DECLARATION

IMPACT

OF

MERGERS

AND

ACQUISITIONS

ON

FINANCIAL

PERFORMANCE a report on Seminar Series which is submitted by me in

partial fulfillment of the requirement for the award of MBA degree of Purbanchal
University Comprise only my original work and due acknowledgement have been
made to materials used in the report.

Hari giri
August, 2015

(APPROVAL SHEET)

This report entitled IMPACT OF MERGERS AND ACQUISITIONS ON

FINANCIAL PERFORMANCE submitted by Hari giri has been accepted as

a partial fulfillment of the requirements for the degree of Masters of

Business Administration (MBA) has been found satisfactory in scope and
quality. Therefore, we accept this report as a part of the said Degree.

Report Evaluation Committee

Dr. Dipak Bahadur Bhandari

Associate Prof.
Registrar, Faculty of Management
Pokhara University
.
Purna Bahadur Khand
................
Prof. Dr. S.K Singh

Acknowledgement
II

This report IMPACT OF MERGERS AND ACQUISITIONS ON FINANCIAL

PERFORMANCE has been prepared as a partial fulfillment of the seminar course
requirement for the degree of Masters of Business Administration (MBA).
First of all I would like to express my sincere gratitude to department of Novel
Academy, Pokhara for providing me an opportunity to carry out this report work. I would
like to extend my sincere thanks and warm gratitude to my respectful seminar trainers
Professor Dr. S.K Singh Associate Professor Dr. Deepak Bhandari, Vice-Dean, Pokhara
University School of Business Lekthnath and Mr. Purna Bahadur Khand, for their
excellent guidance, encouragement and valuable suggestions throughout the seminar. I
am very great full thank to the head of campus Mr. Bisheshowor Acharya, CEO, Novel
Academy, Newroad Pokhara, Novel Academy, Newroad pokhara and Dipendra pahari,
Coordinator, Novel Academy for their co-operation and motivation. I would also like to
express my gratitude to my entire respected teacher, who gave me suggestion and
guidance to make my report as required.
Lastly my genuine sense of gratitude goes to my university that gave me a chance
to brighten my academic qualification that provided me this opportunity to have a
practical knowledge of relevant fields.

Hari Giri
.

EXECUTIVE SUMMARY

III

This chapter outlines the adoption and implementation of merger and acquisition in
finance sector of Nepal. Presently, the Nepalese Banking Sector is facing a huge problem
and is in critical juncture. So, in order to cope with this problem Nepal Rasta Bank
(NRB) has directed the Banking Institutions to go in the process of mergers and
acquisitions. NRB has provided several benefits to the merging institutions. Responding
to the benefits presented by NRB, the banks and the financial institutions of the country
are opting in the process of merger. The paper argues that mergers in the finance sectors
are largely the result of destabilization in the competitive environment for financial
services, which was brought about by the national deregulation of markets and the
increase in new methods of dealing with customers. M&As provide management with the
opportunity to renegotiate terms and conditions, which leads to a destabilization of the
social climate of the company. This is further aggravated by the uncertainty relating to
employee information and consultation arrangements in the new merged company. As
mergers often lead to organizational changes involving the break-up of established
bargaining units, such collective bargaining arrangements often have to be re-negotiated.
The paper argues that current legislation is often insufficient to provide employees
information and consultation bodies enough power and resources to be able to effectively
address crisis situations such as mergers and take-overs. Evidence shows that workers are
often informed very late or even after the event in the case of a merger or take-over. A
review of nic asia bank in this area is therefore urged and it is argued that much could be
learnt from disseminating good practice from companies which have experience in
dealing with such situations.
This paper summarizes the key findings of these papers and highlights the fact & impact
of M&As in the finance sector.

PAGE
DECLARATION....i
IV

APPROVAL SHEET..ii
ACKNOWLEDGEMENT.....iii
EXECUTIVE SUMMARY...iv
TABLE OF CONTENTS ...v/vi
LIST OF FIGURES/DIAGRAMS......vii
LIST OF ABERRATION.....vii
CHAPTER I: INTRODUCTION ......1-5
1.1 Background of the Study......1
1.2 Introduction of the organization...2
1.3 Objective of the Study......2
1.4 Statements of the Problem....3
1.5 Scope of the Study....3
1.6 Study Methodology..3
1.6.1 Approach of the Study
1.6.2 Work Schedule
1.6.3 Data Presentation and Analysis Technique
1.7 Limitation of the study.......5
1.8 Organization of the Project Report.....5

Chapter: II Literature review

2.1 Definition of mergers and acquisitions...6
2.2 Impact of merger and acquisitions on banks performance in NEPAL7

CHAPTER III: PRESENTATION AND ANALYSIS OF DATA..8-13

3.1 Introduction
3.2 Tools for Data Presentation and Analysis
3.3 Ratio analysis
3.3.1 Liquidity Ratio
3.3.2 Leverage Ratio
3.3.3 Equity Multiplier
V

3.3.4 Profitability Ratio

3.3.5 Net interest income
3.3.6: Net Income
3.3.7: Return on Assets
3.3.8: Return on Equity (ROE)
3.3.9: Earnings per Share (EPS)
3.3.10: Dividend per share

CHAPTER IV: SUMMARY, CONCLUSION AND RECOMMENDATION 16-19

4.1Summary
4.2Conclusion
4.3 Recommendation
Bibliography (References)
Appendices

List of Figure and Diagram

No.

Table Name

Page no

Table 1

Current ratio

Table 2

Debt Ratio

Table 3

Equity multiplier

10

Table 4

Net Interest income

11

VI

Table 5

Net Income

11

Table 6

Return On Asset

12

Table 7

Return On equity

12

Table 8

Earnings Per share

13

Table 9

Dividend Per Share

13

LIST OF ABBREVIATIONS
1. MBA = Masters of Business Administration
2. M&A= Merger And Acquisition
3. NIC= Nepal Industry and Commerce bank
4. BoAN= Bank of Asia Nepal
5. ROE= Return On Equity
6. MV= market Value
7. HRM= human resource management
8. NRB= Nepal Rastra Bank
9. EBT= Earning Before Tax
10. EBIT= Earnings Before Interest and tax

VII