1. **Problem Statement:** Investor X subscribed at INR 124 per share when the company valuation was INR 4000 cr pre-money. A new investor comes in at INR 2500 cr valuation with a funding of INR 180 cr, triggering anti-dilution protection for Investor X. 2. **Given Data:** - Original valuation (pre-money): INR 4000 cr - New valuation: INR 2500 cr - Investor X subscription: INR 159 cr at INR 124/share - New investor funding: INR 180 cr - New investor price per share: INR 74.47 - Total shares before new issue (Q1): 335,694,862 3. **Anti-dilution protection rules:** - Full ratchet applies for valuation drop from INR 3400 cr down to INR 2500 cr. - Broad Based Weighted Average (BBWA) applies for valuation drop from INR 4000 cr down to INR 3400 cr. 4. **Step 1: Calculate shares issued to new investor (R):** $$R = \frac{\text{New funding}}{\text{New price per share}} = \frac{180,00,00,000}{74.47} \approx 24,176,367 \text{ shares}$$ 5. **Step 2: Calculate shares issuable at old price (P1) for new funding (Q2):** $$Q2 = \frac{\text{New funding}}{\text{Old price per share}} = \frac{180,00,00,000}{124} \approx 14,516,129 \text{ shares}$$ 6. **Step 3: Apply BBWA formula for new conversion price (NCP):** $$NCP = P1 \times \frac{Q1 + Q2}{Q1 + R}$$ Substitute values: $$NCP = 124 \times \frac{335,694,862 + 14,516,129}{335,694,862 + 24,176,367}$$ 7. **Step 4: Simplify numerator and denominator:** $$NCP = 124 \times \frac{350,210,991}{359,871,229}$$ 8. **Step 5: Calculate fraction:** $$\frac{350,210,991}{359,871,229} \approx 0.9733$$ 9. **Step 6: Calculate new conversion price:** $$NCP = 124 \times 0.9733 \approx 120.7$$ 10. **Step 7: Apply full ratchet for valuation drop from 3400 cr to 2500 cr:** Full ratchet means the conversion price is adjusted to the new lower price per share of INR 74.47. 11. **Step 8: Final conversion price for Investor X:** Since full ratchet applies for valuation drop below 3400 cr, Investor X's conversion price is adjusted to INR 74.47 per share. 12. **Step 9: Calculate conversion ratio:** Conversion ratio = Original price / New conversion price $$= \frac{124}{74.47} \approx 1.665$$ **Answer:** Investor X's new conversion price is INR 74.47 per share with a conversion ratio of approximately 1.665. This means Investor X can convert their shares at INR 74.47 instead of INR 124, effectively increasing their shareholding to protect against dilution.