Product Overview

The case examines the financial and operational causes of business failure associated with Setco Automotive Ltd. an auto-clutch manufacturing company located in India and then proceeds to identify the key turn around factors which eventually led to Setco becoming the largest producer of clutches for medium and heavy vehicles in India. The case allows the participants to understand and evaluate the financial impact of turn around factors on the company’s profitability and survivability and in also determining the optimal capital structure for a struggling company.

Learning Objectives

The case provides an opportunity for the participants to identify the causes of the operational and financial troubles facing an auto component firm and come up with alternative financial rehabilitation strategies to capitalise on the prospective business environment. The case offers the participants ample opportunities to: (a) prepare the pro-forma financial statements of the firm based on a given set of operating forecasts, (b) determine the optimal capital structure for a firm in the automotive component industry through a detailed financial and business analysis, (c) determine the optimal financial package for the rehabilitation of the firm, and (d) identify and value options to negotiate with stakeholders for the rehabilitation package.