M&A Critique – July 2017

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Some reforms are harder because it is a very difficult to job to implement due to changes required but are necessary cause it is to ease the functioning of the administration as well as for the honest citizens of the country. Introducing GST was visualised way back in 2000 and we shall see it getting implemented a good 17 years post the first time discussion on the same happened in the country. GST after quite a few amendments shall be implemented from 1st July, 2017 and as for anyone treading into unknown territory, everyone in the country is anxious of the impact of the GST on the personal and corporate level. Internally in the office we think that more and more people who worked hard to find ways to not pay taxes simply to protect their profit margins shall get registered to avail its benefits and become part of the tax system earlier the better.

Our cover article is on demerger of manufacturing business Tube Investment of India Ltd into Tube Investments Financial Holding which currently has no operations as of now. The demerged manufacturing business into TIFHL shall have it name changed to TIIL. The transaction definitely unlocks value for the present shareholders of TIIL and also frees up TIIL management to focus on the respective businesses and invite focus investors The next article is on the R Systems internal restructuring which we feel was long overdue. The exercise for reduction and reorganisation of capital should have been carried out much earlier to reflect true paid up capital by cancelling the shares which had no real owner.

Our next article is on the M&A transactions in the Chemical Industry in the last 5 years or so. Not only we look at the global history of no. of deals happening country wise but we also note the trend and likelihood of increased deals in India. The slowdown of the Chinese manufacturing and Chemical MNCs looking to expand in India as they see huge potential is already setting of spark in acquisitions of small companies.

Future Retail has proposes a demerger of house furnishing segment which is very small part of its total revenue and merge with the resultant company the online business so that focussed attention can be given by the management of the resultant company to scale up the said business and demerged company can now focus on its core retail business. The move comes at a time when it is expected the demand on home furnishing products shall be increasing with growing residential and non-residential sectors. The main company shall be realigned to have a strategy to stay of their competition.

We have been tracking the Aditya Birla, Grasim and Nuvo restructuring since last 2 years. In the Deal impact section, we see the latest from the restructuring. NCLT approved the merger on 1st June 2017 which shall lead to dissolution of Aditya Birla Nuvo Limited from 1st July 2017. The financial services company which will be demerged will be free to focus on its core business and get listed as per the scheme.

Legal Corner & article on Adani Power Financial Restructuring.

For more details, Visit at – http://huconsultancy.com/

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