SYNOPSIS ON

“MERGERS AND ACQUISITIONS”

AT

“ICICI BANK LTD”

BY

AKEERA SRUTHI

(HALL TICKET NO: 1303-186-72-038)

Synopsis for project to be submitted for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

OSMANIA UNIVERSITY

2018-2020

AURORA’PG COLLEGE, UPPAL

 CHAPTER PLAN

CHAPTER-1
INTRODUCTION
SCOPE OF THE STUDY
OBJECTIVES OF THE STUDY
METHODOLOGY OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER-2
REVIEW OF LITERATURE
CHAPTER-3
INDUSTRY PROFILE
COMPANY PROFILE
CHAPTER-4
DATA ANALYSIS AND INTERPRETATION
CHAPTER-5
SUGGESTION
FINDINGS & CONCLUSION
BIBLIOGRAPHY
 1 INTRODUCTION

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.
Many have argued that mergers increase value and efficiency and move resources to their
highest and best uses, thereby increasing shareholder value. To opt for a merger or not is a
complex affair, especially in terms of the technicalities involved. We have discussed almost
all factors that the management may have to look into before going for merger. 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.

The practice of mergers and acquisitions has attained considerable significance in the
contemporary corporate scenario which is broadly used for reorganizing the business entities.
Indian industries were exposed to plethora of challenges both nationally and internationally,
since the introduction of Indian economic reform in 1991. The cut-throat competition in
international market compelled the Indian firms to opt for mergers and acquisitions strategies,
making it a vital premeditated option.

The factors responsible for making the merger and acquisition deals favorable in India are:

 Dynamic government policies

 Corporate investments in industry
 Economic stability
 “ready to experiment” attitude of Indian industrialists
REVIEW OF LITERATURE
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) purchase of new shares by private treaty;
 (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 offeror company decides about the maximum price. Time taken
in completion of transaction is less in takeover than in mergers, top management of the
offeree 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.

What will it take to succeed?

Funds are an obvious requirement for would-be buyers. Raising them may not be a problem
for multinationals able to tap resources at home, but for local companies, finance is likely to
be the single biggest obstacle to an acquisition. Financial institution in some Asian markets
are banned from leading for takeovers, and debt markets are small and illiquid, deterring
investors who fear that they might not be able to sell their holdings at a later date.
The credit squeezes and the depressed state of many Asian equity markets have only
made an already difficult situation worse. Funds apart, a successful Mergers & Acquisition
growth strategy must be supported by three capabilities: deep local networks, the abilities to
manage uncertainty, and the skill to distinguish worthwhile targets. Companies that rush in
without them are likely to be stumble.

Assess target quality:

 To say that a company should be worth the price a buyer pays is to state the obvious.
But assessing companies in Asia can be fraught with problems, and several deals have gone
badly wrong because buyers failed to dig deeply enough. The attraction of knockdown price
tag may tempt companies to skip crucial checks. Concealed high debt levels and deferred
contingent liabilities have resulted in large deals destroying value. But in other cases, where
buyers have undertaken detailed due diligence, they have been able to negotiate prices as low
as half of the initial figure.

Due diligence can be difficult because disclosure practices are poor and companies
often lack the information buyer need. Moreover, most Asian conglomerates still do not
present consolidated financial statements, leaving the possibilities that the sales and the profit
figures might be bloated by transactions between affiliated companies. The financial records
that are available are often unreliable, with different projections made by different
departments within the same company, and different projections made for different
audiences. Banks and investors, naturally, are likely to be shown optimistic forecasts.

Purpose of Mergers and Acquisition

The purpose for an offeror 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.

Other possible purposes for acquisition are short listed below: -

(1)Procurement of supplies:
1. to safeguard the source of supplies of raw materials or intermediary product;
2. to obtain economies of purchase in the form of discount, savings in transportation
costs, overhead costs in buying department, etc.;
3. to share the benefits of suppliers economies by standardizing the materials.

(2)Revamping production facilities:

 1. to achieve economies of scale by amalgamating production facilities through more
intensive utilization of plant and resources;
2. to standardize product specifications, improvement of quality of product, expanding
3. market and aiming at consumers satisfaction through strengthening after sale
4. services;
5. to obtain improved production technology and know-how from the offeree company
6. to reduce cost, improve quality and produce competitive products to retain and
7. improve market share.

(3) Market expansion and strategy:

1. to eliminate competition and protect existing market;
2. to obtain a new market outlets in possession of the offeree;
3. to obtain new product for diversification or substitution of existing products and to
enhance the product range;
4. strengthening retain outlets and sale the goods to rationalize distribution;
5. to reduce advertising cost and improve public image of the offeree company;
6. strategic control of patents and copyrights.

(4) Financial strength:

1. to improve liquidity and have direct access to cash resource;

2. to dispose of surplus and outdated assets for cash out of combined enterprise;
3. to enhance gearing capacity, borrow on better strength and the greater assets backing;
4. to avail tax benefits;
5. to improve EPS (Earning Per Share).
NEED OF THE STUDY
The Mergers & Acquisitions in India has really taken off in. Business environment is
dynamic, many elements in the event are changing because of changes in the economic,
social, cultural, government and legal factors. Organizations are frequently restructuring their
corporate policies to sustain the changed competitions. In this light mergers & acquisitions
are one of the corporate restructuring strategies that organizations can adopt.

Achieving acquisition success has proven to be very difficult, while various studies have
shown that 50% of acquisitions were unsuccessful. The acquisition process is very complex,
with many dimensions influencing its outcome. "Serial acquirers" appear to be more
successful with M&A than companies who only make an acquisition occasionally.

Previous studies suggests that the shareholders of acquired firms realize significant positive
"abnormal returns" while shareholder of the acquiring company are most likely to experience
a negative wealth effect. The overall net effect of M&A transactions appears to be positive:
almost all studies report positive returns for the investors in the combined buyer and target
firms. This implies that M&A creates economic value, presumably by transferring assets to
management teams that operate them more efficiently.

The present study aims to give awareness on the mergers and acquisitions in India, pros and
cons of mergers and acquisitions and importance of the same.
OBJECTIVES OF THE STUDY

 To understand the concept and importance of mergers and acquisitions.

 To assess the problem of practical causes for M&A.
 To study the M&A guidelines in India.
 To study the overall trend of Merger & Acquisitions in India over the per past 5
Years.
 To Analyse the mergers by industries, financial advisors and legal advisors.
 To study the financial performance in the growth of individual company before &
after the merger by taking a case study of ICICI BANK LTD
SCOPE OF THE STUDY
All data is based on announced transactions over US$ 5m. Deals with undisclosed deal values
are included where the target’s turnover exceeds US$ 10m. Deals where the stake acquired is
less than 10% will only be included if their value is greater than US$ 100m.
Activities excluded include property transactions and restructurings where the ultimate
shareholders’ interests are not changed. All data excludes minority stake deals (10% -
30%) where the dominant target geography is Asia-Pacific and the deal value is less than
US$ 100m
M&A Trend: Based on the dominant geography of the target company being India. Excludes
lapsed and withdrawn bids

Top Announced Deals: Based on the dominant geography of the target, bidder or seller
company being India. Excludes lapsed and withdrawn bids. FA refers to Financial Advisor
and LA refers to Legal Advisor

Industry Analysis: Based on the dominant geography of the target company being India.
Industry sectors represent the primary industry sector of the target company only.
League Tables for Total India M&A: Based on the dominant geography of the target,
bidder or seller company being India. The Financial Advisor tables exclude lapsed and
withdrawn bids, and the legal advisor tables include lapsed and withdrawn bids

League Tables for Indian M&A Advisors: Based on the dominant geography of the target,
bidder or seller company being India and the advisor being an entity which is headquartered
in India. The Financial Advisor tables exclude lapsed and withdrawn bids, and the legal
advisor tables include lapsed and withdrawn bids
RESEARCH METHODOLGY

Data collection is an actively in marketing research. The design of the data collection
method is the spine of research design. The sources of data are classified in to two types.
 The Primary Data.

 The Secondary Data.

PRIMARY DATA:
The primary data are fresh data collected directly from the field and therefore consist
of original information gathered for the specific purpose. It is expensive, laborious, and time
consuming. But it assures a greater degree of accuracy and reliability as it comes straight
from the horse’s month.

SECONDARY DATA:
The secondary data are the data, which the investigator borrows from other who have
collected it for various other purposes. Therefore it may not entirely be reliable. It is less
expensive and involves less expensive and involves less time and labor than the collection of
primary data.
PERIOD OF THE STUDY:
Project Duration of the (Five Years) 2014-2018

DATA ANALYSIS TOOLS:

I. Reports and publication of Government department and international bodies.

II. Newspaper, magazines, trade journals.

III. Publication of books company records, brochures, catalogues and other documents.

Data related by statistical organization

LIMITATIONS OF THE STUDY

Though the project is completed successfully a few limitations may be there.

 Since the procedure and policies of the company will not allow disclosing
confidential financial information, the project has to be completed with the
available data given to us.

 The period of study that is 6 weeks is not enough to conduct detailed study of
the project.

 The study is carried basing on the information and documents provided by the
Organization and based on the interaction with the various employees.
 REFERENCE

Books: -

Merger, Acquisition and corporate restructuring in India (Rachna Jawa)

Financial Services (M.Y.Khan)

Websites: www.google.com
www.businessweek.com
www.moneycontrol.com
www.ril.com
www.wikipedia.com
www.icicidirect.com
www.mergersindia.com
www.mergerdigest.com

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