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After studying and analysing this case, students would be able to evaluate and understand the importance and need of an infrastructure sector in a country, its inherent risks and scope of infrastructure investment and financing in India – National Infrastructure Pipeline and the important role of Non-Banking Finance Company’s (NBFC) vis-à-vis banks in infrastructure financing in India; critically analyse and recommend alternative decisions in a business problem situation using multi-criteria decision analysis, which is a tool used for business portfolio analysis; understand and evaluate the corporate portfolio management (CPM) tools used for an optimum portfolio mix to turn around companies; identify and suggest an optimum portfolio mix to turn around a finance company using CPM assessment applied to Pidun matrix; and recommend operational and strategic levers for successful turnaround implementation by using the integrated canvas on turnaround.

On 10 May 2020, in New Delhi, India, J. Ray took charge as a full-time director of an Indian Non-Banking Finance Company – Infrastructure Finance Company (NBFC-IFC). The NBFC-IFC of the Indian Government extended long-term financial assistance to infrastructure projects in India. During the financial year (FY) 2017–2018 till FY 2019–2020, the company suffered substantial losses to the tune of US$13.7bn, with profitability experiencing a notable decline – return on assets at a negligible 0.11% and return on equity of only 0.68%.

The NBFC-IFC had a declining yield on advances at 7.05%, net interest margins (NIMs) of 2.08% against a high cost of borrowing at 7.66%, a declining loan book (by 4.35%) of US$336.27bn and a fast-deteriorating asset quality with highest ever non-performing assets (NPAs) at 19.70% of its loan book. Such financial parameters, compared with that of the industry average of banks and finance companies, meant that the NBFC-IFC Ray had taken over was fast bleeding and was on the brink of being declared a sick company. In comparison, private and other government players had profitable and much healthier financials, and Ray felt that there was a need for improvement. To make things worse, Ray got to know that the Indian Government was in the final stages of setting up a new development finance institution focused on long-term infrastructure financing in India. Ray realized the question was not only of the NBFC-IFC remaining relevant but also of its existence in the fast-evolving sector. Ray wondered what could his his integrated canvas be for a turnaround strategy that could include effective management of an optimal portfolio mix.

With a healthy capital-to-risk (weighted) assets ratio of 30.85% and a satisfactorily improved net worth of US$103.1bn, in the given Reserve Bank of India regulatory provisions for the NBFC-IFC including restrictive exposure norms and NBFC-IFC’s operational mandate prescribed by the Indian Government, Ray had to shift the product and sectorial investment of the NBFC-IFC to reduce the NPAs, increase loan book size and improve the yield of advances and its NIM to effectively turn around the company’s profitability. Ray realized that he needed his team to evaluate and select a product and sector strategy for this change.

The present case of financing investment in infrastructure is interesting for implementation in developing economies because a lack of infrastructure is a common problem and there is a necessity of achieving a more developed infrastructure system to support accelerated economic growth in these countries. This case can be used in elective courses on corporate finance strategy and corporate portfolio management for infrastructure finance companies. This case can be taught in elective courses in post-graduate and MBA programs. This case can also be included in management development programs (MDP), executive MBA programs and executive-level courses that have subjects such as corporate finance strategy, corporate portfolio management and strategy management that focus on turnaround strategies including portfolio management for banks and finance companies.

Teaching notes are available for educators only.

CSS 11: Strategy.

Corporate governance; General management; Strategy

Post Graduate/MBA

Tata Group is a conglomerate having 29 listed companies with consolidated revenues of $103bn in FY2016. On October 24, 2016, Cyrus Mistry, chairman of the group has been replaced in an unceremonious way from this job, in a boardroom coup, without being given any opportunity to explain his case. This news arrived in the media between October 2016 and December 2016 and wide and public debates took place on the corporate governance practices of Tata Group. Mistry’s ouster was attributed to non-performance, unethical practices and non-compliance to Tata culture. This case presents the Tata Group performance before Mistry, at the ouster of Mistry, the major trouble points and the corporate governance activities that took place in this saga at Tata Group. The real losers in this battle were the investors who lost $12bn between October 2016 and December 2016. Many of Tata Group companies’ stocks plunged.

The students will learn corporate governance, know how a non-listed company control and govern listed entities, know the way performance of a chairman of a company has been evaluated and learn how ethical and cultural issues impact the performance of chairman of a listed company.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS: 11: Strategy

Strategic management.

Upper-level undergraduate courses or introductory MBA courses.

The need to diversify the financial risks of his scrap metal business based in Georgia led Levan to invest in a diamond trading company in the UAE. He agreed to be a sleeping partner and provide the capital to Kewon, a diamond specialist with a wealth of experience in the field, in their joint attempt to build an international network of diamond trade. Despite several difficulties faced on the way, their company seemed to generate stable returns for more than five years. Yet following the surprising discovery of multiple organizational inconsistencies, Levan decided to end the partnership with Kewon and establish his own retail jewelry store to be managed by the members of his family. Ultimately, he was confronted with two important decisions regarding both his jewelry business and the diamond company in which he had previously invested a significant amount of capital. The decisions he was about to make were of critical importance for the future of these companies and the people who managed them. By walking readers through a series of triggering events, this case offers the opportunity to evaluate the effectiveness of managerial actions through the application of various strategic management tools and frameworks.

Upon completion of this case study analysis, students should be able to: estimate the complexities associated with the management of a partnership-based venture in the context of emerging markets; perform a detailed diagnosis of an entrepreneurial venture, applying relevant strategic management tools and techniques; evaluate the effectiveness of managerial actions and decisions at different stages of the organizational lifecycle; and demonstrate the importance of the strategic adaptation of organizations through the deployment of viable decision-making skills.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS 11: Strategy.

The case is based on the data collected from various secondary sources only.

Godi India, a lithium-ion cell manufacturing company in India, was working to design e-cell for electric vehicles (EV) which would be compatible with Indian conditions and reduce the cost of battery to the extent possible because e-cell contributes half of the electric vehicle’s price. Godi India was set up in January 2020 by Mahesh Godi. Looking for opportunities in India after having worked in the USA for 17 years, Mahesh found that even with the rise in EV the lithium-ion cell manufacturing in India was almost zero. Using innovation as its main strategy, the start-up started its operation with a team of 30 scientists. The start-up already registered 25 patents under its name with few awaiting. Most of the EV companies relied on Chinese lithium-ion cell. Local lithium-ion cell manufacturing was believed to be the key for EV industry growth in a country. Central government production linked schemes worth INR 18,100 crore were signed by major players like Ola electric, Reliance new energy and Rajesh exports to develop locally manufactured advance cells. The push from the government for locally manufacturing the cells was a major trigger for the rise in the EV industry. The case provides the analysis of the strategies applied by the company to grow in the lithium-ion cell manufacturing industry.

This case can be used in strategic management, entrepreneurship and general management courses/modules at the Undergraduate and Postgraduate level.

The essence of discounted cash flow valuation is simple; the asset is worth the expected cash flows it will generate, discounted to the reference date for the valuation exercise (normally, the day of the calculation). A survey article was written in Parker (1968), where it was stated that the earliest interest rate tables (use to discount value to the present) dated back to 1340. Works from Boulding (1935) and Keynes (1936) derived the IRR (Internal Rate of Return) for an investment. Samuelson (1937) compared the IRR and NPV (Net Present Value) approaches, arguing that rational investors should maximize NPV and not IRR. The previously mentioned works and the publication of Joel Dean’s reference book (Dean, 1951) on capital budgeting set the basis for the widespread use of the discounted cash flow approach into all business areas, aided by developments in portfolio theory. Nowadays, probably the model with more widespread use is the FCFE/FCFF (Free Cash Flow to Equity and Free Cash Flow to Firm) model. For simplification purposes, we will focus on the FCFE model, which basically is the FCF model’s version for the potential dividends. The focus is to value the business based on its dividends (potential or real), and thus care must be taken in order not to double count cash flows (this matter was treated in this case) and to assess what use is given to that excess cash flow – if it is invested wisely, what returns will come of them, how it is accounted for, etc. (Damodaran, 2006). The bridge to the FCFF model is straightforward; the FCFF includes FCFE and added cash that is owed to debtholders. References: Parker, R.H. (1968). “Discounted Cash Flow in Historical Perspective”, Journal of Accounting Research, v6, pp58-71. Boulding, K.E. (1935). “The Theory of a Single Investment”, Quarterly Journal of Economics, v49, pp479-494. Keynes, J. M. (1936). “The General Theory of Employment”, Macmillan, London. Samuelson, P. (1937). “Some Aspects of the Pure Theory of Capital”, Quarterly Journal of Economics, v51, pp. 469–496. Dean, Joel. (1951). “Capital Budgeting”, Columbia University Press, New York. Damodaran, A. (2006). “Damodaran on Valuation”, Second Edition, John Wiley and Sons, New York.

All information is taken from public sources and with consented company interviews.

Opportunities for value creation may be found in awkward and difficult circumstances. Good strategic thinking and ability to act swiftly are usually crucial to be able to take advantage of such tough environments. Amidst a country-wide economic crisis and general disbelief, José de Mello Group (JMG) saw one of its main assets’ (Brisa Highways) market value tumble down to unforeseen figures and was forced to act on it. Brisa’s main partners were eager in overpowering JMG’s control of the company, and outside pressure from Deutsche Bank was rising, due to the use of Brisa’s shares as collateral. JMG would have to revise its strategy and see if Brisa was worth fighting for; the market implicit assessment about the company’s prospects was very penalizing, but JMG’s predictions on Brisa’s future performance indicated that this could be an investment opportunity. Would it be wise to bet against the market?

This study is excellent for finance and strategy courses, at both undergraduate and graduate levels. Company valuation and corporate strategy are required.

The Hotel Perennial case puts students in the shoes of Dan Jameson, founder and CEO of a boutique real estate private equity firm called EL Investments (ELI), as he wrestles with the decision of whether or not to acquire the distressed Hotel Perennial, a 194-room hotel on the north side of Chicago, Illinois. When making the investment decision, Jameson (and students) must consider various factors: What is ELI's implicit investment strategy, and what are the firm's core competencies? What are Jameson's goals for growing ELI, and how might the acquisition of the Hotel Perennial fit with those goals? What opportunities and challenges might ELI face if it decides to acquire the hotel? How much would a buyer likely have to pay for the Hotel Perennial to achieve an attractive return? In addition to containing a hotel valuation and modeling exercise, the Hotel Perennial case also exposes students to several real estate industry concepts and terminologies, including those regarding the hotel sector, equity sourcing, and distressed investing. The case material assumes that students have taken an introductory real estate finance course or have relevant work experience.

-Show students how an investment decision can go beyond simply “crunching numbers” and projecting an internal rate of return to include considering an individual's or firm's strategic objectives and core competencies. Students should think through how to

Via this case, students are introduced to several alternative methods of valuation, including the valuation based on the “real options” theory. The novelty of the case is the link between valuation and the type of innovation that the company represents. The suggested valuation frameworks, which include both quantitative and qualitative assessments, are applicable not only in the context of an IPO valuation but also in the context of any kind of M&A activity.

This case was prepared mostly via secondary research. All the information about Uber and the industry was collected via publicly available sources. No internal documents of the company were used in the preparation of this case. The primary research consisted of an interview with the protagonist Catherine (whose name is disguised). Other disguised elements in the case include the name of the Value Investor conference organizer (Spyros Spyrou, not his real name), the country of the Value Investor conference (omitted) and the conference venue (Princess hotel, not any actual venue).

In 2019, Uber, the famous ride-sharing company, made waves in financial markets as the most controversial IPO valuation. With a wide range of proposed values, Uber puzzled investors, once again living up to its fame of a rebel and a disruptor. When Uber finally went public in May 2019, its IPO valuation stood at $82.4bn. The heated discussion in the media continued even after the IPO: “Is Uber worth this amount? Is there an upside potential for the investors who bought shares at the IPO price? What if this is a hype and markets are simply embracing higher valuations?”

This case can be used at the undergraduate, graduate (MBA) or executive level in finance-related courses such as Company Valuation or Valuing Innovation, which cover the topic of valuation and specifically the topic of valuing innovative companies.

In October 2008, in the midst of a financial crisis, Anthony Keating, investment manager at the Boston private bank Billingsley, Blaylock, and Montgomery, was searching for an investment strategy to recommend to his high-net-worth clients. Traditional investments in the equity markets were being decimated, and Keating’s clients would be looking to him for ideas. Inspired by the success of Paulson and Co., Keating began to explore the possibility of entering a trade that would profit as homeowners defaulted on their mortgages. The more Keating learned about the trade, the more he realized that he needed to know about mortgage-backed securities and credit default swaps. The case provides instructors with a chance to introduce these financial instruments, while at the same time providing lessons applicable to students interested in value investing or real estate finance.

After reading and analyzing the case, students will be able to:

• Explain how home mortgages are securitized into financial instruments that are traded in public markets

• Describe how credit default swaps can be used to speculate on the value of an underlying financial instrument

• Identify potential mispricing across related financial instruments

• Understand the potential risks and rewards of various financial investment strategies that look to capitalize on defaults on subprime mortgages

Explain how home mortgages are securitized into financial instruments that are traded in public markets

Describe how credit default swaps can be used to speculate on the value of an underlying financial instrument

Identify potential mispricing across related financial instruments

Understand the potential risks and rewards of various financial investment strategies that look to capitalize on defaults on subprime mortgages

In the light of the case study and the accompanying case study questions, the incumbent would be able to gain a comprehensive understanding on the theoretical underpinnings of retail store expansion, identify the challenges for expanding a brand into emerging markets such as India and apply various marketing strategies aimed at in-depth analysis retail expansion. Learners can further comprehend the importance of brand communication incorporated by the brand to attract its customer subset.

It was in December 2022, when Mason Chatterjee, the Indian brand head of Armani Exchange (A|X), was confronted with the managerial dilemma whether launching the second store in the city of Ahmedabad would be a right decision. Another issue that was troubling him was how to go about launching a second store in a city which was not a home to other luxury sublabels. The case study illustrates the decisional aspect of retail expansion adopted by Chatterjee, considering the distinct managerial perspectives. Chatterjee found potential in the city of Ahmedabad, owing to an increased number of high-net-worth individuals and other macro factors. The case study is primarily an outcome of research carried out at A|X store at Ahmedabad One mall, Ahmedabad, for over a fortnight in the month of February 2023. The expansion decision of Chatterjee proved to be a success in the city of Ahmedabad reaching a sales figure of INR 1 crore (US$130,344.11) in the very first month of its launch. However, he was confronted with the managerial dilemma of further expansion, just six months after the launch of the latest expansion.

The case study is intended for advanced undergraduates or postgraduate programs in management or electives such as marketing, retail management and strategic management. It has not only been specifically designed for teaching the concept of retail expansion but can also be used to integrate contexts on brand’s merchandise mix, retail positioning, visual merchandising and brand communication. The case study has an overview of each of these elements. The instructor may choose them into the context for a wider encompassing detailed lesson or particularly on the main aspect of the case.

Teaching notes are available for educators only.

CSS8: Marketing

The pandemic induced lockdown lead to supply and manufacturing disruptions that were swiftly dealt with by the Indian Pharma Industry through successful industry-government collaboration. By May 2020 production was back to normal and exports were higher than the same period in May 2019. The case deals with the processes that enabled this to happen, the policy responses and the changes that happened in the period from March 2020 to August 2020.