RIL AND RPL MERGER CASE STUDY

USD Period of Study: There is no considerable difference between pre and post merger financial performance. Their results suggest that there are minor variations in terms of impact on operating performance following mergers, in different industries in India. Though the theoretical assumption says that mergers improve the overall performance of the company due to increased market power, Tambi uses his paper to evaluate the same in the scenario of Indian economy. Mergers and Acquisitions may generate tax gains, can increase revenue and can reduce the cost of capital. The above Table shows the position of Reliance Industries Ltd.

It seems that the company has resorted to realizing losses. Also the average return on Net worth for the same company before merger was After merger this ratio was declined to 9. RIL currently holds Get instant notifications from Economic Times Allow Not now. Due to the existence of strict government regulations, Indian companies were forced to go to new areas where capabilities are difficult to develop in the short run.

History repeats with RIL-RPL merger – The Economic Times

While Mr Choksey did not recall how much he invested in that public issue, the shares that came his way are still with him. He sold his holding in Wait for it… Log in to our website to save your bookmarks.

Find this comment offensive? Choose your reason below and click on the Report button. Companies intensely working in competitive business environment have to change fast as per the evolving dynamics in their industry of operation.

Importance of the study: Skip to main content. While any swap ratio of more than 20x would be beneficial for RIL shareholders. This was to have a combination of equity merver and debentures. During the post merger period the average of return on investment was declined to Lande, “Efficiency Considerations in Merger Enforcement.

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RIL-RPL merger complete

The following hypotheses have been formulated ajd tested to draw the conclusions: We believe swap ratio in the range of x will be Neutral for both companies. Help Center Find new research papers in: The principal benefits from mergers and acquisitions can be listed as increased value generation, increase in cost efficiency and increase in market share.

ril and rpl merger case study

After merging RPL in to it in this figure stury decreased to A clear communication that much expenditure was incurred at the time of merger, hence profitability of RIL declined after the merger of RPL. My Saved Articles Sign in Sign up.

Also the average return on Net worth for the same company before merger was Their results suggest that there are minor variations in terms of impact on operating performance following mergers, in different industries in India. To analyze the available financial information of sutdy sample company, various techniques of applied research and accounting tools like anv ratios have been employed.

RPL has incurred huge capex towards commissioning its refinery and is likely to generate positive free cash flow FCF going forward.

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RIL-RPL merger complete

At Rs1, the stock is trading at Not all shareholders waited for the announcement. Mergers and Acquisitions is considered as one of the strategies for growth which have emerged as a natural process of business restructuring throughout the world. The study concluded that control firm adjusted long-term operating performance following mergers in case of Japanese firms was positive but insignificant and there was a high correlation between pre and post-merger performance. Thus, a book value based swap ratio does not serve any purpose in this case.

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Following the demerger of the Reliance empire in Junethe Mukesh Ambani-owned group hit the capital markets in April with a public offering from RPL.

ril and rpl merger case study

In the process of takeover, the acquiring company decides the maximum price that is to be offered to the acquired and hence takes lesser time in completing a transaction than in mergers, provided the top management of the acquired company is co-operative. On the basis of analytical study of sample case completed, the nad conclusions have been drawn which are perfectly in the line of objectives predetermined: The following 4 major financial ratios and their means were calculated for analyzing the financial performance of the companies: Due to the existence of strict government regulations, Indian companies were forced to go to new areas where capabilities are difficult to develop in tpl short run.