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On March 18, 2019, Yuvraj Mehta, head Corporate Brand Management & Communications (CBMC) at Larsen & Toubro (L&T), heard about negative media narratives against L&T, following a high-profile merger and acquisition (M&A) between the company and Mindtree. Some of the allegations against L&T were “hostile takeover” and “destruction of Mindtree's culture.” Mehta was faced with the issue of influencing all stakeholders; turning the tide and changing the narrative from hostile takeover to continuity, growth and profitability; and integrating Mindtree and its employees and culture into L&T. Compared to L&T's previous acquisitions, which were small, and other strategic initiatives, which were mostly organic, Mindtree acquisition was the largest (in value terms) in its history. It was also the most complex as Mindtree promoters aggressively resisted the acquisition, and L&T had to acquire a large number of shares through an open offer. Media speculations began in January 2019 when L&T, the engineering and construction giant, planned to acquire a majority stake in the young IT firm, Mindtree. Soon the reporting changed to aggressive media ranting. Time was at a premium. Mehta knew he would need to begin strategising almost immediately. How should he proceed? What should be his first move?

The context of the case presents an account of how corporate social responsibility (CSR) initiated by Lawrence & Mayo (L&M), a company dealing in optical frames for 140 years, helped to build brand equity, image and identity, creating a strategic advantage against competition. The case had a deep-rooted theoretical association with a theory such as the triple bottom line theory (three Ps: profit, people and planet) on CSR. The case helps to understand and clarify the role of CSR in brand equity. It also gives an insight into the value and culture of L&M, and its impact on various stakeholders, namely, employees and customers.

This case is related to the CSR orientation of L&M and its impact on brand equity. As a brand, L&M is over 140 years old and has a dynamic and trending optics market in India. There is a dilemma in the company around the impact of CSR on brand equity, customer engagement and company goodwill. This case focuses on maintaining and improving brand equity, identity and image through CSR initiatives.

Undergraduate and postgraduate students, essential for students focusing on Marketing and CSR disciplines.

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CSS 8: Marketing.

The learning outcomes of this study are as follows:1. Learn to analyze a hostile takeover bid from the perspectives of the acquirer, target firm’s management and a large institutional investor in the target firm.2. Review the structuring, financing, valuation, mode of consideration, legal and regulatory aspects of a hostile takeover.3. Understand the role of the target firm’s board in a hostile takeover transaction.4. Address “to sell or not to sell” dilemma of a large institutional investor in the target firm in the event of a tender offer given financial and non-financial considerations.

On June 14, 2019, Pulak Prasad, Founder and Chief Executive Officer (CEO) at Nalanda Capital, in consultation with other managing partners at Nalanda Capital, had to decide whether to tender a 10.6% equity holding in Mindtree Ltd. in an unsolicited open offer made by Larsen and Toubro (L&T) Ltd. Until then, Nalanda Capital, led by Prasad, had aligned with the Mindtree founders and had led a campaign to thwart L&T’s bid to acquire Mindtree; L&T’s offer to acquire 31% of Mindtree shares was because of open on June 17, 2019 and it is time for Prasad and the management team to take a reasoned call – whether to stay in Mindtree or to exit? Associated aspects included – What could be the consequences of not selling the stake? What could be L&T’s game plan? Could Mindtree continue to create wealth for its shareholders under L&T?

This case is appropriate for Mergers & Acquisitions and Strategic Financial Management courses in modules focused on structuring, financing and takeover defence techniques in a hostile takeover transaction. The case is appropriate for graduate MBA and EMBA programmes.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

The case explores information technology (IT) company Mindtree’s journey of 20 years from the time it was founded in 1999 to be different from others, and how it became a target for acquisition by an Indian diversified conglomerate in 2019. It offers insights into developing organizational culture and values in an organization, threats faced by a company when promoters dilute their shareholding, and the strategies followed by the acquirer and the target firm. It also deals with the challenges in the acquisition of a knowledge service digital firm. After working through the case and assignment questions, students will be able to: identify the circumstances under which a company can become a target for hostile takeover; describe motivations of the acquirer firm in an acquisition; distinguish between acquisition and hostile takeover, and discuss salient features of Securities and Exchange Board of India (substantial acquisition of shares and takeover) regulations, 2011; list the defenses a target firm can adopt to ward off hostile acquirer; explore strategies followed by acquirer and target firms; analyze important ingredients of organization culture, and importance of cultural congruence in an acquisition; and discuss challenges faced by an acquirer in India, namely, legal, retention of clients and key people in the target firm particularly in hostile environment.

The case explores how ten IT professionals founded mid-tier IT services company Mindtree in 1999 in Bengaluru, India (home to Infosys and Wipro) to be different from others – by inserting themselves at a higher level in the value chain, being philanthropic as a part of broader business strategy to attract a certain kind of employee and customer. It developed a culture of equality, consideration and respect. Its attrition rate of 12 to 13 per cent was significantly lower than the Industries. Mindtree crossed annual revenue of US$1bn for FY 2019 and was growing at twice the industry’s growth rate. The most attractive part was that its proportion of revenue from digital services was about 50 per cent as compared to 25-35 per cent of other services vendors. With time, the share of promoters/founders declined and increased one investor’s shareholding of V. G. Siddhartha and his related entities. In early March 2019, the promoters’ stake was 13.32 per cent while Siddhartha had 20.32 per cent. Larsen and Toubro (L&T) one of India’s conglomerate entered into a share purchase agreement on March 18, 2019 with Siddhartha to acquire his 20.32 per cent stake. Immediately, L&T asked its broker to purchase up to 15 per cent of share capital of Mindtree at a price not exceeding INR 980 per share (each share of face value INR 10). This would trigger an open offer by L&T to purchase additional 31 per cent shares of Mindtree. The action of hostile takeover bid by L&T evoked emotional criticism from Mindtree founders. Mindtree efforts to defend itself could not materialize. L&T’s stake crossed 26 per cent on May 16, 2019. After Indian regulator SEBI’s approval, L&T’s open offer to buy shares from Mindtree shareholders commenced on June 17, 2019. The case examines motivation of the acquirer firm particularly when it is a conglomerate, and how a well-performing company became a target for hostile takeover. It looks at vulnerabilities of a target firm, and defensive steps a firm can take to fence itself against such takeover. The case also explores how organizational culture is built in a people-oriented business, namely, digital services, and what role it plays in a merger of two firms.

The case is suited for postgraduate students of management, as well as those undergoing executive courses in management.

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CSS 11: Strategy.

This case is based on using the fraud triangle, theoretical aspects like rationalization and motivation for understanding the financial pressures and corporate greed lead to accounting fraud. Building on the corporate governance’s weakness, the case explores the challenges and the changes that the company has to make to survive.

The case study has been entirely based on published resources. The case explores out the reasons why the companies commit accounting fraud using the motivations, financial pressures and the opportunities exploited due to a weak governance system.

The case deals with a RMB 2.2bn accounting fraud at Luckin Coffee Inc. (L.K.), a US-listed Chinese company, which led to a steep fall in its share price by more than 80% in April 2020. The company’s CEO had to resign in light of the accounting fraud, which involved fabricating the transactions in 2019, the same year it got listed on the NASDAQ stock exchange. The case is a classic example of greed, corporate ambition and flaws in the corporate governance that led to the fraud while framing a course of action for the company moving forward. The case allows the learners to dive deep into the facts to find out why the fraud happened and its repercussions for the company and its various stakeholders. The case can be useful in Accounting, Corporate governance or Ethics modules for both undergraduate and postgraduate students.

The case can be used for both postgraduate and undergraduate financial accounting or corporate governance modules or the executive development programmes explicitly dealing with ethical challenges and accounting fraud.

This study enables to critically assess: what constitutes the consequences of a financial crisis to a multi-national enterprise operating in the emerging market of Russia; the decision-making processes behind crisis management and the corresponding search for informational grounds to be used as decision justification; and the role of sustainable development in times of crisis.

During the 2014–2015 financial crisis in Russia, L’Oréal Russia managed to increase growth by 7%–15%, strengthening its place as the market leader in the country. First, the case illustrates the way Antonio, the General Manager of L’Oréal Russia, had successfully approached this situation by learning from the shortcomings of the company’s strategy during the 2007–2008 crisis and deciding to take a proactive position concerning stakeholders. Then, upon recalling his success story, Antonio suddenly found himself at the dawn of yet another crisis caused simultaneously by the COVID-19 outbreak and oil prices drop. In the face of uncertainty regarding the applicability of prior crisis management strategy for the new economic and social reality of Russia, Antonio was worried about whether the company would be able to achieve the 2020 sustainable development goals of L’Oréal by the end of the year. The case dilemma involves choices Antonio faced during mid-March 2020 about strategy formulation based on an adjustment to the expected consumer behavior patterns and possible need to rethink sustainable development goals priority.

This case is appropriate for an undergraduate or graduate-level program curriculum for courses dedicated to or including topics related to crisis management, doing business in emerging markets, corporate social responsibility and consumer behavior. Before engaging with the case, the students should be aware of basic management- and economics-related concepts and terms, such as strategy, sustainable development, CSR and economic crisis.

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CSS 11: Strategy.

Accounting and Finance.

Postgraduate/graduate.

This paper aims to analyse the fixed assets management of Larsen & Toubro Ltd (L&T), a leading Indian construction company for sufficiency and efficiency, and explore its future growth prospects in relation to its capital investments. It also investigates whether the global crisis in 2008 had any impact on the development plans of the company for future orientation as the global recession affected companies in various sectors worldwide. It specifically aims to find out whether L&T was in a better position to face the situation in the industry.

Expected learning outcomes are as follows: to learn and apply the concept of fixed assets management in a business organization; to evaluate the impact of fixed assets management on the profitability of the company; to appreciate the importance of fixed assets management efficiency in a business organization; and to illustrate the use of financial crisis on the growth prospects of a business.

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CSS 1: Accounting and finance.

This short case could be handed out at the end of class discussion on “J&L Railroad” [UVA-F-1053] in preparation for the following class, or if students are more experienced with hedging and option pricing, the instructor may choose to cover both cases in a single class period. It is the companion case to “J&L Railroad” [UVA-F-1053], and presents more technical issues regarding the hedging problem by requiring students to understand option-pricing principles. The board likes the CFO's hedging recommendations, but it wants a more careful analysis of the bank's prices for its risk-management products: the caps and floors. Besides demanding an understanding of option pricing, this case puts particular emphasis on the calculation and use of implied volatility.

The learning outcomes of this study are to understand the theory of constraints and related concepts, to evaluate constraints impeding organizational growth and to develop a solution addressing the constraints in the best possible way.

Bottlenecks or constraints impede an organization from reaching its full potential, thus having implications for the internal and external functionalities of the organization. Internally, many resources remain idle or deteriorate, as constraints always hamper the overall capacity. Externally, the organization might lose the customer for not fulfilling their demands. The organization may be unable to procure the raw material at economical prices from the suppliers, as large-quantity orders may not be placed. This case was designed to make students understand the theory of constraints (TOC) and related concepts. The TOC framework was a management philosophy developed by Dr Eliyahu Goldratt and popularly mentioned in his book The Goal. This case study considered a dairy plant as its central focus. The protagonist was challenged by the existing constraints in his dairy plant, and his dilemmas were introduced. The dairy processes were discussed, followed by details of supplies made to the dairy plant regularly. The capacity constraints at different levels were mentioned. The case also discussed the quick fixes adopted by the dairy to overcome the constraints. Finally, this case ended with a dilemma presented before the protagonist and a dire need for a solution thereafter.

This case was appropriate for introducing TOC to undergraduate and postgraduate courses in operations management, logistics and supply chain management and general management.

Teaching notes are available for educators only.

CSS 9: Operations and Logistics.

This case describes the coal-procurement process of a small electric utility. The manager of the production fuel department must decide how much coal to purchase from each vendor and how to allocate the purchased coal among the utility's three coal-burning plants. The situation can be modeled and solved as a linear program. Sensitivity analysis can be used to help formulate a strategy for negotiating with the vendors and to address other special issues.