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7. Let us go back to the advisory services that we need to provide to ReNews senior management team on the broader battery storage opportunity. If ReNew Power decides to enter the battery assembly segment organically, it will take 3 years to develop expertise, and 1 year after that to set up an assembly plant. If it decides to acquire a company that has the IP, know-how, and an existing assembly facility with the ability to expand then ReNew Power can essentially hit the ground running with that companys existing production capacity today. Because ReNews board is predominantly comprised of international investors, solve this question in USD. Questions below (answers max 200 words each): a. Make a financial comparison between the organic growth route and the acquisition route over an 11-year period using assumptions provided in the table below. Share your spreadsheet model with us in your response packet.

b. Should ReNew go ahead and make the acquisition from a financial standpoint? Provide both an NPV and IRR analysis on both the organic and acquisition pathways. c. To be sure, this question goes beyond basic financial modeling while a financial model might give us some benchmark to anchor our thinking on, this question is deeply strategic. What should ReNew Power do here? What in your opinion are the benefits of acquiring an entity with expertise and capabilities? What in your opinion are the disadvantages? Other than the assumptions provided below, feel free to be creative and create though state your own assumptions in any analysis you do or provide. d. Imagine you are presenting to ReNew Powers CEO. You are in the boardroom and the companys investment committee is sitting around the table, with the CEO at the head of table. You have been called in to present your analysis on this question. What is your final recommendation to this team? (You are encouraged to think out of the box and go above and beyond the financial analysis.)

Organic route
Number of R&D personnel	15
Average salary per person	$75,000
Additional R&D expenses over and above salaries	30% of salary budget
Annual growth in overall R&D budget	10%
Plant capex (incurred in year 4)	$5 million
Plant expansion capex (incurred every year, year 5 onwards)	$500K
Revenue (achieved year 5 onwards)	$10 million
Annual revenue growth rate	25%
Gross profit margin	15%
Discount rate	10%

Acquisition route
Value of the company today / acquisition cost (incurred today, year 1)	10x of Gross Profit today
Revenue today	$10 million
Annual revenue growth rate	25%
Gross profit margin	15%
Plant expansion capex (incurred every year, year 2 onwards)	$500K
Discount rate	10%

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