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CS Professional · Corporate Restructuring, Valuation and Insolvency · Overview of Business Valuation

Meera Foods Ltd has net assets of Rs 300 crore at book value. A valuer finds land carried at Rs 40 crore is worth Rs 130 crore, and inventory carried at Rs 60 crore is obsolete with a realisable value of Rs 45 crore. An unrecorded contingent liability of Rs 10 crore is probable and measurable. Ignoring tax, the adjusted net asset value is:

The adjusted net asset value is Rs 365 crore. Start with book net assets of Rs 300 crore, add the Rs 90 crore land uplift, deduct the Rs 15 crore inventory writedown and the Rs 10 crore probable liability.

  1. ARs 365 croreCorrect
  2. BRs 375 crore
  3. CRs 390 crore
  4. DRs 345 crore

Explanation

Adjusted NAV = 300 + (130-40) - (60-45) - 10 = 300 + 90 - 15 - 10 = Rs 365 crore. Rs 375 crore misses the contingent liability. Rs 390 crore ignores both inventory writedown and liability.

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