The subject of the case study challenge was on whether Cairn India should merge with Vedanta Ltd, and how good such a merger would be for the shareholders of each entity. The contest received a number of good responses, of which the one from Shruti Choudhary and Shalini Bharadwaj, of IIM Indore was chosen as the best.
Why it stood out
The analysis stood out due to strong linkages to concepts and finance theory. The analysis of synergies for both companies was backed by financial analysis. It covered most of the aspects and there was clarity in the decision.
Criteria for evaluation
— Linkage to concepts
— Logic
— Depth of Analysis
— Breadth of issues considered
— Clarity in decision
This case analysis started by putting the case in context and taking into consideration the market developments. The case analysis was built well on a model that analysed the possibility of success of the merger according to a time-frame.
Another important aspect of this case analysis was that the analysis of synergy was also backed by quantitative financial analysis which not only took into account the present financials but also the past financial information especially focusing on the cash-flows and trend in the cash equivalents, which are important from this merger point of view. Attempts made to calculate shareholder value-added by taking into account different scenarios is appreciated.
The case analysis followed a step-wise, systematic and logical analysis, covering the major issues and resulting in a clear-cut decision making.