VALUATION REPORT OF CARS24 SERVICES PRIVATE LIMITED PREPARED BY CAPITALSQUARE Teaming together to create value CAPITALSQUARE ADVISORS PRIVATE LIMITED (Category — I Merchant Banker) (Reg off: 208, Aarpee Centre, CTS 70, MIDC Road no. 11, Andheri (East), Mumbai 400093, India) 08" January 2019 1|PageDISCLAIMER: This valuation exercise of CARS24 Services Private Limited (“CARS24” / “The Company”) is being undertaken by CapitalSquare Advisors Private Limited (“CSAPL") at the request of CARS24 Services Private Limited ("CARS24”). Our report is subject to the scope and limitations detailed hereinafter. As such the report is to be read in totality and not in parts. This report has been based on the information provided by CARS24 and from other sources believed to be reliable, While the information contained herein is believed to be accurate, no representation or warranty, expressed ot implied, is or will be made and no responsibility or liability will be accepted by CSAPL as to, or in relation to the accuracy or adequacy of information contained in this report. The opinions and recommendations in this report are provided in good faith. CARS24 accepts full responsibility for all the data and information pertaining to the valuation report and confirms that no material information that is vital for arriving at a decision for valuation has been suppressed or misstated while providing data / information to CSAPL. This report has been prepared for with a limited purpose / scope, as identified / stated in the report and will be confidential and for use only to whom it is issued. Tt must not be copied, disclosed or circulated in any correspondence of discussions with any person, except to whom it is issued and to those who are involved in this transaction and for various approvals for this transaction. 2|PageINDEX Particulars Page no Introduction and Scope of Assignment Purpose of Valuation Sources of Information About the Company ‘Valuation: Methodology and Fair Market Value Exclusions/Disclaimer/Limitation/ Warranties & Caveats | | BS] tho fo}on] |e m 3|Page24. 2.2. 22. 3. INTRODUCTION AND SCOPE OF ASSIGNMENT ‘Company Name ‘CARS24 Services Private Limited CIN [1074999HR2015FTC056386 Registered office address 04th Floor, Plot 65, Sector 44, Gurgaon-122003. CARS24 Services Private Limited (“CARS24") has appointed CSAPL to derive equity valuation of CARS24 Services Private Limited. PURPOSE OF VALUATION CARS24 wants to ascertain the fair value of equity, for the same it has appointed CapitalSquare Advisors Private Limited, Category - 1 Merchant Banker registered with SEBI to undertake the valuation exercise and determine fair value. This report has been prepared for the management of CARS24 Solely for the purpose as mentioned in above para and should not be used for any other purpose. The equity valuation mentioned herein reflects our independent opinion which is arrived at based on past financials and future projections of CARS24 for the period January 1, 2019 till December 31, 2023 as provided by the management of CARS24. CARS24 has engaged CapitalSquare Advisors Pvt. Ltd. a registered Category 1 Merchant Banker (Registration no: INM000012219) vide the letter dated December 28, 2018 to conduct a Fair Valuation of “CARS24” and issue Valuation report. SOURCES OF INFORMATIONS All information related to CARS24, including but not limited to past and future profit & loss accounts and Balance sheet of CARS2 and qualitative information's were sourced from management of CARS24 either in the written hard copy or digital form. All information, explanation, data has been provided which includes: * Financial Statements of CARS24 for FY-2017-18, * Provisional Financial Statements of CARS24 for the period ended December 31, 2018, + Financial Projections for the period January 1, 2019 till December 31, 2023 * Information, documents, data, reports, explanations, Discussion etc. provided by CARS24 oy rE eof} AS 4|Page4 ABOUT THE COMPANY CARS24 Services Private Limited (CARS24) was incorporated on 12 August, 2015 and its registered office is located at 04th Floor, Plot 65, Sector 44, Gurgaon-122008. ‘CARS24's makes selling a car an easy, fair and quick experience. It has revolutionized the way used cars are sold in India. It offers an efficient and reliable way to car owners to sell their cars at the best price. Since its inception in 2015, it has come a long way - from one office to 133 branches actoss 27 major cities in India, Equity Share Holders ae RR z Global Car Group Pte Ltd, Singapore, 113,11,321 10.00% holding company and its nominees i __| Total 113,11,321 100.0% | Board of Directors: ENN TS DETTE (0005221419 Chopra Vikram Rajesh Director (0005841082 Mehul Agrawal Director Financial Summary: Crores) Total Equity Share Capital 10.08 1131 Reserves & Surplus 78.05 220.10 Total Shareholder's Fund 88.12 231.41 Cash & Cash Equivalents 73.37 172.40 Net Fixed Assets 8.72 13.30 Total Revenue 669.83 1,060.31 EBITDA (75.44) (184.50) PAT (78.95) (187.81) 5|Page5 i) VALUATION: METHODOLOGY AND FAIR MARKET VALUE ‘Methods of Valuation There are number of methodologies to value the companies/ business using historical and forecast financials of the company. Discounted Cash Flow (“DCF”): DCF method uses future free cash flow projections and discounts them to arrive at a present value. It is widely used in investment finance, real estate development, corporate financial management and patent valuation. Under DCF, Free Cash Flow to Firm or Free Cash Flow to Equity approach is used to arrive at a Valuation of Company: + Free cash flow to firm (FCFF): This indicates the Fair value of the firm based on the value of the cash flows that the business is expected to generate in the future. All future cash flows are estimated and discounted using cost of capital to give their present values. This is a measurement of a company's profitability after all expenses and reinvestments. It’s one of the ‘benchmarks used to compare and analyse financial health. ‘+ Free Cash flow to equity (FCFE): This indicates the Fair value of the equity based on the value of the cash flows that the business is expected to generate in the future. The method involves the estimation of post-tax cash flows to equity for a projection period, after consideration of reinvestment in terms of capital expenditure, incremental working capital, and debt repayment. These cash flows are then discounted at a cost of equity that reflects the risks of business. ii) Asset based methods Asset based methods are normally based on the Net Asset Value (NAV) of the unit as on the valuation date and could be on current replacement cost basis or on the basis of book values. Ona going concern basis, normally the book value of the assets is considered. iii) For Relative Valuation Method In relative valuation, the value of an asset is compared to the values assessed by the market for similar or comparable assets. Comparable assets values are derived either using trading multiples of comparable companies or transaction (Merger, Acquisition, Private Equity Investments etc.) based multiples, Steps involved in Relative valuation: ‘+ Identify comparable assets and obtain market values for these assets ‘+ Convert these market values into standardized values, as the absolute prices cannot be compared 6|Page5.2 ‘The standardizing process creates price multiples Compare the standardized value or multiple for the asset being analyzed to the standardized values for comparable asset, controlling for any differences between the firms that might affect the multiple, to judge whether the asset is under or over valued ‘Standardize price multiples are arrived by using below mentioned variables such as Earning, Cash flow, Book Value and Revenues. Below are various multiples: © Revenues + Eamings Multiples + Book Value Multiples * _ Industry Specific Variable (Price/kwh, Price per ton of steel etc.) Valuation methodology used: CARS24 is in growth phase therefore Discounted Free Cash Flow Method of Valuation is appropriate method. Our estimated valuation of the company was on the basic assumption of going concern entity and is based on the following methodologies. DCF VALUTION USING FCFE Model Valuation of the Company is carried out as given below. © Total Equity Value the Company (derived using FCFE Model is calculated) The Total Equity value of CARS24 is Rs.3809.08 crores (details in Annexure 1), Equity Value of the Company * We have considered cash flows for period starting from January 1, 2019 till December 31, 2023 as provided by the management of CARS24 * Free Cash Flows to Equity (FCFE) are calculated as: Profit after tax of the business Plus, non-cash charges Less, incremental capex Less, incremental working capital Less, other non-current assets © For Terminal Value, © we have considered growth rate of 2% + Cost of Equity of 24.38% is taken as Discounting rate, calculated using, © Historical Market Return of BSE 500 from February 01,.1999 to December 31, 2018 is 14.38% © We have considered Premium of 10.00% towards risk and illiquidity ° eooe 7|PageThe Total Equity value of CARS24 as per FCFE is Rs.3809.08 crores. (Details in Annexure 1), A. FAIR VALUATION As on December 31, 2018, total equity value of the Company is Rs.3809.08 crores. The fair value per equity share of CARS24 is Rs.3367.49 (Details in Annexure 1) 8|Page61 6.2. 63. 6A. 65, 66. EXCLUSIONS/DISCLAIMER/LIMITATION/WARRANTIES & CAVEATS ‘This confidential report is prepared by CSAPL solely for the purpose set out in the report, It should not be copied, disclosed, circulated, quoted or referred to, either in whole or in part, in correspondence or in discussion with any other person except to whom it is issued, and the purpose mentioned herein, For the purpose of clarity, CARS24 may share this report with its auditors, advisors and investment bankers in the normal course of its business. We will not accept any responsibility to any other party to whom this report may be shown or who may acquire a copy of the report, without our written permission in each instance. The material is true only as of the date of this letter. We assuming no responsibility to update or revise the opinion based upon events or circumstances that occur later on. ‘We have prepared this report based on the information provided, explanation given, and representations made by management of CARS24. We have neither checked nor independently verified such information and representations. We have also not factored any tax implications or any financial or tax planning which the CARS24 take in future. We have solely relied on explanations, information, paper, reports, documents & Statements provided by the Management of CARS24 only and accepted all that information provided to us as consistent and accurate on an 'as is" basis and taken in good faith and in the belief that such information is neither false nor misleading. ‘Our work did not include either an audit of the financial statements of the CARS24 or validating the financial performance of the company. We have prepared this report with assumption that financial statement of CARS24 captures all the contingent liabilities and there are no other contingent liabilities of the ‘Company. This Report is issued on the understanding that Management of CARS2 has drawn our attention to all matters of which they are aware concerning the financial position of the business of the CARS24, which may have an impact on our report up to the date of issue Our views are necessarily based on economic market and other conditions currently in effect. We have no responsibility to update this report for events and circumstances occurring after the date of this Report. We do not hold ourselves responsible or liable, for any losses, damages, costs, expenses ot outgoings whatsoever and howsoever caused, incurred, sustained or arising out of errors due to false, misleading or incomplete information or documentation being provided to us or due to any acts, or omissions of any other person, Provision of valuation recommendations and considerations of the issues described herein are areas of our regular corporate advisory practice, 9|Page67. 68. 69. 6:10. For CapitalSquare Advisors Pvt. Ltd. ~ Authorized Signatory Date: January 8, 2019 The scope of our work has been limited in terms of the purpose of valuation mentioned in Article 1 and 2 of this report. There may be matters, other than those noted in this report, which might be relevant in the context of any other purpose and which a wider scope might uncover. It may be noted that Valuation, is not an exact science and ultimately depends upon what the business is worth to a serious investor or buyer who may be Prepared to pay a substantial goodwill. The valuation exercise is carried out using generally accepted valuation methodology, principles, and the relative emphasis of each often varying, based on several specific factors. The results of this exercise could vary significantly depending upon the basis used, the specific circumstances and professional judgment of the valuer. In respect of going concern, certain valuation techniques have evolved over time and are commonly in use, which we have applied in We have no present or planned future interest in CARS24 and the fees for this report is not contingent upon the value reported herein. Our Valuation Analysis should not be construed as investment advice, specifically we do not express any opinion on the suitability or otherwise of entering into any transaction with CARS24. Further CSAPL nor the members of the team working on the independent valuation have directly or indirectly, through the client or otherwise shared any advisory perspective or have been influenced or undertaken advocating a management position in determining the value. We have not considered any law, regulation, and taxation or accounting principle as related or applicable to Target Company's country. We have prepared this report as per Indian law, regulation, or accounting principle in India on the data provided to us. CSAPL does not accept any liability to any third party in relation to the issue to this valuation report. Neither the valuation report not its contents may be referred to or quoted in any registration statement, prospectus, offering memorandum, annual report, loan agreement or other agreement or document given to third parties without our prior written consent. We retain the right to deny permission for the same. 10|PageValuation Working of CARS24 eres Ser) faz} eer] Annexure 1 (Rs. In Crores) PAT 352.16 278.30 131.41 Depreciation 577 10.00 15.70 2432 3749| 37.46 Capex - Ber - 26.93 - 3849 - 5880 - = 90.190. Net Debt 209.41 310.00 e - Incremental Working Capital = = 9432 - 37.50 - 2362 - 33.57 - 38.24 Equity Infusion 70.00 - - » Other Long Term Liabilities 14.50 29:16 42.26 48.40 Other Long Term Assets : 431 - 5.80 - 497_- 5.46 6.53 Free Cash Flow to Equity (FCFE) 166.67 068 132.40 77696 1,866.64 | 1,982: ‘Terminal Value z Discounting factor 0.80 065 ose a, os] 0% Present Value of FCFE -134.08 oat 68.85 324.84 C277 | 2977 “Total Present Value of FCFE Working of Fair Value: (Rs, In crores) Present Value of FCFE, 3,865.39 PV of Equity Infused 5631 Adjusted Equity 3,809.08 Equity Value 3,809.08 Total no. of shares 113,11,321 [Per Share Value 3,367.49 11|PageAnnexure 2 Working of Cost of Equity Cost of Equity | Premium’ S Market Return (Historical Market Return of BSE 500 from February 01, 1999 fo 14.38% December 31, 2018) 12|Page