Mergers and amalgamation this financial year could be heading for a record high. In the first seven months (April-October) of the current financial year, 80-odd companies have proposed to merge 98 subsidiaries or group entities.
This contrasts with 97 companies in 2003-04, involving 150 subsidiaries. In the previous year, 84 companies had proposed mergers and amalgamations involving 144 subsidiaries.
This year's mergers and amalgamation scene will mark another record: in terms of the size of assets involved in transfers. This year's activity involves an asset size of over Rs 2,88,000 crore (Rs 2,880 billion). The companies involved reported a collective sales turnover of Rs 2,95,500 crore (Rs 2,955 billion) and a net profit of Rs 16,400 crore (Rs 164 billion) in 2003-04.
But the sample includes eight public sector undertakings, and they account for over 80 per cent of the assets, sales and profits of the full sample.
The eight PSUs include four refineries, two steel companies and two banks. Together they have assets of Rs 2,36,442 crore (Rs 2,364.42 billion). These PSU posted sales of Rs 2,55,117 crore (Rs 2,551.17 billion) and net profit of Rs 13,174 crore (Rs 131.74 billion) in 2003-04.
Kochi Refineries proposes to merge into BPCL, Indian Oil Corporation will merge its subsidiary IBP with itself, Indian Iron & Steel will merge with its parent, the Steel Authority of India Ltd, and IDBI Bank will merge into IDBI.
In the private sector, 70-odd companies, with assets of over Rs 50,000 crore (Rs 500 billion) have put forward proposals to merge as many as 94 subsidiaries. These companies reported sales of over Rs 40,000 crore (Rs 400 billion) and net profits of over Rs 3,300 crore (Rs 33 billion) in 2003-04.
ITC Hotels -- and its wholly owned subsidiaries Bay Hotels and Ansal Hotels -- is merging with parent ITC. Eicher Motors and Malbros Investment propose to merge into Eicher Ltd, Chowgule Steamship into Chambal Fertilisers, Ses Kembla Coke with Sesa Goa, Monnet Power with Monnet Ispat, Vision Hotels Resorts with Hotel Leela Ventures and Ispat Metalics with Ispat Industries.
Matrix Laboratories will be merging four of its pharmaceutical subsidiaries with itself, Pentamedia Graphics proposes to merge four of its media subsidiaries, Haryana Fibres is merging its infotech and finance companies and Nahar Industries is merging its sugar and trading companies.
