H Ltd agrees to buy over the business of B Ltd. effective Ist April, 2012 The summarized Balance Sheets of H Ltd. and B Ltd. as on 31st March 2012 are as follows Rs in crores Liabilities HLtd B Ltd Paid up Share Capital: -Equity Shares of 100 each 350.00 Equity Share of 10 each 650 Reserves&Surplus 950.00 25.00 Total 1,300.00 31.50 Assets Net Fixed Asset 220.00 0.50 Net Current Assets 1,020.00 29.00 Deferred Tax Asset 60.00 200 Total 1,300.00 31.50 H Ltd. proposes to buy out B Ltd. and the following information is provided to you as part of the scheme of buying a) The weighted average post tax maintainable profits of H Ltd and B Ltd. for the last 4 years are 300 crores and 10 crores respectively b) Both the companies envisage a capitalization rate of 8% c) H Ltd. has a contingent liability of 2 300 crores as on 31st March, 2012 4) H Ltd. to issue shares of 100 each to the shareholders ofB Ltd. in terms of the exchange ratio as arrived on a Fair Value basis Please consider weights of I and 3 for the value of shares arrived on Net Asset basis and Eamings capitalization method respectively for both H Ltd and B Ltd) You are required to arrive at the value of the shares of both H Ltd and B Ltd under I Net Asset Value Method 2 Earnings Capitalisation Method. Exchange ratio of shares of H Ltd to be issued to the shareholder of B Ltd on a Fair value basis taking into consideration the assumption mentioned in point d above )

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