Limited (the Company) in relation to valuation of equity. Based on the request letter, we are enclosing herewith our report. Our analysis is solely based on the information/documents and explanations provided by the management and we have not independently verified the accuracy and authenticity of those information/documents. Roglatered Valuer (5 & F) es TBRUT RV 94/2181 12318 Thanks, and Regards Ves \y: CA Abinash Parlda Date :- 1406207 Place:- Bhubaneswar UDIN:- 23209994 Bu xc es soesContents BACKGROUND MASTER DATA, IDENTITY OF VA INDEPENDENC! ICT OF INTE MANAGEMENT SUMMARY. VALUATION BASE. VALUATION APPROACT FAIR VALUE OF THE EN’ INCOME APPROACH INFORMATION SOURC! AN RISK FREE INTERE |ARKET RATE OF Rt 'A FACTOR PISCLOSURE S AND METHODS: ERPRISE. ON TERMS USED DISCLAIMER. 9 10 n “ 15, 16 18 9 a 24BACKGROUND Larkai healtheare Pvt Ltd is a Developer of a technology designed to improve medical technologies. The company's technology uses AI to develop biomedies and offers prevention and diagnosis of diseases at an eal e, enabling clients to have a technology that can detect dis ease at an early stage and decreases the risk factors. The company is contemplating to restructure its equity. Accordingly, the management has approached us to determine the value of equity.U85200WB2020PTC235633 Lark RoC: 235633 Company limited by Shares Healthcare Pvt Ltd Cuttack Non-govt company Private 01/01/2020 C/o-DR.PRIYATOSH DHALLA, VILL BELIATORE, (COL! A BANKURA, WE BELIATORE Bankura WE pritam.dhalla@gmail.com Unlisted 19.05.2023 |IDENTITY OF VALUER Sl. | Particulars Descriptions No. | oe a {1 | Valuer’ | CA Abinash Parida — 2__| Registered Valuer Ne 3 o = 3 Professional Qualification D-IFRS (ACCA-UK) | NCMP IBBI Registered Valuer 4 | Membership of | ICAT- 309999 ACCA- 4139739 IESMA-IESMA-ARVO/PM/2018/0264 NSE-000791308DEP DENCE & CONFLICT OF INTERI DISCLOSURE, We hereby declare that the information in and accompanying. this disclosure is true and complete to the best of our knowledy and belief. We declare that we have disclosed all associations with company required for disclosure and we do not consider that any of the associations present a conflict of interest. Should there be any change to the above information and declaration during valuation assignment, we will promptly notify that describing the changes. Further, we have independent not influenced by any of the directo shareholders, or any other person directly ried out the assignment where we are key managerial personnel, associated with the company.MANAGEMENT SUMMARY Based on our workings and information shared by management, we conclude that total value of equity is Rs 2,474.46 Lakhs and the value of Per Equity of the company is Rs 2,10,056.15.VALUATION BASE * Valuation base means the indication of the type of value being used in an engagement. Different valuation bases may lead to different conchisions of value, ‘Therefore, it is important for the valuer to identify the bases of value pertinent to the engagement. * Considering the purpose of valuation, we have considered Discounted Cash flow as valuation model. © Fair value is the price that would be received to sell ana to transfer a liability in an orderly transaction between market participants at the valuation date. ue is usually synonymous to market value, * Further, we make assumptions to derive the value in_certain circumstances considering principles of valuation standards issued by International Valuation Standards Council(IVSC). Valuation is time specific and can change with the passage of time due to changes in the condition of the asset to be valued and/ or market. Accordingly, valuation of an asset as at a particular date can be different from other date. Based on the terms of the engagement letter we have considered 19" May 2023 is the valuation date. All the as i stimates and information are collected i ¥y 2023 as valuation date unless any other things sset or paid ‘air Vi specified. « Premise of Value refers to the conditions and circumstances how an asset is deployed. In this circumstance we have considered Going Concern Value is the premise of value. During our engagement, we did not find any event or transactions which will signify any contrary to management's going concern assumption.VALUATION APPROACHES AND METHODS ches: * As per VS 103 followings are three main valuation appr (a) Market approach: - Market appro a valuation approach that uses prices and other relevant information generated by market transactions involving identical or comparable (.e., similar) assets, liabilit ora group of assets and | ies, such as al business. (b) Income approach: Income approach isa valuation approach that converts maintainable or future amounts (e.g, eash flows or income and expenses) toa single current (ie. discounted, or ci pitalised) amount. ‘The fair value measurement is determined based on the value indicated by current market expectations about those future amounts, (c)Cost approac! Cost approach is a valuation approach that reflects the amount that would be required currently to replace the service eapacity of an asset (often referred to as current replacement cost). © Key factors that we have considered while determining the appropriatene: fic valuation approach and method are: a) Nature of asset to be valued. b) Availability of adequate inputs or information and its reliability. ©) Strengths and weakness of cach valuation approach and method; and d) Valuation approach/method cor ofa spe dered by market participants.Business | Value — ears iscounted Cash Flow Approach Qn Lakh y other Adjustments | a Fair Market Value (in Lakh: 2474.46 No of Shares | outstan 1178 Per Share Value 2,10,056.15,INCOME APPROACH VALUATION The Income Approach indicates the value of a business based on the value of the cash flows that a business is expected to generate in future. This approach is appropriate in most going concern situations as the worth of a business is generally a function of its ability to earn income/cash flow and to provide an appropriate return on investment. Income approach includes different models of valuation, out of which Discounted Cash Flow model is most used. Discounted Cash Flow model measures the Fair Value of an asset by calculating the present value of its future economic benefits. When used to determine Equity value, the Income Approach develops an indication of value by discounting forecasted cash flows to their present value at a rate of return that incorporates the risk-free rate for the use of funds plus the expected rate of inflation and the risks associated with the particular investment. The discount rate applied to these expected cash flows is generally based upon rates of return available from alternative investments of similar type and quality. The DCF methodology is primarily based on the premise that the company is able to estimate future cash flows with some degree of reliability. In the present case, the Company has identified the particular domain and the market segment in which it would carry out its business operations. ‘Therefore, the Company is able to estimate future cash flows with certain degree of reliability. Accordingly. application of the DCF methodology for determination of the value of the shares of the Company would be appropriate. The step wise fair value derivation under income approach is depicted as below: - Step- 1 Cash Flow projections f 2023-| 2024- 2025- Particulars 24 | 25 26 ‘Net free cash | flows (Lakh: _64.60| 189.64) 385.74 | _932.34| _ 1011.30 | ‘The Free Cash Flows are arrived based on forecasted Financial Statements presented by management, ‘The forecasted financials have changed considerably as represented by management. The management is of the opinion that the projections are increasing due to receipt of orders from various customers both Indian and abroad.Step-2 Assets Pricin As per CAPM, Where, Determination of Discount Rate(K) Using Capital lodel (CAPM) Rf+ (Rm-Rf) B+ DLOM RE = Risk Free Return we have considered as per 7.38% Goverment Securities 2027 B = Beta (Details is provided in Annexur Rm= Market Rate of Return, 5 years considered as Rm. DLOM: - It stands for Degree of Lack of Marketability. We have added 4.95% extra as coverage to this, as the company is not a listed company. fic C) which comes to 1.3 SR on market return is Reference Annexure Annexure - B Annexure - C K= Rf+ (Rm-Rf) B+ DLOM+CSP 6 ~~ Company specific _premium(CSP) ered te as per applic | Degree of Lack of Materiality ((e) management. Company s _management. — Lo Step -3 Terminal Growth Rate Determination: Growth rate of the company is assumed to be 2%. assumed to be 4.95% as represented by cific premium is assumed to be 10.00% as represented by ee# A End-FCFF (Lakhs) B__|Growth rate i) [C_ | Discount Rate (WACC) Dd E ‘Terminal Value (Lakhs | ANG+B)/(C-B) | Present Value Factor of pt Year = F | Present Value of ‘Terminal Value (Lakhs) Terminal = _ FCFF, Value Formula (1+WACC)* _ Step-5 Determining PV of Forecasted Value Particulars zozg-25 | 2025 Net Cash | Flow(Lakhs) 189.64 | 385.74 | Discount Factor 0.62) 0.49] [Present Value 189.04: PV of r Forecasted | Value (Lakhs) | _ 1019.93. — | Step-6 Determining Value Value (EV)= PV of Terminal Value (TV)+ Forecasted Value (FV) i.e. 1454.54+1019.93=2474.47 LakhsINFORMATION SOURCES The following sources of information were used in preparing the appraisal: 1, We conducted interviews with the Client management team. 2, National, regional and local economic data were compiled and reviewed. 3. Research of compari performed. ‘This ineluded data compil company sale databases, The transactional data, howev included in this report. 4. Business financial statements and tax records of the subject business over the most recent years have been analysed to estimate the business current performance and outlook for continued income generation. nancial statements, including the comp Statements and Balance Sheets. Provisional ‘on valuation date. Dusiness sale transaction data has been lation from publicly traded , is not ny historic Income nancial statements asANNEXURE A::RISK FREE INTEREST RATE We have considered Rf as per yield of 7.38% GS 2027 Bond. It comes out to be around 7.04% p.a. os meee isan tot od Si vs (et Dap Rae v Maoat Tan ; Money Maret recent Commas 30% 520 a . 4158.05 202 stants aaj Te Capit ake ecommanatans SUPESE Sersen were)ANNEXURE B :: MARKET RATE OF RETURN ‘The market rate of return has been calculated based on 5 yrs CAGR (Source:- SENSEX 50) | S&P BSEINDEX ____— Particulars Return on end date (May 2018) | Return on start date (May 20% d (in years) [Rate 61729-7, ecm sesso Ea | } ‘ETA FACTOR ANNEXURE.C Palaver! beta is the beta of a company without the a wn as the volatility of returns for a company, account its financial leverage. It compares the risk of an U nlevere company to the risk of the market. It is also ‘commonly referred to as “asset beta” because the volatility ofa company ‘without any leverage is the result of only its assets. dered Damodaran beta for companies Step-1 We have consi engaged in Healtheare Information ‘< Technology which comes out to be 1.33- impact of debt. It is without taking intoCAVEATS ‘This valuation reli 1 6. 10. i. Jo ass We assume nor 8 , f ; ; Upon the following contingent and limiting caveats: not limited to, eal ee for the legal matters including, but assels is assume en conc 15. ‘Title to all subject business No hidden or ne eo Teele A i \ eerie Be conditions regarding the subject business All infocmat whership are assumed to exit. AU Information provided by the client and others is thought to be Accurate, However, we offer no assurance as to its accuracy, Unless stated otherwise in this report, we have assumed compliance with the applicable federal, state and local laws and regulations, Absent a statement to the contrary, we have assumed that no rdous conditions or materials exist which could affect the ect business or ils assets, However, we are not qualified to ablish the absence of such conditions or materials, nor do we assume the responsibility for discovering the same. he report may not fully disclose all the information sources, discussions and valuation methodologies used to reach the conclusion of value. Supporting information concerning this report ison file. ‘The valuation analysis and conclusion of value presented in the report are for the purpose of this engagement only and are not to be used for any other reason, any other context or by any other person except the client to whom the report is addressed ‘The opinion of value expressed in this report does not obligate us: to render a comprehensive business appraisal report, to give testimony, or attend court proceedings regarding the subject business ass properties or business interests, unless such arrangements have been made previously. Possession of this report does not imply permission to publish the same or any part thereof. No part of this report is to be communicated to the public by means of advertising, news releases, s and promotions or any other media without a prior written consent and approval by us. Our service for valuation docs not represent accounting, auditi uurance, financial due diligence review, consulting, transfer pricing or domestic/international tax-related services that may otherwise be provided by us. Our review of the affairs of the Company and their books and account does not constitute an audit in accordance with Auditing Standards. We have relied on explanations and informationprovided by the Management of the Company and accepted the ormation provided to us as accurate and complete in all respects. Although, we have reviewed such data for consistency and reasonableness, we have not independently investigated or otherwise verified the data provided. Nothing has come to out attention to indicate that the information provided had material misstatements or would not afford reasonable grounds upon whieh to base the Report. 12. We have relied on data from external sources. These sources 01° considered to be reliable and therefore, we assume no liability for the accuracy of the data, We have assumed that the business: continues nort ‘ithout any disruptions duc to statutory or other external /internal occurrences, 13, The valuation work sheets prepared for the exercise are proprietary to the Valuer and cannot be shared. Any tlarifications on the workings will be provided on request, prior to finalizing the Report, as per the terms of our engagement. 14. The scope of our work hi been limited both in terms of the areas of the business and operations which we have reviewed and the extent to which we have reviewed them. 15. The valuation analysis conta ned herein represents the value only on date that is specifically stated in this Report. This Report is issued on the understanding that the Management of the Company has drawn our attention to all matters of which they are aware, which may have an impact on our Report up to date of signature. We have no responsibility to update this Report for events and circumstances occurring after the date of this Report. 16. Our valuation analy advice; specifically, suitability or otherwise of entering any tan! Company. 17. This report is valid only for the valuation date specified herein. should not be construed as investment e do not express any opinion on the action with theTERMS USED Activ ket: Activ a en, ae Market fsa market in which transactions for the provide prici ty take place with sufficient frequency and volume to : pricing information on an ongoing basi he The word asset would refer to the assets that need to be valued uring an engagement and will also include a group of assets, a liability or a group of liabilities, business or business ownership interests. Any reference to the term asset also includes liability. As-is-where-is B The term as-is-where-is basis will consider the existing use of the asset which may or may not be its highest and best use. Business Valuation: It is the act or process of determining the value of a business enterprise or ownership interest therein. Discount Rate: Discount Rate is the return expected by a market participant from a particular investment and shall reflect not only the time value of money but also the risk inherent in the asset being valued as well as the risk inherent in achieving the future cash flows, Cost approach: It is a valuation approach that reflects the amount that would be required currently to replace the service capacity of an asset (often referred to as current replacement cost) Comparable Companies Multiple Method: This method is also known as Guideline Public Company Method. It involves valuing an asset based on market multiples derived from prices of market comparable traded on active market. Comparable Transaction Multiple Method: This method is also known as Guideline Transaction Method. It involves valuing an asset based on transaction multiples derived from prices paid in transactions of assets to be valued /market comparable (comparable transactions). Control Premium: Control Premium is an amount that a buyer is willing to pay over the current market price of a publicly-traded company to acquire a controlling interest in an asset. It is opposite of discount for lack of control to be applied in case of valuation of a noncontrolling/ minority interest. Discounted Cash Flow (‘DCF’) Method: The DCF method values the asset by discounting the cash flows expected to be generated by the asset for the explicit forecast period and also the perpetuity value (or terminal value) in case of assets with indefinite life. Fair value: Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the valuation date. Forced transaction: Forced transaction is a transi ion where a seller is under constraints to sell an asset without appropriate marketing period or efforts to market such assetPeete ae value: It refers to the value of a business enterprise that is 2 “d to. ‘ontinue to operate in the future Goodwill: The term goodwill is defined as an asset representing the future economic benefits arising from a business, business interest or a group of assets, which b 1s Not been separately recognised in other assets. Intangible Asset: An intangible asset isan identifiable non-monetary asset without physical substance. Integration costs: It refers which may need to be incurred by an acquir i employment terms/ remuneration for employees of the target entity with the acquiring entity. Liquidation value: Itis the amount that will be realised on sale of an asset or a group of assets when an ‘aactual/hypothetical termination of the business is contemplated/ assumed. , Income approach: It isa valuation approach that converts maintainable or future amounts (e.g, cash flows or income and expenses) to a single current (ie. discounted or capitalised) amount. ‘The fair value measurement is determined on the basis of the value indicated by current market expectations about those future amounts Market approach: Market approach is a valuation approach that uses prices and other relevant information generated by market transactions: involving identical or comparal ble (i.c., similar) assets, liabilities or a group of assets and liabilities, such as a busines: Observable inputs: Inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability. liquidation: An orderly liquidation refers to the r anasset in the event of a liquidation after allowing appropriate mar keting a reasonable period of time to market the as to additional one time/ recurring expenses , alignment of Orderly transaction: Orderly transaction is a transaction that assumes exposure to the market for a period before the valuation date to allow for marketing activities that are usual and customary for transactions involving such assets or liabilities and it is not a forced transaction. The length of exposure time will vary according to the type of asset and market conditions. Premise of value: Premise of value refers to the conditions and circumstances how an asset is deployed. Present value: It is an integral tool used in the income approach to link future amounts (e.g., cash flows or values) to a present amount using a discount rate.Replaceme st . Get Methah Gost bet: Iisalso known as “Depreciated Repkacement participant shall hi ves valuing an asset based on the cost that it market Samet ity (4c io to incur to recreate an asset with, substantially the for obsclee comparable utility’) as that of the asset to devalued, adiusted ior obsolescence. Rule of Thumb or Benchmark Value: Rule of thumb or benchmark indicator is used as a reasonable check against the value determined by the use of other valuation approaches in a valuation engi wyement Significant/material: While considering any particular aspect be significant/mate ial froma valuation standpoint isa value! 's professional judgement, any aspect of valuation will be significant material if its application or ignorance can significantly change ot impact the overall value. | Synergies: Synergi concept which indicates that the combining effect | See or mare assets or group of assets and Fibilities a 18) OF | entities in terms of their value and benefits Will be or is likely to be, greater than that of their individual values on. standalone basis. ‘Terminal value: Terminal value represents the present value at the end of explicit foree: period of all subsequent cash Hows to the end of the life of the asset or into perpetuity if the asset has an indetinite lif | Unobservable inputs: Inputs for which market data are nota avilable and that are developed using the best information 3 lable about the assumptions that market participants w ‘ould use when pricing the asset or liability Value: A value is an estimate of the value of a business or business: ownership interests, arrived at by applying the valuation procedures appropriate for a valuation engagement and using professional judgment as to the value or range of values based on those procedures. Caluation base: Valuation base means the indication of the type of value | being used in an assignment. | Valuation date: Valuation date is the specific date at which the valuer | estimates the value of the underlying asset. |DISCLAIMER and should ly for the spt This report has been prepared for this specific requirement nol be used for any other purpose. This Report is provided sole Enterprise's tise and for the specifi purposes indicated above. Exe where we expressly agree in writing, it should not be disclosed or provided to any third party. In the absence of such consent and an express assumption of responsibility, no responsibility whatsoever fs a epted by ine for any consequences atising, from any third party relying, en this Report or any advice relating, to its contents. | |