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Interdisciplinary Journal of Research in Business
Vol. 1, Issue. 4, April 2011(pp.58-82)
Corporate Restructuring & Firms Performance: An Empirical Analysis of

Selected Firms of Across Corporate Sectors in India
Dr. Ramachandran Azhagaiah
Associate Professor of Commerce,
Kanchi Mamunivar Centre for Post-Graduate Studies
(Autonomous Centre with Potential for Excellence by UGC), by UGC)
(Government of Puducherry), Pondicherry University, Puducherry-605 008, India
drrazhagaia@yahoo.co.in
T. Sathish Kumar
Ph.D Research Scholar,
Kanchi Mamunivar Centre for Post-Graduate Studies
(Autonomous Centre with Potential for Excellence
ABSTRACT
This paper examines the corporate (financial and Pondicherry University, operating) performance of Indian
manufacturing firms, following the merger event from the economic-finance Puducherry-605 008, India
perspective. The study is based on short run analysis of two periods: viz three years prior to merger, and three
E-mails: sathishvethathiri@yahoo.com years immediately after merger covering a period from 2004 to 2010.
We tested two hypotheses whether there have been significant improvements in the corporate performance of
Indian manufacturing corporate firms following the merger event, using a parametric statistical t-test. To
measure the corporate performance, ratios such as current ratio, quick ratio, working capital turnover ratio,
inventory turnover ratios, total asset turnover ratio, fixed asset turnover ratio, gross profit margin, net profit
margin, operating leverage, net fixed assets relative to net worth and total liabilities relative to net worth are
extensively used. Empirical results show mixed results of pre-and post-merger values computed. The study
proves that Indian manufacturing corporate firms involved in merger& acquisition (M&A) have achieved an
increase in the liquidity position, operating performance, profitability, and financial and operating risk.
Further, it is inferred that the overall efficiency of acquirer firms is also increased. The statistical analysis also
supports for a significant relationship between the pre and post M&As level of the corporate firms
performance.
Keywords: Merger; Acquisition; Merger & Acquisition; Corporate restructuring; Business restructuring
INTRODUCTION
Dramatic events like mergers, takeovers, restructuring, and corporate controls are the developments that have
become central focus of public and corporate policy issues all around the globe. For any firm, the prime
objective is to grow profitably, which can be achieved either through the process of developing new products
(external) or by expanding (internal) the capacity of the existing products. The external growth can be achieved
by merger& acquisition (M&A). The last decade of 20th the century and the first decade of 21st century has seen
a substantial increase in both the number and volume of M&A activities. In fact, consolidation through M&A
has become a major trend across the globe in the recent past. This wave was driven by globalization,
technological changes, and market deregulation and liberalization. Around the globe, almost all industries are
going through reorganization and consolidation by M&A, which has been predominant in sectors like steel,
aluminum, cement, auto, banking and finance, computer software, pharmaceuticals, consumer durables, food
products, agro-chemicals and textiles.
The impact of information and communication technology (ICT) has further increased the pace and size of
M&A, which helps in fast growth, tax benefit, diversification, bigness, market leader, cost advantage,
competitive advantage, technology advantage, etc. To illustrate, the diversification and conglomerate types of
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M&A dominated the business restructuring movement during the sixties. However, the eighties witnessed the
mergers characterized by a return to specialization, and an enormous increase in real sizes. The merger waves in
the U.S. in the 1980s and afterwards are characterized by the strong relatedness between the businesses of the
merging firms unlike the conglomerate mergers in the sixties and seventies. In constant dollar terms, the
mergers during 1988 increased almost four to six times more than that of the value of mergers in the early
seventies.
LITERATURE REVIEW
Dash (2004) examined the economic consequences of mergers on the shareholders of the acquirer firm. The
event study methodology which was employed to assess the extent of value creation by mergers, indicates that
on an average mergers lead to value destruction, irrespective of their pattern over a long period of time and the
destruction is relatively greater in case of unrelated mergers. The study draws a contradictory conclusion to the
popular belief that the merger as a means of corporate salvation and declares it as a myth. Moeller and
Sehlingemam (2005) analyzed the performance of acquirer firms through two major merger waves that
occurred during that period. They found that over the period 1998 through 2001 shareholders in bidders lost
$240 billion. They also found that even when the target shareholder benefits were taken into account the net
effects were still negative $134 billion. They opined that the target shareholders gain at acquirer firm
shareholders expense. Davi (2006) analyzed the prices paid by foreign corporate firms for acquisitions in the
United States (US) relative to the price paid by US corporate firms for mergers. The data used were obtained
from the Securities Data Corporation Platinum database and consist of a list of all M&As from 1980 to 2005 in
which the target corporate firms was based in the United States. The findings indicate that foreign corporate
firms do pay more for US acquisitions, and that this does result in significantly lower returns on M&As
investment in the US by foreign corporate firms.
Isabel Feito-Ruiz (2010) analysed family versus nonfamily firms returns under different legal environments
when an M&A is announced. The database includes 124 M&As of European-listed firms (15 countries), with
acquired firms being worldwide public or private firms (23 countries), over the 2002 to 2004 period. The
findings showed that family ownership has a significant positive influence on acquirer shareholder M&A
valuation. However, a major shareholder ownership of 32% has a negative effect. The authors also observed that
a weaker legal and institutional environment in the target country has a positive influence on acquirer
shareholder valuation. Indhumathi (2011) M&A becomes the major force in the changing environment. The
policy of liberalization, decontrol and globalization of the economy has exposed the corporate sector to
domestic and global competition. It is true that there is little scope for corporate firms to learn from their past
experience. Therefore, to determine the success of a merger, it is to be ascertained if there is financial gain from
mergers. The study was limited to a sample of corporate firms which underwent merger during the period of
2002-2005. It was proposed to compare the performance of the acquirer and target corporate firms before and
after the period of mergers by using ratio analysis and t-test during the study period. The study found that the
shareholders of the acquirer corporate firms increased their financial performance after the merger event.
RESEARCH METHODOLOGY
Objectives and Hypotheses Development of the Study
The study is primarily designed to examine the impact of relevant benefits expected by the Indian
manufacturing firms in India after M&A, thereby tries to measure the shareholders wealth and operating
performance of selected sample Indian firms. More specifically, the present study is proposed to:
Study the impact of M&A on liquidity, profitability and financial and operating risks of
firms across industries in India after M&A.
Based on the objectives the following hypotheses are developed:

Ho#1-There is no significant improvement on the liquidity, profitability, and operating performance of
acquirer firms across industries in India after M&A.
Ho#2- There is no significant decline in financial as well as operating risks of acquirer firms across
industries in India after M&A.
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Statement of the Problems and Scope of the Study

When the firm gets merged with other or acquired by the profit making firm, it benefits for both the firms, hence
now-a-days all firms are interested in resorting to corporate restructuring in the form of M&A. However, the
question often arises whether all the firms that are merged / acquired are ending up with maximization of
shareholders wealth and improved operating performance? In some firms, the shareholders wealth gets
reduced after it get merged / acquired. Hence, the present study is proposed to seek answers to the stated
question by analyzing the impact of M&A on the firms performance of selected corporate firms in India
corporate considering three years period before and three years period after the process of M&A. The period of
the study is from 2004 to 2010. i.e., pre merger period from 2004-2006; post merger period from 2008-2010.
Sampling Design
The study used secondary sources of data. The required data for the study were collected from the capital
market database called Centre for Monitoring Indian Economy Private Limited (Prowess CMIE). The
sample units (firms) drawn are based on the list of firms that ventured into the M&As process with the help of
the comprehensive list provided by the Third Annual Issue 2007 Grant Thornton India 2008. During the
calendar year 2007, 52 corporate firms have undergone for M&A activities, out of which full-fledged data were
available for 12 firms only, hence all the 12 firms are selected for the analysis of the study (see table 2).
Tables 1 & 2 go here
Fig.1 (a) go here
STATISTICAL RESULTS AND FINDINGS
Plan of Analysis
To study the impact of M&A on the overall performance of acquirer firms, the analysis has been made focusing
on five elements viz liquidity, working capital position, operating performance, profitability, financial and
operating risks. Appropriate ratios viz., current ratio, quick ratio, working capital turnover ratio, inventory
turnover ratios, total asset turnover ratio, fixed asset turnover ratio, gross profit margin, net profit margin,
operating leverage, net fixed assets relative to net worth and total liabilities relative to net worth been used to
measure the impact of M&A on the specific element. To measure the impact of M&A on various dimensions
(elements) parametric statistical tool, viz., t test has been extensively used by use of the following formula.
Paired t test for difference of two means is
t=
|d|
------------- ~ t n-1 dt
S/n
Where d = d/n and d= x y or y
S=
(d d) 2
------------n-1
Impact of M&A on Liquidity of Acquirer Firms

To study the impact of M&A on the liquidity position of acquirer firms, current ratios (CA_CL), quick ratio
(QA_QL) are used.
Current Assets
Current Ratio=
60
Current Liabilities
Table three reports the mean CR of before and after merger of the selected acquirer firms. The average CRs
vary between minimum of 1.13 (Tata Global Beverage) and maximum of 5.64 (Rain Calcining) in the premerger period. The average CR ranges from 1.00 (Tatia Globa) to 6.01 (Rain Calcining) in the post-merger
period. The mean CRs in post-merger period are more than that of in the pre-merger for seven out of 12 acquirer
firms. For the other five acquirer firms, the CRs have declined during the post-merger period. From t-values, it
is inferred that the CR position of Tata Steel Industry (t = -3.53, p < 0.01), United Sprits (t = -14.32, p < 0.01),
Tata Global Beverage (t = -2.37, p < 0.05) and Reliance Industry (t = -2.41, p < 0.05) increased significantly
after M&A process. However CR position of Visualsoft Industry (t = 2.93, p < 0.01) and Tatia Global Venture
(t = 3.11, p < 0.01) has declined after M&A process.
Table 3 goes here
Overall, it is inferred from the comparison of CRs between pre and post merger periods that the liquidity
position in terms of CR has improved in seven out of 12 firms after merger but the enhancement has been at
apparent level only in four firms. Hence five firms have experienced with decline in CR position after merger,
the decline has been significant for two firms. On the whole, it is inferred that M&A process has significant
effect on CR of acquirer firms in India.
Quick Assets
Quick Ratio=
Quick Liabilities
Table 4 goes here
It is inferred that the quick ratio (QR) is increased after merger in nine out of 12 firms (see table 4). Only in the
case of Visualsoft Industry, Tatia Global Venture and Mcleod Russel India there has been a decline in the QR
after merger, which are significant at 10 per cent level (t value = 1.97, p < 0.10) and at 1 per cent level (t value =
4.97, p < 0.01) respectively. Among the firms with increase in QR, it is inferred that it has been statistically
significant for three acquirer firms out of four firms whose liquidity position is declined for three firms the
change (decline) in liquidity position is statistically significant (Tata Steel, Visualsoft and Tatob). Hence, it is
inferred that there has been a significant increase in liquidity position in terms of QR of acquirer firms after
merger. On the whole, it is found that the M&A process has significant impact on liquidity position of acquirer
firms in India.
Impact of Merger on Working Capital Turnover Ratio of Acquirer Firms

To study the impact of M&A on the working capital position of acquirer firms, two measures, viz working
capital turnover ratio (WCTR), and inventory turnover ratios (ITR) are used.
Cost of Goods Sold or Sales
Working Capital Turnover Ratio=
Net Working Capital
Table five evidences that the working capital turnover ratio (WCTR) shows a decline in five out of 12 acquirer
firms in post-merger period and the decline has been significant for two firms, viz Tata Steel Industry ( t = 4.14,
p < 0.01) and Reliance Industry (t = 2.16, p < 0.05), however, there is an increase in WCTR which is highly
significant for Visualsoft Industry (t = -2.53, p < 0.05) and Russian Aluminium Giants Rusal and Sual (t = -3.95,
p < 0.01). Overall for majority of the acquirer firms the change in WCTR is not statistically significant,
revealing a fact that the merger has not impacted much in increasing the working capital position of the acquirer
firms.
Table 5 goes here
Perusal of the table six shows that the inventory turnover ratios (ITRs), which vary from 2.59 (Bannari Amman
Sugar) to 9.02 (United Sprits) in pre-merger period, and a ranged between 2.92 (Bannari Amman Sugar) and
16.16 (Tatia Global Venture) in post-merger period has increased after merger process in all selected corporate
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firms. The ITR has almost doubled after merger in the case of Tatia Global Venture, but with high variation
(SD = 6.10). Though ITR has increased for all the acquirer firms under study after merger process, the
difference in mean ITR between pre and post merger period is significant only for four corporate firms, (Rain
Calci, Reliance, Tata Global and Kochi Refi) t-values for the difference in mean ITR between the two periods
for Rain Calcining (t = -3.14, p < 0.01), Reliance Industry (t = -3.47, p < 0.01), Tatia Global Venture (t = -2.46,
p < 0.05) and Kochi Refineries (t = -4.44, p < 0.01) is significant.

Inventory Turnover Ratio=
Average Inventory
Table 6 goes here
However, the increase in the mean ITR in post-merger period among all selected corporate firms revealed the
impact of merger. Therefore, it is inferred that M&A process has significant impact in Inventory turnover of
acquirer firms.
Impact of M&A on Operating Performance of Acquirer Firms

Inv
Total Assets Turnover Ratio=

Total Assets
Table 7 goes here

Operating performance (OP) in terms of comparing mean total asset turnover ratio (TATR), fixed asset turnover
ratio (FATR), between pre and post merger periods has studied to measure the impact of merger on OP of the
firms undergone for merger activities. Perusal of the table seven shows that the increase in sales relative to
total assets is statistically significant in the case of Tata Steel Industry (t = -1.86, p < 0.10), United Sprits (t = 3.59, p < 0.01), Tata Global Beverage (t = -3.54, p < 0.01), Russian Aluminium Giants Rusal and Sual (t = 3.37, p < 0.01) and Mcleod Russel India (t = -7.32, p < 0.01). The decrease in TATR is statistically significant
only in respect of reliance industry (t = 1.83, p < 0.10). The total-asset-turnover-ratio (TATR) has increased for
eight out of 12 acquirer firms. Hence, from all the analysis, it can be inferred that there is a significant positive
change in turnover relative to total assets in acquirer firms. There has been a significant increase in sales relative
to fixed assets after merger for majority of the firms involved in M&A activities (see table 8). The fixed assets
turnover ratio (FATR), which range from 0.90 (Times) to 7.91 in pre-merger period has been Oscillating
between 1.13 (Times) and 13.62 (Times) in post-merger periods. The positive changes in FATR after merger
for all nine firms have been significant statistically the computed t-values are significant. Hence, it is inferred
that there is a significant improvement in acquirer firms in terms of using fixed assets for generating sales after
merger. Table 8 goes here
Fixed Assets Turnover Ratio=

Total Fixed Assets
Impact of M&A on Profitability of Acquirer Firms

To what extent the M&A process of the acquirer has impacted on the profitability has been analyzed by
comparing the mean profitability between pre and post merger periods the use of t-test. The profitability
measures considered for the analysis are: gross profit margin (GPM) and net profit margin (NPM) are used.
Gross Profit Ratio =
Gross Profit * 100

Net Sales
62
The gross profit margin (GPM) varies between as low as five per cent for Bannari Amman Sugar and Tatia
Global Venture to as high as 31 per cent for United Sprits during pre-merger. In post-merger period, the GPM
ranges from minimum of three per cent in tatia global venture to maximum of 30 per cent for Bannari Amman
Sugar. The GPM has increased only in five out of 12 firms and decline for the other firms (see table 9). The
increase in GPM is significant for Tata Steel Industry (t = -4.72, p < 0.01) and Bannari Amman Sugar (t = -5.01,
p < 0.01) and decrease in GPM is significant for Mcleod Russel India (t = 3.61, p < 0.01) and united sprits (t =
3.02, p < 0.05). Hence, the merger activity has a significant impact on GPM but failed to push it in the upward
direction in the case of acquirer firms.
Table 9 goes here
Net
Net Profit Ratio =
Net Profit * 100

Net Sales
The net profit relative to sales is negative in three out of 12 firms during pre-merger period (see table 10). The
minimum and maximum positive net profit margins (NPM) are three per cent (Mcleod Russel India and
Reliance Industry and 18 per cent (Rain Calcining) during the pre merger period but it is only one per cent and
22 per cent respectively for post merger period. Also, the NPM has shown an increase during post merger
period in seven out of 12 firms and is statistically significant in respect of Tata Steel Industry (t = -5.91, p <
0.01), Dhunseri Tea (t = -2.17, p < 0.10) and Bannari Amman Sugar (t = -3.94, p < 0.01). Therefore, it is
inferred that the M&A activity has a significant positive impact on the NPM of the acquirer firms.
Table 10 goes here
Impact of M&A on Financial Risk of Acquirer Firms after Merger
The condition of financial risk of the firms involved in M&A activities after merger is studied. In order to
ascertain the merger effect on financial risk of the acquirer firms, two measures namely ratio of long-term debt to
equity (D_E) and ratio of total debt to total assets (TD_TA) have been considered for the analysis.
Table 11 goes here
Debt
Debt Equity Ratio =
Equity
Long-term debt (LTD) is 1.13 times the equity for Tatia Global Venture and 1.40 times for Mcleod Russel India
and for the other firms; LTD is below the level of equity capital during pre merger period (see table 11). It has
been as low as two per cent for reliance industry and eight per cent for Reliance Industry. Only in Tatia Global
Venture, the LTD is more at 1.2 times of its equity in post merger period. Moreover, in post merger period,
LTD has been as low as 0.01 times of the equity for Reliance Industry. The Tata Global Beverage for which the
LTD_E is 0.22 times in pre merger period, become almost nil in post merger period. However, the LTD_E has
decreased in eight out of 12 firms after merger. The decline in LTD_E after merger differs significantly from its
level in pre merger period for Tata Steel Industry (t = 6.75, p < 0.01), Tata Global Beverage (t = 2.84, p < 0.01)
and Mcleod Russel India (t = 3.27, p < 0.01). So, it is inferred that the financial risk of the acquirer firms has
declined after merger, which indicates that the firms involved in merger process might have used their internal
funds in buying the shares of acquired firms. Therefore, there is a significant decline in LTD_E after merger in
acquirer firms.
Total Debt
Total Debt to Total Assets Ratio =
Total Assets
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With regard to the use of borrowed funds against assets, (see table 12) the share of debt fund in total assets (TA)
varies between minimum of 0.06 times in the case of Reliance Industry and maximum of 0.51 times in respect
of Mcleod Russel India during pre merger period. However, in post merger period, the minimum and
maximum debt funds in TA are 0.01 times (Reliance Industry) and 0.40 times (Mcleod Russel India).
Table 12 goes here
The use of borrowed funds against TA has declined in nine out of 12 firms after merger. Also, the changes in
borrowed fund relative to TA after merger when compared to that of its level in pre merger period is significant
for Tata Steel Industry (t = 8.04, p < 0.01), Visualsoft Industry (t = 3.44, p < 0.01), United Sprits (t = -2.35, p <
0.05), Tata Global Beverage (t = 3.54, p < 0.01), Tatia Global Venture (t = 2.23, p < 0.10), Mcleod Russel India
(t = 3.56, p < 0.01), and Kochi Refineries (t = 1.83, p < 0.10), which reveal the effect of merger on use of debt
fund in TA. Hence, the financial risk of the acquirer firms in terms of relying on the borrowed funds is
significantly affected by their merger activity.
Impact of M&A on Leverage Position of Acquirer Firms after Merger
Table 13 goes here
The status of leverage of acquirer firms after merger is analyzed. The measures considered for the analysis are:
operating leverage (OL), net fixed assets relative to net worth (FA_NW) and total liabilities relative to net worth
(TL_NW) are used. Operating leverage (OL), which measures as ratio of fixed cost to variable cost, is low at
three per cent for United Sprits and high at 51 per cent for Reliance Industry during pre merger period, however,
it is declined to 48 per cent for Reliance Industry after merging activity (see table 13). For most of the firms,
OL has shown a decline during post merger period, which in four out of 12 firms the OL, is in the increase after
merger. T-values are significant for Tata Steel Industry (t = 4.17, p < 0.01), Dhunseri Tea (t = 3.92, p < 0.01),
Rain Calcining (t = - 4.64, p < 0.01), Visualsoft Industry (t = 11.44, p < 0.01), Tata Global Beverage (t = 3.07, p
< 0.05), Russian Aluminium Giants Rusal and Sual (t = 2.75, p < 0.05), bannari amman sugar (t = -12.20, p <
0.01), mcleod russel India (t = 4.42, p < 0.01) and united sprits (t = 3.19, p < 0.01), which shows the impact of
merger on OL of the acquirer firms. Hence, overall, the FC relative to variable cost becomes less after merger
and merger has significant impact in declining the OL of acquirer firms. Table 14 goes here
Table 14 shows that the net fixed assets relative (NFAR) to net worth (NW) is above one for Tata Steel Industry,
United Sprits, Russian Aluminium Giants Rusal and Sual, Tatia Global Venture, and Mcleod Russel India in
pre-merger period, whereas for post-merger period, it is more than one only in three firms, namely russian
aluminium giants rusal and sual, bannari amman sugar and mcleod russel India, which reveals the decrease in
tangible assets of the acquirer firms after merger, thereby reducing the risk of OL. Moreover, the NFAR_NW
shows a decline in 10 out of 12 firms after merger. The difference in average NFAR_NW between the two
periods is significant for Tata Steel Industry (t = 7.34, p < 0.01), Dhunseri Tea (t = 3.77, p < 0.01), Tata Global
Beverage (t = 2.94, p < 0.05), Reliance Industry (t = 2.35, p < 0.05), and for Tatia Global Venture (t = 2.32, p <
0.05).
Net Fixed Assets
Net Fixed Assets to Net Worth Ratio =
Net Worth
The t-values for firms with increase in NFAR_ NW after merger are insignificant, which fact shows only the
decline in NFAR _ NW for acquirer firms after merger is significant, thereby leads to make significant impact
on reducing the risk of OL of the acquirer firms either by reducing the tangible assets or by increasing the
shareholders equity in NW.
CONCLUSION, SUGGESTIONS AND SCOPE FOR FUTURE RESEARCH
The M&A process has significant effect on CR, LR, and overall liquidity of acquirer firms in India. The change
in WCTR is not statistically significant for the acquirer firms revealing a fact that the merger has not impacted
much in increasing the working capital position of the acquirer firms. The increase in the mean ITR in postmerger period among all selected corporate firms shows a significant impact of merger. Therefore, M&A
process has significant impact in inventory turnover of acquirer firms. There is a significant positive change in
the turnover relative to total assets in
the acquirer firms. Similarly there is a significant improvement in
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acquirer firms in terms of usage of fixed assets for generating sales immediately after merger. The merger
activity has a significant impact on GPM but failed to push it in the upward direction. The M&A activity has a
significant positive impact on the NPM of the acquirer firms, which reveal the impact of merger on use of debt
fund in TA. Hence, the financial risk of the acquirer firms in terms of relying on the borrowed funds is
significantly affected by their merger activity. The financial risk of the acquirer firms in terms of relying on the
borrowed funds is significantly affected by their merger activity. The FC relative to variable cost becomes less
after merger, and merger has significant impact in declining the OL of acquirer firms. There is a significant
impact on reducing the risk of OL of the acquirer firms either by reducing the tangible assets or by increasing
the shareholders equity in NW.
CONCLUSION AND SUGGESTIONS
M&A is an important tool among the most effective ways to expedite the implementation of a plan to grow
rapidly. Corporate firms across sectors have grown at high rate, in part because of an aggressive M&A strategy.
The impact of technology and the internet have further increased the pace and size of deals. The present study
examined the corporate performance of 12 corporate firms in India which involved in M&A during the calendar
year 2007. To study the after merger performance of the firms, measures viz., CR, LR, WCTR, ITR, TATR,
FATR, GPR, NPR, DER, TD_TAR, OL, and NRA_NWR are used under six dimensions viz., liquidity, working
capital, operating performance, profitability, financial risk and operating risk, and leverage position. The
impact of M&A on these dimensions is studied considering data relating to three years, immediately before
merger, and immediately after merger i.e., from 2004-06 (pre merger); and from 2008-10 (post merger) in short
run analysis. To test the impact of M&A on the various dimensions paired t test has been extensively used.
The study proves that there is a mixed performance of pre merged, and post merged values. The liquidity
position in terms of CR has improved in seven firms (for four firms it is statistically significant); in terms of LR
it has improved in nine firms (significant for three firms) after merger. With respect to WCT, the M&A has
impacted negatively for five firms (significant for two firms); it has impacted positively for two firms. The ITR
has increased for all selected firms after merger (significant for four firms). Hence, H01 in respect of liquidity is
disproved. The operating performance analysis shows that TATR is increased for eight firms (significant for five
firms). The FATR is also increased for nine firms (significant for six firms). Hence, H01 in terms of operating
performance is rejected. The impact of M&A on profitability is significant positively. The GPM has increased
in five firms while NPM has increased in seven firms, though significant for three firms. Hence, the H01 in
terms of profitability is rejected. The impact of M&A on the financial risk is decreased in eight firms, though
significant for three firms thereby leading to reject the H 02 in terms of financial risk i.e., there is a significant
decline in financial risk of acquirer firms across industries in India after merger. The impact of M&A on OL is
significant, that is FC relative to variable cost becomes less after merger, and the merger has significant impact
in declining trend of the OL of acquirer firms. Hence, the H 02 in terms of operating risk of the acquirer firms is
rejected. The impact of M&A on NFAR_NW is significant as it leads to reduce the operating risk of the
acquirer firms. Hence, the H02 in terms of operating risk is rejected.
Table 15 goes here
Buyers of all shapes and sizes have adopted many of the same strategic objectives to build long-term
shareholders value and take advantage of the synergies that the merged firms will create but each industry has
its own specific objectives. Hoping the mergers work successfully, a complicated process which involves not
only putting two corporate firms together but also involves integrating people of two firms with varied cultures,
attitudes and mindsets, has been involved. Therefore, there must be a meticulous pre merger planning including
conduct of proper investigation, effective communication during the integration, committed and competent
leadership, and speed, with which the integration plan is integrated, together will pave way for the success of
M&As. Hence, it is concluded that the Indian firms across industries involved in M&As have achieved an
increase in the liquidity position, operating performance, profitability, and reduced their financial and operating
risks immediately after merger. Further it is inferred that the overall efficiency of those corporate firms has also
increased.
LIMITATIONS OF THE STUDY
The study is mainly based on secondary data. The study is confined to only manufacturing firms that are
categorized into food & beverages, chemicals, non-metallic mineral products, metal & metallic products,
machinery and miscellaneous manufacturing & diversified. The study is limited to 12 corporate firms out of 52
corporate firms, which have undergone mergers and acquisitions during 2007. In the absence of more reliable
65
data, CMIE data on M & As are used in this study. The study is undertaken only for the pre merger period of
three years and post merger period of three years, leaving a lengthy coverage of period sample for want to
studying the immediate impact of merger as it was intended for short- run analysis.
SCOPE FOR FURTHER RESEARCH
Studies with similar objectives could be attempted with reference to other sectors like banking,
insurance, IT sector etc.
The study with similar objectives could be made from time to time covering a lengthy period.
The stock index price improvement could be analyzed for pre merger and post merger period.
Impact of M&A on financial performance and shareholders wealth of acquirer firms may be studied.
Important implication for research concerning M&As is to take the integration issues into
consideration along with the human factors.
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Dash, A. (2004). Value creation through mergers, the myth and reality, The ICFAI Journal of Applied
Finance, 10 (10): 20-38.
David (2006). Examining merger and acquisition foreign direct investment in the United States: Do
high purchase prices drive low return, Stanford University Department of Economics.
Indhumathi. G, M. Selvam, and M. Babu. (2011). The effect of mergers on corporate performance of
acquirer and target corporate firms in India. Euro Journals Publishing, Inc. Issue 1.
Isabel Feito-Ruiz and Susana Menndez-Requejo. (2010). Family firm mergers and acquisitions in
different legal environments. Family Business Review, 23(1): 6075.
Mallikarjunappa, Panduranga Nargak. (2007). Why do mergers and acquisitions quite often fail: 53-69.
Moeller, S.B., F.P. Schilingemann and R. Stulz. (2005). Wealth destruction on a massive scale? A
study of acquirer-firm returns in the recent merger wave. Journal of Finance, 757-82.
Sarka Zapletalova. (1997). Opportunities and challenges. In World Economic Outlook. Washington
international monetary fund.
Stephen. (2007). The wealth effects of yield- accretive acquisitions: The case of Asian Reits,
Submission for Manuscript Prizes: Intentional Real Estate Investment/ Portfolio Management, Real
Estate Investment Trusts.
Fig. 1(a)
66
SI.No.
1.
Source: Grant Thornton India 2008

Table 1
List of Deals Announced in the Calendar Year 2007
Acquirer Firms
Target Firms
Shiva fertilizers ltd
Parvati fertilizers ltd
Sector
Agriculture & agro
products
Agriculture & agro
products
Agriculture & agro
products
Aluminium
Automotive
Automotive
Aviation
Banking & financial
services
Banking & financial
services
Banking & financial
services
Banking & financial
services
Banking & financial
services
Cement
FMCG, food
&beverages
FMCG, food
&beverages
FMCG, food
&beverages
Hospitality
IT & IteS
IT & IteS
2.
Coromandel fertilizers ltd
Godavari fertilizers and chemicals ltd
3.
Khaitan chemicals & fertlizers ltd
Shobhan enterprises private ltd
4.
5.
6.
7.
8.
Hindalco industries ltd

ANG auto ltd
Jamna auto industries
Air India
Emami
Indian aluminium corporate firms ltd (India)

ANG Auto tech pvt ltd
Jai parabolic springs
Indian airlines
J B marketing &finance (JB)
9.
Cosmos cooperative bank
Manasa cooperative bank
10.
Almondz global securities ltd
Almondz capital markets pvt ltd
11.
State bank of India (SBI)
State Bank of Saurashtra
12.
Consolidated finvest and holdings
Rishi trading corporate firms
13.
14.
Rain commodities
VIP industries ltd
Rain calcining ltd

Blow plast ltd
15.
Dabur India ltd (DIL)
Dabur foods ltd (DFL)
16.
Dhunseri tea &industries ltd
Tezpore tea corporate firms ltd
17.
18.
19.
GL hotels
Datamatics technologies Ltd
Satyam computer services ltd
Mayfair banquets private ltd

Datamatics ltd
Nipuna
20.
Aftek ltd
IT & IteS
21.
Mistral solutions
22.
Axon infotech ltd.
C2Silicon software solutions

pvt ltd and Elven micro circuits pvt ltd
Mistral software and mistral
solutions
Quasar innovations
23.
Locuz enterprise solutions ltd
Choice solutions ltd
IT & IteS
24.
3i Infotech ltd
IT & IteS
25.
26.
27.
28.
Eveready industries India

VIP industries
PG foils
Adlabs films
SDG Software Technologies Ltd (SDG - WOS

of 3i Infotech)
Powercell battery India
Aristocrat luggage ltd
Prem cables
Katch 22 entertainment
29.
TV today network ltd
Radio today broadcasting ltd
30.
31.
32.
Gujarat NRE coke ltd

Reliance industries ltd
Goa carbon ltd (GCL)
India NRE minerals ltd

IPCL
Paradeep carbons ltd
IT & IteS
IT & IteS
Manufacturing
Manufacturing
Manufacturing
Media, entertainment
&Publishing
Media, entertainment
&Publishing
Metals & ores
Oil & gas
Oil & gas
67
33.
34.
35.
36.
37.
38.
Indian oil corporation

Regency ceramics ltd
Mahindra forgings ltd
SB&T international
Jay engineering works
Indoco remedies
IBPs petroleum retail business

Regma ceramics ltd
Mahindra forgings Mauritius ltd
Mimansa jewellery
Usha International
La nova chem India pvt ltd
39.
Bodal chemicals ltd
Milestone organic ltd (MOL)
40.
Aurobindo pharma ltd
APL Life Sciences ltd
41.
Excel crop care ltd
42.
43.
Texmaco ltd
KEC international ltd
44.
Texmaco ltd
Business units of excel industries ltd

environment and biotech division
Shree export house ltd
RPG transmission ltd and national information
technologies ltd
Evershine merchants pvt ltd
45.
Phoenix mills ltd
Ashok Ruia Enterprisespvt ltd
46.
Nitco tiles
Shark properties (SPPL)
47.
Nitco realties (NRPL)
Motivation properties(MPPL)
48.
Radhe developers India ltd
49.
50.
51.
52.
Shree precoated steels

JSW steel ltd
Kamadgiri synthetics
Maxwell industries
Radhe Infrastructure &

Projects (India) ltd
Anik development corporation
Southern iron &steel corporate firms
Stripes apparels
Microtex India
Oil & gas

Others
Others
Others
Others
Pharma, healthcare &
biotech
biotech
biotech
Plastic & chemicals
Power & energy
Power & energy
Real estate & infrastruc
Real estate &
infrastruct
Real estate &
infrastruct
Real estate &
infrastruct
Real estate &
infrastruct
Steel
Steel
Textiles & apparels
Textiles & apparels
Source: Grant Thornton India 2008
Table 2
Sample Corporate Firms Selected for the Study
Sl.No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
Acquirer Firms
Tata Steel Industry
Dhunseri tea& industries ltd
Rain Calcining
Visualsoft Industry
United Sprits
Tata Global Beverage Ltd
Russian Aluminium Giants Rusal and
Sual
Bannari Amman Sugar Ltd
Reliance Industry ltd
Tatia Global Venture Ltd
Mcleod Russel India
Kochi Refineries ltd
Target Firms
Year of
Acquisition
Corus
Tezpore tea co. ltd
Rain Commodities
Megasoft Industry
Shaw Wallace & Co. Ltd
Tezpore Tea Co. Ltd
2007
2007
2007
2007
2007
2007
Swiss Co.
2007
Maheswara Sugar Ltd

Indian Petrochemical Corp. ltd
GIS Cotton Mill Ltd
Moran Tea Co. Ltd
BPCL
2007
2007
2007
2007
2007
Source: Complied & edited from the financial statements of selected firms listed-CMIE-prowess
package.
68
Table 3
Impact of M&A on CURRENT RATIO of Acquirer Firms
SI. No
Pre merger
Acquirer
Firms
Post merger
t-value
Mean
SD
Mean
Impact
SD
1. Tata Steel
1.82
0.20
4.89
+
1.93
-3.53***
2. Dhunseri tea
2.22
0.26
2.38
+
0.32
-0.74
3. Rain Calc
5.64
0.96
6.01
+
1.61
-0.42
4. Visualsoft
2.66
0.28
2.01
0.43
2.93***
5. United Sp
1.30
0.09
2.63
+
0.18
-14.32***
6. Tata Global
1.13
0.23
1.49
+
0.17
-2.37**
7. Russian
2.76
0.69
3.39
+
1.03
-1.06
8. Bannari
2.92
1.09
2.53
0.24
0.69
9. Reliance
2.78
0.51
3.44
+
0.22
-2.41**
10. Tatia Globa
1.83
0.55
1.00
0.30
3.11***
11. Mcleod Rus
2.48
1.15
2.03
0.35
0.65
12. Kochi Refi
3.25
0.21
2.80
0.85
1.02
Source: Complied & edited from the financial statements of selected firms listed-CMIE-prowess package.
Degrees of freedom are 8 for all t-values. **Significant at 5% level; ***Significant at 1% level.
Table 4
Impact of M&A on QUICK RATIO of Acquirer Firms
Pre merger
Sl. No
Post merger
Acquirer Firms
t-value
Mean
SD
Mean
Impact
SD
Tata Steel
0.51
0.07
3.07
1.32
-4.32***
Dhunseri tea
1.05
0.13
1.20
0.15
-1.51
Rain Calcin
2.99
0.51
3.78
1.42
-1.05
Visualsoft
1.32
0.17
1.06
0.25
1.97*
United Spri
0.08
0.04
1.13
0.17
-13.96***
Tata Global
0.22
0.08
0.60
0.19
-4.66***
Russian
1.10
0.30
1.66
0.65
-1.59
Bannari
0.83
0.45
0.89
0.13
-0.28
Reliance
1.03
0.45
2.09
0.44
-3.71***
10
Tatob
0.71
0.20
0.18
0.13
4.97***
11
Mcleod Ru
1.20
0.58
0.91
0.12
0.83
12
Kochi Refi
1.20
0.39
1.61
0.79
-0.96
Degrees of freedom is 8 for all t-values *Significant at 10% level; ***Significant at 1% level.
69
Table 5
Impact of M&A on WORKING CAPITAL TURNOVER RATIO of Acquirer Firms
Sl. No
Acquirer
Firms
Pre merger
Post merger
t-value
Mean
SD
Mean
Impact
SD
Tata Steel
5.69
1.28
2.60
1.06
4.14***
Dhunseri tea
4.29
0.37
4.42
0.66
-0.32
Rain Calci
1.43
0.16
1.38
0.35
0.24
Visualsoft
2.58
0.48
3.71
0.94
-2.53**
5
6
7
United Spri
Tata Global
Russian
8.95
8.57
2.35
2.76
75.75
0.55
6.47
6.61
3.47
0.49
1.29
0.36
1.75
0.04
-3.95***
8
Bannari
2.82
1.53
2.84
+
0.72
-0.02
9
Reliance
2.92
0.77
2.04
0.26
2.16**
10
Tatia Glob
7.56
4.89
0.20
13.09
1.06
11
Mcleod Rus
5.03
3.00
7.80
+
1.56
-1.48
12
Kochi Refi
2.85
0.37
2.87
+
1.19
-0.03
Source Complied & edited from the financial statements of selected firms listed-CMIE-prowess package.
Degrees of freedom is 8 for all t-values **Significant at 5% level; ***Significant at 1% level
Table 6
Impact of M&A on INVENTORY TURNOVER RATIO of Acquirer Firms
Sl. No
Acquirer Firms
1
2
3
4
5
6
7
8
9
10
11
12
Tata Steel
Dhunseri tea
Rain Calci
Visualsoft
United Spri
Tata Global
Russian
Bannari
Reliance
Tatia Glob
Mcleod Rus
Kochi Refi
Pre merger
Post merger
Mean
4.26
SD
0.96
Mean
5.02
5.73
0.70
5.80
3.14
0.71
5.15
9.02
5.32
5.13
2.59
3.94
8.39
8.49
7.08
Impact
+
t-value
SD
1.02
-1.21
0.63
-0.15
4.22
0.39
-3.14***
0.47
1.70
0.52
1.00
0.53
0.51
1.37
1.84
5.19
9.94
6.29
6.08
2.92
5.05
16.16
10.77
+
+
+
+
+
+
+
+
0.57
0.90
1.49
1.86
0.47
0.47
6.10
2.04
-0.14
-0.96
-1.61
-0.93
-1.02
-3.47***
-2.46**
-1.75
0.60
9.54
0.98
-4.44***
Degrees of freedom is 8 for all t-values **Significant at 5% level; ***Significant at 1% level.
70
Table 7
Impact of M&A on TOTAL ASSET TURNOVER RATIO of Acquirer Firms
Sl. No
Acquirer
Firms
Pre Merger
Mean
SD
Post Merger
Mean
t-value
Impact
SD
Tata Steel
1.13
0.05
1.26
0.15
-1.86*
Dhunseri tea
1.67
0.09
1.63
0.17
0.39
3
4
5
Rain Calci
Visualsoft
United Spr
0.60
1.06
1.43
0.06
0.15
0.46
0.70
1.08
2.42
+
+
+
0.14
0.06
0.34
-1.37
-0.25
-3.59***
Tata Global
0.90
0.10
1.26
0.24
-3.54***
7
8
9
Russian
Bannari
Reliance
0.69
0.97
1.33
0.08
0.28
0.26
1.34
0.84
1.09
+
-
0.37
0.30
0.03
-3.37***
0.74
1.83*
10
Tatia Glob
1.58
0.17
1.42
1.05
11
Mcleod Rus
0.93
0.12
1.48
0.05
0.29
-7.32***
12
Kochi Refi
0.43
0.07
0.45
+
0.04
-0.74
Source: Complied & edited from the financial statements of selected firms listed -CMIE-prowess package.
Degrees of freedom is 8 for all t-values *Significant at 10% level; ***Significant at 1% level.
Table 8
Impact of M&A on FIXED ASSET TURNOVER RATIO of Acquirer Firms
Sl. No
Acquirer
Firms
Pre Merger
Post Merger
t-value
Mean
SD
Mean
Impact
SD
1
2
Tata Steel
Dhunseri tea
2.38
7.91
0.33
0.86
5.24
13.62
+
+
1.04
3.03
-5.88***
-3.11**
Rain Calcin
2.36
0.21
3.45
0.59
-3.49***
4
5
6
7
8
9
10
11
12
Visualsoft
United Spr
Tata Global
Russian
Bannari
Reliance
Tatia Globa
Mcleod Rus
Kochi Refi
4.76
4.82
2.60
1.36
3.26
6.66
6.51
1.95
0.90
1.06
0.94
0.29
0.16
0.91
1.81
2.04
0.15
0.05
4.28
6.79
5.59
3.51
2.04
8.41
6.15
2.71
1.13
+
+
+
+
+
+
0.26
2.03
1.07
1.78
0.40
0.84
4.58
0.03
0.18
0.86
-1.95*
-7.36***
-2.36**
2.48**
-1.79
0.15
-8.50***
-2.51**
Source: Complied & edited from the financial statements of selected firms listed -CMIE-prowess package.
Degrees of freedom is 8 for all t-values *Significant at 10% level; ***Significant at 1% level
71
Table 9
Impact of M&A on GROSS PROFIT MARGIN of Acquirer Firms
Sl. No
Acquirer Firms
Pre merger
Post merger
t-value
Mean
SD
Mean
Impact
SD
1
Tata Steel
0.11
0.02
0.24
+
0.06
-4.72***
2
Dhunseri tea
0.06
0.01
0.08
+
0.02
-1.73
3
Rain Calci
0.22
0.05
0.20
0.10
0.52
4
Visualsoft
0.16
0.13
0.09
0.01
1.08
5
United Spr
0.07
0.03
0.08
+
0.03
-0.33
6
Tata Global
0.09
0.02
0.10
+
0.04
-0.62
7
Russian
0.08
0.07
0.04
0.06
0.99
8
Bannari
0.05
0.10
0.30
+
0.02
-5.01***
9
Reliance
0.18
0.05
0.16
0.07
0.53
10
Tatia Glob
0.05
0.04
0.03
0.10
0.37
11
Mcleod Ru
0.13
0.03
0.07
0.01
3.61***
12
Kochi Refi
0.31
0.05
0.24
0.02
3.02**
Table 10
Impact of M&A on NET PROFIT MARGIN of Acquirer Firms
Pre Merger
Sl. No
Post Merger
Acquirer Firms
t-value
Mean
SD
Mean
Impact
SD
1
Tata Steel
0.05
0.01
0.16
+
0.04
-5.91***
2
Dhunseri tea
0.03
0.01
0.05
+
0.02
-2.17*
3
Rain Calci
0.18
0.05
0.16
0.09
0.28
4
Visualsoft
0.09
0.11
0.05
0.01
0.65
5
United Spr
0.04
0.02
0.04
0
0.02
0.05
6
Tata Global
0.04
0.02
0.07
+
0.05
-1.15
7
Russian
-0.01
0.07
0.01
+
0.07
-0.37
8
Bannari
-0.01
0.11
0.22
+
0.02
-3.94***
9
Reliance
0.10
0.04
0.10
0
0.04
0.03
10
Tatia Globa
-0.02
0.04
-0.01
+
0.10
-0.24
11
Mcleod Rus
0.03
0.01
0.03
0
0.01
-0.19
12
Kochi Refi
0.14
0.04
0.13
0.01
0.74
Source: Complied & Edited from the financial statements of selected firms listed-CMIE -prowess package.
Degrees of freedom is 8 for all t-values *Significant at 10% level. ***Significant at 1% level.
72
Table 11
Impact of M&A on RATIO OF LONG-TERM DEBT to EQUITY of Acquirer Firms
Acquirer
Firms
Sl. No
Pre Merger
Post Merger
t-value
Mean
SD
Mean
Impact
SD
Tata Steel
0.33
0.09
0.04
0.02
2
3
4
Dhunseri tea
Rain Calcin
Visualsoft
0.08
0.05
0.43
0.03
0.05
0.12
0.19
0.12
0.36
+
+
-
0.19
0.13
0.14
-0.92
-0.98
0.87
6.75***
5
6
7
United Spri
Tata Global
Russian
0.43
0.22
0.60
0.10
0.13
0.16
0.35
0.00
0.65
0.20
0.00
0.27
0.78
2.84**
-0.34
8
Bannari
0.45
0.41
0.41
0.50
0.14
9
Reliance
0.02
0.05
0.01
0.02
0.45
10
Tatia Glob
1.13
0.34
1.20
+
2.78
-0.05
11
Mcleod Rus
1.40
0.25
0.89
0.15
3.27***
12
Kochi Refi
0.65
0.11
0.54
0.12
1.45
Source: Complied & edited from the financial statements of selected firms listed-CMIE -prowess package.
Degrees of freedom is 8 for all t-values *Significant at 10% level. ***Significant at 1% level.
Table 12
Impact of M&A on RATIO of TOTAL DEBT to TOTAL ASSETS of Acquirer Firms
Sl. No
Acquirer
Firms
Pre Merger
Post Merger
t-value
Mean
SD
Mean
Impact
SD
Tata Steel
0.26
0.06
0.05
0.02
8.04***
Dhunseri tea
0.12
0.06
0.17
0.10
-0.76
Rain Calcin
0.14
0.05
0.12
0.14
0.22
Visualsoft
0.34
0.05
0.25
0.02
3.44***
United Spri
0.13
0.04
0.21
0.07
Tata Global
0.15
0.03
0.07
0.02
Russian
0.34
0.03
0.35
0.12
-0.11
Bannari
0.28
0.09
0.23
0.18
0.62
Reliance
0.06
0.10
0.01
0.01
1.13
10
11
12
Tatia Globa
Mcleod Rus
Kochi Refi
0.41
0.51
0.34
0.05
0.05
0.04
0.14
0.40
0.29
0.23
0.04
0.04
2.23*
3.56***
1.83*
-2.35**
3.54***
Degrees of freedom is 8 for all t-values *Significant at 10% level; **Significant at 5% level; ***Significant at
1% level.
73
Table 13
Impact of M&A on OPERATING LEVERAGE of Acquirer Firms
Sl. No
Acquirer
Firms
Pre Merger
Post Merger
Mean
SD
Mean
Impact
t-value
SD
Tata Steel
0.33
0.04
0.25
0.02
4.17***
Dhunseri tea
0.16
0.02
0.12
0.01
3.92***
Rain Calcin
0.25
0.05
0.36
0.03
-4.64***
Visualsoft
0.39
0.02
0.22
0.03
11.44***
United Sp
0.03
0.00
0.03
0.01
-0.12
Tata Global
0.39
0.07
0.24
0.07
3.07**
Russian
0.19
0.04
0.13
0.03
2.75**
Bannari
0.08
0.02
0.19
0.01
-12.20***
9
10
Reliance
Tatia Globa
0.51
0.13
0.11
0.03
0.48
0.28
0.02
0.21
11
Mcleod Rus
0.20
0.02
0.14
0.01
0.52
-1.38
4.42***
12
Kochi Refi
0.38
0.05
0.28
0.05
3.19***
Table 14
Impact of M&A on NET FIXED ASSETS RELATIVE to NET WORTH of Acquirer Firms
Pre Merger
Sl. No
Post Merger
Acquirer Firms
t-value
Mean
SD
Mean
Impact
SD
1
Tata Steel
1.53
0.31
0.40
0.16
7.34***
2
Dhunseri tea
0.43
0.03
0.25
0.08
3.77***
3
Rain Calcin
0.39
0.10
0.34
0.19
0.50
4
Visualsoft
0.69
0.19
0.75
+
0.09
-0.62
5
United Spri
1.06
0.11
0.92
0.31
0.94
6
Tata Global
0.86
0.21
0.48
0.07
2.94**
7
Russian
1.10
0.17
1.02
0.37
0.39
8
Bannari
0.90
0.54
1.01
+
0.55
-0.32
9
Reliance
0.43
0.17
0.23
0.04
2.35**
10
Tatia Globa
1.34
0.70
0.63
0.26
2.32**
11
Mcleod Rus
1.76
0.25
1.58
0.20
1.09
12
Kochi Refi
0.90
0.07
0.76
0.15
1.74
74
SI.N
o.
Acquire
r Firms
1. Tata
Steel
2. Dhunser
i
3. Rain
Calc
4. Visualso
ft
5.
United
6. Tata
Glob
7. Russian
8.
Bannari
9.
Reliance
10. Tatia
Glo
11.
Mcleod
Table 15
t Value of Impact of M & A on Various Dimensions (Variables)
Liquidit
Working
Operating
Profitabilit
Financial
y
Capital
Performance
y
Risk
Statistic
Turnover
Statistics
Statistics
Statistics
s
Statistics
Leverage
Position
Statistics
C
R
Q
R
WCT
R
IT
R
TAT
R
FAT
R
GP
R
NP
R
DE
R
TDTA
R
**
*
**
*
***
NS
***
***
***
***
***
NS
NS
NS
NS
NS
**
NS
NS
NS
NS
NS
NS
**
*
NS
***
NS
NS
NS
NS
**
NS
NS
NS
NS
NS
NS
***
NS
NS
***
NS
NS
NS
**
NS
NS
**
*
**
*
O
L
**
*
**
*
**
*
**
*
NFA_NW
R
***
***
NS
NS
NS
NS
***
***
NS
NS
**
***
**
**
NS
**
*
**
*
NS
***
NS
***
**
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
**
***
***
NS
NS
**
**
*
**
**
*
NS
NS
NS
NS
NS
NS
**
NS
**
NS
NS
NS
NS
NS
NS
**
**
**
**
*
**
*
**
*
NS
**
NS
*
12.
**
**
Kochi
NS NS
NS
NS
**
**
NS
NS
*
NS
*
*
Source: Computed from tables 2 to 13; ***Significant at 1% level. **Significant at 5% level, *Significant at
10% level, NS- Not Significant.
NS
NS
NS
NS
***
***
***
NS
***
***
Note: 1. CR- Current Ratio, 2. QR- Quick Ratio, 3. WCTR- Working Capital Turnover Ratio, 4. ITR- Inventory
Turnover Ratio, 5. TATR- Total Assets Turnover Ratio, 6.FATR- Fixed Assets Turnover Ratio, 7. GPR- Gross
Profit Ratio, 8. NPR- Net Profit Ratio, 9. LTD_ER- Long Term Debt to Equity Ratio, 10. TD_TAR- Total
Debts to Total Assets Ratio, 11. OL -- Operating Leverage Ratio, and 12. NFA_NWR- Net Fixed Assets to Net
worth Ratio
75
SI.No.
1.
Table 16
Descriptions of Various Measures Used for Analysis
ELEMENT
RATIOS
MEASURES
DIMENSION
a. Current Ratio=
Current Assets
Liquidity
Current Liabilities
b. Quick Ratio=
2.
Working
Turnover
Capital
c. Working Capital
Turnover Ratio=
d. Inventory Turnover
Ratio=
3.
4.
Operating
Performance
Profitability
e. Total Assets Turnover

Ratio=
f. Fixed Assets Turnover

Ratio=
g. Gross Profit Ratio =
h.
5.
6.
Financial Risk
Leverage Position
Net Profit Ratio =
Quick Assets
Quick Liabilities
Cost of Goods
Sold or Sales
Net
Working
Capital
Cost of Goods Sold
or Sales
Average Inventory
Cost of Goods Sold
or Sales
Total Assets
Cost of Goods Sold
or Sales
Total Fixed Assets
Gross Profit * 100
Net Sales
j. Total Debt to Total

Assets Ratio=
Net Profit * 100

Net Sales
Debt
Equity
Total Debt
Total Assets
k. Net Fixed Assets to Net

Worth Ratio =
Net Fixed Assets

Net Worth
i. Debt Equity Ratio =
DESCRIPTION
Relation
between
current assets to
current liabilities
Relation
between
quick assets to quick
liabilities
Relation
between
sales to networking
capital
Relation
between
sales to average
inventories
Relation
between
sales to total assets
Relation
between
sales to total fixed
assets
Relation
between
gross profit to net
sales
Relation between net
profit to net sales
Relation
between
debt to equity
Relation
between
total debt to total
assets
Relation between net
fixed assets to net
worth
76
77
78
79
80
81
82

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Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Corporate Restructuring & Firms Performance: An Empirical Analysis of

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Based on the objectives the following hypotheses are developed:

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Statement of the Problems and Scope of the Study

Where d = d/n and d= x y or y

Impact of M&A on Liquidity of Acquirer Firms

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Impact of Merger on Working Capital Turnover Ratio of Acquirer Firms

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Cost of Goods Sold or Sales

Cost of Goods Sold or Sales

Total Assets Turnover Ratio=

Table 7 goes here

Fixed Assets Turnover Ratio=

Cost of Goods Sold or Sales

Impact of M&A on Profitability of Acquirer Firms

Gross Profit Ratio =

Gross Profit * 100

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Net Profit Ratio =

Net Profit * 100

Table 11 goes here

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

SCOPE FOR FURTHER RESEARCH

Interdisciplinary Journal of Research in Business

Vol. 1, Issue. 4, April 2011(pp.58-82)

Source: Grant Thornton India 2008

Coromandel fertilizers ltd

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