Numerical Sheet 3

MIX and MATCH

What is Enterprise Value?

Enterprise value Enterprise value means the value calculated as market capitalization of a company
plus debt, minority interest and preferred shares, minus total cash and cash equivalents.

Enterprise Value= Market capitalization+ Debt+ Minority Interest and Preferred Shares- Total Cash
and Cash Equivalents

Ques 1: From the following information, calculate the Enterprise Value of E Ltd

Balance Sheet of E Ltd. as on 31st March, 2018

Liabilities Amount (Rs. Lakh) Assets Amount (Rs. Lakh)
Share Capital (Face 952 Non-Current Assets 2,550
Value Rs.2)
Current Assets: Cash & 102
Reserves & Surplus 48 Cash Equivalent

Minority Interest 115 Other Current Assets 1,323

Short-term Borrowings 2,860

3,975 3,975

Current Market Price Per Share is Rs.96.

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 2: What is Enterprise Value ? Compute the Enterprise value from the following information of XYZ
Ltd., if the current market price per share is 93 :

Liabilities (in lakh) Assets (in lakh)

Share capital (Face 840 Non-current assets 2,490
value 2 Rs)
Reserve and surplus 56 Current assets 900
Minority Interest 110 Cash and cash 96
equivalent
Short term debt 2,280
Long term debt 200
3,486 3,486
(2+3 marks) (Dec 23)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 3: TechNoGrow Ltd. approved buy back proposal of 200000 Equity share capital in its Board meeting
on 25th April, 2019. The record date was fixed on 25th June, 2019. The closing market price on NSE as on
25th April, 2019 and 25th June, 2019 was `2640.40 and `2514.05 respectively.

Determine the number of equity shares which is eligible to be tendered by Small Shareholder Category
(rounded off to lower whole number) (5 marks) (Dec 2019)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 4: NLR Ltd. approved buy-back proposal of 2,00,000 Equity Share in its Board meeting on 25th April
2019. The record date was fixed on 25th June, 2019. The closing market price on NSE as on 25th April,
2019 and 25th June, 2019 was ` 2640.40 and ` 2514.05 respectively. Determine the number of equity
shares which is eligible to be tendered by Small Shareholders’ Category (rounded off to lower whole
number). Calculate the maximum equity share capital and number of equity shares that can be bought
back. (4 marks) (June 23)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 5: The Board of Directors of a listed company desires to delist its equity shares from all recognized
stock exchanges. The Voting details through postal ballot are as under:

 Total Number of Voters : 7000 (Public – 5000 and Promoter – 2000)

 Voting at shareholders meeting:
a. Public shareholders :
In Favour : 3300 votes
In against : 1700 votes
b. All promoters shareholder have voted in favour of resolution.
By Referring SEBI delisting regulation, decide upon the resolution passed by the shareholders. (June 2019)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 6: ABC Ltd. a company whose equity shares are listed at BSE and NSC is seeking delisting of its equity
shares from both the recognized stock exchanges. It provides an exit opportunity to all public shareholder
in accordance with SEBI (Delisting of Equity Shares) Regulations, 2009. Calculate the minimum number of
equity shares to be acquired for the delisting offer to be successful. Also determine the final offer price
from the details given hereunder:

No. of shares Percentage holding

Promoter 75,00,000 75
Public 25,00,000 25
1,00,00,000 100
i. The floor price in terms of SEBI (Substantial Acquisition of shares and Takeovers) Regulations, 2011
is Rs. 550 per share.
ii. Assume that all the public shareholders holding shares in the demat mode had participated in the
book building process as follows:

Bid price No. of investor Demand

550 5 2,50,000
565 8 4,00,000
575 10 2,00,000
585 4 4,00,000
595 6 1,20,000
600 5 1,30,000
605 3 2,10,000
610 3 1,40,000
615 3 1,50,000
620 1 5,00,000
48 25,00,000
(5 marks) (Dec 17)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

 Ques 7: XYZ Ltd. is proposing to make a public issue of 400 crore equity shares through the book building
mechanism where 50% of the issue size is required to be allotted to Qualified Institutional Buyers.
Determine the following :

(i) The quantum available for allocation to anchor investors.

(ii) The quantum reserved for domestic mutual funds in the anchor investor portion, if any.
(iii) The amount, if any, required to be brought in by the anchor investors given :
(a) The price at which allocation is made to anchor investors is 855 per share, and
(b) The price fixed as a result of book building is 858 per share.

Ques 8: Govind Ltd. Proposes to issue 20 lakh share warrants to its promoters. The share warrant gives an option
to buy shares at a predetermined price. The price trend of the Company’s share in the stock market is given below:
 Closing price in the relevant date: Rs. 250
 The average weekly high and low of the closing price during the 26 weeks preceding to the relevant date:
Rs. 275
 The average weekly high and low of the closing price during the 2 weeks preceding to the relevant date:
Rs. 280
You are required to:
a) Identify the minimum price at which share warrants should be issued
b) Calculate the amount payable by the promoters at the time of allotment of warrants. (4 marks) (Dec 2020)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 9: RP Ltd. Is planning to issue an IPO in 2019 for which a draft offer document is proposed to be filed in
September, 2019. The following data is available regarding the company:

Rs in Crores
2015-16 2016-17 2017-18
Net tangible assets 5.00 8.00 7.00
Monetary assets 1.00 3.00 3.00
Net worth 5.00
3.00 4.00

i) Advise the company whether they can proceed with the IPO
ii) Will you answer be different if vale of monetary assets is Rs 4 crore in 2016-17?
iii) How will you deal with the situation, if company has monetary assets of Rs. 5 crore in the year 2017-18?
(5 marks) (Dec 2020)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 10: Following information has been collected regarding Share X trading at NSE on 2nd Sept., 2016

DATE TIME PRICE No. of shares traded

2nd September, 2016 14:42:10 265.60 550

2nd September, 2016 14:53:35 262.78 1575

2nd September, 2016 15:00:20 260.99 1514

2nd September, 2016 15:03:30 261.79 1625

2nd September, 2016 15:05:40 260.38 1025

2nd September, 2016 15:12:20 261.51 1390

2nd September, 2016 15:21:25 261.42 800

2nd September, 2016 15:22:20 264.07 600

2nd September, 2016 15:26:55 263.74 1200

You are required to determine the closing price and last traded price for Share–X for 2nd September,
2016. (3 marks) (Dec 16)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

 EXTRAs

1. [J] 2016 Prime Ltd. issued some warrants which allowed the holders to purchase, with one
warrant, one equity share at 18.275 per share. The equity share was quoted at 25 per share and
the warrant was selling at 9.50. In this case, you are required to compute — (i) The minimum price
of warrant; and (ii) The warrant premium. (4 marks)

2. [J] 2016 Manish owns 250 preference shares of Amaze Ltd. which currently sells for 77 per share
and pays annual dividend of 13 per share—(i) What is Manish's expected return? (ii) If Manish
requires 13% return, should he sell or buy more preference shares at the current price? (4 marks)

3. [D] 2014 On 25th January, 2013, XY Bank purchased a 91-day treasury bill maturing on 16th
March, 2013. The rate quoted by the seller is 99.25 per 100 face value. Compute the yield
percentage of the treasury bill. (3 marks)

4. [D] 2016, As on 1st April, 2016, Russel Ltd. has surplus cash for six months. It has following two
options under consideration for investing the surplus cash : (i) To invest in fixed deposit at an
interest rate of 8% per annum payable quarterly; or (ii) To buy treasury bills of the face value of
100 at 98.019 maturing after six months. Presuming that the risk involved in both the options is
identical, state with reasons as to which option should be selected by the company for investing
its surplus funds. (4 marks)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

 THEORY BASED

Ques 1: The financial data of a listed company as on 31 March, 2018 are as follows

Authorised Equity Share Capital (Rs. 1 crore Rs. 10 Crore

shares of Rs. 10 each)
Paid-up equity share capital Rs. 5 Crore
General Reserve Rs. 3 Crore
Debenture Redemption Reserve Rs. 2 Crore

The Board of Directors of your Company passed resolution by circulation for buy back of Shares to the
extent of 9% of the company’s paid up share capital and free reserves. You are required to examine the
validity of the proposal with reference to the provisions of the SEBI Regulations. (June 2019)

Ques 2: The following information is available from the audited balance sheet of SZ Ltd.

(in lakh)
Equity Share capital (3,000 lakh share of ` 10 each) 30,000
Share Premium A/c 3,000
General Reserve 10,000
Secured Loans 40,000
Unsecured Loans 22,000

Compute the maximum limit up to which buy-back is permitted in the financial year 2022-2023. (7 marks)
(Dec 23)

Ques 3: The financial data of a listed company Sun Rise Ltd. as on 31st March, 2021 is as follows:

Equity Share Capital (fully paid-up of face value of 10 each) 5,00,000

10% Preference Share Capital (fully paid-up of 100 each) 1,00,000
12% Debentures (100 each) 2,00,000
Revaluation Reserve 50,000
General Reserve 2,00,000
Profit & Loss Account 2,00,000

The company wanted to place proposal before the Board for buy-back of its equity shares and also
simultaneously redeem the entire preference share capital. You, as a Company Secretary, advise the Board
on the following issues :
(i) Maximum limit (in amount) up to which shareholders can approve buy-back of shares.
(ii) Maximum number of shares that can be bought back and the maximum price that can be
paid per equity share bought back.
(iii) Generally, what should be the ratio of the aggregate of secured and unsecured debts
owed to the company after buy-back? (7 marks)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 4: The following is an extract of Balance Sheet of Alpha Ltd. : Equity Shares Capital — 50,000 Equity
Share of 10 each 10% Debenture Capital — 20,000 Debenture of ` 10 each. On 21st April, 2018, the Board
of directors decided to buy-back 5,000 equity shares for which they would call Extra-ordinary General
Meeting. In the year 2016, the company has defaulted in payment of interest on secured loan to Bank
amounted to ` 25 crore, which was remedied in the year 2017. Comment on the above situation.
(Dec 2020)

Ques 5: Tata Aviation Ltd., having nation-wide terminals, is in the process of delisting its equity shares
from recognized stock exchange. As per the provision of the delisting regulation, the company is providing
exit opportunity to its public shareholder; so the company has got approval from shareholders of the
company on 18th March, 2023.

Following details are made available to you by the company :

No. of equity shares outstanding are 43,48,33,000
Shares hold by promoters 14,87,67,800
Shares hold by public shareholders 28,60,65,200
Floor price 90 per shares
Indicative price 97 per share

You are required to calculate the amount to be deposited at the time of opening Escrow account and
mention the date of opening of Escrow account as per the provisions of the SEBI (Delisting of Equity
Shares) Regulations, 2021. (5 marks) (Dec 23)

Ques 6: XYZ Limited is having three subsidiaries X Ltd., Y Ltd., and Z Ltd. The consolidated income of XYZ
Limited is 300 crore and net worth is 600 crore. The income and net worth of X Ltd., Y Ltd., and Z Ltd. are
as follows:

Company Income (in crore) Net worth (in crore)

X Ltd. 10 65
Y Ltd. 45 14
Z Ltd. 10 18
Examine if there is any material subsidiary of XYZ Limited. (June 23) (4 marks)

Ques 7: Yaksha Motors Ltd. is a listed company. It had a turnover of ` 450 crore on standalone basis as per
the latest audited financial statements. It also has only one subsidiary/ associate company – Yaksha Auto
Components Ltd. whose standalone turnover as per the latest audited financial statements was ` 70 crore.

Yaksha Motors Ltd. entered into transactions with related parties during the current financial year as
follows :

(i) Purchase of goods amounting to ` 60 crore

(ii) Payment of royalty amounting to ` 30 crore
(iii) Payment of ` 15 crore towards supply of services

Decide, whether the above related party transactions are material or not? (5 marks) (June 2024)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY

Ques 8: Girdhar (Retail Individual Investor) had applied for Initial Public Offer of Six Sigma Ltd. through
Applications Supported By Block Amount (ASBA) process. The Self Certified Syndicate Banks (SCSBs) failed
to make bids in the Stock Exchange system even after the amount has been blocked. The issue was
oversubscribed. Based on the SEBI guidelines/circulars, answer the following :

What are the factors that have been taken into account by SEBI for finalization of uniform policy for
calculation of the minimum fair compensation?

Calculate the minimum fair compensation payable to Girdhar based on the following information: Listing
Price : 350, Issue Price : 300, Minimum Bid lot-20 shares, probability of allotment of shares on the basis of
allotment (ratio 7 : 8). (4 marks) (Dec 2018)

Shubhamm Sukhlecha (CA, CS, LLM) INSPIRE ACADEMY