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CS Professional · Corporate Restructuring, Valuation and Insolvency · Valuation of Business and Assets for Corporate Restructuring

Sagar Engineering Ltd is being valued on a going-concern basis using adjusted net asset value. Book net worth is Rs 80 crore. Land carried at Rs 10 crore has a market value of Rs 25 crore; stock carried at Rs 12 crore is realisable at Rs 9 crore; and an unrecorded contingent liability of Rs 4 crore is virtually certain to crystallise. Ignoring tax, what is the adjusted net asset value?

Adjusted NAV is Rs 88 crore. Starting from Rs 80 crore net worth, add land appreciation of Rs 15 crore, deduct the Rs 3 crore stock write-down and deduct the Rs 4 crore probable liability, giving a net upward adjustment of Rs 8 crore.

  1. ARs 88 croreCorrect
  2. BRs 92 crore
  3. CRs 96 crore
  4. DRs 84 crore

Explanation

Adjustments: land +15, stock -3, liability -4 = +8. Adjusted NAV = 80 + 8 = Rs 88 crore. Rs 92 crore ignores the liability; Rs 84 crore applies only stock and liability and omits... actually mishandles land surplus by adding only part.

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