‘M&As to become crucial in a growing economy’

As business becomes competitive, the traditional methods of achieving profit for growth will not work, said Mr S.K. Gupta, Director, PHD Chamber of Commerce and Industry, at a lecture on mergers and acquisitions given to the students of New Delhi Institute of Management. The lecture was a part of a BL Club event.

Mr Gupta cited various reasons for an increase in mergers and acquisitions in the Indian economy.

“Organisations are evolving. There are two routes to growth, internal or external. Internally, it can be done via restructuring and splitting up the company. Alternatively, the growth process can be facilitated externally by mergers and acquisitions (M&A),” he said.

He went on to explain the various forms of M&As, including horizontal mergers, vertical mergers and conglomerate mergers. Highlighting the benefits of M&As, Mr Gupta said that M&As could become a profitable option if companies want an immediate operationalisation of the investments they make for growth.

Pointing out the reasons for M&As, Mr Gupta said that M&As happen for two main reasons, viz production or marketing. “Companies may want to acquire new technology and add manufacturing capacities. They might need operational synergies for improved margins or reduce procurement costs. M&As for these reasons would be for production,” he said.

“There are also marketing reasons where a company might want to acquire new brands, products or markets, acquire a distribution network or increase market share,” said Mr Gupta.

He went on to explain the various process related to M&As. The lecture was attended by the students and senior management of the college.