Case Name :      Asahi India Glass Limited: Leverage, A Double-edged Sword

Authors :           Sanjay Dhamija, David J. Sharp

Source :              Ivey Publishing

Case ID :           9B15N018 / W15457

Discipline :        Finance

Case Length :    12 pages

Plagiarism : NO (100% Original work)

Asahi India Glass Limited faces a situation encountered by many growing companies after having funded its diversification from retained earnings and debt, both in rupees and foreign currency. An over-reliance on borrowed funds without a matching infusion of equity has plunged the company into losses. To reduce its need for financial leverage, the company has issued equity shares on a rights basis, which has helped but is insufficient to reduce its debt burden. The company’s management is seeking alternatives to further deleverage the company’s capital structure but is finding it difficult due to losses in the recent past, the adverse operating environment created by the global economic crisis and a slowdown in the major segments in which it operates.