What is Enterprise value (EV) ? How is it calculated

The following are study questions for this case. Please review them, discuss them with team members and develop answers to them. These will be discussed in class, and I encourage you to be ready to participate in class discussion. It is a much richer class experience for all.

What is Enterprise value (EV) ? How is it calculated

What is the difference between comparable analysis and DCF ? Why and when would you prefer to use comparable analysis ?

What is control premium analysis ?

Questions for Specific Teams Using the tables provided below

Team 2: Using the Table : Talbros Comparables what would be your estimate of the equity value for Talbros using EV/Sales Multiple

Requirements: 250

W16542 TALBROS AUTOMOTIVE COMPONENTS LIMITED: RELATIVE VALUATION Monika Chopra and Umang Gupta wrote this case solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) [email protected]; www.iveycases.com. Copyright © 2016, Richard Ivey School of Business Foundation Version: 2016-09-08 In 2015, an automobile ancillary client of JM Financial Limited, a leading investment bank based in New Delhi, India, wanted to pursue acquisitions and expand revenues from its two-wheeler and four-wheeler vehicle segments. The client hoped to do so by acquiring original equipment manufacturer (OEM) customers like Bajaj Auto and Maruti Suzuki. Accordingly, Abhishek Agarwal, a financial analyst working with JM Financial, was assigned the task of identifying the right target for the client and performing the relative valuation analysis in order to calculate the worth of the target company and the expected transaction value. He was advised to use two valuation techniques—comparable company analysis and comparable transaction analysis—and communicate the results to management so that it could initiate a meeting with the client and take the deal forward. In accordance with the client’s requirements, Agarwal identified Talbros Automotive Components Limited (Talbros) as the best target. ABOUT TALBROS Talbros was established in partnership with a U.K. company, Coopers Payen, in 1965. Talbros’s major products were gaskets and heat shields, forgings, suspension systems and modules, anti-vibration components, and hoses. The company’s manufactured product lines catered to various segments, including passenger vehicles, commercial vehicles, two-wheelers, three-wheelers, and farm equipment. It had a variety of OEM customers in India and abroad, as well as clients in after-markets. Many of the world’s largest OEMs (e.g., Ashok Leyland Limited, Bajaj Auto Limited, Cummins Group, Eicher Motors Limited, Escorts Group, Force Motors Limited, General Motors, Hero Motocorp Ltd., Hyundai Motor Company, John Deere, Mahindra and Mahindra Limited, Maruti Suzuki India Limited, Tafe Motors & Tractors Limited, and Tata Motors Limited) and international corporations (e.g., Carraro, Dana, KMP Brand, and GKN Drivelines) were customers of Talbros. In addition, the company also had partnerships with global giants, including the following firms: This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 2 9B16N054 Nippon Leakless Talbros Private Limited Established in 2005, this partnership was a 40:60 joint venture between Talbros and Nippon Leakless Corporation, Japan, created to manufacture gaskets for passenger cars, motorcycles, scooters, power equipment products, and industrial applications. Magneti Marelli Talbros Chassis System Private Limited This association was a 50:50 joint venture with Sistemi Sospensioni, SPA, Italy. It was established in 2011 in order to manufacture chassis components such as control arms, steering knuckles, front cross-members, and rear twist-beam axles. Talbros Maurgo Rubber Private Limited This 50:50 joint venture was established in 2012 with Marugo Rubber Industries, Japan, to manufacture products such as suspension bushes, strut mounts, and engine mounts and hoses. The company’s technology partners were Sanwa Packaging, Japan, and Interface Solutions, United States. Talbros’ manufacturing facilities were located in Faridabad (Haryana), Sitarganj (Uttarakhand), Pune (Maharashtra), Bawal (Haryana), and Haridwar and Manesar (Haryana).1 Identification of Approach for Valuation Agarwal decided to conduct a relative valuation of Talbros using two methods: comparable company analysis and comparable transaction analysis. He finalized three valuation metrics for this analysis: enterprise value-to-sales (EV/sales); EV-to-earnings before interest, tax, depreciation, and amortization (EV/EBITDA); and price-to-earnings per share (P/E ratio). Comparable Firm Selection The first step in this method was finding a set of comparable firms. Agarwal searched for publicly traded firms whose primary industry classification was auto parts and equipment, which yielded a list of four firms. He then acquired the income statements and balance sheets for each of the four firms (see Exhibits 1–8). He compared this information to the same available data for Talbros (see Exhibits 9–10). Using this data, Agarwal also calculated certain variables for further analysis at the end of each company’s financials and reviewed a description of each firm’s business (see Exhibit 11). Control Premium Analysis The next step in the analysis was to estimate the control premium. Agarwal reviewed recent transactions where the buyer had offered the premium for the acquisition of companies that were similar to Talbros in the automobile ancillary sector (see Exhibit 12). 1 “Talbros Automotive Components Limited” (business description), CMIE Prowess Database, accessed May 25, 2015, https://prowess.cmie.com. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 3 9B16N054 Identification of Comparable Transactions For comparable transaction analysis, Agarwal identified the transactions that were most relevant. Transactions were selected that were similar in size to the transaction that was being considered for the target company. The type of transaction and the characteristics of the target were similar. Transactions that occurred more recently were given more weight than older transactions (see Exhibit 13). THE VALUATION OF TALBROS With the data he had gathered, Agarwal had to value Talbros on the basis of comparable company analysis and comparable transaction analysis using the three valuation ratios specified (EV/sales, EV/EBITDA, and P/E ratio). The objective was to arrive at the final valuation range by combining the results of both techniques and then calculating the final value of Talbros. Valuation by use of EV along with P/E multiples was selected as they were based on gross cash flows or operating income and earnings. The final price in the range of values derived would actually depend on the value acceptable to both parties so that post-merger success was ensured. Major issues that Agrawal needed to handle while completing the valuation were as follows: What set of companies and transactions should he select for calculation of multiples in order to get a reasonable approximation of the target company? What should be the fair value of the takeover/control premium such that both parties’ return can be maximized and the benefit of synergies preserved? Agrawal decided to proceed with first, a comparable firm, and then second, a comparable transaction analysis. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 4 9B16N054 EXHIBIT 1: COMPARABLE FINANCIALS FOR MUNJAL SHOWA LIMITED Income Statement (in ₹ millions except EPS) FY2011FY2012FY2013 FY2014 FY2015Net sales 12,89315,56815,814 15,979 16,429Other income 231635 61 81Total revenue 12,91615,58415,849 16,040 16,510Operating expenses 12,08314,34114,761 14,926 15,163EBITDA 8101,2271,053 1,053 1,266Depreciation & amortization 262272276 284 286Earnings before interest & taxes (EBIT) 571971812 830 1,061Finance costs 9111272 27 4Profit before tax & exceptional items 480859740 803 1,057Exceptional items (61) 7Tax expense 13918772 101 307Net profit for the year 341672607 702 757EPS face value 8.516.715.1 17.4 18.9 Expected Income Statement Particulars (in ₹ millions except EPS) FY2016 (E)FY2017 (E) Net sales 18,15420,283 EBITDA 1,4221,629 Net profit for the year 832969 EPS 20.824.3 Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2016; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Munjal Showa Ltd, “Equities, Analyze Munjal Showa Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015; Munjal Showa Ltd, “Equities, Analyze Munjal Showa Ltd: Financial Analysis 2016(E)–2017(E),” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 5 9B16N054 EXHIBIT 2: BALANCE SHEET FOR MUNJAL SHOWA LIMITED Balance Sheet (in ₹ millions) FY2011 FY2012 FY2013 FY2014 FY2015 Equities & liabilities Shareholders’ funds Share capital 797979 79 79Reserves & surplus 1,9492,4822,948 3,481 4,027Noncurrent liabilities Long-term borrowings 519211 Deferred tax liabilities (net) 139142142 118 85Long-term provisions 667 15 25Other long-term liabilities 53 Current liabilities Short-term borrowings 54200 Trade payables 1,6371,6861,508 1,656 1,552Other current liabilities 378393391 158 106Short-term provisions 188182191 234 252Total 4,9495,3815,319 5,741 6,126Assets Noncurrent assets Fixed assets Tangible assets 2,5132,4272,439 2,309 2,092Intangible assets 322220 19 18Capital work in progress 8511274 5 17Intangible assets under development Noncurrent investments Long-term loans & advances 3534382 440 394Other noncurrent assets 820.1 0.6 0.7Current assets Current investments 30200 300 680Inventories 367491399 493 665Trade receivables 1,4291,7591,416 1,768 2,033Cash & bank balances 3147179 155 15Short-term loans & advances 369371186 208 174Other current assets 808624 44 38Total 4,9495,3815,319 5,741 6,126 Workings from Balance Sheet Current market price of share ₹160.8 Common shares outstanding 39,995,000 Market value of equity ₹6,431 million Net debt ₹(695 million) EV ₹5,736 million EV/Sales 0.32× EV/EBITDA 4× Price/EPS 7.7× Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2015; 1 EPS = earnings per share; FY = fiscal year; E = estimate. Source: Created by the case authors using data from Munjal Showa Ltd, “Equities, Analyze Munjal Showa Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 6 9B16N054 EXHIBIT 3: COMPARABLE FINANCIALS FOR GABRIEL INDIA LIMITED Income Statement (in ₹ millions except EPS) FY2011FY2012FY2013 FY2014 FY2015Net sales 9,69911,28212,053 12,866 14,440Other income 937440 56 43Total revenue 9,79211,35612,093 12,922 14,483Operating expenses 8,81010,36211,226 11,961 13,275EBITDA 889920827 905 1,165Depreciation & amortization 219276272 270 311Earnings before interest & taxes (EBIT) 763718595 691 897Finance costs 171170122 89 55Profit before tax & exceptional items 592548473 602 842Exceptional items (17)77(59) (42) (6)Tax expense 1229330 131 235Net profit for the year 453532384 429 601EPS face value 1 6.37.42.6 2.9 4.2 Expected Income Statement Particulars (in ₹ millions except EPS) FY2016 (E)FY2017 (E) Net sales 17,65920,211 EBITDA 1,4621,782 Net profit for the year 8651,091 EPS 67.6 Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2016; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Gabriel India Ltd, “Equities, Analyze Gabriel India Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015; Gabriel India Ltd, “Equities, Analyze Gabriel India Ltd: Financial Analysis 2016(E)–2017(E),” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 7 9B16N054 EXHIBIT 4: BALANCE SHEET FOR GABRIEL INDIA LIMITED Balance Sheet (in ₹ millions) FY2011FY2012FY2013 FY2014 FY2015Equities & liabilities Shareholders’ funds Share capital 7272144 144 144Reserves & surplus 1,7932,2402,424 2,708 3,111Noncurrent liabilities Long-term borrowings 562246164 96 58Deferred tax liabilities (net) 157133111 96 105Long-term provisions 533057 41 93Other long-term liabilities 36 Current liabilities Short-term borrowings 678662497 469 Trade payables 1,4671,4111,391 1,578 1,907Other current liabilities 401468557 454 411Short-term provisions 115118195 291 335Total 5,2985,3805,576 5,877 6,164Assets Noncurrent assets Fixed assets Tangible assets 2,0242,0592,498 2,635 2,655Intangible assets 767956 36 21Capital work in progress 1083764 125 31Intangible assets under development Noncurrent investments 1330.20.2 0.2 0.2Long-term loans & advances 414377298 232 226Other noncurrent assets 24Current assets Current investments Inventories 1,0171,2351,112 1,168 1,121Trade receivables 9431,2441,215 1,360 1,723Cash & bank balances 395674 48 38Short-term loans & advances 382267254 273 321Other current assets 162265 0.2 3Total 5,2985,3805,576 5,877 6,164 Workings from Balance Sheet Current market price of share ₹76.9 Common shares outstanding 143,643,940 Market value of equity ₹11,046 million Net debt ₹20 million EV ₹11,066 million EV/Sales 0.6× EV/EBITDA 7.6× Price/EPS 12.8× Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2015; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Created by the case authors using data from Gabriel India Ltd, “Equities, Analyze Gabriel India Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 8 9B16N054 EXHIBIT 5: COMPARABLE FINANCIALS FOR MINDA INDUSTRIES LIMITED Income Statement (in ₹ millions except EPS) FY2011FY2012FY2013 FY2014 FY2015Net sales 9,54211,79213,404 17,061 22,266Other income 146163109 168 229Total revenue 9,68811,95513,513 17,229 22,495Operating expenses 8,70411,03312,469 16,282 20,722EBITDA 838759935 779 1,544Depreciation & amortization 338402463 591 835Earnings before interest & taxes (EBIT) 646520581 356 938Finance costs 167198191 242 250Profit before tax & exceptional items 479322390 114 688Exceptional items (76)2 15 159Tax expense 1223109 76 194Net profit 357243283 53 653(–) Share of profit transferred to minority 26 10 3(+) Share of profit/loss of associate 42(7) 8 24Net profit for the year 357283270 51 674EPS face value 10 26.117.717.7 4.5 42.8 Expected Income Statement Particulars (in ₹ millions except EPS) FY2016 (E)FY2017 (E) Net sales 23,54627,031 EBITDA 1,9192,342 Net profit for the year 7421,086 EPS 46.965.8 Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2016; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Minda Industries Ltd, “Equities, Analyze Minda Industries Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015; Minda Industries Ltd, “Equities, Analyze Minda Industries Ltd: Financial Analysis 2016(E)–2017(E),” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 9 9B16N054 EXHIBIT 6: BALANCE SHEET FOR MINDA INDUSTRIES LIMITED Balance Sheet (in ₹ millions) FY2011FY2012FY2013FY2014 FY2015Equities & liabilities Shareholders’ funds Share capital 565194194194 194Reserves & surplus 1,4222,6682,8952,920 3,459Minority interest 115123138 213Deferred revenue income 8 Noncurrent liabilities Long-term borrowings 5526618871,376 972Deferred tax liabilities (net) 1035 Long-term provisions 74157176237 264Other long-term liabilities 267419 30Current liabilities Short-term borrowings 9509388081,402 1,115Trade payables 1,3991,7732,1642,473 2,669Other current liabilities 448551633935 894Short-term provisions 7999111111 157Total 5,5947,1678,0659,813 9,967Assets Noncurrent assets Fixed assets Tangible assets 2,4052,6543,1163,928 4,027Intangible assets 98926977 85Capital work in progress 6247416218 89Intangible assets under development 7460.7 3Noncurrent investments 189217218244 263Deferred tax assets 1416 2Long-term loans & advances 133216224206 186Other noncurrent assets 17154586 119Current assets Current investments 11 230 20Inventories 8371,9638951,246 1,406Trade receivables 1,3078082,1732,610 2,895Cash & bank balances 229666385278 280Short-term loans & advances 301446466598 544Other current assets 9283875 48Total 5,5947,1678,0659,813 9,967 Workings from Balance Sheet Current market price of share ₹506.9 Common shares outstanding 15,871,324 Market value of equity ₹8,042 million Net debt ₹2,000 million EV ₹10,042 million EV/Sales 0.43× EV/EBITDA 5.23× Price/EPS 10.81× Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2015; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Created by the case authors using data from Minda Industries Ltd, “Equities, Analyze Minda Industries Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 10 9B16N054 EXHIBIT 7: COMPARABLE FINANCIALS FOR SONA KOYO STEERING SYSTEMS LIMITED Income Statement (in ₹ millions except EPS) FY2011FY2012FY2013 FY2014 FY2015Net sales 12,06714,21214,600 14,923 15,529Other income 333193 397 48Total revenue 12,10014,24314,693 15,320 15,577Operating expenses 10,60812,46412,953 13,138 13,371EBITDA 1,4591,7481,647 1,785 2,158Depreciation & amortization 377457585 679 1,037Earnings before interest & taxes (EBIT) 1,1151,3221,155 1,503 1,169Finance costs 437459411 392 311Profit before tax & exceptional items 678863744 1,111 858Exceptional items 58 Tax expense 245258263 247 267Net profit 491605481 864 591(–) Share of profit transferred to minority 4511598 177 204(+) Share of profit/loss of associate (7) (6)Net profit for the year 446490383 680 381EPS face value 1 2.22.41.9 3.4 1.9 Expected Income Statement Particulars (in ₹ millions except EPS) FY2016 (E)FY2017 (E) Net sales 17,40618,873 EBITDA 2,3222,617 Net profit for the year 702666 EPS 3.53.4 Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2016; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Sona Koyo Steering Systems Ltd, “Equities, Analyze Sona Koyo Steering Systems Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015; Sona Koyo Steering Systems Ltd, “Equities, Analyze Sona Koyo Steering Systems Ltd: Financial Analysis 2016(E)–2017(E),” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 11 9B16N054 EXHIBIT 8: BALANCE SHEET FOR SONA KOYO STEERING SYSTEMS LIMITED Balance Sheet (in ₹ millions) FY2011FY2012FY2013FY2014 FY2015Equities & liabilities Shareholders’ funds Share capital 198198198198 198Reserves & surplus 1,8572,1932,4232,890 3,035Minority interest 382508607785 985Noncurrent liabilities Long-term borrowings 2,5472,6232,4031,695 1,674Deferred tax liabilities (net) 353397517525 417Long-term provisions 40445461 68Other long-term liabilities 30.133 2Current liabilities Short-term borrowings 322352703653 424Trade payables 1,9372,0331,9351,951 1,926Other current liabilities 8099951,4421,398 1,202Short-term provisions 196185189227 199Total 8,6449,52810,47410,386 10130Assets Noncurrent assets Fixed assets Tangible assets 4,5415,1845,7835,715 5,469Intangible assets 142264286302 372Capital work in progress 146398254632 490Intangible assets under development 936265121 142Goodwill on consolidation 111524 Noncurrent investments 2952952959 12Long-term loans & advances 214226137103 72Other noncurrent assets 3344 4Current assets Current investments Inventories 752607814935 1,004Trade receivables 1,6171,7522,2742,082 1,892Cash & bank balances 1191232528 179Short-term loans & advances 550361291361 322Other current assets 16123822294 172Total 8,6449,52810,47410,386 10,130 Workings from Balance Sheet Current market price of share ₹50.4 Common shares outstanding 198,741,832 Market value of equity ₹10,017 million Net debt ₹2,904 million EV ₹12,921 million EV/Sales 0.7× EV/EBITDA 5.6× Price/EPS 14.4× Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2015; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Created by the case authors using Sona Koyo Steering Systems Ltd, “Equities, Analyze Sona Koyo Steering Systems Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 12 9B16N054 EXHIBIT 9: INCOME STATEMENT FOR TALBROS AUTOMOTIVE COMPONENTS LIMITED Income Statement (in ₹ millions except EPS) FY2011FY2012FY2013FY2014 FY2015Net sales 3,2083,7543,4473,659 3,887Other income 50396271 96Total revenue 3,2583,7933,5093,730 3,983Operating expenses 2,8433,3263,0553,301 3,484EBITDA 365428392358 403Depreciation & amortization 108112103104 99Earnings before interest & taxes (EBIT) 307355351325 400Finance costs 166199205190 187Profit before tax & exceptional items141156146135 213Exceptional items 88 (18)Tax expense 1411727 51Net profit for the year 127145139196 144EPS face value 10 10.211.611.215.6 11.4 Expected Income Statement Particulars (in INR millions except EPS) FY2016 (E)FY2017 (E) Net sales 4,6005,460 EBITDA 540700 Net profit for the year 210310 EPS 1725.1 Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2016; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Talbros Automotive Components Ltd, “Equities, Analyze Talbros Automotive Components Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015; Talbros Automotive Components Ltd, “Equities, Analyze Talbros Automotive Components Ltd: Financial Analysis 2016(E)–2017(E),” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 13 9B16N054 EXHIBIT 10: BALANCE SHEET FOR TALBROS AUTOMOTIVE COMPONENETS LIMITED Balance Sheet (in ₹ millions) FY2011FY2012FY2013 FY2014 FY2015Equities & liabilities Shareholders’ funds Share capital 123123123 123 123Reserves & surplus 749847935 1,069 1,148Noncurrent liabilities Long-term borrowings 343327257 309 317Deferred tax liabilities (net) 717665 52 47Long-term provisions 393239 40 41Other long-term liabilities 12 6 3Current liabilities Short-term borrowings 588678758 772 851Trade payables 778825754 749 923Other current liabilities 274288332 310 357Short-term provisions 281927 28 25Total 2,9933,2153,302 3,458 3,835Assets Noncurrent assets Fixed assets Tangible assets 1,0461,0631,013 1,038 1,110Intangible assets 141139 40 35Capital work in progress 21538 103 85Intangible assets under development 14 4Noncurrent investments 62529 42 57Long-term loans & advances 6787115 114 127Other noncurrent assets 12 3 5Current assets Current investments 9 Inventories 8569891,065 1,068 1,275Trade receivables 658716644 696 738Cash & bank balances 577689 81 103Short-term loans & advances 251235255 264 287Other current assets 869 9 9Total 2,9933,2153,302 3,458 3,835 Workings from Balance Sheet Current market price of share ₹119 Common shares outstanding 12,345,630 Market value of equity ₹1,469 million Net debt ₹1,065 million EV ₹2,534 million EV/Sales 0.55× EV/EBITDA 4.7× Price/EPS 7× Note: ₹ = INR = Indian rupee. All currency amounts are in ₹ unless otherwise specified; ₹1 = US$0.02 on March 31, 2011 to March 31, 2015; 1 EPS = earnings per share; FY = fiscal year; E = estimated. Source: Created by the case authors using Talbros Automotive Components Ltd, “Equities, Analyze Talbros Automotive Components Ltd: Financial Analysis 2011–2015,” Bloomberg L.P., accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 14 9B16N054 EXHIBIT 11: COMPARISON OF BUSINESS DESCRIPTIONS FOR EACH FIRM Munjal Showa Limited Munjal Showa Limited was established in 1985. It was started as a technical joint venture between Showa Corporation, Japan, and Hero Group. Munjal Showa Limited manufactured auto components for two-wheelers and four-wheelers. Its product range consisted of front forks, shock absorbers, struts, gas springs, and window balancers for sale in the domestic market. The company had exports in Japan, Germany, the United States, and the United Kingdom. Its products also functioned as original equipment for companies like Maruti Suzuki (for its upper-end cars and exported models), Honda (for its city cars), Hero Honda Motorcycles, Kawaski Bajaj Motorcycles, and Scooters India Private Limited. The company’s manufacturing operations were spread across the states of Haryana and Uttarakhand. Gabriel India Limited Established in 1961, Gabriel India Limited had partnered with Maremont Corporation to manufacture shock absorbers. The company’s product line included front forks and rear shock absorbers (for two-wheelers), McPherson struts and shock absorbers
(for passenger cars), axles, cabin and seat dampers, suspension shock absorbers (for commercial vehicles), and shock absorbers (for railway coaches). Its major clients included two- and three-wheeler manufacturers (e.g., Bajaj, HMSI, Mahindra and Mahindra, Piaggio, Royal Enfield, Suzuki, TVS, Yamaha, and the after-market), passenger vehicle manufacturers (Bajaj, General Motors, Honda, Hyundai, Indian Railways, Mahindra and Mahindra, Maruti Suzuki, Piaggio, Renault, TATA Motors, Toyota, and Volkswagen), commercial vehicle manufacturers (Ashok Leyland, Asia Motor Works, Daimler-Bharat Benz, Force Motors, Indian Railways, Mahindra and Mahindra, MAN Trucks, Ride Control LLC, TATA Motors, VE Commercial Vehicles, and Wheels India Limited). The company had six manufacturing facilities (Pune, Khandsa, Nashik, Hosur, Dewas, and Parwanoo) and three satellite plants (Sanand, Malur, and Aurangabad). Minda Industries Limited Minda Industries Limited was established in 1992 as the flagship company of the UNO Minda Group. It was the largest manufacturer of automotive switches for two-wheelers, three-wheelers, and off-road vehicles in India. Sales to OEMs formed the largest revenue segment for the company, followed by the after-market and exports. Some of its OEM customers were Bajaj Auto, Yamaha, Suzuki, Hero Motorcorp, HMSI, TVS, New Holland, Eicher, Mahindra and Mahindra, TAFE, and Royal Enfield. Sona Koyo Steering Systems Limited Sona Koyo Steering Systems Limited, established in 1985, was the flagship company of Sona Group and the largest manufacturer of steering systems in India, catering to passenger cars, utility vehicles, and light commercial vehicles. Some of its customers included major vehicle manufactures in India, such as Maruti Suzuki, Toyota, Hyundai, Tata Motors, Mahindra and Mahindra, General Motors, and Mahindra-Renault. It also exported its products to the United States, Europe, and Japan. Source: “Business Description of Companies,” CMIE Prowess Database, accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 15 9B16N054 EXHIBIT 12: CONTROL PREMIUM ANALYSIS PremiumTarget Acquirer Completion Date Deal Value (in ₹ millions) Offer Price (₹) One Day Prior (%) One month Prior (%) Kar Mobiles Ltd (60.43%) Rane Engine Valves Ltd NA460150.50 48.94 40.79JMT Auto Ltd (52.61%) Amtek Auto Ltd 2013-01-132,440148.70 34.39 50.96Shanthi Gears Ltd (70.12%) Tube Investments of India Ltd 2012-11-194,08080.98 34.85 51.95Igarashi Motors Ltd (51.9%) Agile Electric Drives Technologies & Holdings Ltd 2011-03-3176076.30 69.15 −13.44Automotive Stamping & Assemblies Ltd (37.5%) Tata Autocomp Systems Ltd NA34089.50 −5.29 −6.18Amtek India Ltd (60.21%) Amtek Auto Ltd 2010-12-159,40070.40 −22.98 −28.20Ahmednagar Forgings Ltd (47.4%) Amtek Auto Ltd NA1,900114.77 18.63 22.95 Source: “Mergers & Acquisition Deals in the Auto Parts & Equipment Industry in India 2005–2015,” Merger Market Database, accessed May 25, 2015. This document is authorized for use only by wangzheng yin ([email protected]). Copying or posting is an infringement of copyright. Please contact [email protected] or 800-988-0886 for additional copies.

Page 16 9B16N054 EXHIBIT 13: COMPARABLE TRANSACTIONS Ann. Date Completion Date Target Company Bidder Company Deal Value (in ₹ millions)EV (in ₹ millions)Year 1 Ending Date Sales(in ₹ millions)EV/Sales Multiple EV/EBITDA Multiple PE Multiple2014-05-20 Kar Mobiles Limited (60.43% stake) Rane Engine Valve Limited 456 589.2 2014-03-311,201.7 0.49 7.01 24.47 2013-06-27 2013-10-03 JMT Auto Limited (52.61% stake) Amtek Auto Limited 2,439 3,453.2 2013-03-313,350.2 1.03 6.17 18.07 2012-08-03 2012-08-03 Mag Engineering Private Limited (100% stake) Sandhar Technologies Limited 700700.02012-03-31 652.3 1.07 4.78 NA2012-07-13 2012-11-19 Shanthi Gears Limited (70.12% stake) Tube Investments of India Limited 4,0816,058.2 2012-03-31 1,730.1 3.50 8.74 23.54 2012-01-05 2012-02-23 Trinity India Limited (78% stake) Ring Plus Aqua Ltd. 741 893.2 2011-03-31 843.9 1.06 9.88 117.81 2010-12-10 2011-03-31 Igarashi Motors India Limited (51.9% stake) Agile Electric Drives Technologies and Holdings Private Limited 776 1,523.4 2010-03-31 1,592.4 0.96 8.12 38.73 2008-08-01 2010-12-15 Amtek India Limited (60.21% stake) Amtek Auto Limited 9,40213,188.8 2008-06-30 13,189.1 1.00 2.56 6.15 2008-07-31 Ahmednagar Forgings Ltd (47.4% stake) Amtek Auto Limited 1,900 5,025.5 2008-06-30 6,610.6 0.76 4.50 6.66 Source: “Mergers & Acquisition Deals in the Auto Parts & Equipment Industry in India 2005–2015,” Merger Market Database, accessed May 25, 2015. This docum

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