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INORGANIC GROWTH-ISIT THE RIGHT STRATEGIC

MOVE FOR INDIAN

BUSINESSES

SUBMITTED BY:Shalini Prabha

Shallu DhirShubha DixitSukhwinder Singh

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CONTENTS

INTRODUCTION

MEANING

INORGANIC GROWTH STRATEGIES

MERGER

JOINT VENTURE

SUCCESSFUL MERGERS IN INDIABENEFITS

CONCLUSION

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INTRODUCTION

LPG 1991

BUSINESS ENVIRONMENT

POST LIBERALISATION

WHETHER MERGERS & ACQUISITIONSPAY?

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MEANING OF INORGANIC

GROWTHInorganic Growth means that thecompany has grown by merger,acquisitions or takeover.

Inorganic growth is attained when acompany acquires a technologydeveloping company in order to enhanceits competitive advantage and growth rateand is also known as External Growth

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STRATEGIES OF INORGANICGROWTH

External growth has been attempted bythe business houses through the twostrategies

mergers and acquisitions

joint ventures.

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MERGER

Merger is an external growth strategy.When different companies combinetogether into new corporate

organizations, such a process is known asmergers. Merger can occur in two ways:

Acquisition or takeover and

amalgamation.

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PHASES

PRE MERGER PHASE

Financial position oftransferor company

Market Value

Brand Value

Communication Issues

Share Holders & other

stake holders view

ACQUISITION PHASE

Cost of merger &

acquisitionMaintenance of

customer

relationships duringintegration phase

Knowledge transferamong 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

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JOINT VENTURE

When two or more firms mutually decideto establish a new enterprise byparticipating in equity capital and in

business operations, it is known as jointventure.

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SUCCESSFUL MERGERS ININDIA

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TATA CHEMICALS TOOK OVERBRITISH SALT

Tata Chemicals took over British saltbased in UK with a deal of US $ 13 billion.

This is one of the most successful recentmergers and acquisitions 2010 that madeTata even more powerful with a strongaccess to British Salt's facilities that areknown to produce about 800,000 tons ofpure white salt annually.

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RELIANCE POWER AND RELIANCENATURAL RESOURCES

Merger of Reliance Power and RelianceNatural Resources with a deal of US $11billion is another biggest deal in the

Indian industry. This merger between thetwo made it convenient and easy for theReliance power to handle all its powerprojects as it now enjoys easy availability

of natural gas.

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AIRTEL ACQUIRED ZAIN

Airtel acquired Zain in Africa with anamount of US $ 10.7 billion to set newbenchmarks in the telecom industry. Zain

is known to be the third largest player inAfrica and being acquired by Airtel it isdeliberately increasing its base in theinternational market.

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ICICI BANK ACQUIRED BANK OFRAJASTHAN

ICICI Bank's acquisition of Bank ofRajasthan at aout Rs 3000 Crore is agreat move by ICICI to enhance its

market share across the Indianboundaries especially in northern andwestern regions.

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FORTIS HEALTHCARE ACQUIRED

HONG KONGS QUALITYHEALTHCARE ASIA Ltd

Fortis Healthcare acquired Hong Kong's

Quality Healthcare Asia Ltd for around Rs882 Crore and is now on move to acquirethe largest dental service provider inAustralia, the Dental Corp at about Rs 450

Crore.

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BENEFITS TO BUSINESS

Helps reduce competition in the marketplace

Instantly adds new brands andproduct/service lines to the acquiring

companyProvides access to fresh customer base and

adds new geographical locations In many cases, an established marketing

channel also becomes availableEconomies of scale are achieved over a

period of time.A fresh breath of management skills

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CONCLUSION

A firm desiring immediate growth andquick returns mergers and takeoverafford attractive opportunities as they

obviate the necessity of starting fromscratch. However, identifying the rightcandidate for merger or acquisition is anart at which only a few managements can

really excel.

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Establishing joint venture, especially in

the international arena, is a low risk

alternative. Many firms prefer thisapproach.

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THANK YOU