Royden & Co. wants to setup a plant to manufacture advanced dentistry equipment. The said equipment is imported from USA. The Indian Government is giving benefits in terms of tax holidays for such types of business.

Royden & Co. wants to setup a plant to manufacture advanced dentistry equipment. The said equipment is imported from USA. The Indian Government is giving benefits in terms of tax holidays for such types of business. It is estimated that turnover of ₹ 800 lakhs could be generated at a profit in the first year of operations. The new business setup requires a significant investment. Royden & Co. have reached out to GKJ & Co. for the first round of funding. GKJ & Co. has requested Royden & Co. for some further information before investing. Royden & Co. is requested to prepare profitability projections under different scenarios. The scenarios are given below : Base Case (₹ Lakhs) Best Case Worst Case Revenues 800 Sales higher by 37.5% Sales decline by 25% Variable Cost 60% of sales 480 56% of sales 65% of sales Fixed Cost 80 60 100 Depreciation 100 100 100 Income Tax ₹ 40 lakhs Same income tax rate as base case Same income tax rate as base case Calculate profit under different scenarios.