A

Project Report On
Trend analysis of merger and acquisition in the year 2005
Of
Merger and acquisition
Subject
In the Partial Fulfillment of M.B.A Programme 2014-2016
Submitted on: 1ST APRIL 2016

Submitted to: PROF. AMISH SONI

SUBMITEED BY
No.

Name of Student

Roll No.

1.
2.
3.
4.
5.
6.

Mansi Modi
Anil Nanda
Navin Ram
Nidhi Raval
Manish Ravat
Khooshbu Shah

NR 14072
NR 14080
NR 14121
NR 14127
NR 14128
NR 14143

N.R.Institute of Business Management

Affiliated To Gujarat Technological University (GTU)

PREFACE
1

Experience is the best teacher

The practical training is a subject in the MBA programme. The industrial
knowledge is very important and integral part of experience to develop managerial abilities at
the level of MBA. The students are required to get the practical knowledge and training as
management students. It helped us to know the practical and technical aspect of business.
Gujarat Technological University has provided the student to participate in the
preparation of group project. It is the golden opportunity for us. We have prepared the project
report on TREND ANALYSIS OF MERGER AND ACQUISITION IN THE YEAR 2005.
We have tried our best to include all the necessary information and express it in our project
report.

ACKNOWLEDGEMENT

We are glad to present this report before you. We are greatly thankful tothe entire
person who helped us to prepare this report. It is our profound gratitude and extreme regard
to PROF. AMISH SONI, under whose kind and pinpointed guidelines, we are able to
complete the project report, and without his guidance and encouragement this work would
have never been completed.

EXECUTIVE SUMMARY
3

Under the guidance of PROF.AMISH SONI we learn what the merger is and
acquisition is. We prepare this report on trend analysis of merger and acquisition in the year
2005. We try to do trend analysis of various merger and acquisition done in the year 2005
with the classification of merger and acquisition in the various industry. We also provide the
information regarding the effect of various M&A on the industry as well as on the overall
market.

TABLE OF CONTENT

SR. NO

PARTICULARS

PAGE NO.

1.

6
INTRODUCTION OF MERGER AND ACQUISITION

2.

8
INTRODUCTION OF VARIOUS INDUSTRY

3.

14
TREND ALALYSIS OF M&A

4.

15
RECENT TREND OF M&A IN INDIA

5.

16
REFERENCE

INTRODUCTION ABOUT M&A

Mergers and acquisitions mean alliance of two or more companies. Where a merger leads to
formation of a new company, acquisition leads to purchase of a company by other and no
new company is formed.
M&A is the area of corporate finances, management and strategy dealing which deals with
purchasing and/or joining with other companies.
M&A can generate cost efficiency through economies of scale, can enhance the revenue
through gain in market share and can even generate tax gains. The principal benefits from
mergers and acquisitions can be listed as increased value generation, increase in cost
efficiency and increase in market share.
Companies also enter into M&A
To enter a new market
For product expansion
For administrative & cost benefits
For increased market share, Profitability & EPS
To gain higher competitiveness
For industry know how and positioning
Types of Expansions through M&As
Horizontal
Joining of two or more companies that are in direct competition to each other
Vertical
Joining of two or more company in the same line of production, i.e. merger with customer or
seller
Conglomerate
Joining of two or more companies from the business completely unrelated to each other
Market Extension

Combination of two companies that sell the same products in different markets
Product extension
Combination of the companies that deal in products those are related to each other and
operate in the same market
M&A in India
India has been a hot market for Mergers & acquisitions for global companies, reasons being:
Entry in Developed Markets: Outbound M&As help the Indian companies to tap the
global developed markets.
Technology transfer: Main Reasons to do M&As. This helps Indian companies in
gaining access to more developed and advanced technologies.
New Product Mix: To expand product wise and market wise becomes profitable for
companies to manufacture products themselves which were not possible earlier due to
cost constraints or requirement of huge investments. Such alliances give them the right to
sell and diversify their product range.
Hedging Country Risks: Merger and Acquisitions are also attempted to reduce the
reliance on the Indian markets and escape the local business cycles.

BRIEF INTRODUCTION ABOUT VARIOUS INDUSTRIES

Pharma industry
Globally, India ranks 3rd in terms of volume and 14th in terms of value. According to
Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, the total turnover of
India's pharmaceuticals industry between 2008 and September 2009 was US$21.04 billion.
Hyderabad, Mumbai, Bangalore and Ahmedabad are the major pharmaceutical hubs of India.
While the domestic market is worth US$13.8 billion as of 2013, and is expected to reach
US$49 billion by 2020
The government started to encourage the growth of drug manufacturing by Indian companies
in the early 1960s, and with the Patents Act in 1970. However, economic liberalization in 90s
by the former Prime Minister P.V. Narasimham Rao and the then Finance Minister, Dr.
Manmohan Singh enabled the industry to become what it is today. This patent act removed
composition patents from food and drugs, and though it kept process patents, these were
shortened to a period of five to seven years.
The lack of patent protection made the Indian market undesirable to the multinational
companies that had dominated the market, and while they streamed out. Indian companies
carved a niche in both the Indian and world markets with their expertise in reverseengineering new processes for manufacturing drugs at low costs. Although some of the larger
companies have taken baby steps towards drug innovation, the industry as a whole has been
following this business model until the present.
India's biopharmaceutical industry clocked a 17 percent growth with revenues of Rs.137
billion ($3 billion) in the 2009-10 financial year over the previous fiscal. Bio-pharma was the
biggest contributor generating 60 percent of the industry's growth at Rs.8829 crore, followed
by bio-services at Rs.2, 639 crore and bio-agri at Rs.1, 936 crore.
India's health care sector is estimated to reach $197 billion by 2017-18

Banking and finance industry

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Indian banking, which experienced rapid growth following the nationalization, began to face
pressures on asset quality by the 1980s. Simultaneously, the banking world everywhere was
gearing up towards new prudential norms and operational standards pertaining to capital
adequacy, accounting and risk management, transparency and disclosure etc. In the early
1990s, India embarked on an ambitious economic reform programme in which the banking
sector reforms formed a major part. The Committee on Financial System (1991) more
popularly known as the Narasimham Committee prepared the blue print of the reforms. A few
of the major aspects of reform included (a) moving towards international norms in income
recognition and provisioning and other related aspects of accounting (b) liberalization of
entry and exit norms leading to the establishment of several New Private Sector Banks and
entry of a number of new Foreign Banks (c) freeing of deposit and lending rates (except the
saving deposit rate), (d) allowing Public Sector Banks access to public equity markets for
raising capital and diluting the government stake,(e) greater transparency and disclosure
standards in financial reporting (f) suitable adoption of Basel Accord on capital adequacy (g)
introduction of technology in banking operations etc. The reforms led to major changes in the
approach of the banks towards aspects such as competition, profitability and productivity and
the need and scope for harmonization of global operational standards and adoption of best
practices. Greater focus was given to deriving efficiencies by improvement in performance
and rationalization of resources and greater reliance on technology including promoting in a
big way computerization of banking operations and introduction of electronic banking.

The reforms led to significant changes in the strength and sustainability of Indian banking. In
addition to significant growth in business, Indian banks experienced sharp growth in
profitability, greater emphasis on prudential norms with higher provisioning levels, reduction
in the non-performing assets and surge in capital adequacy. All bank groups witnessed sharp
growth in performance and profitability. Indian banking industry is preparing for smooth
transition towards more intense competition arising from further liberalization of banking
sector that was envisaged in the year 2009 as a part of the adherence to liberalization of the
financial services industry.
o Introduction of Financial Services
The financial services industry plays a vital intermediary role in the world economy, moving
funds from entities with excess funds to those with a need for funds. It includes firms that are
9

engaged in activities such as investing, lending, insurance, securities trading and securities
issuance. Its clients are individuals, businesses, non-profit organizations and agencies of
government.
Bank deposits provide the capital for bank loans.
The sale of stocks and bonds to investors supports the operations of businesses and
governments. Insurance contracts help to pool and manage risks.
The term "financial services" became more prevalent in the United States partly as a result of
the Gramm-Leach-Bliley Act of the late 1990s, which enabled different types of companies
operating in the U.S. financial services industry at that time to merge.
Companies usually have two distinct approaches to this new type of business. One approach
would be a bank which simply buys an insurance company or an investment bank, keeps the
original brands of the acquired firm, and adds the acquisition to its holding company simply
to diversify its earnings. Outside the U.S. (e.g., in Japan), non-financial services companies
are permitted within the holding company. In this scenario, each company still looks
independent, and has its own customers, etc. In the other style, a bank would simply create its
own brokerage division or insurance division and attempt to sell those products to its own
existing customers, with incentives for combining all things with one company.
Introduction of automobile industry
The automotive industry in India is one of the largest automotive markets in the world. It was
previously one of the fastest growing markets globally, but it is currently experiencing flat or
negative growth rates. In 2009, India emerged as Asia's fourth largest exporter of passenger
cars, behind Japan, South Korea, and Thailand, overtaking Thailand to become third in 2010.
As of 2010, India was home to 40 million passenger vehicles. More than 3.7 million
automotive vehicles were produced in India in 2010 (an increase of 33.9%), making India the
second fastest growing automobile market in the world (after China). India's passenger car
and commercial vehicle manufacturing industry recently overtook Brazil to become the sixth
largest in the world, with an annual production of more than 3.9 million units in 2011. From
2011 to 2012, the industry grew 16-18%, selling around three million units. According to the
Society of Indian Automobile Manufacturers, annual vehicle sales are projected to increase to
4 million by 2015, not 5 million as previously projected.

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Introduction of Textile Industry

The Indian textile industry is one the largest and oldest sectors in the country and among the
most important in the economy in terms of output, investment and employment. The sector
employs nearly 35 million people and after agriculture, is the second-highest employer in the
country. Its importance is underlined by the fact that it accounts for around 4% of Gross
Domestic Product, 14% of industrial production, 9% of excise collections, and 18% of
employment in the industrial sector, and 16% of the countrys total exports earnings. With
direct linkages to the rural economy and the agriculture sector, it has been estimated that one
of every six households in the country depends on this sector, either directly or indirectly, for
its livelihood.
A strong raw material production base, a vast pool of skilled and unskilled personnel, cheap
labor, good export potential and low import content are some of the salient features of the
Indian textile industry. This is a traditional, robust, well-established industry, enjoying
considerable demand in the domestic as well as global markets.
Introduction of Information Technology sector
The Information Technology Industry of India dates back to 1967 when the Tata Group in
collaboration with Burroughs set up the first software zone, SEEPZ in Mumbai. In 1973
SEEPZ became the first software export zone which saw 80% of the software export in the
1980s. Since then, the IT sector of India has grown by leaps and bounds and has acquired
India a brand name in the IT and ITES (Information Technology Enabled Services) sector in
the global scenario. The major hubs for the IT export sector are Bangalore, Chennai,
Hyderabad, Delhi, Mumbai and Kolkata. Bangalore has earned the sobriquet, The Silicon
Valley of India owing to the maximum IT export (generating 77% of the net IT export
revenue of India). The IT- ITES sector can be broadly classified into two categories (i)
Business Process Outsourcing (BPO) and (ii) Domestic and IT export. The growth in the
BPO sector under the supervision of the IT-ITES sector has been phenomenal. According to
NASSCOM, The IT-BPO sector in India aggregated revenue of US$ 100 billion in FY 2012,
where export and domestic revenue stood at US$ 69.1 billion and US $31.7 billion
respectively.
Introduction of Foods & Beverages
India is fervently poised for the Food Revolution
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This will ensure agricultural diversification and large investments in food processing.
The concept of food security has two dimensions availability of food and access to food.
30% of the food produced in the country is wasted.
There is a need to increase the range of foods available to improve overall nutrition.
Special foods for patients suffering from hypertension, diabetes gives health benefits.
Packaging of food products has become important to ensure safety and hygiene.
Introduction of RETAIL & FMCG sector
Fast Moving Consumer Goods (FMCG) Industry in India is one of the fastest developing
sectors in the Indian economy. At present the FMCG Industry is worth US$ 13.1 billion and it
is the 4th largest in the Indian Economy. These products have very fast turnaround rate, i.e.
the time from production to the revenue from the sale of the product is very less. In the
present economic scenario, time is regarded as money, so the FMCG companies have to be
very fast in manufacturing and supplying these goods.
The Fast Moving Consumer Goods (FMCG) Industry in India include segments like
cosmetics, toiletries, glassware, batteries, bulbs, pharmaceuticals, packaged food products,
white goods, house care products, plastic goods, consumer non-durables, etc. The FMCG
market is highly concentrated in the urban areas as the rise in the income of the middleincome group is one of the major factors for the growth of the Indian FMCG market.
The penetration in the rural areas in India is not high as yet and the opportunity of growth in
these areas is huge by means of enhanced penetration in to the rural market and conducting
awareness programs in these areas. The scopes for the growth of the FMCG industry are high
as the per capita consumption of the FMCG products in India is low in comparison to the
other developed countries. The manufacturing of the FMCG goods is concentrated in the
western and southern belt of the country. There are other pockets of FMCG manufacturing
hubs.

Introduction of real estate and construction

There's no avoiding the facts: The real estate "bubble" has burst. Beginning in 2006, a
significant housing downturn affected all corners of the real estate industry-from commercial
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real estate developers to real estate investment trusts (REITs) to mortgage lenders. Whether
you're looking to rent out apartments or develop condominiums, the atmosphere is vastly
different from just a few years ago.
Of course, the basics are still the same. The real estate industry's pared-down definition is
land. However, it's much more complicated than that. The industry involves the buying,
selling, renting, leasing, and management of commercial, residential, agricultural, and other
kinds of property, including all the functions that support such activity, such as appraising and
financing. The successful realtor is necessarily a shrewd salesperson with a deep knowledge
of real estate markets and a broad understanding of the contracts, laws, and tax regulations
that apply to real estate transactions.
Thinking big is part and parcel of the real estate industry, and grandiose speculation has
created some of America's greatest fortunes. John Jacob Astor traded in his empire of beaver
pelts for a gamble on uptown Manhattan real estate and in the process became the richest man
in America. Arthur Levitt's own development virtually created that fixture of American life:
the suburbs. More recently, moguls like Sam "the grave dancer" Zell and the perennially
overreaching Donald Trump have made fantastic fortunes on real estate gambles. Even for
non-billionaires in the industry, the thrill of deal making, the promise of financial reward, the
potential to have a lasting impact on cities and communities, and the sociability make real
estate a rewarding profession.

TREND ANALYSIS OF MERGER AND ACQUISITION DONE IN THE YEAR 2005

SECTORS

TOTAL NO OF
COMPANIES
13

Manufacturing
IT
Pharmaceutical
Finance
Agriculture
Chemical
Entertainment
Automobile
Electrical
Services
Others

90
80

81
49
7
2
7
11
4
1
6
21
31

81

70
60
50

49

40

31

30

21

20
10

11
4

ANALYSIS OF ABOVE CHART:

From the above graph, we found that in 2011 there are 81 companies acquired in
manufacturing sector, 49 companies acquired in IT sector, 14 companies are in
Pharmaceutical industry,2 companies are in Finance sector. There are companies in
Agriculture and Entertainment sector 7 and 4 respectively. 11 companies are acquired in
Chemical sector. The least no of companies are acquired in Automobile sector which is 1 and

14

in Electrical sector there are 6 companies. In other sector, there are 11 companies which
include hotel, mining, textile, etc. And services are of 21.
From the data of 2005, we conclude that the highest no of companies are acquired in
manufacturing sector and the least no. of companies are acquired in automobile sector. There
are equal no. of sectors acquired in finance and IT Sector. There is less no. of companies in
Agriculture and Entertainment sector.

RECENT TRENDS OF MERGERS AND ACQUISITIONS IN INDIA

There are various factors that facilitate mergers and acquisitions in India. Government
policies, resilience in economy, liquidity in the corporate sector, and vigorous attitudes of the
Indian businessmen are the key factors behind the fluctuating trends of mergers and
acquisitions in India.
Considering the trends in previous years, Year 2012 saw a slowdown in mergers and
acquisitions in India. It hit a three year low down by almost 61% from its preceding year.
This was majorly caused by the tough macro-economic climate created due to euro zone
crisis and other domestic reasons such as inflation, fiscal deficit, and currency depreciation.
However that year also saw a key trend that emerged and it was the increase in domestic
deals compared to cross border M&As. The domestic agreement value stood at USD 9.7
billion, up by almost 50.9% in comparison with 2011.
In the year 2014, has started off on a positive note for inbound M&A deals in India which has
so far seen 15 deals in the first two months. The general elections due in the coming months
would have a huge impact on the on the mergers and acquisitions in India. Though the
investment sentiments have improved the foreign companies are awaiting the effect of
elections before putting in money in India.

Bibliography

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