Financial Modeling Case - Premium Bus Service

Debt is to be
repaid in 4
equal
Assumptions - Bus Assumptions - Financing annual Assumptions - General
installments
at the end
Cost of Bus 7,500,000 Debt 75% Taxevery
of Rate 33%
Maintenance / year 10% Equity 25% year
Escalation Rate - Maintenance 15% Interest on Debt 15% Interest Income 5%
Life of Bus (years) 4 Tenure of loan (years) 4 Diesel rate (Rs./Lit) 42
Deprecation Rate 25% SLM Cost of Equity 20% Diesel Price escalation 15%
Inflation 10%
Assumptions - Operating Revenues Assumptions - Operating Costs Assumptions - Operating General

Seating Capacity 56.5675 62.22425 Fuel Efficiency ( Km / L ) 5 Route Mumbai - Pune

Load Factor 50% Driver Cost (Rs./ Trip) 500 Distance (Kms) 155
Tariff (Rs./Ticket) 300.00 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
Flag 0 1 2 3 4
Revenue 12,388,283 13,627,111 14,989,822 16,488,804 Escalation Rate - Tariff
Other Income - 71,972 141,156 207,134 All inflation/escalation happens from year 2
Fuel Costs 1,900,920 2,186,058 2,513,967 2,891,062 Diesel Price escalation
Maintenance Expenses 750,000 750,000 750,000 750,000
Driver Costs 730000 730000 730000 730000 Increase at inflation rate
Miscellaneous Costs 730,000 730,000 730,000 730,000 Increase at inflation rate
Toll Amount 730,000 730,000 730,000 730,000 Toll amount remains constant
Cost of Revenues 4,840,920 5,126,058 5,453,967 5,831,062

Gross Pofit / (EBITDA) 7,547,363 8,573,025 9,677,012 10,864,877 14%

Depreciation 1,875,000 1,875,000 1,875,000 1,875,000

Interest Expense 843,750 674,776 480,456 256,988
Profit Before Tax 1,031,250 1,200,224 1,394,544 1,618,012
Income Taxes 340,313 396,074 460,199 533,944
Profit After Tax 690,938 804,150 934,344 1,084,068

Balance Sheet
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Assets Year - 0 Year - 1 Year - 2 Year - 3 Year - 4
Cash 1,439,445 2,823,128 4,142,686 5,388,500 BOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254
PPE, Gross 7,500,000 7,500,000 7,500,000 7,500,000 7,500,000 Int Expense 843,750 674,776 480,456 256,988
Acc Depreciation - 1,875,000 3,750,000 5,625,000 7,500,000 EAI (1,970,243) (1,970,243) (1,970,243) (1,970,243)
PPE, Net 7,500,000 5,625,000 3,750,000 1,875,000 - EOP - Debt 5,625,000 4,498,507 3,203,041 1,713,254 -
Total Assets 7,500,000 7,064,445 6,573,128 6,017,686 5,388,500
Principle Repaid 1,126,493 1,295,466 1,489,786 1,713,254
Liabilities
Debt 5,625,000 4,498,507 3,203,041 1,713,254 -
Equity 1,875,000 1,875,000 1,875,000 1,875,000 1,875,000
Retained Profit - 690,938 1,495,088 2,429,432 3,513,500
Total Liabilities 7,500,000 7,064,445 6,573,128 6,017,686 5,388,500
Checksum - - - - -

Cash Flow Statement

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

Net Income (PAT) - 690,938 804,150 934,344 1,084,068

Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000
Cash Flow From Operations - 2,565,938 2,679,150 2,809,344 2,959,068
Capex (7,500,000) - - - -
Cash Flow from Investing (7,500,000) - - - -
Debt (Repayment)/Issuance 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254)
Equity Addition 1,875,000 - - - -
Cash Flow from Financing 7,500,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254)
Net change in Cash - 1,439,445 1,383,684 1,319,558 1,245,813
Cash - BOP - - 1,439,445 2,823,128 4,142,686
Cash - EOP - 1,439,445 2,823,128 4,142,686 5,388,500
Checksum

Free Cash Flow - Equity

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

Net Income - 690,938 804,150 934,344 1,084,068

+ Depreciation - 1,875,000 1,875,000 1,875,000 1,875,000 Financing Debt (%) - For Neutral Case
- Capital Expenses (7,500,000) - - - - 63% 10% 25% 40% 55% 95%
- Debt Repayment/+ raised 5,625,000 (1,126,493) (1,295,466) (1,489,786) (1,713,254) 12% 25.9% 29.4% 34.4% 42.6% 277.8%
Interest Rate (%)

Cash Flow to Equity (1,875,000) 1,439,445 1,383,684 1,319,558 1,245,813 13% 25.9% 29.2% 34.0% 42.0% 270.2%
14% 25.8% 29.0% 33.6% 41.3% 262.5%
15% 25.7% 28.8% 33.3% 40.6% 254.7%
16% 25.7% 28.6% 32.9% 39.9% 246.8%
Returns Analysis - Equity 17% 25.6% 28.4% 32.5% 39.2% 238.7%
Year - 0 Year - 1 Year - 2 Year - 3 Year - 4

FCFE (1,875,000) 1,439,445 1,383,684 1,319,558 1,245,813

Cost of Equity 20.0%

NPV 1,649,859
IRR 63.46%
Loan 500000
Rate 12%
N 5

EAI -£138,704.87 Int 60000

Principle R -£78,704.87
£421,295.13