In case you agree with the views expressed by Mr. Basak, please clarify the conceptual limitation that the break even analysis given in Exhibit II actually suffers from. (As would be allowed by IT Authorities in the instant case) Effective Tax Rate Mode of Financing of the above capital investment Expected Returns of Equity Investors Selling Price Per Unit of this new product (Minimum) Variable Cost Per Unit (Maximum) Attributable Annual Fixed Cost-Other than Depreciation (Maximum) 35% Internal Accruals 18% Rs. 500 Rs. 400 Rs. 5 Crores Annual Average Market Demand of "Subject to Market Survey" this New Product (In Units) Exhibit II New Product Launch-Break-Even (Based on the "Worst-Case" Estimated Scenario) Level of Operation- New Product Details 4 lakh 7 lakh 9 lakh Units Units Units Rs. Rs. Rs. lakhs lakhs Lakhs Revenue (Rs 500) 2000 3500 4500 Variable Cost (Rs 400) (1600) (2800) (3600) Contribution 400 700 900 Attributable Fixed Costs (500) (500) (500) Depreciation Charges (200) (200) (200) Profil Before Tax (PBT) (300) 200 (Tax Charge)/Tax Savings 105 (70) Profit After Tax (PAT) (195) 130