subject: MERGER AND ACQUISITION IN THE CONTEXT OF INDIAN SCENERIO [print this page] MERGER AND ACQUISITION IN THE CONTEXT OF INDIAN SCENARIO.
In the current scenario it is difficult for the company to grow organically, so in order to develop and diversify its product and services, companies take up mergers and acquisition activities.
M&A is take up not only for acquiring company but for varied reason. Before taking up M&A, companies management need to think logically and rationally. As the BRIC counties companies are developing at a faster pace so all investor across world having an eye on BRIC industry to build portfolio in order to diversify their risk and increase their return. According to major analyst the M&A activity will increase in India. Once the economy matures companies find it difficult to grow organically so companies need to diversify its business in varied host countries.
Indian companies are expanding rapidly overseas in order exploit the opportunities available outside the domestic country. India's total value for M&A for the first quarter 2010 was USD 19,198 million compared with USD 5,195 million a year ago (Source: VCCEdge).
SOME OF THE BIGGEST ACQUISITION RECENTLY MADE BY INDIAN COMPANIES ARE:
Bharti Airtel acquired telecom operator of Africa "Zain" for USD 10.7 billion (INR 493.56 billion)
Fortis Healthcare one of the biggest healthcare chain of India acquired 23.9% stake in parkway holdings of Singapore based for USD 685.3 million (INR 31.10 billion).
Godrej Consumer acquired the Indonesian household insecticide maker Megasari Makmur Group for INR 12 billion.
Godrej consumer conglomerates is expanded its base in almost in 6o countries engaged itself in delivering varied product and services in thirty different categories. They grow both organically and inorganically by acquiring companies like Keyline, Issue group, Rapidol and Kinky and set up the joint ventures with companies like Hershey's and Efcec.
Now companies started understanding the importance of M&A. They are many reasons of mergers and acquisition undertakes by companies but some of the important reasons are
To narrow down the technological and efficient management gaps.
To reduce competition across industry with in the sector.
To reach out the large base of customer with the help of other company.
To forecast competition and acquire different line of business which will become the premium in the future to business to build competitive edge.
To grab the opportunity of buying companies at a purchasing consideration which is lower than the intrinsic value of company.
Mergers and acquisition takes place in order to achieve the economies of scale which in turn results in increase in bottom line.
By expanding in number of host Countries Company diversify its risk.
MERGER AND ACQUISITION IN THE CONTEXT OF INDIAN SCENERIO
