The Wind Urja Ltd. (WUL) is a closely held unlisted company with financial details as under: Assets Market Value on 31.03.2015 (₹ in lakh) Land and building 6,500 Plant and machinery 2,000 Furniture and fixtures 20 Trade

CS Professional · Corporate Restructuring, Valuation and Insolvency · PYQS · December 2015
The Wind Urja Ltd. (WUL) is a closely held unlisted company with financial details as under: Assets Market Value on 31.03.2015 (₹ in lakh) Land and building 6,500 Plant and machinery 2,000 Furniture and fixtures 20 Trade receivables 1,000 Cash and cash equivalents 30 Spares 10 Outside Liabilities Trade payables 20 Long-term loans 2,000 Outstanding expenses 5 Worldwide Wind Energy Ltd. (WWEL) is ready to take over WUL by paying 35% premium over the market value of assets and liabilities as goodwill. Calculate the price which WWEL is ready to pay to shareholders of WUL.

Answer & Explanation:

In the case of Wind Urja Limited (WUL), market value of assets and liabilities is given. On the basis of data given, we know : Net Market Value of the WUL = Market value of (land and building + plant and machinery + furniture and fixtures +trade receivables +cash and cash equivalents + spares) - (Trade payable + long term loans + outstanding expenses) = ₹(6500+2000+20+1000+30+10) - (20+2000+05) = ₹(9560-2025) lacs = ₹75,35,00,000 Plus 35% premium over value = 35% of ₹75,35,00,000 = ₹26,37,25,000/- Price to be paid by WWEL = Value plus 35% premium = ₹(75,35,00,000 + 26,37,25,000) Price Payable = ₹101,72,25,000/-

Topics: Valuation

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