Scribd
Upload
45 views

Apex Industries: Business Plan

Apex Industries is a power cable company that seeks to raise Rs. 50 crore in funds. Its business plan outlines goals such as expanding manufacturing and distribution networks across India. It analyzes opportunities in replacing overhead power lines with underground cables. Apex also plans to diversify into retail, real estate, hospitality and infrastructure. The business plan presents a 4-laning highway project costing Rs. 75 crore with equity of Rs. 25 crore and debt of Rs. 50 crore. Cash flow projections estimate positive returns with an IRR over 15% and satisfactory debt coverage ratios.

Uploaded by

bhavesh_mankani7373
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
45 views

Apex Industries: Business Plan

Apex Industries is a power cable company that seeks to raise Rs. 50 crore in funds. Its business plan outlines goals such as expanding manufacturing and distribution networks across India. It analyzes opportunities in replacing overhead power lines with underground cables. Apex also plans to diversify into retail, real estate, hospitality and infrastructure. The business plan presents a 4-laning highway project costing Rs. 75 crore with equity of Rs. 25 crore and debt of Rs. 50 crore. Cash flow projections estimate positive returns with an IRR over 15% and satisfactory debt coverage ratios.

Uploaded by

bhavesh_mankani7373
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 25

Apex Industries

Business Plan
Mission Statement
•  To enhance value generating capability of the Company in a globalizing environment,
delivering superior and sustainable customer value.

• To display highest commitment to excellence in product quality, service and


enriching customers through added value.

• Build exceptional standards and systems for productivity, performance, safety,


environment and quality.

• Expand manufacturing facility and distribution network to cater to all regions in


the country.

• Be a socially responsible corporate, addressing need of community and


environment.

• Empower and energise employees to embrace new ideas, learn continuously and
build HR processes for continual capability development of its talent.
The Team
• Prasun Pandey CEO and MD
• Sajesh Nair
• Bhavesh Mankani
• Sunil Ledwani
• Sagar Vartak
• Nikesh Malhotra
Company Profile
– Apex is a Power Cable Company and has the
potential to greatly benefit from the replacement of
the overhead conductors with the underground
cables.
Why in Red?
– Loss in 2009 is due to low market request, deferred
or cancelled orders and the ambiguity of Authorities
how to invest.
– Due to the impetus of setting up power generation
plants, most companies exceeded the capacity and
thus lead to excess supply.

Hence, Management and Production team restructured.


Cost cutting measures have been taken.
Opportunities
– Benefit from replacement of overhead conductors
with underground cables
– There is a potential replacement opportunity of
10,000 Cr. in India.
– Privatization of power transmission and distribution
company.
– Change in Government Policy
– An amount of 35 Billion was budgeted for the
Accelerated Power Development and Reforms
Programme (APDRP)
Opportunities
– In India, Transmission and Distribution loss are
mainly due to theft and lack of maintenance.
– Estimates of T&D loss is around 25% to 50%.
– Government provides 50% subsidy on capital
investment meant to reduce T & D losses.
– Tapping Top corporate, Indian Railways etc.
– Entry into the HT cables segment gives accessibility
to the generation and distribution segment, where
the market opportunity is estimated at Rs37,000cr
over the next 10 years.
Balance Sheet and P-L Analysis
Balance Sheet and P-L Analysis
Financial Ratio
Assumptions:
• Sales growth rate – 20% to 30%
• Poised for high growth going ahead: Strong growth in the
existing LT cables segment and entry into the HT and
extra high voltage (EHV) cables verticals. Increase in
demand of higher quality and branded wires.
• Major capex already undertaken: The company has
already incurred the major capex required to register
growth over the next 4-5 years. Thus, on account of high
operating leverage and strong sales growth, we expect
the company to increase its net profit to Rs 3.41 CR in
FY2013E from loss of – Rs32 CR in FY2009.
• Sales to be driven by improvement in the economy
• OPM to remain under pressure owing to high copper
prices
Goals and Objectives
• To raise the fund for Rs. 50 Crore
• To diversify into another segment – mainly in retail &
trading, real estate development, hospitality
construction and infrastructure development
Industry Analysis
• Key Characteristics
– Comparative low project risk.
– The infrastructure segment is expected to see
investments of Rs 5356 billion till 2012, as compared
to Rs 3320 billion.
– According to a recent report by Cris Infac on Indian
construction industry, government's spending on
infrastructure has increased by 106 percent to Rs
8,163 billion in the tenth plan period compared to Rs
3959 billion during the ninth plan period.
– Competitive pricing due to competitive bidding in
government projects.
Industry Analysis
• Key Characteristics
– Over Rs 380 billion will be spent on hydropower
projects, resulting construction contracts worth
almost Rs 266 billion in the next five years.
– Implementation of the build-operate-transfer (BOT),
build-own-operate-transfer (BOOT) mechanism by
the government has generated interest from the
private sector and a lot of projects in the road and
hydropower segments are already underway.
– Roads, urban infrastructure are expected to be still
the key for investment in infrastructure sector.
Infrastructure Mix
Resource Requirements

– Personnel
– Technology
– Finances
– Material
– Land
Project
• The work entailed 4 laning of the existing 2-lane
carriageway on the Raipur- Durg section of NH-6 in
Chattisgarh state. It connects Chhattisgarh with
Vishakapatnam, one of the most important ports of
India and Mumbai, the financial capital of the country,
with Kolkata (Eastern / North Eastern Markets). This
project has ensured that this important route is
decongested thereby substantially speeding up the
movement of goods and help in easing the flow of traffic
into the region. Over 18,000 vehicles are using the
highway every day.
Project Cost

Cost Structure of the Project:


• Total Cost 75 Cr
• Equity : 25 Cr
• Debt : 50 Cr

Concession Period : Till March 2020


Assumptions – Cash Flow
Method DCFE Discounted Cash Flow To Equity

Net Income + Depreciation


Expenditure-increase in Working
Cap+debt Infusion
FCFE= Repayments  
The FCFE is discounted at expected rate of return by equity capital provider

Discounting
Rate Risk Free Rate + Market Risk Premium

Interest Rate on Long Term Govt. Securities


Risk Free Rate =7.75 Source (www.rbi.org.in)

Beta ( Expected market return of the similar


listed Company
Risk Premium =4.25 Rate)
Average Int. volatility 0.65
Discounting rate lower limit of the sector 11.35
Discounting rate upper limit of the sector 12.65
For Valuation Discounting rate range is 10.5% to 14.0%
Assumptions – Cash Flow
• The FCFE is projected after industry analysis, historical
data and future potential estimates.
• The discounting rate is 11.5%.
FCFE Projections
FCFE Projections

Year End 31-Mar FCFE

2012 8.4

2013 11.9

2014 14.4

2015 18.5

2016 22.3

2017 25.7

2018 40.1

2019 61.25

2020 85.86
Expected Financial Position
Summary of the Project

• IRR is more than 15 % and therefore the project is


worthwhile
• Average DSCR is satisfactory. DSCR is gradually
increasing.
• Promoter’s contribution is fairly good
• ROI (before tax) and ROI (after tax) are good
• Profitability ratios show that the project would earn
sufficient returns on the capital employed over its
estimated life
Bibliography

• Rbi.org.in
• Wikipedia.com
• Indiainfoline.com
• Angelbroking.com
• Cmie.com
Thank You

You might also like