CS Professional December 2025 Question Paper Strategic Management and Corporate Finance

FOR CS PROFESSIONAL EXAM PREPARATION

CS Professional 2025
Question Paper ·
Strategic
Management and
Corporate Finance
EXAM YEAR TYPE

CS Professional 2025 Question Paper
SUBJECT DATE

Strategic Management and Corporate Finance December 2025

Notes · Sample Papers · Previous Year Papers · Mock Tests

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

Time allowed : 3 hours
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Maximum marks : 100
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Total number ofm
e questions : 6 l a s
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Total number of printed pages : 12

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NOTEa: Answer ALL Questions.

PART–I
1. Case Study :
(a) Ace Motors Ltd., a leading automobile manufacturer, faced growing competition from

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global players in the early 2000s. With rising customer expectations for quality and

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efficiency, the management decided to implement Total Quality Management (TQM)

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as a strategic approach to improve processes, reduce waste and increase customer
satisfaction.
TQM Implementation a
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Steps
(1) Top Management Commitment :
CEO initiated TQM as a company-wide movement.
Clear communication of quality goals across departments.
(2) Customer Focus :

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Feedback systems were improved.

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Regular customer satisfaction surveys were conducted.

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(3) Employee Involvement :

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Quality Circles were established across all production lines.
Employees received Six Sigma and Kaizen training.
(4) Continuous Improvement (Kaizen) :
Introduction of lean practices.
Waste reduction initiatives saved 150 crores in the first two years.
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(5) Use of Quality Tools :
Statistical Process Control (SPC), Pareto Analysis and Fishbone Diagrams used
regularly.
ISO 9001 and ISO/TS 16949 certifications obtained.
(6) Supplier Quality Management :
Long-term partnerships with key vendors.
Supplier audits and joint training sessions conducted.
Outcomes After 3 Years :
• Defect rate reduced by 65%
• Production lead time decreased by 20%
• Customer satisfaction score increased from 78% to 91%
• Cost savings of 320 crores over 3 years
Based on the above case study, answer the following questions :
(i) In context with the Ace Motors Ltd., what is Total Quality Management (TQM) ?
Explain any four key principles followed by the company.
(ii) Mention any four major areas of focus for continuous improvement through
Total Quality Management (TQM) used by Ace Motors Ltd. ?
(iii) What tools did Ace Motors use under its TQM program and also mention
two benefits and two challenges Ace Motors faced during TQM implementation.
(5+2+3=10 marks)
(b) Kumarakom Organics Pvt. Ltd., established in 2010 in Cochin, Kerala, started as
a small organic farming and retail venture. Initially, the company focused on cultivating
vegetables and fruits without chemical fertilizers and sold them in local markets. Over
time, the firm aspired to expand into packaged organic products, such as juices, spices,
and ready-to-cook meals.

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Despite having good products, the company faced many challenges. Its growth and

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sustainability were significantly influenced by environmental factors beyond its direct
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control. The government introduced subsidies for organic farming, which helped
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regulations

ag due to favourable trade policies in the EU for organic produce. As a result, political
and mandatory FSSAI labelling increased compliance costs. Export opportunities opened

support boosted domestic sales, but regulatory requirements slowed down scaling.
During 2016-2019, India’s growing middle class with higher disposable income increased
demand for organic products. Inflation in raw material packaging (like eco-friendly
cartons) raised costs. The COVID-19 pandemic (2020) disrupted supply chains, but

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simultaneously, health-consciousness surged, creating higher demand. In a cyclical growth

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environment, economic downturns hurt logistics, but rising income and demand trends

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fuelled expansion.

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Consumers became more health-conscious, preferring chemical-free and natural products.
Urban lifestyles increased demand for ready-to-cook organic meals. However, price
sensitivity in rural areas limited penetration outside cities. The social trends acted as
a catalyst for company’s urban growth strategy.
Adoption of e-commerce platforms allowed Kumarakom Organics to reach customers
nationwide. Mobile payment systems and UPI enabled smooth transactions. Use of

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blockchain for supply chain traceability enhanced customer trust in authenticity. Hence

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technology has accelerated Kumarakom’s market reach and credibility.
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. supply stability.
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ebuyers. The company
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Erratic monsoons and climate change reduced crop yields, affecting

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Sustainable farming practices attracted environmentally conscious
invested in solar-powered cold storage to reduce a carbon
environmental risks increased operational challenges, but sustainability initiatives
strengthened brand image.

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By 2024, Kumarakom Organics grew from a small farm venture into a 150 crore
company, with 40% revenue from exports, 35% from online sales and the rest from
retail outlets in metros. Despite facing regulatory, climatic and economic challenges,
the business adapted by leveraging technology, changing consumer preferences and
global trade opportunities.

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

(i) Define environmental factors in the context of business growth. Give two examples
from the Kumarakom Organics’ case study.

(ii) How did political and legal factors influence the company’s business growth ?

(iii) Mention two economic opportunities and two economic challenges faced by
the company.

(iv) Explain how technological advancements helped the company in expanding its
market.

(v) State one positive and one negative impact of climate change on Kumarakom
Organics’ business.

(2×5=10 marks)

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

2. (a) BPT Ltd. is a listed company liable for CSR (Corporate Social Responsibility Policy)
under Section 135 of the Companies Act, 2013. The management has asked the
Company Secretary about the certain activities which excludes from the ambit of statutory
obligation of CSR.

As a Company Secretary, advise the management about such activities.

(5 marks)

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(b) In the context of Ansoff’s Product Market Growth Matrix, identify reason for the

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cA leading producer of toothpaste, advises its customers to brush their teethse
type of growth strategies followed in the following cases :
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s em twice a day to keep their breath fresh.
(i)
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a (ii) A business giant in the hotel industry decides to enter into the dairy business.

(iii) One of India’s premier utility vehicle manufacturing company ventures to foray
into foreign markets.

(iv) A renowned auto manufacturing company lauches ungeared scooters in the market.

(5 marks)

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(c) ‘‘A well-conducted execution of Business Process Reengineering (BPR) can prove to

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be a game-changer for an organization. BPR can revive a failing entity and lead it

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to the path of profit maximization.

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it involves enforcing a change in the entire organization’’. What are the steps to be
followed in this regard ?

(5 marks)

(d) What is Strategic Leadership ? What are the benefits of Strategic Planning ?

(2+3=5 marks)

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OR (Alternative question to Q. No. 2)

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(i) ‘‘Transformational leadership style may be appropriate in turbulent environments,

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transactional leadership style may be appropriate in settled environments, while charismatic
leaders work their charm to persuade others’’.

Comment on each of the above strategic leadership.

(5 marks)

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(ii) ‘‘A mission statement is an enduring statement of purpose that distinguishes one business
from other similar firms’’. What is a mission statement and what are the questions
to be considered while preparing a mission statement ?

(2+3=5 marks)

(iii) In terms of market position, firms may be classified as Market Leader, Market Challenger,
Market Follower and Market Nicher. Briefly explain these terms.

(5 marks)

(iv) Compare PERT and CPM-based on its :

• Meaning

• Orientation

• Model

• Focus

• Suitability.

(5 marks)

PART–II

3. (a) Norton Ltd. manufactures steel rods and is now considering to purchase a new
aluminum smelting plant. This initial cost of the plant is 20,00,000. It has a useful
life of 5 years with a residual value of 1,00,000. Production and sales from the
new plant are expected to be 1,00,000 units per year. Other estimates are as follows :

Selling Price 150 per unit

Direct Cost 100 per unit

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Fixed cost (including depreciation) is 8,00,000 per annum. Marketing and promotion
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cost not included in the above will be 1,00,000 and
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1,60,000 for years 1 and
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la s2, respectively. Additionally, investment in debtors and stocks will increase aingyear
ag 1 by 1,50,000 and 2,00,000, respectively. Creditors will also increase by
1,00,000 in year 1. Thus, debtors, stocks and creditors will be recouped at the

end of the fifth year.

The cost of capital is 18%. Corporate tax is 30% and is paid in the year in which

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profits are made. Depreciation is tax deductible. The company follows straight line

method of depreciation. Assumeem
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Required : a g
(i) Estimate the net cash inflows after tax over the useful life of the project.

(ii) Calculate the Net Present Value and Profitability Index of the project.

(iii) Advise Norton Ltd. whether the plant should be purchased. Justify with reasoning.

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The PV factors at 18% are :

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Year 1 2 3 4 5

la PV Factor 0.847 0.718 0.609 0.437

(5+2+1=8 marks)

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(b) Compute the Drawing Power for Cash Credit Limit granted to Mukund by Laxmi
Bank for the month of March 2025 from the following information :
Particulars Amount
( )
Value of stocks 50,000
Value of debtors (including debtors of
5,000 for an invoice dated 18.11.24) 45,000
Value of creditors for goods 15,000
Sanctioned limit 45,000
Margin on stock is 20% and on debtors is 50%
Note : Debtors older than 3 months are ineligible for calculation of drawing power.
(3 marks)
(c) The following information is available for Vision Ltd. :
Particulars
Cost of Production 15,48,000
Cost of goods sold 14,61,000
Average stock of work-in-progress 94,600
Average stock of finished goods 2,43,500
Administration and Selling Expenses 4,14,000
Receivables collection period 36 days
Raw material storage period 65 days
Creditors payment period 63 days
You are required to calculate the working capital requirement by operating cycle method.
Assume 1 year = 360 days.
(4 marks)

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4. (a) A firm has credit sales of 360 lakh and its average collection period is 30 days.

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The financial controller estimates that bad debt losses are around 2% of credit sales.
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The firm spends 1,40,000 annually on debtor’s administration. These are the
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l charge 1% commission and will pay an advance against receivables on an ainterest
avoidable costs. A Factoring firm has offered to buy the firm’s receivables. The factor
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a @ 15% p.a. after withholding 10% as reserve. Advise the firm whether it should
will

avail factoring services. Assume 360 days in a year.
(5 marks)
(b) What are the conditions to issue Redeemable Preference Shares ? Which are the
companies that are permitted to issue Redeemable Preference Shares ?

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(3+2=5 marks)
(c)
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ABC Ltd. wants to make an Initial Public Offer (IPO) and to list its shares on
NSE in April 2025.
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The following information is available :
(1) a
Net Tangible Assets :
• 2022 : 4 crore
• 2023 : 3.5 crore
• 2024 : 2.8 crore
(2) Average Operating Profits (last 3 years) :

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• 2022 : 5 crore

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• 2023 : 6 crore

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• 2024 : 4 crore

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• 2022 : 1.5 crore
• 2023 : 1.2 crore
• 2024 : 1.3 crore

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(4) The company changed its name in 2024. In FY 2024, 55% of total revenue
came from the new line of business.

(5) Proposed IPO size : 20 crore.

(6) Pre-issue Net Worth = 1.3 crore.

Based on the above details answer the following questions :

(i) Analyse whether ABC Ltd. satisfies the conditions under Regulation 6(1) (Track
Record Route) of SEBI (ICDR) Regulations, 2018 to bring IPO in April 2025 ?

(ii) Under what circumstances, IPO can be brought under Regulation 6(2) of SEBI
(ICDR) Regulations, 2018 (Book Building Route) by ABC Ltd. ?

(4+1=5 marks)

5. (a) What are the amendments made by SEBI vide amendment to Master Circular for
Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs)
dated May 15, 2024, related to :

(i) The board nomination rights to unitholders of REITs and InvITs (August 06,
2024),

(ii) Review of statement of investor complaints and timeline for disclosure of statement
of deviations(s) (August 22, 2024).

(2+3=5 marks)

(b) Info Tech Ltd., an unlisted public company, has a paid-up equity share capital of
10 Crores (1 Crore shares of 10 each fully paid-up).

The company wishes to reward its Chief Technology Officer (CTO) for developing
a patented software which has significantly improved the performance and revenues
of the company. The company decides to issue sweat equity shares to the CTO.
The company has not issued sweat equity shares so far.

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Following details are available :
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cFace Value of share =
Current Market Price of share = 250
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• 10

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• Number of sweat equity shares to be issued = 1,00,000 shares

a These shares will be issued to the CTO at a premium of 50%.
Based on the above information answer the following :
(i) Verify whether the proposed issue is within statutory limits or not.
(ii) Compute the post-issue share capital and percentage holding of sweat equity in it.
(iii) Explain any two conditions for the issue of sweat equity shares under Section

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54 of Companies Act, 2013.

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. 2024) specified the Information to be filed
(1+2+2=5 marks)

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e Funds (AIFs) availing dissolution period/additional
s
(c) SEBI vide its circular dated (July 09,

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l for in-specie distribution of assets of AIFs.
by schemes of Alternative Investment

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liquidation period and conditions
What are the informations to be filed by schemes of AIFs availing dissolution period/
additional liquidation period and conditions for in-specie distribution of assets of AIFs ?
(5 marks)
Attempt all parts of either Q. No. 6 or Q. No. 6A

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provisions pertaining to denomination of issuance and trading of. non-convertible
6. (a) Explain the changes made by SEBI vide its circular dated 3rd July, 2024 in the

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securities.

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(b) List the documents required for listing approval for equity shares allotted upon conversion
of FCCBs issued by the Companies.
(5 marks)

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(c) SEBI vide circular ‘‘SEBI (Research Analysts) (Third Amendment) Regulations, 2024
[Notification No. SEBI/LAD-NRO/GN/2024/220 dated December 16, 2024]’’ has made
certain changes in the provisions related to the following :
(i) The capital adequacy requirement for the research analyst
(ii) Appointment of compliance officer.
Explain the changes made in this context.
(2+3=5 marks)
OR (Alternative question to Q. No. 6)

6A. (i) Calculate Current ratio from the following information of a trading concern :
• Projected Annual Sales : 6,50,000
• Percentage of Net Profit on sales : 25%
• Average Credit period allowed to debtors : 10 Weeks
• Average Credit period allowed by creditors : 4 Weeks
• Average Stock holding in terms of sales requirement : 8 Weeks
• Company operates 52 weeks per year
(4 marks)
(ii) What is meant by Securitization ? Which parties are involved in the process of
Securitization ?
(2+4=6 marks)
(iii) Explain the following methods used by banks to assess working capital requirements
of a borrower :
(a) Maximum Permissible Banking Finance Method (Tandon Committee)
(b) Turnover Method (Nayak Committee).
(3+2=5 marks)
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