Restructuringis thefinancialterm for the act of reorganizing the legal, ownership, operational, or other structures of acompanyto make it more profitable, better organized for its present needs. Other reasons for restructuring is to change ownership or ownership structure,demerger, or a response to a crisis or major change in the business such as bankruptcy,repositioning. Restructuring may also be described as debt restructuringand financial restructuring.Corporate debt restructuring is the reorganization of companies liabilities. It is generally a process used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over longer duration with smaller payments. This allows companys ability to meet debt obligations. Also, some creditors may agree to exchange debt for some portion of equity. It is based on the principle that restructuring facilities available to companies in a timely and transparent matter goes a long way in ensuring their viability which is sometimes threatened by internal and external factors. This process tries to solve the difficulties faced by the corporate sector and enables them to become viable again.

Future RetailFuture Group is the foremost retailer and a consolidator in Indian retail market. Future Retail, the Groups Hypermarket & Home Retail arm has announced two steps to transform its operations.a) Consolidating Bharti Groups Retail operations in an all-stock dealb) Segregating the Retail business from its Infrastructure.

Transaction has a sound industry logic and has the potential to drive significant value creation1. Create a pure play Retail organization that accrues value for all stakeholders2. Scale benefits and optimization of the cost structure3. Strong geographic and format fit4. Creation of an Infra Company with strong annuity cash flow, part from having access to upside from key Investments being held5. Access to new avenues of capital

Reason for mergerEnhances Financial Performance and Growth Prospects

1. Increased sales due to wider presence and opportunity to sell high margin products 2. Improved EBITDA due to cost optimization, corporate overhead realignment and stronger procurement & distribution capabilities3. Lower cost of borrowing due to improvement in credit profile, ability to structure debt and raise lower cost funds 4. Large amount of tax benefits due to carry forward losses from Bharti Retail

All Stock Deal with BhartiRetail with and Upside Sharing

a) BRL / FRL shareholders to receive shares in the ratio of 1:1b) As a result BRL shareholders to have ~9% stake in each of the Retail and Infrastructure Companyc) BRL to share the upside on sale of holding in each of the company with the respective companies

Cash flow and shares price are calculated before and after merge in the attached excel sheet

Hotel industry in IndiaTourism is a significant industry in India. As per the World Travel & Tourism Council, the tourism industry in India is likely to generate US $121.4 bn economic activity by 2015, and the hospitality sector has the potential to earn US $24 bn in foreign exchange by 2015. The booming tourism industry has had a cascading effect on the hospitality sector with an increase in the occupancy ratios and average room rates. In FY14, the occupancy ratio was around 57%, up 1% from last year. As per Cushman & Wakefield (C&W) reports, hospitality sector of India is expecting to witness better infrastructure growth. Approximately 4,304 new hotel rooms are expected to open in 2015, of which 36% for Mid-scale, 13% in the upscale segment, 17% is expected for Budget segment, 13% in Upper Upscale, and 20% in the Luxury segment.

Hotel LeelaHotel Leela venture, the luxury hotel chain, is to sell its Chennai and Goa properties, to reduce its debt pile of nearly Rs 5,000 crore. The debt has repeatedly eroded its margins. During the recently ended quarter, the company posted a 25 per cent increase in net loss at Rs 125 crore as against Rs 100 net loss in the same period last year. The loss widened due to lower other income and higher finance costs, which stood at 133 crore. Chennai property has not done well. The annual report says occupancy was 33 per cent last year, with an ARR of Rs 7,317, a drop of 18 per cent when compared to Rs 8,924 in FY13.

Hotel Leela Financial Figures before and after restructure(in crores)

201320142015(E)2016(E)

Total Revenue663768650760

Total Expense541573450420

PDIT122194200340

Interest Payment401500250200

Tax & Others140806050

Net Profit-433-444-110150

Total Shares(lacs)41864516500525

EPS-9.33-10.43-2.22.82

Max India InsuranceCompany splitted into 3 listed entities Max Financial Services Ltd. with the insurance business, Max India Ltd. with the health and allied businesses, and Max Ventures and Industries Ltd. with the specialty packaging films business. The original entity Max India, which will be renamed as Max Financial Services Ltd., will focus solely on the groups flagship insurance activity, through its 72.1% holding in Max Life. It will be the first Indian listed company exclusively focused on life insurance.The second entity, named as Max India will continue to manage investments health and allied businesses comprising Max Healthcare, Max Bupa and a Corporate Management Services team. The Corporate Management Services team will manage a shared services centre which will provide functional support to all the 3 entities.The third entity will be named Max Ventures and Industries Ltd. and will house the investment activity in the groups manufacturing subsidiary Max Speciality Films handling the speciality packaging films business.

Max Life Insurance:

New business premium grew 12.5% YoY to INR8.8bn; however, individual APE grew closer to 10% YoY (growth seems a tad lower partially as the company restricted the business from a few third party distributors given the apprehension on multi-level marketing of products by regulator. However, going forward, the impact will be limited given that now this channel contributes only 4-5% of the business. Conservation ratio continues to be healthy at ~81% (albeit lower than 83% in Q4FY15), which fed into 12%YoY growth in Gross Written Premium (GWP).

Max Healthcare

Performance of existing hospitals was on track reported EBIDTA of INR440mn (up 20% YoY). However, what was surprising was slower than expected performance of new hospitals (EBIDTA negative after turning EBIDTA positive in H1FY15). This management highlighted was due to cost associated with development of new oncology center in NCR.

Max BUPA

First year premium growth was muted (declined 4% YoY) as the company continued to defocus on institutional business. However, retail business was on track (B2B business is in run-off mode as the company has consciously chosen to grow only in B2C segment)- B2C market share increased to 9.3% (FY15) versus 7.5% (FY14) of private players.

Max India Future Financials

Year2014201520162017

Net sales73337626892210439

Growth Rate4%4%17%17%

Other Income2752583020002000

Expense2783209725082933

Net profit1852480817171741

DCF_BeforemergeFuture Retail(Before Merge)ActualYear2013201420152016(P)2017(P)2018(P)2019(P)Revenue8,60011,57710,34111,78913,43915,32117,466Growth (%)34.62%-10.68%14.00%14.00%14.00%14.00%EBITDA840103912431209140016691838Revenue(%)10%9%12%10.25%10.42%10.90%10.52%Depreciation600407540618626772870% of Revenue6.98%3.52%5.22%5.24%4.66%5.04%4.98%EBIT240632703591774897968NOPAT273274.0615491138168% of Revenue3.17%0.02%0.72%1.30%0.68%0.90%0.96%Working Capital400352450473511621691% of Revenue4.65%3.04%4.35%4.01%3.80%4.06%3.96%Cap investments4004505006007509381172Growth(%)12.50%25.00%25.00%25.00%25.00%25.00%Free cash flow873311564.06644478594557Terminal value6125.4459589935NPVTerminal growth rate4%Discount rate13.45%FCFF5488Outstanding shares(Crore)47.87Target Price114.6302557276AssumptionsGrowth rate is as per Micknsey reportCost of Capital is as per E&Y report

DCF_AftermergeFuture Retail(Before Merge)ActualYear2013201420152016(P)2017(P)2018(P)2019(P)Revenue12,40013,60015,00016,65018,48220,51422,771Growth (%)9.68%10.29%11.00%11.00%11.00%11.00%EBITDA1240103912431439151417181913Revenue(%)10%8%8%8.64%8.19%8.37%8.40%Depreciation60070080085096010691178% of Revenue4.84%5.15%5.33%5.11%5.20%5.21%5.17%EBIT640339443589553648736NOPAT273274.0642476964% of Revenue2.20%0.01%0.49%0.25%0.25%0.33%0.28%Working Capital300350400425480535589% of Revenue2.42%2.57%2.67%2.55%2.60%2.61%2.59%Cap investments4004501000600626656691% of Revenue3.23%3.31%6.67%4.40%4.79%5.29%4.83%Free cash flow773602274.0671886110161139Terminal value12536.6402543072NPVTerminal growth rate4%Discount rate13.45%FCFF10443Outstanding shares(Crore)55.87Target Price186.8983484352AssumptionsGrowth rate is as per Micknsey reportCost of Capital is as per E&Y report