Section C - Analytical Reasoning and Decision Making

81 Wind turbine maker Leone Energy posted a net loss of `250 crore for the fourth quarter ended March 31, 2010 as against a net profit of `350 crore in the same quarter a year-ago. In the financial year 2009-10, the company clocked a gross income of `6,517 crore, as against `9,778 crore in the previous year. Leone Energy clocked a loss of `1100 crore in 2009-10, as against a net profit of `320 crore in 2008-09. The sales revenues stood at `22,400 crore for the year, approximately 21 per cent less as against `28, 350 crore last year. For the financial year ending March 31, 2010, Leone Energy's sales volume (in terms of capacity of projects executed) was 4,560 MW from 2,935 MW a year ago. The CEO of Leone Energy in his message to shareholders suggested that the poor performance of the company was the result of adverse economic conditions during the year ended March 31, 2010

You are a shareholder owning 5% of the shares of Leone Energy, have seen the stock price decline by more than 50% during the year 2009-10, and are quite upset with the way the management has been handling the business. You have decided to confront the management at the next shareholders' meeting and have chosen the following 5 points to argue against the CEO's version of the story. In light of the above paragraph, select the most appropriate order of these 5 statements that you, as a disappointed shareholder, should adopt as a stinging and robust preface in your case against the management in front of the management and other shareholders.

a. The management is not doing its best to maintain the profitability of the company

b. The company has actually increased its sales volume during the year under consideration

c. The adverse economic conditions have led to a worldwide increase in the adoption of alternative energy sources, reflecting in all-time highest profits for wind turbine makers in both developed and developing countries

d. The management has been lax with its employees as the management enjoys a large set of benefits from the company that they would have to forgo if they became strict with employees.

e. The company is trying to increase sales by charging lower, unprofitable prices.

A. b,c,a B. a,c,b C. b,e,c D. c,b,e E. e,b,c

Explanation:

The fact that economic conditions have actually brightened the prospects of alternate energy by citing the example of other wind turbine makers can be used to counter the argument of the management that poor economic condition resulted in the deterioration of performance. This would blunt the main argument of the CEO. So this should be the primary argument. The fact that the company increased its sales volume but the profit margin has declined can be used to point out that the company is not concentrating on profitability and was increasing sales at unprofitable prices. Choice (D)