Submitted by

Syeda Sara Tazeen Jaffer

Dated
August 7 , 2011
th

INDUS STEEL COMPANY LIMITED CASE STUDY

Assumptions for Restructuring of the Capital Structure of Indus Steel is as follows:

The company can sell the Land it has for 500 and utilize the amount to pay off its current
liabilities
Further it will have to take debt of 750 as project financing at KIBOR + 0.5
Raise Equity of 500 from sponsors
The company will have to maintain a debt equity ratio of 60:40
The repayment plan of the project financing would span 15 years with two years relief

1988

1989

1990

1991

1992

1993

1994

1995

1996

Current Assets

580

785

876

935

630

850

642

616

Fixed Assets

120

160

205

230

430

380

365

Total Assets

700

945

1081

1165

1060

1230

Current Liabilities

525

690

800

960

870

50

120

110

105

575

810

910

Paid-up Capital

40

50

R/Es

85

85

Term Loans
Total Liabilities (L)

1997

1998

1999

682

823

500

378

400

600

600

1007

994

1082

1423

1100

1100

1025

1050

1210

1635

62

90

80

70

50

20

1065

960

1180

1095

1100

1230

85

85

85

100

100

100

86

15

-235

-300

-438

-456

750
0

1635

812

100

100

600

-498

-562

-562

Rev. reserve

250

250

250

250

250

250

250

Total Equity

125

135

171

100

100

50

-88

-106

-148

-212

288

Total L+E

700

945

1081

1165

1060

1230

1007

994

1082

1423

1100

Submitted by
DANISH
Dated
August 7th, 2011

INDUS STEEL CASE STUDY

Assumptions for the forecasting of Balance Sheet

The company would have to take debt from Asset based and Project financing at different
rates, total amounting to 1100
Debt to equity ratio would be maintained at 70:30
Equity to be raised from sponsors 400
Some portion of current liabilities would be paid off from selling off land at the value
mentioned in the case of 500
The current liabilities would be paid off leaving some portion as Working Capital

1988

1989

1990

1991

1992

1993

1994

1995

1996

Current Assets

580

785

876

935

630

850

642

616

682

Fixed Assets

120

160

205

230

430

380

365

378

400

Total Assets

700

945

1081

1165

1060

1230

1007

994

1082

Current Liabilities

525

690

800

960

870

1100

1025

1050

1210

Term Loans
Total Liabilities
(L)

50

120

110

105

90

80

70

50

20

575

810

910

1065

960

1180

1095

1100

1230

Paid-up Capital

40

50

85

85

85

100

100

100

R/Es

85

85

86

15

-235

-300

-438

-456

1997

1998

1999
688

600

600

600

1288

1635
1100
0

1635

1100

100

100

500

-498

-562

-562

Rev. reserve

250

250

250

250

250

250

250

Total Equity

125

135

171

100

100

50

-88

-106

-148

-212

188

Total L+E

700

945

1081

1165

1060

1230

1007

994

1082

1423

1288