Cii Plans White Paper On Indian Mergers
The Confederation of Indian Industry (CII) is preparing a white paper on takeovers and mergers. The paper will focus on whether the recent spate of takeovers and mergers have yielded economic value to the organisations.
The new Companies Bill and the modifications on Sebi (Securities and Exchange Board of India) guidelines focus on hostile takeovers and how these can be thwarted, but Indian industry has by and large ignored the issue of whether these mergers and acquisitions by industry add any economic value to the organisations, said a senior CII official.
The white paper which will be placed before the confederations national council within a fortnight will also suggest necessary modifications to Sebi guidelines and the Companies Bill to address this issue.
The CII paper will focus on whether Indian industry is on the right track as far as mergers and takeovers are concerned.
Is the domestic industry indulging in mergers and takeovers just by emulating the global practices, or is it pushed by economic logic to do so? This is the main question probed by the paper, the official said.
Specific cases of mergers and acquisitions will be picked up from diverse sectors for further analysis. For example, the merger between ICICI and SCICI and the HLL-Tomco merger will be looked into.
These cases and a few others from different sectors will be analysed to find out what economic value each merger or acquisition have added to the industry, the official pointed out.
Indian industry is forever saying that there is a credit crunch faced by the domestic industry. However, domestic industry do generate enough funds for mergers and takeovers. We will be looking in this contradiction closely, he said.
However, CII officials pointed out that this paper is different from the earlier draft on corporate governance prepared by the confederation.
The code on corporate governance, the draft of which was released a few days ago, chalks out good corporate behaviour which needs to be followed by the industry.