Empirical Study of M&A in India
Dr. J. M. Kapadia Professor, S.R. Luthra Institute of Management, MTB College Campus, Near Adarsh Society, Athwalines, Surat: 395001 Ph. No: 09374888937 E-mail: email@example.com
Ms. Delnaz Dastoor Assistant Professor, S.R. Luthra Institute of Management, MTB College Campus, Near Adarsh Society, Athwalines, Surat: 395001 Ph. No: 09727157228 E-mail: Delnaz.firstname.lastname@example.org
Abstract: India’s corporate sector has undergone a sea change during the last two decades. The first wave of this sea change occurred during the early 1990s when the Indian economy moved from being a closed one to an open one by adopting the new industrialization policy in favor of Liberalisation, Privatization and Globalization. The MNCs over the world were eyeing India as a huge market and hence a lot of multinationals stepped into the country to establish their businesses. They brought in the needed technology, expertise, standards, employment and development. But at the same time it increased competition for the domestic firms and forced them to better themselves. It was this period that marked the beginning of amalgamations between companies, more popularly known as Mergers and Acquisitions (M&A). For multinationals it was an easier route to enter into the country and for Indian firms it was one of the key strategies to survive and expand.
This paper tries to study the extent to which Indian companies have utilized this strategic tool of M&As in the past two decades. It tries to show the trend of M&As in India during the past years. It also attempts to highlight which period specifically witnessed higher M&A activity. An attempt is made to know which segments or sectors have more prominently undergone M&As. This study tries to bring out the overall trends with regard to M&A activity in India.
In the current scenario of highly competitive globalised markets, it is detrimental for organizations to be dormant and sit on their laurels. Organisations today need to be much more strategic in their decisions as compared to the same twenty years back. Thus organizations constantly need to re-invent and re-construct themselves to meet the demands of the ever growing market and to satisfy a more powerful group of stakeholders. Corporate restructuring in general and Mergers and Acquisition (M&A) in particular have given the required pace to organizations to develop and expand. Countries like U.S and U.K have passed four–five waves of mergers and acquisitions, while developing countries like India are witnessing probably the first wave of mergers and acquisitions. This paper is an attempt to look in detail the trend of M&A been in India in the last two decades. Before beginning with the trend of M&A in India, it is important to build a little conceptual framework regarding mergers and acquisitions. First of all, mergers and acquisitions are a part of the broad purview of corporate restructuring. Corporate restructuring stands for partially dismantling or otherwise reorganizing a company to make it more efficient or otherwise more profitable. This re-structuring can be internal or external to the organization. Internal restructuring involves in making changes internal to the organization like changing the organization structure, changing employee policy, changing the working conditions and systems, etc. While external re-structuring includes mergers and acquisitions, takeover, capital restructuring, creditor restructuring, hive-off/spin-off, slump sale, etc. Among the same, mergers and acquisitions have been more popular. A merger is a strategy where two or more companies agree to combine their operations. Once the merger happens, one company survives while other loses its corporate identity. The surviving company acquires all the assets and liabilities of the merging company. It either loses its identity or is rechristened. The laws in India use the term...
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