Financial Modeling Case - Premium Bus Service

Assumptions - Bus Assumptions - Financing Assumptions - General

Cost of Bus 7,500,000 Debt 75% Tax Rate 33%

Maintenance / year 10% Equity 25% Debt is to be repaid in 4 equal annual installments at
Escalation Rate - Maintenance 15% Interest on Debt 15% the end of every year
Life of Bus (years) 4 Tenure of loan (years) 4 Diesel rate (Rs./Lit) 42
Deprecation Rate 40% Cost of Equity 20% Diesel Price escalation 15%
Inflation 10%

Assumptions - Operating Revenues Assumptions - Operating Costs Assumptions - Operating General

Seating Capacity 35 Fuel Efficiency ( Km / L ) 5 Route Mumbai - Pune

Load Factor 50% Driver Cost (Rs./ Trip) 500 Distance (Kms) 155
Tariff (Rs./Ticket) 250 Miscellaneous (Rs. / Trip) 500 Estimated Time Hours/Trip 3
Escalation Rate - Tariff 10% Toll Amount (Rs. / Trip) 500 Trips / Day 4

Income Statement
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
0 1 2 3 4
Revenues 6,387,500 7,026,250 7,728,875 8,501,763
Fuel Costs 1,900,920 2,186,058 2,513,967 2,891,062
Driver Costs 730,000 803,000 883,300 971,630
Miscellaneous Costs 730,000 803,000 883,300 971,630
Toll Amount 730,000 730,000 730,000 730,000
Cost of Revenues 4,090,920 4,522,058 5,010,567 5,564,322
Gross Pofit 2,296,580 2,504,192 2,718,308 2,937,441
Depreciation 3,000,000 1,800,000 1,080,000 648,000
Interest Expense 843,750 674,776 480,456 256,988
Profit Before Tax (1,547,170) 29,416 1,157,852 2,032,453
Income Taxes - 9,707 382,091 670,709
Profit After Tax (1,547,170) 39,123 1,539,943 2,703,162

Balance Sheet
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Assets
Cash 326,337 869,994 2,000,151 3,638,059
PPE, Gross 7,500,000 7,500,000 7,500,000 7,500,000
Accumulated Depreciation (3,000,000) (4,800,000) (5,880,000) (6,528,000)
PPE, Net 7,500,000 4,500,000 2,700,000 1,620,000 972,000
Total Assets 7,500,000 4,826,337 3,569,994 3,620,151 4,610,059

Liabilities
Debt 5,625,000 4,498,507 3,203,041 1,713,254 (0)
Equity 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000
Retained Profit (1,547,170) (1,508,047) 31,897 2,735,059
Total Liabilities 7,500,000 4,826,337 3,569,994 3,620,151 4,610,059
Checksum - - - - -

Cash Flow Statement

Year - 0 Year - 1 Year - 2 Year - 3 Year - 4

Net Income (PAT) (1,547,170) 39,123 1,539,943 2,703,162

Depreciation 3,000,000 1,800,000 1,080,000 648,000
Cash Flow From Operations 1,452,830 1,839,123 2,619,943 3,351,162
Capex - - - -
Cash Flow from Investing - - - -
Debt (Repayment)/Issuance (1,126,493) (1,295,466) (1,489,786) (1,713,254)
Equity Addition - - - -
Cash Flow from Financing (1,126,493) (1,295,466) (1,489,786) (1,713,254)
Net change in Cash 326,337 543,657 1,130,157 1,637,908
Cash - BOP - 326,337 869,994 2,000,151
Cash - EOP 326,337 869,994 2,000,151 3,638,059
Checksum - - - -

Selected Financials Data & Key Ratios Management Information Summary

Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Project Life 4 Years
Revenues - 6,387,500 7,026,250 7,728,875 8,501,763 Initial Investment 1,875,000
Operating ratio (%) 64% 64% 65% 65% Minimum required return (%) 20%
Gross Profit - 2,296,580 2,504,192 2,718,308 2,937,441
Profit After Tax (PAT) - (1,547,170) 39,123 1,539,943 2,703,162 NPV (1,875,000)
NPM (%) -24% 1% 20% 32% IRR 25%
Payback (Years) 2 Years 11 Months
Debt 5,625,000 4,498,507 3,203,041 1,713,254 (0) Minimum Tariff for Breakeven (Rs. / Ticket) 247.6
Equity 1,875,000 327,830 366,953 1,906,897 4,610,059
D/E 3 14 9 1 (0)
ROE NMF 11% 81% 59% Scenario Analysis Sensitivity - Returns (IRR)
Pessimistic Neutral Optimistic Load Factor - For Neutral Case
Cash from Operations - 1,452,830 1,839,123 2,619,943 3,351,162 Assumptions 25% 40% 50% 60% 70% 80%
Tariff (Rs./Ticket)

Cash - End of Period - 326,337 869,994 2,000,151 3,638,059 Tariff(Rs./Ticket) 245 250 255 175 #NUM! #NUM! 15% 77%
DSCR 1.28x 1.15x 1.11x 1.11x Load Factor (%) 45% 50% 55% 200 #NUM! #NUM! 5% 77% 142%
Trips / Day 4 4 4 225 #NUM! -32% 61% 133% 212%
Free Cash Flow - Equity Diesel (Rs./l) 42 42 42 250 #NUM! 25% 109% 194% 282%
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 Debt 50% 75% 75% 275 #NUM! 69% 159% 256% 353%
Interest Rate (%) 15% 15% 13% 300 5% 109% 212% 318% 425%
Net Income (1,547,170) 39,123 1,539,943 2,703,162
Depreciation 3,000,000 1,800,000 1,080,000 648,000 Returns Financing Debt (%) - For Neutral Case
Capital Expenses - - - - NPV @ 20% -2,468,250 218,399 3,296,751 25% 10% 25% 40% 55% 70%
Debt Repayment (1,126,493) (1,295,466) (1,489,786) (1,713,254) IRR -15% 25% 83% 12% 20.4% 21.5% 23.1% 25.6% 29.9%
Interest Rate (%)

Cash Flow to Equity 326,337 543,657 1,130,157 1,637,908 Payback (Years) No Payback 3 1.5 13% 20.3% 21.2% 22.4% 24.4% 27.9%
14% 20.2% 20.9% 21.8% 23.2% 25.8%
Minimum Tariff 276.11 247.55 222.68
Value for NPV @ r = 15% 20.1% 20.5% 21.1% 22.0% 23.7%
Returns Analysis 20% 16% 20.0% 20.2% 20.4% 20.8% 21.6%
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4 17% 19.9% 19.8% 19.7% 19.6% 19.5%

Initial Investment (1,875,000) Project NPV Profile Cash Flow v/s Debt Service
Free Cash To Equity Holders 326,337 543,657 1,130,157 1,637,908 1
1
0.9
Cash Flow To Equity (1,875,000) 326,337 543,657 1,130,157 1,637,908 0.8
0.7
Cumulative Cash Flow (1,875,000) (1,548,663) (1,005,006) 125,151 1,763,059 0.6 1 Cash Flow
0.5
0.4 Interest
NPV (1,875,000) 0.3 Pricipal
IRR 25% 0.2
0.1 0
Payback Period 2 Years 11 Months 0 Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Minimum Ticket Rate for Break-even 247.55 0% 5% 10 15 20 25 30 35 40 45 50
% NPV
% % % % % % % %
Profile

Year - 0 Year - 1 Year - 2 Year - 3 Year - 4

Cash Flow 0 2,528,709 2,271,809 2,177,667 2,181,925
Pricipal 1,126,493 1,295,466 1,489,786 1,713,254
Interest 843,750 674,776 480,456 256,988
Average DSCR 1.16x 1.16x 1.16x 1.16x

(1,875,000)
0% 1,763,059 0% 1,763
5% 1,252,693 5% 1,253
10% 838,790 10% 839
15% 499,430 15% 499
20% 218,399 20% 218
25% (16,463) 25% (16)
30% (214,395) 30% (214)
35% (382,501) 35% (383)
40% (526,300) 40% (526)
45% (650,128) 45% (650)
50% (757,418) 50% (757)