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Published by: IBS Center for Management Research
Published in: 2011

Abstract

The case brings to the fore that some Indian companies have accumulated huge cash balances on their books in 2011. These huge cash balances could be accumulated for some strategic requirements in the future. The total cash balances accumulated by 100 companies in BSE-500 accounted for 93% of market capitalization of BSE-500 shares. The companies which held huge cash balances included bigwigs like Tata Motors with Rs 109,479.3 million, Infosys with Rs 150,900 million, and Reliance Industries with Rs 301,390.3 million. The cash was invested in short-term instruments, but the companies had a strong reason for keeping such a cash pile. This case is designed to enable students to: Understand the cash position of the companies, whether the cash position can be considered surplus or optimal; Determine the different motives for which those companies accumulated a huge cash balance; Determine whether there could be any adverse possibilities to the management if accumulated cash is more than market capital of the company; Compute the minimum and maximum level of cash in hand to be maintained by the companies; Discuss what could happen if the company could not use the cash for the set purpose. This case is meant for MBA/MS students as part of a strategic financial management and financial / treasury management curriculum.
Location:
Industry:
Size:
Large
Other setting(s):
2007-2011

About

Abstract

The case brings to the fore that some Indian companies have accumulated huge cash balances on their books in 2011. These huge cash balances could be accumulated for some strategic requirements in the future. The total cash balances accumulated by 100 companies in BSE-500 accounted for 93% of market capitalization of BSE-500 shares. The companies which held huge cash balances included bigwigs like Tata Motors with Rs 109,479.3 million, Infosys with Rs 150,900 million, and Reliance Industries with Rs 301,390.3 million. The cash was invested in short-term instruments, but the companies had a strong reason for keeping such a cash pile. This case is designed to enable students to: Understand the cash position of the companies, whether the cash position can be considered surplus or optimal; Determine the different motives for which those companies accumulated a huge cash balance; Determine whether there could be any adverse possibilities to the management if accumulated cash is more than market capital of the company; Compute the minimum and maximum level of cash in hand to be maintained by the companies; Discuss what could happen if the company could not use the cash for the set purpose. This case is meant for MBA/MS students as part of a strategic financial management and financial / treasury management curriculum.

Settings

Location:
Industry:
Size:
Large
Other setting(s):
2007-2011

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