INORGANIC GROWTH-IS

IT THE RIGHT STRATEGIC MOVE FOR INDIAN BUSINESSES

SUBMITTED BY: Shalini Prabha Shallu Dhir Shubha Dixit Sukhwinder Singh

CONTENTS
INTRODUCTION
MEANING INORGANIC MERGER JOINT

GROWTH STRATEGIES

VENTURE SUCCESSFUL MERGERS IN INDIA BENEFITS CONCLUSION

INTRODUCTION
LPG

1991 BUSINESS ENVIRONMENT POST LIBERALISATION WHETHER MERGERS & ACQUISITIONS PAY?

MEANING OF INORGANIC GROWTH

Inorganic Growth means that the company has grown by merger, acquisitions or takeover.

Inorganic growth is attained when a company acquires a technology developing company in order to enhance its competitive advantage and growth rate and is also known as External Growth

STRATEGIES OF INORGANIC GROWTH

External growth has been attempted by the business houses through the two strategies mergers and acquisitions joint ventures.

MERGER
Merger is an external growth strategy. When different companies combine together into new corporate organizations, such a process is known as mergers. Merger can occur in two ways: Acquisition or takeover and amalgamation.

PHASES
ACQUISITION PHASE Cost of merger & acquisition Maintenance of customer relationships during integration phase Knowledge transfer among units that are to be integrated POST MERGER PHASE Corporate culture Existing value systems Staff qualification Stress Management Technology HR Policy Leadership styles Core competencies Post Integration

PRE MERGER PHASE Financial position of transferor company Market Value Brand Value Communication Issues Share Holders & other stake holders view

JOINT VENTURE
When two or more firms mutually decide to establish a new enterprise by participating in equity capital and in business operations, it is known as joint venture.

SUCCESSFUL MERGERS IN INDIA

TATA CHEMICALS TOOK OVER BRITISH SALT

Tata Chemicals took over British salt based in UK with a deal of US $ 13 billion. This is one of the most successful recent mergers and acquisitions 2010 that made Tata even more powerful with a strong access to British Salt's facilities that are known to produce about 800,000 tons of pure white salt annually.

RELIANCE POWER AND RELIANCE NATURAL RESOURCES

Merger of Reliance Power and Reliance Natural Resources with a deal of US $11 billion is another biggest deal in the Indian industry. This merger between the two made it convenient and easy for the Reliance power to handle all its power projects as it now enjoys easy availability of natural gas.

AIRTEL ACQUIRED ZAIN

Airtel acquired Zain in Africa with an amount of US $ 10.7 billion to set new benchmarks in the telecom industry. Zain is known to be the third largest player in Africa and being acquired by Airtel it is deliberately increasing its base in the international market.

ICICI BANK ACQUIRED BANK OF RAJASTHAN

ICICI Bank's acquisition of Bank of Rajasthan at aout Rs 3000 Crore is a great move by ICICI to enhance its market share across the Indian boundaries especially in northern and western regions.

FORTIS HEALTHCARE ACQUIRED HONG KONGS QUALITY HEALTHCARE ASIA Ltd

Fortis Healthcare acquired Hong Kong's Quality Healthcare Asia Ltd for around Rs 882 Crore and is now on move to acquire the largest dental service provider in Australia, the Dental Corp at about Rs 450 Crore.

BENEFITS TO BUSINESS
Helps reduce competition in the market place Instantly adds new brands and product/service lines to the acquiring company Provides access to fresh customer base and adds new geographical locations In many cases, an established marketing channel also becomes available Economies of scale are achieved over a period of time. A fresh breath of management skills

CONCLUSION
A firm desiring immediate growth and quick returns mergers and takeover afford attractive opportunities as they obviate the necessity of starting from scratch. However, identifying the right candidate for merger or acquisition is an art at which only a few managements can really excel.

Establishing joint venture, especially in the international arena, is a low risk alternative. Many firms prefer this approach.

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