CS Professional June 2026 Question Paper Strategic Management and Corporate Finance

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2026
Question Paper ·
Strategic Management
and Corporate Finance
EXAM YEAR TYPE

CS Professional 2026 Question Paper
SUBJECT DATE

Strategic Management and Corporate Finance June 2026

Notes · Sample Papers · Previous Year Papers · Mock Tests

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Roll No. ..................................... :1:

Time allowed : 3 hours Maximum marks : 100

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Total number of questions : 6 Total number of printed pages : 15

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NOTE : Answer ALL Questions.
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PART–I

1. Case Study :

(a) Neel Ltd., is a business organized as three divisions and head office. The divisions

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are based on market groupings, which are Retail, Wholesale and Government. The

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divisions do not trade with each other.

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The main method of control of the divisions has been the requirement to earn a

Return On Investment (ROI) of 18% p.a. The definition of return and capital employed

is provided by head office and the criterion ROI rate of 18%.

The recent experience of Neel Ltd., is that the group as a whole has been able

to earn the 18% but there have been wide variations between the results obtained

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by different division. This infringes another group policy that forbids cross-subsidization,

c. o i.e., each and every division must earn the criterion ROI.
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Neel Ltd. is now considering divestment strategies and this

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The head office is aware that the Boston Product Market Portfolio Matrix (BPMPM)
is widely used within the divisions in the formulation and review of marketing strategies.
As it is so widely known within the group and is generally regarded by the divisions
as being useful, the head office is considering employing this approach to assist in
the divestment decision.

You are required to :

(i) Evaluate the use of the concept of ROI by Neel Ltd. and its policy that
forbids cross-subsidization.

(ii) Describe the extent to which BPMPM could bc applied by Neel Ltd. in its
divestment decision. Evaluate the appropriateness of the use of the BPMPM
for this purpose.

(iii) Recommend and justify, two other models viz., porter’s five forces model &
the product life cycle model that could be used in making a divestment decision.
Demonstrate how Neel Ltd. could utilize these models to make this decision.

(2+4+4=10 marks)

(b) InfiniTech Systems Ltd., headquartered in Hyderabad, is a mid-sized Indian technology
company specializing in enterprise software. The management is considering a ` 100
crore investment into developing an AI-powered compliance and HR analytics platform
for large corporates and government institutions. The platform promises to automate
payroll, employee records, and compliance filings, while also offering predictive insights
into workforce productivity.

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:3:

The Board is aware that Artificial Intelligence (AI) is reshaping the business landscape

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globally. AI adoption is not just about technology—it requires alignment with business

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strategy, ethical considerations, data management and competitive positioning. InfiniTech’s

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leadership team has therefore decided to evaluate the project using the nine areas

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of AI business strategy and competitive positioning principles.

• Business Strategy Alignment : The company must ensure that its AI initiative

supports its long-term vision of becoming a leader in compliance automation.

• Strategic AI Priorities : Key priorities include automating repetitive HR tasks,

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developing smarter compliance tools and enhancing decision-making for clients.

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Short-term Adoption : Quick .wins could include automating payroll reconciliation
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and compliance reporting

• Data Strategy : AI requires large volumes of accurate employee and compliance

data. InfiniTech must decide whether to collect data internally or partner with

third-party providers.

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• Ethical & Legal Issues : Privacy concerns, bias in algorithms, and legal

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compliance with Indian data protection laws must be addressed.

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Technology Issues : The firm must evaluate whether

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• Skills & Capacity : Skilled AI engineers are scarce in India, and InfiniTech

may need to hire or partner with cxternal providers.

• Implementation : Clear accountability and phased rollout are essential.

• Change Management : Employees and clients may resist AI adoption due

to job security concerns, requiring effective communication and training.

The Board must decide whether this investment positions InfiniTech competitively in

the Indian market or exposes it to risks of rivalry, substitutes and buyer power.

Based on the above case study, answer the following questions :

(i) Why must InfiniTech align its AI initiative with overall business strategy before

investing ` 100 crore ?

(ii) Identify two strategic AI priorities that InfiniTech should focus on to strengthen

competitive positioning.

(iii) Explain the importance of a data strategy in ensuring successful AI adoption

in compliance and HR analytics.

(iv) What ethical and legal issues must InfiniTech address while deploying AI solutions

in India ?

(v) Based on competitive positioning principles, evaluate whether InfiniTech’s

AI project is attractive or unattractive for long-term profitability.

(2×5=10 marks)

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:5:

Attempt all parts of either Q. No. 2 or Q. No. 2A

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2. (a) XYZ Ltd., a listed company, has the following net profits (as per Section 198) :

c.FYo 2021-22 : ` 6 crore s e m
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FY 2022-23 : ` 9 crore

• FY 2023-24 : ` 15 crore

During FY 2024-25, the company undertook CSR activities as follows :

1. ` 25 lakh spent on construction of a school building (owned and controlled

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by the company)

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2. ` 12 lakh spent on training employees’ children

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` 18 lakh contributed to a registered NGO for rural healthcare

4. ` 10 lakh spent on an ongoing project (sanitation project) not completed during

the year

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5. ` 6 lakh transferred to PM CARES Fund

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6. ` 4 lakh administrative overheads

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Additional Information :

• The ongoing project was approved by the Board.

• The company failed to transfer unspent amount (if any) within the prescribed
time.

• Assume CSR rules are fully applicable.

Required :

(i) Compute minimum CSR obligation

(ii) Compute eligible CSR expenditure

(iii) Determine unspent CSR amount

(iv) State treatment of :

• capital asset created

• ongoing project

• surplus arising

(v) Explain penal consequences for non-compliance.

(5 marks)

(b) Mehta Appliances Ltd., a Bengaluru-based home electronics company, plans to expand
operations through an e-commerce platform.

As a strategy consultant, explain the three broad questions the company should address
under the e-commerce strategy framework.

(5 marks)

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:7:

(c) ABC Textiles Ltd., a Coimbatore-based cotton yarn manufacturer, has been facing

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market fluctuations due to rising competition and changes in export demand. The

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management is reviewing its strategic options and is considering whether to maintain

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its current operations, expand into new product lines, or exit unprofitable divisions.

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Advise the management on the four grand strategic alternatives available to the company

according to Glueck and Jauch’s framework (1984). Briefly explain each alternative

with reference to the given scenario.

(5 marks)

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(d) PQR Ltd. is benchmarking its operational and financial performance against the best-

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in-class competitor XYZ Ltd. The following data is available :

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Particulars PQR Ltd. XYZ Ltd.

Sales (` crore) 50 50

Operating Cost (` crore) 40 32

Operating Profit (` crore) 10 18

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Inventory Turnover (times) 4

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Customer Complaint Rate (%) 5%

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a Employee Utilisation (%) 60% 85%

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Additional Information :

• Industry requires minimum operating margin of 30%

• Cost of improvement programme = ` 3 crore

• Expected cost reduction potential = 15% of current cost

Required :

(i) Identify efficiency and profitability gaps

(ii) Evaluate whether PQR Ltd. meets industry standards

(iii) Compute expected benefit from improvement programme

(iv) Recommend strategic actions based on benchmarking

(1+1+1+2=5 marks)

OR (Alternative question to Q. No. 2)

2A. (i) What is Strategic Gap ? Explain the meaning, causes and significance of strategic
gap in strategic management theory.

(5 marks)

(ii) How does PESTLE framework assist the management of a company in analysing the
external micro environment of a business ?

(5 marks)

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(iii) Explain Ansoff Growth Matrix. How does it help organisations in choosing growth

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strategies ? Are there any limitations to this growth strategy ?

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(5 marks)

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(iv)
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Explain the three pillars of Blockchain Technology and discuss how they contribute
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(5 marks)

PART–II

3. (a) Lotus Chemicals Pvt. Ltd., a newly incorporated company, plans raw material

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purchases of ` 400 crores in FY 2025-26. Out of this, 80% will be routed through

s em40% will be imports. The lead time, transit time
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Letters of Credit (LC), of which

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and usance period are as g
• Domestic : Lead time – 1 month; Transit – 1 month; Usance – 1 month

• Import : Lead time – 60 days; Transit – 30 days; Usance – 90 days

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(i) Calculate the total LC limit required for the year.

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(ii) Breakdown the LC requirement into domestic and import

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considering the effective credit cycle.

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a (2+3=5 Marks)

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(b) Sunrise Textiles Ltd., a listed company, has shares that are not frequently traded.
For a preferential issue, the merchant banker has provided the following valuation
parameters :

• Book Value per share : ` 120

• Comparable trading multiples valuation : ` 150

• Other customary valuation (DCF method) : ` 135

(i) Calculate the issue price of the shares as per SEBI Regulation 165.

(ii) Explain one adjustment that may be required under Regulation 166 if the
company undertakes a stock split after the preferential issue.

(2+3=5 marks)

(c) A Real Estate Investment Trust (REIT) has the following financial details for
FY 2024-25 :

• Total value of real estate assets : ` 1,000 crore

• Rental income : ` 120 crore

• Operating expenses : ` 30 crore

• Interest on borrowings : ` 20 crore

• Depreciation : ` 10 crore

• Capital gains from sale of property : ` 40 crore

• Units outstanding : 10 crore units

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: 11 :

Additional Information :

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• REIT is required to distribute 90% of net distributable cash flows (NDCF)

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• Out of capital gains, only 50% is considered for distribution

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• Market

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Required

(i) Compute Net Distributable Cash Flow (NDCF)

(ii) Calculate minimum distribution to unit holders

(iii) Determine Distribution Per Unit (DPU)

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(iv) Compute yield to investors.

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(5 marks)

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4. (a) Ace Tech Pvt. Ltd., is a start up that requires funding of ` 5 crore for expansion.
The promoters approach the following :

• An Angel Fund willing to invest ` 1 crore at a pre-money valuation of
` 4 crore

• A Venture Capital Fund (VCF) willing to invest the remaining amount at a

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post-money valuation of ` 10 crore.

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• Face value per share = ` 10

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Required :

(i) Calculate the post-investment shareholding pattern

(ii) Determine the price per share for Angel Fund and VCF

(iii) Analyse the control implications for promoters.

(1+2+2=5 marks)

(b) Rural Health Impact Foundation (NPO) plans to raise funds through the Social Stock
Exchange (SSE).

Part A : NPO (ZCZP Instruments)

• Project cost : ` 3 crore

. Funds raised via Zero Coupon Zero Principal (ZCZP) : ` 2.4 crore

. Minimum subscription required : 75%

. Administrative overheads : ` 50 lakh

. Actual project spending : ` 1.6 crore

• Unutilised funds transferred after 8 months to a separate account

Required :

(i) Evaluate whether NPO issue is successful

(ii) Check compliance of fund utilisation & transfer rules

(iii) Identify non-compliance and consequences.

(1+2+2=5 marks)

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(c) InvITs issue units to the investors for the amount of investments made by them. However

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these units differ from traditional investments. Explain.

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(5 marks)
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ag is offering 4 crore specified securities at ` 400 per share, out of which 2.5 crore
5. (a) Arjun Patel wants to apply for shares in the public issue of Surya Limited. The company

are reserved for Qualified Institutional Buyers (QIBs) and 40 lakh for Retail Individual

Investors (RIIs).

The offer document specifies that the minimum application value is ` 12,000, and

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em answer the following :
applications must be made in multiples of this value.

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Based on SEBI ICDR Regulations,

(i)
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What is the maximum number of specified securities Arjun Patel can apply

for in the net offer category ?

(ii) What is the maximum number of specified securities that non-institutional investors

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can apply for in this issue ?

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. the application
c. o (iii)
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How many shares must an investor apply for at minimum, given

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value of ` 12,000 and issue price of ` 400 per share ?

ag (1+2+2=5 marks)

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(b) (i) Define a dissenting shareholder in the context of SEBI (ICDR) Regulations,
2018.

(ii) Explain the conditions under which promoters or controlling shareholders are
required to provide an exit opportunity to dissenting shareholders.

(2+3=5 marks)

(c) (i) Explain Fund Based and Non-Fund Based Credit Facilities.

(ii) Calculate the amount of fund-based and non-fund-based credit facilities availed
by Veena Ltd. from Bank from the following details :

Sr. No. Credit Facilities Provided by ` In

Lakhs

1. Standby Letter of Credit 2.50

2. Clean Overdraft 9.80

3. Bank Guarantee 12.50

4. Car Loan 60.95

5. Letter of Credit 22.50

6. Key Cash Credit 35.50

7. Post Shipment Packing Credit 80.40

8. Suppliers Credit 30.50

Total Credit Facilities 254.65

(2+3=5 marks)

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Attempt all parts of either Q. No. 6 or Q. No. 6A

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6. (a) SEBI vide its notification dated October 31, 2025, made certain amendments in Schedule

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XIII of ICDR Regulations, 2018 pertaining to the allocation of equity shares to the

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anchor investors. Briefly explain the changes envisaged.

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(b) SEBI Vide circular dated September 09, 2025, introduced a new framework enabling

to accredited investors within the AIF structure itself, through the launch of
separate Co-Investment Schemes (CIV schemes). Explain any 5 key highlights of this
circular.

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(c) Explain the changes made by SEBI vide its notification Dated 25th November 2025

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in the provisions pertaining to qualification and certification requirement for Investment

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Advisers.

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(5 marks each)

OR (Alternative question to Q. No. 6)

6A. Distinguish between the following :

(i) Letter of Credit (LC) and Letter of Guarantee (LG).

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(ii) Hire purchase and Hypothecation.

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(iii) Bill Discounting and Factoring.

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