Assignment 1

Mujtaba Ajaz Ansari (2013160)

Navya Mukhi (2013162)
Section ABC1

Rationale of Mergers & Acquisitions


Acquisition of Utkal Soap Product Ltd. By Yashraj
Biotechnology Ltd.

BRIEF INFORMATION
Acquirer Company Yashraj Biotechnology Limited
Target Company Utkal soaps Products Limited
Offer Price Cash offer @ 16 per fully paid up equity share of face value of Rs. 10

ACQUIRERS MOTIVE
This Open offer was made by the Acquirer (Yashraj Biotechnology Ltd.) in compliance with
regulation 3(1) & 4 of the SEBI (SAST) Regulations, to the equity shareholders of Utkal Soap
Products Limited, incorporated and duly registered under the Companies Act, 1956 .The prime
objects & motive of the Offer are as follows:
To acquire substantial acquisition of shares/voting rights accompanied with the change in
control and management of Utkal Soap Products Limited from its present promoter.
The acquirer does not have any plane to dispose off any asset of Utkal Soap Products Limited
in the subsequent two years from the date of closure of offer and if they require to do so, prior
approval of the shareholders through a postal ballot would be taken.
The Acquirer proposes to expand and venture into related field of the target company along
with its existing Biotechnology venture.
The Acquirer intends to control over the Target Company & make changes in the Board of
Directors of the Utkal Soap Products Limited.
To consolidate its shareholding in the Target Company thereby to exercise effective
management and control over the Target Company.


TARGETS MOTIVE
The motive of the target company is to improve the capital structure as they are having huge debt
in their capital. Which is clearly evident from their debt equity ratio. Other motive could be for
efficient management & better control.

FINANCIAL STATEMENTS OF THE ACQUIRER

PROFIT AND LOSS STATEMENT

Share Capital Structure of Utkal Soap Products
Limited
Paid UP Equity Shares of TC
No. of
Share
Voting Rights %
of Shares /
Voting Rights
Fully Paid up Equity Shares 3,99,750 99.94
Partly Paid UP Equity Shares 250 0.06
Total Paid up Equity Shares 4,00,000 100
Total Voting Rights in TC 3,99,750 99.94





BALANCE SHEET

Balance Sheet Statement March 31, March 31, March 31, September
2011 2012 2013 30, 2013
Sources of Funds
Paid Up Share Capital 451.80 451.80 451.80 451.80
Reserves and Surplus 2748.99 2821.98 3250.99 3488.03
(Excluding Revaluation
Reserves)
Net worth 3100.79 3273.78 3702.79 3939.83
Deferred tax Liability 91.91 104.25 120.28 144.53
Long Term Borrowings 252.24 239.90 393.25 606.76
Other Long Term 0.00 16.31 27.44 39.27
Liabilities
Total 3544.94 3634.24 4243.76 4730.39
Uses of Funds
Net Fixed Assets 1660.62 1640.44 2652.39 2722.76
Capital Work In Progress 63.50 278.29 20.83 236.05
Long Term Loans and 0.00 350.76 117.15 118.40
Advances
Investments(At Cost) 250.70 483.88 579.92 585.98
Other Non-Current Assets 0.00 100.00 100.00 252.00
Net Current Assets 1570.12 780.86 773.47 815.20
Total 3544.94 3634.24 4243.76 4730.39

OTHER FINANCIAL DATA

Other Financial Data March 31, March 31, March 31, September
2011 2012 2013 30, 2013
Dividend (%) 16% 10% 15% N.A.
Earnings Per Share (in Rs)
( Where required, Annualized)
8.04 1.57 6.36 5.93

Book Value Per Share
38.78 40.94 46.31 49.27
Market Price per share
N.A. N.A. N.A. N.A.






FINANCIAL STATEMENTS OF THE TARGET COMPANY

PROFIT AND LOSS STATEMENT
Profit & Loss Statement March 31, March
31,
March 31, September 30,
2011 2012 2013 2013
Income from operations 0.00 0.00 0.00 0.00
Other Income 14.77 2.40 4.14 1.39
Total Income 14.77 2.40 4.14 1.39
Total Expenditure 1.93 1.56 1.16 0.20
Profit/ (Loss) Before 12.84 0.84 2.98 1.19
Depreciation Interest and Tax

Depreciation 0.00 0.00 0.00 0.00
Interest 5.27 0.13 0.00 0.00
Profit/(Loss) Before Tax 7.57 0.71 2.98 1.19
Provision for Taxation ( includes 2.35 0.22 1.04 0.00
deferred tax adjustment - a
positive figure)
Profit /(Loss )After Tax 5.22 0.49 1.94 1.19

BALANCE SHEET
Balance Sheet Statement


Sources of Funds
Paid Up Share Capital 39.99 39.99 39.99 39.99
Reserves and Surplus 18.69 19.18 21.12 22.31
Net worth 58.68 59.17 61.11 62.30
Unsecured Loans 0.00 0.00 0.00 0.00
Deferred Tax Liability 0.00 0.00 0.00 0.00
Total 58.68 59.17 61.11 62.30
Uses of Funds
Net Fixed Assets 0.00 0.00 0.00 0.00
Investments 0.33 0.20 0.00 15.00
Long Term Loans &
Advances
0.00 0.00 0.00 0.00
Net Current Assets 64.15 59.17 61.11 47.30
Total 58.68 59.17 61.11 62.30


OTHER FINANCIAL DATA
Other Financial Data March 31, March 31, March
31,
September
30,
2011 2012 2013 2013
Dividend (%) NIL NIL NIL NIL
Earnings Per Share 1.30 0.12 0.48 0.30
Return on Net worth(%) 8.90 0.83) 3.17 1.91
Book Value Per Share (Rs.) 14.67 14.79 15.28 15.58

EPS has diluted year after year which is shown in the above table

Particular March 31, 2011 March 31, 2012 March 31, 2013 September 30, 2013
Debt Equity ratio 0.08 0.078 0.11 0.16
Net Profit ratio 27.64 11.13 30.32 21.77
Net worth 0.11 0.04 0.14 0.06

Debt Equity ratio of the target company is going up hence we can see that there is a huge debt on the
company as compared to its previous records therefore rational of the takeover can be repaying its debt
that it has acquired during the past year of its functioning.
EFFECT ON STOCK OF ACQUIRER AND TARGET COMPANY

Utkal soap Products Limited was listed on Calcutta Stock Exchange and no trading has taken
place for a long period of time.

INDUSTRY POINT OF VIEW
This was a conglomerate merger where the two companies were dealing in two different fields. So
there will be an expansion of business in untapped market. Which is beneficial for the economy.