The Hindu Business Line : Beware `proactive synergy restructuring teams'

RESTRUCTURING is a happening thing. Yesterday, it hit an air pocket in Delhi and Mumbai airports after Bharti-Changi consortium pulled out of the modernisation project. At the Reserve Bank of India, the word restructuring has caused jitters, because what had started off with a bang ended as a whimper after the Bank and the Ministry of Finance decided to back off from preparing any list of `weak' private sector banks that needed restructuring, for fear of creating panic among depositors.

You can spot restructuring on wheels, and in deals too. For instance, Scooters India that holds global rights for the `Lambretta' technology found that it could wipe out accumulated losses when it stopped making Lamby scooters and focussed on three-wheelers, to help come out of BIFR restructuring.

If you're on the PM's trail, and defence deals, you know that India has agreed to buy 6 French Scorpene submarines, and also that the French President, Mr Jacques Chirac, has underlined the need for the restructuring of the United Nations Security Council because it is out of date and highly unrepresentative.

At times restructuring may do good, as in the case of the Birla group where analysts opine that the Indo Gulf shareholders get a nice deal, even as the fertiliser business re-enters an assortment of dissimilar businesses under Indian Rayon's wings.

And at times, the idea may be no good, as the PSU Restructuring Department in Kolkata realises, because there are no takers for sick public sector units, despite a Rs 200-crore funding from the UK's Department for International Development. Restructuring is a global phenomenon.

For instance, "Cash-strapped Delta Air Lines Inc could file for bankruptcy as soon as this week while it arranges $1.7 billion in financing for its restructuring," reports San Mateo Daily Journal. "Following a massive company restructuring reducing the fleet size by 50 per cent Berlin disappeared from Virgin Express's route network end of 2000," informs noticias.info, Spain, when discussing Virgin's latest `world's longest advertising headline' running to 1,100 metres announcing the resumption of service.

There can be a gloomy side of restructuring. For example, Hewlett-Packard Co is cutting 5,900 jobs in Europe as part of its global restructuring plan, says Seattle Post-Intelligencer. But what is restructuring — that ominous 13-character word?

Reform, reformation, reorganisation, reshuffle, shake-up, streamlining and restructure are synonyms that MS-Word suggests. Concise Oxford English Dictionary defines restructure just after restroom (`a toilet in a public building') as, "organise differently; convert (a debt) into a debt that is repayable at a later time."

The latter, that is, `debt restructuring', is defined in Oxford Dictionary of Business as the adjustment of a debt "to give the debtor a more feasible arrangement with the creditor for meeting the financial obligations".

In Cambridge Advanced Learner's Dictionary (http://dictionary.cambridge.org), the word means "to organise a company, business or system in a new way to make it operate more effectively" as in the examples, "The government restructured the coal industry before selling it to private owners," and "The company underwent restructuring and 1500 workers lost their jobs."

But job is the focus of the definition in Cambridge Dictionary of American English: "to change (the jobs and responsibilities within an organisation), usually in order to make the organisation operate more effectively." Restructuring is "The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics)," states the Free On-line Dictionary of Computing. Restructuring is "process which unites two clauses yielding one clause," explains Lexicon of Linguistics on www2.let.uu.nl. Since that may not fit the current context in which the word is used, let us turn to Dictionary.com which defines restructure thus: "To alter the makeup or pattern of; to make a basic change in."

A major business modification, usually associated with personnel downsizing and asset revaluation, is how www.investopedia.com explains restructuring. For something more direct, see Dictionary of Management Jargon, where restructuring is "the firing of employees and the reorganisation of those remaining".

Restructuring is the corporate management term for the act of partially dismantling and reorganising a company for the purpose of making it more efficient and therefore more profitable, explains The Free Encyclopedia. Restructuring may involve one or more of these: "Changes in corporate management (usually with golden parachutes); sale of under-utilised assets, such as patents or brands; outsourcing of operations such as payroll and technical support to a more efficient third party; moving of operations such as manufacturing to lower-cost locations; reorganisation of functions such as sales, marketing, and distribution; renegotiation of labour contracts to reduce overhead; refinancing of corporate debt to reduce interest payments; a major public relations campaign to reposition the company with consumers," elaborates Wiki. Restructuring is the reorganisation of a company in order to attain greater efficiency and to adapt to new markets, defines www.bloomberg.com. "Major `corporate restructuring' transactions include mergers, acquisitions, tender offers, leveraged buyouts, divestitures, spin-offs, equity carve-outs, liquidations and reorganisations," it adds. It is in this category that the recent exercise of the Birla group would fit.

Oxford Dictionary of Business defines `corporate restructuring' as "a change in the business strategy of a company by diversification into new areas, which it considers more attractive." Skadden, Arps, Slate, Meagher & Flom LLP, the law firm that you may remember for having argued for KPMG recently, "ranked first in the number of worldwide mergers and acquisitions and second in the aggregate value of such transactions for the first three quarters of 2004, according to the latest M&A rankings released by Global Securities Information, Inc," as one learns on http://en.wikipedia.org. A phrase ahead of `portfolio separation theorem' in Bloomberg Financial Glossary is `portfolio restructuring', which applies to derivative products, and means "recomposition of a portfolio's asset mix by selling off undesired asset types (equities, debt, or cash) or specific securities within that class, while simultaneously buying desired types or securities."

Catch up with recent research on restructuring on www.ssrn.com. As for example: `Downsizing, Firm Performance, and Income Distribution: Evaluating the Labor Restructuring Program in Chinese Firms,' by Xiao-Yuan Dong and Lixin Colin Xu; `Exports, Restructuring and Industry Productivity Growth' by Rod Falvey, David Greenaway, Zhihong Yu and Joakim Gullstrand; `Mahut Group: A Failed Case of Organisational Restructuring' and `Building Sustainable Organisations through Restructuring: Role of Organisational Character in France and India' by Ashok Som; and `Employment Restructuring in Russian Industrial Enterprises: Confronting a `Paradox'' by Gregory Schwartz.

It is no accident that a search of `restructuring' on Wikipedia leads me to a page devoted to Seppuku, the Japanese word for ritual suicide by disembowelment, a.k.a. hara-kiri. What follows is a grim read, let me caution:

"In 1999, Masaharu Nonaka, a 58 year old employee of Bridgestone in Japan, slashed his belly with a sashimi knife to protest his forced retirement.

He died later in the hospital. This suicide was dubbed risutora (corporate restructuring) seppuku by the mass media, and was said to represent the difficulties in Japan following the collapse of the bubble economy."

Restructuring is thus a destructive word that workers naturally dread, though the origin of the word structure is from Latin struere, `build'. Appropriately, Scott Adams would say, `Let's form proactive synergy restructuring teams,' as a wry caution of trouble to come!

ZeroBase@TheHindu.co.in

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