Let’s assume the date today is 5th August, 2014.
We are going through newspaper and we come to know that Mr. Neeraj Singal M.D of Bhushan Steel has been arrested as he was caught giving bribe to a bank chairman for loans. Slowly the share price starts crashing after 6th August,2014 and there are freezes. Over time as it emerged the company soon went into bankruptcy. The problem was not with the asset however, with promoters.
We knew about business failure due to debt or slight corporate governance issues, however the exact nature of fraud carried out by the management (by taking money from company into personal accounts) surprised us.
The purpose of these case studies is to practice such cases and help all of us develop patterns to take similar decisions in future and avoid mistakes of both omission/comission. Its like practice before the main match. We may have made some mistakes or you may not agree with us. However, we would love to know why you think so or what you may have done differently? So that we may all learn together.
Before Going further it would be better if you Analyse the case or do the valuation or allocation according to your own Method. That way it may help you to do better with the case further and sharpen your mind for future.
Pick Parts of the case study and use it as it may be helpful to you.
May we all learn and progress together.