Valuation of Intangible Assets using Relief From Royalty (RFR) Method I CA Pramod Jain
Summary
TLDRThe video script discusses the concept of relief from royalty methods, explaining how a company can determine the value of using a licensed brand like 'Kaka Halwai'. It elaborates on the valuation process, suggesting a hypothetical royalty rate of 5% based on turnover data, and how to calculate the brand's value by assessing the present value of future cash flows. The script also touches on the importance of royalty as a determinant of brand value, especially when the brand is not owned but licensed for operations.
Takeaways
- 📜 The script discusses the concept of relief from royalty method and its implications for a company using a license and rights.
- 🏭 It mentions a specific company in Pune, possibly involved in the food industry, using the brand name 'Kaka Halwai', which seems to be a sweet shop or confectionery.
- 🔑 The brand 'Kaka Halwai Chitale' is associated with 'Bindhu Mithaivale' and 'Joshi Badi Wale', indicating a potential brand extension or franchise.
- 💡 The script talks about the valuation of the brand name and how it can be determined, suggesting a process of evaluation for the brand's worth.
- 🤔 It raises a hypothetical scenario where if the brand is not owned by the company and is licensed, the royalty percentage would need to be calculated.
- 💰 The script suggests a royalty fee of 5% based on turnover, which seems to be a common practice in licensing agreements.
- 📊 It explains that the royalty fee is calculated as a percentage of the sales or turnover generated by the brand, emphasizing the importance of sales figures.
- 🔍 The discussion includes finding out the amount of royalty by multiplying the sales by the royalty percentage, indicating a method to determine the financial impact of the brand.
- 📈 The script talks about the present value of future cash flows, suggesting a method to evaluate the brand's value over its expected life.
- 🏷 It concludes by emphasizing the brand value of 'Kaka Halwai', 'Chitale Bindhu Mithaivale', and 'Joshi Badi Wale', and how it is derived from the royalty payments.
- 📝 The final note is about the brand being free from royalty, meaning the company does not have to pay royalty anymore, and the brand value is equivalent to the royalty amount they were paying.
Q & A
What is the main topic discussed in the script?
-The script discusses the concept of valuing a brand using the royalty method and the hypothetical royalty rate that might be applied to determine the brand's value.
What is the context of the brand mentioned in the script?
-The brand mentioned in the script is associated with 'Kaka Halwai' and 'Chitale Bandhu', which are sweet shops in Pune, India.
What is the royalty method and how is it used in brand valuation?
-The royalty method is a technique used to determine the value of a brand by estimating the royalty payments that would be made if the brand was licensed to a third party.
What is the hypothetical scenario presented in the script for brand valuation?
-The script presents a hypothetical scenario where the brand owners would need to pay a royalty to a third party if they did not own the brand and had to license it for their operations.
What percentage of royalty is being discussed in the script?
-The script discusses a royalty rate of 5% based on certain mathematical understanding, interaction, research, and assessment.
How is the 5% royalty rate applied to the brand valuation?
-The 5% royalty rate is applied to the brand valuation by multiplying it with the sales or turnover generated by the brand to estimate the cash flow saved by owning the brand.
What is the significance of the 10:15 years mentioned in the script?
-The 10:15 years mentioned in the script likely refers to the period over which the brand is expected to generate cash flows, which is then used to calculate the present value of those cash flows.
How does the script suggest finding the amount of royalty for the brand?
-The script suggests finding the amount of royalty by determining 5% of the turnover or sales generated by the brand over the next 10 to 15 years.
What is the purpose of calculating the present value of cash flows in the script?
-The purpose of calculating the present value of cash flows is to determine the brand's value by discounting future cash flows to their present value, considering the time value of money.
How does the script relate the royalty amount to the brand's value?
-The script relates the royalty amount to the brand's value by suggesting that the brand's value is equivalent to the amount of royalty that would be saved or generated by owning the brand, rather than having to pay it to a third party.
What is the conclusion drawn about the brand valuation in the script?
-The conclusion drawn in the script is that the brand valuation is the present value of the cash flows saved by not having to pay the hypothetical royalty, which is calculated to be 5% of the turnover or sales.
Outlines
😀 Understanding the Royalty Method for Brand Valuation
The first paragraph discusses the concept of valuing a company using the royalty method. It mentions a company that uses a license and rights to determine the hypothetical royalty rate based on brand value. The company in question is 'Kaka Halvai Chitle' and 'Joshi Bhale', which are brands in Pune. The paragraph explains the process of valuing the brand by considering the hypothetical royalty percentage, which is calculated based on research and assessment. It also touches on the importance of understanding the brand's turnover and how to calculate the royalty amount from sales.
😀 Valuation of Kaka Halvai and Joshi Bhale Brands in Pune
The second paragraph continues the discussion on brand valuation, specifically focusing on the 'Kaka Halvai' and 'Joshi Bhale' brands existing in Pune. It emphasizes the need to evaluate the entry value of these brands based on their business data. The summary suggests that the brands are being assessed for their market presence and potential value, although the exact details of the valuation process or the brands' current status are not provided in the script.
Mindmap
Keywords
💡Royalty Method
💡Brand Name
💡Valuation
💡Turnover
💡Cash Flow
💡Discount Rate
💡Hypothetical Third Party
💡Royalty Rate
💡Present Value
💡Brand Value
💡Pune
Highlights
Relief from royalty method and its implications for a company.
Company using a license and the rights involved in valuation.
The concept of determining the value of a company using the royalty method.
Introduction of Kaka Halwai Chitale and Joshi, a company in Pune.
Brand name associated with Kaka Halwai Chitale and its significance.
The importance of brand valuation for Kaka Halwai and Chitale Joshi.
The process of brand valuation and its impact on business operations.
Hypothetical scenario of a third party using the brand name.
Understanding the royalty based on research and assessment.
Calculation of a 5% royalty based on business turnover.
The need for Kaka Halwai, Chitale, and Joshi to determine their brand's value.
The method to find out the 5% of the turnover generated today.
Estimating the brand's value based on the saved cash flow from sales.
Understanding the present value of all cash flows over the expected life of the brand.
The total brand value of Kaka Halwai, Chitale, and Joshi's brand.
The concept of royalty-free brand valuation and its importance.
The hypothetical amount of royalty that would be payable to another party.
The brand's value based on the hypothetical royalty amount.
The business existence of Kaka Halwai, Chitale, and Joshi in Pune.
Transcripts
रिलीफ फ्रॉम रॉयल्टी मेथड नाउ व्हाट इस इट
मैं इट मेंस
इट मेंस था ए कंपनी व्हिच इस
यूजिंग ए लाइसेंस और राइट
राइट एंड व्हाट विल बी वैल्यू
कंपनी इस यूजिंग हो डू यू डिटरमिन वैल्यू
फ्रॉम रॉयल्टी मेथड तो इसका मतलब क्या है
इसका मतलब ये है की एक कंपनी है काका
हलवाई चितले बंधु एंड जोशी
कंपनी विच आर देर इन पुणे
[संगीत]
ब्रांड नाम विद विच दे ओनली ऑन इट दे आर
यूजिंग दी ब्रांड नाम काका हलवाई चितले
मिठाई चितले बंधु मिठाईवाले एंड जोशी बड़े
वाले सो इफ यू कम anevan कम फ्रॉम कम तू
पुणे एंड ही वुड बी एमिरेट्स निंग डेट डीज
ब्रांड एक्जिस्ट इन इन पुणे तो अभी इनका
इनका वैल्यूएशन कैसे करेंगे हो तू डू
वैल्यूएशन ऑफ ब्रांड नाम काका हलवाई हो तू
डू डी इवेलुएशन ऑफ ब्रांड नाम चितले बंधु
मिठाई वाले हो तू डू दी इवेलुएशन ऑफ
ब्रांड नाम जोशी बड़े वाले तो उसका
वैल्यूएशन करने के लिए क्या करना पड़ेगा
उसका वैल्यूएशन करने के लिए काका हलवाई
विल हैव तू आस्क इट सेल्फ
और जोशी बड़े वाले
ब्रांड लेने के लिए हो मच सी वुड हैव पेड़
तू दी थर्ड पार्टी तू तू सच ए थर्ड पार्टी
हाइपोथेटिकल थर्ड पार्टी हो मच सी वुड हैव
पेड तू डेम इस रॉयल्टी तो समझो
बेस्ड ऑन दी रिसर्च एंड जजमेंट एंड
एवरीथिंग इफ यू कम तू दी कंक्लुजन की अगर
काका हलवाई के पास में या जितने बंधु
मिठाई वाले के पास में या जोशी बड़े वाले
के पास में ये जो ब्रांड है अगर ये ब्रांड
इनके पास में नहीं होते द और इनको अपने
ऑपरेशंस को चने चलाने के लिए ये ब्रांड
किसी और से
रॉयल्टी पर लेने पड़ते द तो कितना रॉयल्टी
यह लोग उसे पार्टी को देते द जिससे की ये
ब्रांड लीज पर रॉयल्टी के बेसिस पर लेते द
तो समझो था फिगर कम्स तू 5% राइट बेस्ड ऑन
दी मैथमेटिक्स अंडरस्टैंडिंग इंटरेक्शन
रिसर्च जजमेंट एवरीथिंग पुट टुगेदर डेट
फिगर कॉम तू 5% सो नौ व्हाट काका हलवाई और
चितले बंधु और जोशी बड़े वाले व्हाट दे
विल नीड तू डू दे विल नीड तू फाइंड एस तू
हो मच इसे 5% ऑफ दी टर्नओवर डेट दे आर
जेनरेटिंग टुडे एंड डेट दे विल जेनरेट अन
लेट्स इट 10:15 इयर्स फ्रॉम हैंड्स सो
डी टर्नओवर डेट देयर जेनरेटिंग टुडे एंड
डेट दे विल जेनरेट ओवर नेक्स्ट 10:15
इयर्स दे विल्ली तू फाइंड आउट एस तू व्हाट
इस 5% ऑफ डेट अमाउंट सो 5% ऑफ डेट अमाउंट
इस दी अमाउंट ऑफ रॉयल्टी था दिस पीपल आर
सेविंग बिकॉज दे ऑन दिस ऑन दिस ब्रांड विद
डेम सेल्फ सो अब क्या करना होगा अब यह जो
5% का जो अमाउंट अन कन्वर्ट किया सेल्स
सेल्स को 5% से मल्टीप्लाई किया तो जो
अमाउंट आया डेट इस दी कैश फ्लो सेव्ड ऑन
अकाउंट ऑफ ओनिंग दी ब्रांच एंड नौ व्हाट
यू डू नौ आगे यू विल डू इन केस ऑफ
डिस्काउंट इट कैश फ्लो मेथड नौ यू फाइंड
आउट डी प्रेजेंट वैल्यू ऑफ ऑल डीज कैश
फ्लॉस ओवर दी लाइफ ऑफ ओवर दी एक्सपेक्टेड
लाइफ फाइंड आउट डी प्रेजेंट वैल्यू ऑफ ऑल
ठोसे कैश फ्लोज
टोटल विल बी डी ब्रांड वैल्यू ऑफ दी ऑफ दी
ब्रांड काका हलवाई ऑफ डी ब्रांड चितले
बंधु मिठाईवाले और दी ब्रांड जोशी बड़े
वाले तो दिस इसे नॉन आगे फ्री फ्रॉम
रॉयल्टी यानी की इनका जो ब्रांड है उसकी
वैल्यू कितनी है उसकी वैल्यू उतनी है
जितने की यह रॉयल्टी को से कर का रहे हैं
देयर एबल तू से रॉयल्टी एंड वही देयर एबल
तू से रॉयल्टी देयर एबल तू से रॉयल्टी
बिकॉज दे डू नॉट हैव तू पे दी रॉयल तू
रॉयल्टी अमाउंट तू अन्य वैन एंड डेट इस
बिकॉज दे ओनली ब्रांड सो दी अमाउंट ऑफ
रॉयल्टी डियर एबल तू से डी हाइपोथेटिकल
अमाउंट ऑफ रॉयल्टी डी देयर एबल तू से
इक्वल तू दी वैल्यू ऑफ दी entriable
ब्रांड डेट इस डेट इस काका हलवाई और चितले
और जोशी बड़े वाले इन केस ऑफ़ डीज थ्री
बिज़नेस डेट एक्जिस्ट इन पुणे
Voir Plus de Vidéos Connexes
Present Value 2 | Interest and debt | Finance & Capital Markets | Khan Academy
#4 Net Present Value (NPV) - Investment Decision - Financial Management ~ B.COM / BBA / CMA
A Basic Discounted Cash Flow Model
Session 2: Intrinsic Value - Foundation
Time value of money | Interest and debt | Finance & Capital Markets | Khan Academy
Valuation Methods
5.0 / 5 (0 votes)