WINTER INTERNSHIP PROJECT REPORT ON Study of Mergers and Acquisitions in the Industry Sector with special Reference to TATA

STEEL and COURS GROUP SUBMITTED TO: -

In the partial fulfillment of the award of the degree of MMS (MASTER OF MANAGEMENT STUDIES)

Project Guide: Submitted By: PROF. Rajshree Shrivastav ASHISHKUMAR. A. PATEL. (Professor IMCOST) (FINANCE) MMS II
nd

MR.

Year

(Roll No. MS1011055) INSTITUTE OF MANAGEMENT & COMPUTER STUDIES (IMCOST) WAGLE ESTATE, THANE

CHAPTER: 1 INTRODUCTION OF PROJECT

Introduction of project
We have been learning about the companies coming together to from another company and companies taking over the existing companies to expand their business. With recession taking toll of many Indian businesses and the feeling of insecurity surging over our businessmen, it is not surprising when we hear about the immense numbers of corporate restructurings taking place, especially in the last couple of years. Several companies have been taken over and several have undergone internal restructuring, whereas certain companies in the same field of business have found it beneficial to merge together into one company. In this context, it would be essential for us to understand what corporate restructuring and mergers and acquisitions are all about. All our daily newspapers are filled with cases of mergers, acquisitions, spin-offs, tender offers, & other forms of corporate restructuring. Thus important issues both for business decision and public policy formulation have been raised. No firm is regarded safe from a takeover possibility. On the more positive side Mergers & Acquisitions may be critical for the healthy expansion and growth of the firm. Successful entry into new product and geographical markets may require Mergers& Acquisitions at some stage in the firm's development. Successful competition in international markets may depend on capabilities obtained in a timely and efficient fashion through Mergers & Acquisitions. Many have argued that mergers increase value and efficiency and move resources to their highest and best uses, thereby increasing shareholder value. Like all business entities, industrial sector want to safeguard risks, as well as exploit available opportunities indicated by existing and expected trend. Merger and Acquisitions of the Industrial sector have been on the rise in the recent past, both globally and in India. In this backdrop of emerging global and Indian trends in the Industrial sector, this project illuminates the key issues surrounding M&A in this sector with the focus on India. It seeks to explain the motives behind some M&A that have occurred in India, analyze the benefits and cost to both parties involved and the consequences for the merged entity. A look at the future of the Indian Industrial sector and some key recommendations for Industry, follow from this analysis. The Internationals Industry scenario has shown major turn over in the past few years in terms of mergers and acquisitions. Deregulation has been the main driver through three major routes dismantling of interest rate control, removal of barriers between Industries and other financial intermediaries and lowering of entry barriers. It has lead to disintermediation, investors demanding higher returns, price competition, reduced margins, falling spreads and competition across geographies foreign company to look for new ways to boost revenues. Consolidation has been a significant strategic tool for this and has become a worldwide phenomenon driven by apparent advantage of

scales economies, geographical diversification and lower costs through brand and staff rationalization across border expansion and market share concentration.

This project looks at some Merger and Acquisition that happened past2011 in India to understand to intent (of the targets and the acquirers), resulting synergies (both operational and financial), modalities of the goals of the involved Industry and the long vision term implications of the mergers. The project also analyses emerging future trends and recommends steps that Industry should consider, given forecasted scenario. Before going for merger, Considerable amount of brainstorming would be required by the managements to reach a conclusion. E.g. A due diligence report would clearly identify the status of the company in respect of the financial position along with the net worth and pending legal matters and details about various contingent liabilities. Decision has to be taken after having discussed the pros & cons of the proposed merger & the impact of the same on the business, administrative costs benefits, addition to shareholders' value, tax implications including stamp duty and last but not the least also on the employees of the Transferor or Transferee Company.

MERGER:
Merger is defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. The survivor acquires all the assets as well as liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller. Merger is also defined as amalgamation. Merger is the fusion of two or more existing companies. All assets, liabilities and the stock of one company stand transferred to Transferee Company in consideration of payment in the form of: Equity shares in the transferee company, Debentures in the transferee company, Cash, or A mix of the above modes

ACQUISITION:

Acquisition in general sense is acquiring the ownership in the property. In the context of business combinations, an acquisition is the purchase by one company of a controlling interest in the share capital of another existing company.

Methods of Acquisition:
An acquisition may be affected by a) Agreement with the persons holding majority interest in the company management like members of the board or major shareholders commanding majority of voting power. b) Purchase of shares in open market. c) To make takeover offer to the general body of shareholders. d) To make takeover offer to the general body of shareholders. e) Acquisition of share capital through the following forms of considerations viz. Means of cash, issuance of loan capital, or insurance of share capital.

Takeover:
A takeover is acquisition and both the terms are used interchangeably. Takeover differs from merger in approach to business combinations i.e. The process of takeover, transaction involved in takeover, determination of share exchange or cash price and the fulfillment of goals of combination all are different in takeovers than in mergers. For example, process of takeover is unilateral and the offer or company decides about the maximum price. Time taken in completion of transaction is less in takeover than in mergers, top management of the offered company being more co-operative.

De-merger or corporate splits or division:

De-merger or split or divisions of a company are the synonymous terms signifying a movement in the company.

Purpose of Mergers & Acquisitions

The purpose for an offer or company for acquiring another company shall be reflected in the corporate objectives. It has to decide the specific objectives to be achieved through acquisition.

The basic purpose of merger or business combination is to achieve faster growth of the corporate business. Faster growth may be had through product improvement and competitive position.

1. Scope of the project

(1) The Project study is about the Industry sector.

(2) It consists of the impact of Mergers and Acquisitions in Industry.

(3) It also helps the strategies for survival and growth of the Industry sector. (4) It is relevant to inflows and outflow of Industry sector in India.

1. Objective of the study

(1) To get an understanding of the Industry sector. (2) To find out if the mergers and acquisitions have helped the Industry sector to improve their financial performance.
(3) Analyze parameters like Earning per share to know the impact of Merger and Acquisition

on shareholders. (4) To find out basis of Mergers and Acquisitions. (5) To trace it out the related issues in both pre and post merger case. (6) To study why the Industry are going towards Mergers and Acquisitions. (7) To study the measures taken by the government to increase Merger and Acquisition in Industry sector.

2.

Research Methodology

Research is one kind of process to get knowledge about some topic. Research is done so that systematic analysis can be done and problem can also be solved.

The title of Study

Here it is Merger and Acquisition of Industry Sector

Benefits from the study

(1) It helps to know detail about Merger and Acquisition and the situation when the

Industry involved in Merger and Acquisition.

(2) It helps to know the strategies adopted by Industry to Takeover other Industry and

understand SBEI guideline to Merger and Acquisition in Industry Sector.

Research Design
Here the research design is exploratory which helps to explore the Mergers and Acquisitions of Industry Sector.

Research Instrument
As a research instrument had been taken guidance from college Professor.

Data Collection
Secondary Data Hence it is an exploratory research there is not any dependence on primary data.

Sources of Secondary data

(1) Website

(2) Books

Analysis and Report writing

Here, done ratio analysis and used various chart for analysis purpose and also written report on it.

2. Limitation of Project

(1) The study was restricted only to Merger and Acquisition of Industry Sector.. (2) The study was conducted mainly through secondary data.

(3) The data collected and subsequent study is restricted for specific time frame.

2. Direction for Future

(1) The Project of Merger and Acquisition of Industry sector gives the direction of future research. (2) This research gives knowledge about every aspect of Merger and Acquisition. (3) It gives the direction about how Merger and Acquisitions helps of Industry to grow their business profit and survive from losses.