The merged firms gave better performance than industry in terms of profitability. Mergers and operating performance by Mr. Mantravadi: An Indian perspective, attempted to examine the impact of mergers on the performance post industrial reforms, by investigating some pre- and post-merger financial ratios, with chosen sample firms, and all mergers linking public and private limited companies The study results suggested that there are minor variations in terms of impact on financial performance of subsequent mergers across different intervals of time in India.
It also indicated that for mergers between the same groups of companies in India, there has been deterioration in performance and ROI. Selvam has analyzed the impacts of stock price changes to mergers and acquisitions behavior taken place in banking industry with particular reference to private and public sector banks. Found that share prices are market sensitive. From the financial analysis it was noted that greater part of the banks went for branch extension and this has affected profitability to some extent and it resulted in harmful competition among the players.
To add up the review of literature, many offerings have offered diverse perspectives of merger in different industries globally and explained the valuation techniques followed by merging companies, and shareholders possessions effect due to merger. From the review of several papers evaluating the pre and post merger performance of merged companies, it is incidental that majority of the studies powerfully support the concept of improved post merger performance due to merger and it is valuable to the acquirer companies. Hence, the sample size of this study is confined to 3.
Besides, while selecting the sample, following points were taken into account.
Financial and marketing analysis of Tata Group in India
The present study covers a period of one year from April 1, to March 31, But in order to evaluate the financial performance of sample companies on a comparative basis, days before merger and after merger were considered. The present study fundamentally depends on secondary data. The pre-merger average performance of the companies was compared with the post- merger performance of the joint firm. The present study attempts to calculate and study the pre and post merger performance of acquirer and target companies by using financial ratios in order to determine whether mergers resulted in shareholders wealth or not.
It shows what proportion of equity and debt the company is presently using to finance their assets. Net profit margin: The profit margin says how much profit a company makes for every 1 Rupee it generates in revenue or sales. A healthy operating margin is necessary for a company to be able to pay for its fixed costs, such as interest on debt. Also known as net profit margin.
Enterprise value is a figure that, in theory, that represents the entire cost of a company if someone was to acquire it. Enterprise value is a more precise estimate of takeover cost than market capitalization since it includes a number of important factors such as preferred stock, cash reserves and debts.
With around about 96 operating companies it diversifies businesses into 7 different sectors. Revenues equal to 5. The total revenue of Tata companies, taken together, was around Rs, crore in the year , with 57 per cent of this contributed by business outside India. Tata companies employ about , people globally. The Tata name has been valued in India for years for its devotion to strong values and business ethics. Leading employer in private sector over , employees.
A shareholder base of over 2. With a controlled position in emerging markets, Tata Communications leverages its superior solutions capabilities and domain expertise throughout its worldwide and pan-India network to deliver managed solutions to multi-national enterprises and Indian customers. The merged body, Tata-Corus, engaged 84, people across 45 countries in the globe. It had the ability to make 27 million tons of steel per annum, making it the fifth largest steel producer in the globe as of early Prior to the acquisition, the chief market for Tata Steel was India.
But as soon as the acquisition took place, the earnings showed a marginal rise and again got back to the level where it was just before the acquisition. This happened due to very large debt generated due to overpaying by acquiring the Corus at a very high price of pence per share as compared to previously valued pence per share. Debt equity ratio on post acquisition increase because Corus debt was high it was GBP1. ROCE shows that post acquisition is very less as compared to pre acquisition it has negative percentage because company has short term returns after one year it will improve in the long run.
Net profit margin has very less change as profit is not much affected. ROE is decreasing by EPS has a very minor change. Operating profit margin is reduced by 9. Some say the deal is over-valued and some say its not easy to put value on the fastest growing mobile market in the world.
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The Tata Motors Bombay Essay
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