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

Sundaram Textiles Ltd has total assets with a fair value of Rs 90 crore and external liabilities of Rs 35 crore. It has 5 crore equity shares and no preference capital. Using the net asset (adjusted book value) method at fair values, what is the value per equity share?

The value per share is Rs 11. Under the net asset method, equity value equals fair value of assets less external liabilities, which is Rs 55 crore, and dividing by 5 crore shares gives Rs 11 per share.

  1. ARs 11Correct
  2. BRs 18
  3. CRs 7
  4. DRs 25

Explanation

Net asset value = fair value of assets minus external liabilities = 90 - 35 = Rs 55 crore. Dividing by 5 crore shares gives Rs 11 per share. Rs 18 wrongly ignores liabilities (90/5), while Rs 7 deducts liabilities twice (90-35-35=20... not matching) and is not a valid approach.

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