You are on page 1of 23

By Group Steve Jobs

(GROUP 8)

BHARGAVI . M 08PG296
K. VYSHALI 08PG026
K. SRICHITRA 08PG197

M. SREETEJA 08PG169

SRAVANI INDUKURI 08PG134


 Normal capitalisation method
Normal capital required to get actual return less actual
capital employed
 Super profit method
Excess of actual profit over normal profit multiplied by
number of years super profits are expected to continue
 Annuity method
Discounted super profit at a suitable rate
COMPANY A

• Capital employed: Rs. 45 cr


• Normal rate of return: 12 %
• Future maintainable profit: Rs. 5.5 cr

What would be the goodwill under the normal capitalization


method?
SOLUTION:
• = (5.5/.12) – 45 = Rs. 0.83 cr
COMPANY B

• Capital employed: Rs. 50 cr


• Normal rate of return: 15 %
• Future maintainable profit: Rs. 8 cr
• Super profit can be maintained for:3 years

• What would be the goodwill under the super profit method?


SOLUTION:
= [8 – (50*.15) ] * 3 = Rs.1.50 cr
BRAND
VALUATION
 IMPORTANCE
 APPLICATIONS

METHODS OF VALUATION OF A
BRAND
• Historical Cost Method
• Replacement Cost Method
• Market Value Approach
• Valuation Based On Premium Price
 1978- BIOCON WAS INCORPORATED

 2001-JOINT VENTURE OF BBPL

 2001-CLINIGENE

 2002- SYNGENE AS SUBSIDARY

 2002-BBPL WAS INCORPORATED

 2006-NOBEX

 2008-JOINT VENTURE (NEO BIOCON)

 2008-BIOCON AQUIRED 71% EQUITY INTEREST IN AXICORB

 2009-ADDITIONAL 7.4% EQUITY INTEREST IN AXICORB


 Biocon had a total asset of 415 patent applications of which international
PCT applications were 99

 In this fiscal, Biocon was granted 25 patents with 4 in order for grant. Till
date, 34 patents are in the US alone

 Through acquisitions Biocon’s IP asset now stands at 516 of which 94 are


granted, bringing the total number of patent applications to 924 and the total
number of granted patents to 178.
(Rs in thousands)
INTANGIBLE OPENING ADDITIONS AMORTISATIO CLOSING
ASSETS BALANCE AS DURING THE N BALANCE AS
AT APRIL1, YEAR DURING THE AT MARCH 31,
2006 YEAR 2007
INTELLECTUAL
PROPERTIES
FROM NOBEX

-For further - 440000 - 4,40,000


development
&
commercialisa
tion
-To be - 81,138 9,138 72,000
commercialise
d
Total value 521138 9,138 512,000
(Rs in thousands)
INTANGIBLE OPENING ADDITIONS AMORTISATION CLOSING
ASSETS BALANCE DURING DURING THE IMPAIREMENT BALANCE
AS AT THE YEAR YEAR OF AS AT
APRIL1, LOSSES MARCH
2007 31, 2008

INTELLECTUAL
PROPERTIES
FROM NOBEX
-Under 4,40,000 - - 2,20,000 2,20,000
development &
commercialisatio
n
-under 72,000 - 16,000 - 56,000
commercialised
Total value 512,000 - 16,000 2,20,000 2,76,000
Year ended - 521,138 9,138 - 5,12,000
march
31, 2007
(Rs in thousands)
INTANGIBLE BALANCE AT THE ACCUMULATED NET VALUE
ASSETS END OF YEAR AMORTISATION
INTELLECTUAL
PROPERTIES FROM
NOBEX
-Under 220000 220000
development &
commercialisation
-Under 81138 41,138 40,000
commercialised
Development cost 44213 44213
For products
Computer software 21535 6525 15010

Product licenses 156390 40,845 115545


Manufacturing 63760 63760
rights for hR3
Good will 1132128 1132128
Total year ended 1719164 88,405 1630656
value
 Bharti Airtel – flagship company of Bharti enterprise
 The businesses at Bharti Airtel have been structured into three individual strategic
business units (SBU’s) - mobile services, telemedia services (ATS) & enterprise
services
 First private telecom services provider
 In 10 yrs, Airtel became the leader in providing telecom services to its customers
 Goodwill
 Other acquired intangible assets
 Software
 Bandwidth
 Licenses
 License entry fees
 Brands
 Distribution networks
 Customer relationships
(Rs in thousands)
March 31, 2008 March 31,2009

Balance ( beginning 23683549 27043223


of the period)

Additions 3427020 10834

Valuation allowance (67,346) -


reversals

Balance ( end of the 27043223 27054057


period)
(Rs in thousands)
Particulars March 31, Less March 31, Less
2008 Amortization 2009 Amortizatio
n
Software 83,993 83,993 1,00,458 88,659
Bandwidth 20,96,218 96,346 33,63,064 3,07,261
Licences 63,59,042 29,87,002 63,59,402 34,27,900
Licence entry fees 1,08,16,027 31,15,513 1,08,97,940 36,97,713

Brands 1,10,514 92,250 1,10,514 94,990


Distribution networks 11,34,508 11,344,188 11,34,508 11,34,484
Customer relationships 7,28,840 7,23,639 7,28,840 7,28,004

Other intangibles 1,54,659 47,234 1,54,659 60,874


Total 2,14,84,161 82,80,165 2,28,49,385 95,39,885

NET 1,32,03,996 1,33,09,500


Intangible assets of the company –
 Human resources
Collective expertise, innovation, leadership, managerial skills
of employees
 Intellectual property assets
Know-how, copyrights, patents, products and tools owned by
a corporation
 Internal assets
Systems, technologies, methodologies, processes and tools
specific to organization
 External assets
 Examples : customer loyalty, brand value
 LEV & SCHWARTZ MODEL

 Projects the direct & indirect benefits enjoyed by the employee till
retirement

 Discounts CTC at the WACC to arrive at the present value.


HUMAN RESOURCE VALUATION AT
INFOSYS (Rs. in crores)
2009 2008
Employees no.

Software professionals 97349 85013

Support 7501 6174


Total 104850 91187
Value of Human
Resources

Software professionals 95600 92331

Support 6533 6490

Total 102133 98821

Assumption : cost of capital 12.18%


 Brand earnings multiple model

 Brand Strength multiple


 Brand Earnings

Brand Value = Brand Strength multiple X Brand earnings


Rs. in crores
2009 2008 2007

Profit before interest and 6907 5344 4245


tax
Less: non-brand income 426 634 335
Adjusted profit before tax 6481 4710 3910

Inflation factor 1.0000 1.092 1.192


PV of brand profits 6481 5142 4660
Weighted factor 3 2 1
Weighted avg profits 5731 - -
Remuneration of capital 801 - -

Brand related profits 4930 - -


Tax 1676 - -
Brand earnings 3254 - -
Brand multiple 9.94 - -
Brand value 32345 - -
2009
In Rs. in crores
Total Assets 152732
Intangible assets
Brand value 32345
Human Resources 102133
135478

Intangible Assets / Total Assets = 88.7%

You might also like