This issue covers a wide range of subjects that are relevant to business strategy, such as merger and acquisitions, performance of firms and a case study on passenger car segment. The first paper, “The Missing Links of Mergers & Acquisitions Waves” by Humberto R Ribeiro, deals with research in the Mergers and Acquisitions (M&A) field, which has been prolific in recent years. M&A have been becoming increasingly relevant for corporate growth and restructuring, as proved by the magnitude of the latest M&A global wave. Nevertheless, despite the large contribution from literature, some relevant issues remain unexplained. Although much is known about the pattern of M&A activity, the fact that M&A tend to occur in waves continues to puzzle researchers worldwide. This paper examines the phenomenon of M&A wave and discusses the need for a theoretical framework that may shed light on the determinants of its complex occurrence. Accordingly, this paper studies the evolution of M&A over time, focusing on its pattern of activity and also covering different research methodologies used in M&A activity. This paper also considers M&A abandonment issue. A substantial number of announced M&A deals is never completed, often resulting in significant loss of resources for economic agents. Like the waves issue, the topic of abandonment in M&A activity raises questions yet to be addressed, thereby offering interesting prospects for further research.

The second paper, “Performance Comparison of Group Firms and Individual Firms in the Indian Iron and Steel Industry” by Shirshendu Ganguli, talks about how the Indian Government has meticulously built the iron and steel industry from the time of independence. The industry scenario has changed a lot after liberalization and globalization as the need was felt for continuous improvement in the production processes and products. As it has always been a capital intensive industry, huge investments are required to continue its growth. In countries like India, where economy is still developing, it is a common phenomenon that the firms which are part of big business groups perform financially much better than the stand-alone individual firms. This is because group firms are often in a better position with regard to investment and innovation capabilities. This paper compares the performance efficiency of group and individual firms based on certain parameters (Net Sales, NOPAT, ROCE) in the Indian iron and steel industry in different size categories (high, medium and low).

There has been an increase in both the number and size of M&A in all the sectors of Indian economy. The financial sector in India is highly fragmented and is characterized by a large number of small banks and financial institutions. Its size and scale should grow to compete internationally. Consolidation is the ideal way to achieve this. The trends in M&A in this sector would therefore, be of special interest to economists, researchers and policy makers. Keeping in mind the dearth of literature on the subject, the paper, “Mergers and Acquisitions in India with Special Reference to the Financial Sector: Recent Trends and Patterns” by Priya Bhalla intends to capture the trends and patterns of M&A in some sectors of the Indian economy with special reference to the financial sector. It has been observed that there has been a rising number of M&A in this sector (according to the recommendations of the Narasimhan Committee II on consolidation of the banking sector). A newly constructed database is used to identify the kind of deals (horizontal or vertical) and nature of companies (banks, financial institutions or non-bank financial companies) involved.

The Indian automobile industry is one of the fastest growing automobile industries of the world. The low penetration level of cars in India coupled with the rise in disposable income level has made it an attractive destination for global automobile manufacturers. The final paper, “The Indian Mid-Segment Passenger Car Industry” by Nitin Gupta and Vaibhav Shekhar, deals with the mid-size car segment of the passenger car industry in India. In 2009-10, this segment accounted for approximately 12.7% of the total passenger cars manufactured in India, and its Year-on-Year (YoY) growth rate was approximately 15%. The major players in this segment include Tata Motors, Maruti Suzuki, Hyundai Motors India, Ford India, General Motors India, Honda Siel India, Mahindra-Renault and Hindustan Motors. In addition to the existing players, various new players like Volkswagen, Nissan, Fiat, etc., have either already entered this segment or are about to enter. The case highlights various issues being faced by current as well as new entrants in this segment. The case provides exhaustive contemporary data on the mid-size car segment of the passenger car industry in India. Analysis of the case is done by using Porter’s five forces model.

-- Saptarshi Purkayastha
Consulting Editor