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Brand Valuation

The document discusses projections made by a marketing consultancy firm for the tyre industry in India over the next 10 years. It provides estimates for market size, growth rates, and market shares of different segments. If the discount rate is 15%, the solution calculates the discounted cash flows to determine the brand value of Sanju Ltd. under a market-oriented approach.

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Preet Bhuta
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56 views3 pages

Brand Valuation

The document discusses projections made by a marketing consultancy firm for the tyre industry in India over the next 10 years. It provides estimates for market size, growth rates, and market shares of different segments. If the discount rate is 15%, the solution calculates the discounted cash flows to determine the brand value of Sanju Ltd. under a market-oriented approach.

Uploaded by

Preet Bhuta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Sanju Ltd has hired a Marketing Consultancy Firm for doing market research and provide data relating

to Tyre indu
projections made by the consultancy firm:
(1) The Tyre Industry in the target area i.e. Whole of India, is expected to grow at 5% p.a. for the next 3 years and t

(2) The market size in terms of unencumbered basic sales of tyres was estimated at Rs. 8,000 Lakhs in the last year
brands and locally manufactured tyres. Market share of this segment is expected to increase by 0.5%.

(3) Cheap Chinese imports accounts for 40% of the business (but 60% of the volume). This is expected to increase b

(4) The other large players account for roughly 35% of the business value, which is expected to go down by 0.5% ov

(5) The Company is in the process of business re-engineering, which will start yielding results in 2 years' time, and i

If the appropriate discount rate is 15% what is the Brand Value


of Sanju Ltd., under Market Oriented Approach?

SOLUTION
MARKET SHARE OF SANJU LTD = 100 - 9% LOCAL BRANDS - 40% CHINESE IMPORT - 35% OTHER BRAND

INC & DEC IN MARKET SHARE


[+] LOCAL BRANDS 0.5%
[+] CHINESE IMPORT 0.25%
[-] OTHER BRANDS 0.5%

MARKET SHARE MARKET


YEAR MARKET SIIZE OF SANJU SHARE IN RS
1 8000 + 5% = 8,400 15.75% 1,323
earch and provide data relating to Tyre industry for the next 10 years. The following were the observations and

to grow at 5% p.a. for the next 3 years and thereafter at 7% p.a. over the subsequent seven years.

estimated at Rs. 8,000 Lakhs in the last year, dominated by medium and large players. This includes roughly 9.0% of fake
expected to increase by 0.5%.

f the volume). This is expected to increase by 0.25% over the next decade.

ue, which is expected to go down by 0.5% over the next ten years, due to expansion of Sanju Ltd.'s product portfolio.

l start yielding results in 2 years' time, and increase its profitability by 3% from its existing 12%.

SOLUTION
DS - 40% CHINESE IMPORT - 35% OTHER BRANDS, THERFORE MARKET SHARE OF SANJU LTD IS 16%

DISCOUNTED DISCOUNTED
EXP PROFIT FACTOR CASH FLOW
1,323 X 12% = 158.76 0.870
0.756
0.658
0.572
the observations and

n years.

s includes roughly 9.0% of fake

nju Ltd.'s product portfolio.

12%.

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