You are on page 1of 4

1

BBAFN-30603

Roll
BACHELOR OF BUSINESS ADMINISTRATION SIXTH SEMESTER END TERM EXAMINATION: MAY, 2012 ADVANCED CORPORATE FINANCE

No.

Time: 3Hours Note: Attempt questions from all sections as directed. Section A Attempt any 5 questions. Each question carries 6 marks.

Maximum Marks:70

(30 Marks)

Q-1: The goal of the firm should be to maximize the shareholders wealth! Comment Q-2: Market Value Added (MVA) is a measure of wealth a company has created for its investors. Comment Q-3: Zee Ltd is undergoing a hostile takeover. According to you what measures would the company had taken to make the takeover difficult for the acquirer? Q-4: What are the major principles of social Audit? How does it help in ethical investing? Q-5: Calculate:NOPAT from the following data:Sales are Rs 10, 00,000, General selling and administration expenses are 20,000.The tax rate is 20%.Cost of goods sold is Rs 7,50,000.

Q-6:What are the factors that contribute to the increased need for effective Supply Chain Management?

Section B
Attempt any 2 questions. Each question carries 10 marks

(20 Marks)

Q-7: Studies indicate that mergers of equals are more likely to fail than mergers of firms of different sizes. Respond highlighting the different types of mergers

Q-8:Corporate finance covers all decisions made by businesses that affect their finances. Elaborate. Q-9: Write in brief the following:a.) Balanced scorecard b.) Operating Synergy & Pure Diversification
c.) Turnaround Strategies

d.) Non-Expected Utility Preferences e.) Economic Value Added(EVA)

Section C (Compulsory- Case Study)


Q-10:

(20 Marks)

Bharti Airtel Ltd.: Going Global


BAL's telecom model was considered as the new model for telecom and effective for emerging markets like India, according to experts. BAL had established itself as a dominant player in India with its innovative business processes and strong brand, but was witnessing tapering growth because of increasing competition and saturation of the more lucrative urban markets. While more and more players were eyeing the fast-growing Indian mobile market which was experiencing high growth, BAL put its sight on foreign shores. The acquisition of Zain Group's telecom business in fifteen African counties in 2010 gave it a footprint in the African continent. While concerns regarding whether BAL had overpaid for the deal remained, industry observers were keenly observing to see whether the company could replicate its successful telecom model in these developing and emerging markets. Africa posed an intriguing environment with different cultures, political forces and socio-economic environment. After completing the deal, BAL was in the process of giving shape to its strategy for the African markets.
FORAY INTO AFRICA

In June 2010, leading Indian mobile telecom company Bharti Airtel Ltd. (BAL) concluded a deal with Zain Group (Zain) to buy its businesses in fifteen African countries. Zain, Africa's second largest mobile telecom service provider, had operations in seventeen African countries, apart from six Middle Eastern countries3. The deal, valued at US$10.7 billion, was considered one of the biggest acquisitions in the emerging markets. With this, BAL's subscriber base rose by 42 million to reach 185 million, which made it the world's fifth largest mobile telecom operator. BAL, which had earned a name for itself globally with its low cost model and strategic innovations, was actively looking to globalize itself since 2007.

In the years 2008 and 2009, it was in advanced stages of negotiation to complete a deal with the MTN Group (MTN), Africa's largest telecom company, but the deal fell through both times. MTN had a presence in more than twenty African countries. Many analysts felt that BAL had settled for the second best, and called the deal a forced marriage'. They said that the deal with Zain was nowhere as attractive as the one contemplated with MTN, especially at a price tag of US$10.7 billion. The reasons for this, they said, were declining profits and the low contributions of the fifteen acquired businesses to the group's revenues. Zain's African assets accounted for about 58% of its total subscriber base (71.8 million), but they made up only a fraction of its net profits. Though BAL was able to acquire a global footprint and a much larger customer base through this deal, industry experts believed it would be difficult for it to leverage on the business model and strategies which had kept it afloat and ahead of the competition in India. Africa represented diverse cultures with many of the countries having minimal infrastructural resources. Further, BAL had to function in fifteen different countries, each of which came with its own different regulatory requirements and geopolitical risks. Jaydeep Ghosh, Executive Director of KPMG , said, "Bharti has replicated the low-cost model through outsourcing in India, but depending upon different geographies (in Africa), it will not be easy." From its humble beginnings in 1976 as a bicycle part manufacturing business, the Bharti Group had transformed itself into a successful business conglomerate with businesses such as telecom, retail, financial services, and food....
EMERGING AS THE MARKET LEADER

By the end of 2001, BAL had 1 million subscribers but was at strategic inflection point. Though the market reflected huge potential with the number of subscribers almost doubling each year... The competition in the Indian telecom market was increasing by the year. In 2007, Vodafone entered India by acquiring Hutch, while players such as Reliance that operated through the CDMA technology, were allowed to offer mobile telecom services using both GSM and CDMA Technology....
GLOBALIZATION INITIATIVES

BAL felt that its extensive experience in India, coupled with its unique business model, would help it tap the opportunity provided by other developing and emerging markets and create value for its customers.
ACQUISITION OF ZAIN

On February 15, 2010, BAL decided to enter into an 'exclusive discussion' with Zain, Africa's second largest telecom company, which operated in....
CHALLENGES IN AFRICA

The African sub-continent posed numerous challenges to BAL. There were significant cultural, language, and regulatory differences among the fifteen countries...
EMBARKING ON THE AFRICAN SAFARI

Soon after the deal, Mittal delegated responsibilities to senior managers in top positions in BAL in India and also got new people on board.The entire international operations were being headed by Kohli, who was promoted as CEO (International) in January 2010.

Issues:
Understand the issues and challenges in globalization, especially the critical success factors in emerging markets. Understand the importance of business process innovation and strategic partnerships. Analyze BAL's strengths, weaknesses and its external opportunities and threats. Understand and discuss cross-country differences in Cultural, demographic and market conditions and its possible impact on business. Explore the ways a business can be successful in international markets.