In March 2021, Nayan Parikh & Consultants (NPC) has to decide how to recover the loan that it had extended to Shrenikbhai Vimawala, Chairman and Managing Director, Shrenik Limited against a pledge of Shrenik shares. When NPC granted the loan to Vimawala a year earlier, it was to be paid back within 3 months. But, immediately after disbursing the loan, the Covid-19 pandemic caused a severe disruption of economic activities in India and Shrenik also faced financial difficulties. In view of this, NPC provided multiple extensions of time to Vimawala. But in March 2021, the pandemic had abated in India, the economy was on the recovery path, and NPC was concerned about recovering its dues. Shrenik's stock price had fallen sharply and its financial situation had deteriorated considerably.
NTL is an Indian company that earns much of its revenues from exports. Its hedging activities had become increasingly sophisticated under a treasury that was incentivized to generate profits. As a rising rupee reduced NTL's competitiveness in global markets, it has come to rely more and more on treasury income to remain profitable. NTL's treasury under Thomas has responded to this challenge by embracing highly complex leveraged structured products. As the Global Financial Crisis (GFC) hit in 2007 and 2008, exchange rates and interest rates started moving in ways that Thomas had never anticipated, inflicting serious losses on NTL. Seth, the founder Chairman of NTL is upset after a bank wrote to him demanding payment of the loss incurred by NTL on a derivative product that NTL had bought from the bank. Seth has no knowledge of the rest of the hedge book and is unaware of the seriousness of the problem. One of his banker friends has suggested that he should hire a more professional CFO to replace the current CFO, Rao. From Seth's point of view, the case presents interesting issues of risk governance and risk management policies. Rao is immersed in firefighting, figuring out the gravity of the problem and managing the liquidity needs of NTL. Thomas is the only person who understands the derivative book in its entirety, but is obviously not keen to let his superiors know how big the problem really is.
The case is about a decision problem facing a young analyst on identifying the relative mispricing in bonds issued by RCom in Indian Rupees (INR) and US Dollars (USD) and its stock price. As RCom's debt troubles had increased over time, with lawsuits filed by some of its largest lenders, its stock price and credit rating had been falling consistently. On the other hand, the yields on its INR bonds had hardly moved in the meantime. After giving a brief background on RCom's difficulties in establishing itself as one of the largest telecommunications operators in India, the case describes the behaviour of yields on RCom's INR and USD bonds over time. It provides additional relevant financial information about RCom, including its stock price, credit rating and balance sheet variables.
In November 2017, Arthur and Kathleen Breitman, the founders of Tezos, confronted a governance crisis that threatened to destroy their project and expose them to serious legal risks. All developmental activities in Tezos were stalled after Breitmans lost access to the funds raised through an initial coin offering (ICO) four months earlier. Moreover, a series of class-action lawsuits in the United States alleged that the USD 230 million ICO of July was an illegal security offering. The case provides a fascinating situation for discussions on the principles and the frameworks for governance.
The case is about a decision problem facing James on whether or not to invest in a structured product called the "CMS Steepener" issued by a large US investment bank. The payoff from the product is linked to two constant maturity swap (CMS) rates, and the investor profits if the difference between the two CMS rates increases, or alternatively if the CMS curve steepens. The case describes the risks that investing in such a product poses, and presents relevant data on the CMS rates, term structure and recent financial history of the issuer to help resolve James's decision problem.
The case focuses on the key choices and decision issues that entrepreneurs face in the fast evolving mode of startup funding, known as 'crowdfunding'. It is centred around three products which vary significantly on many dimensions such as the level of innovativeness, risk, social good generated by the product, and the target group. The products presented facilitate rich discussion on the key crowdfunding decisions such as relative merits of angel funding and crowdfunding, choice of the crowdfunding platform, nature of campaign, target amount and reward structure. The case highlights financing issues of startups and compare the two products in their attractiveness for reward crowdfunding.