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  Copyright Nghe An Tate & Lyle Sugar Company (Vietnam) Harvard Business School Case 9-202-054Case Software 2-202-734Copyright © 2002 by the President and Fellows of Harvard College This course software was prepared by Professor Benjamin C. Esty, and Frank J. Lysy, Senior Advisor at the International Finance Corporation and Resesarch Associate Carrie Ferman soley as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.1  Nghe An Tate and Lyle Sugar Project Key Assumptions and Results(Real US$, $000)AssumptionsResults from Model Real Discount rate10.0%Inflation3.0%Nominal Discount rate13.3% Private ReturnNPVFRR Domestic Sugar Revenue$275,724 Revenue Operating Expenses($136,390)Cane Crushed (quantity) EBITDA$139,335Use company projections?TRUEDepreciation($23,907)If false, reach full capacity in (year)2003 EBIT$115,427Profit Taxes($14,924) Average Sugar Price per Ton1999-2005After 2005 EBIAT$100,503Use World Bank projections?TRUEplus: Depreciation $23,907If false, sugar price growth rate5.0%2.0%less: Capital Expenditures($85,897)less: Increases in Net Working Capital($4,326)Yield of Sugar per Ton of Cane10.3%plus: Terminal Value$23,519  Nominal Free Cash Flow $57,70721.2%  Real Free Cash Flow $57,707 17.7%Expenses Price NATL Pays Farmers for Cane 1999-2005After 2005Use company projections?TRUEIf false, cane price growth rate0.0%0.0%Capital Expenditures Percent Use company projections?TRUE Social Return (Real Terms)NPVERRof Total If false, percent change in total cost 0.0%Private returns$57,70794.1%Vietnamese labor employed$9,67815.8%Value of training to labor$4700.8% Tax Rates Cane Growers$39,58764.5%1999-2005After 2005Truck haulers$2,7464.5%Value Added Tax (VAT) Rate10.0%10.0%Profit taxes paid$22,69237.0%Import Tariff Rate on Sugar30.0%30.0%VAT paid by firm$29,01147.3%VAT paid by domestic suppliers$5,4288.8%2005-2010After 2010Reduced VAT on imports($34,439)-116.6%Profit Tax Rate25.0%25.0%Reduced import tariffs($71,527)-56.1%  Total Net Returns $61,352 18.6%100.0%Returns to Deal Participants Returns to FarmersNet return from alternative cash crops ($/ha)1Opportunity cost of labor ($/day)$1.00Returns to TruckersValue above opportunity cost (profit margin)31%(To calculate the profit margin see Trucking spreadsheet) 250489217.xls.ms_office11/8/2014,5:18 AM  Nghe An Tate and Lyle Sugar Project Key Assumptions and Results(Real US$, $000)   250489217.xls.ms_office11/8/2014,5:18 AM  Nghe An Tate and Lyle Sugar Project, Vietnam All Assumptions  All fiscal years are October to September1996199719981999200020012002200320042005 Rates US GDP deflator (% annual change)3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%3.00%US GDP deflator index (1990=100)1.0611.0301.0000.9710.9430.9150.8880.8630.8370.813Exchange rate---15,00015,00015,00015,00015,00015,00015,000LIBOR5.5%Spread on IFC LoansIFC A-loan (LIBOR +)3.250%IFC B-loan (LIBOR +)2.875%EFIC / other (LIBOR +)2.500%Real Discount Rate10.0%Nominal Discount Rate13.3%Depreciation allowance6%Terminal Value Discount Rate- Rest of Society20% Taxes 1999-2005After 2005Tariffs30.0%30.0%Value Added Tax (VAT) rate10.0%10.0%1999-20002001-2005After 2005Value Added Tax (VAT) rate on Cane Cost5.0%2.0%2.0%2005-2010After 2010Profit Tax25.0%25.0% Revenue Assumptions  Assumed yield of sugar per ton of cane10.3%Cane crushed (tons):Min 64,000Max900,000Company projections836,00000064,000400,000750,000850,000900,000900,000900,000Delay- Student Input209,00000064,000273,000482,000691,000900,000900,000900,000Price per ton Sugar:World Bank Import Price Projections, excl VAT000300314331348366385405Student Input Import Price, excl VAT000300315331347365383402Implied Tariff0%0%0%30%30%30%30%30%30%30%WB Domestic, excl VAT000390409430453476501527Student Input Domestic, excl VAT000390410430452474498523 Costs Assumptions Capital Costs Company Projections1,54814,04238,58510,3761,5853,3073,4063,5083,6133,722of which Local Works and Installation Labor371,5953,2912,11717800909396Student Input1,54814,04238,58510,3761,5853,3073,4063,5083,6133,722of which Local Works and Installation Labor371,5953,2912,11717800909396  Admin, Operating, & Selling Expenses


Jul 23, 2017


Jul 23, 2017
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