ANALYZING THE IMPACT OF MERGER AND ACQUISITION ON BIG GIANT IN THE TELECOM SECTOR : VODAFONE AND IDEA

Abstract

A business might grow in two ways. Either the growth could be with the passage of time, or it could be inorganic i.e., a sudden expansion in the workforce, customers, infrastructure etc. which might lead to an overall increase in the revenues and profits of the business. M&A are basically the execution of some form of transactions amongst the two companies combining in some form. The two terms are often used interchangeable but refer to different legal meanings. M&A are instruments which help in growth of an organization and are gaining wide acceptance by businesses in India. M&A are becoming the need of hour to deal with competition and macroeconomic factors, for other the objective may be to get global recognition and become market leaders. Whatever be the objective of business, it is observed that M&A has grown drastically in recent years and become popular method for restructuring. This project talks about corporate restructuring through ownership restructuring by M&A. Such decision are strategic which lead to the maximising the growth of a firm. This can be achieved by enhancing the operations of business , helping them in creating a larger value along with achieving business objective and financial strategies. This external growth strategy has recently acquired a lot of attention due to privatization, globalisation along with increased deregulation, enhanced competition, breaking of trade barriers. M&A decisions are capital budgeting and strategic decisions and impact the entire organisation. Such decision requires review at every level within the organisation. The success of M&A depends on the correct valuation of company which acquiring company targeted. Determining the correct value is one of the most challenging tasks. Analysts face many complications and choices while assessing the target company’s value. The proper planning along with the correct methodology help in correct valuation of target company. The project aims is to find the financial performance of the two giants in the Telecom Sector Vodafone and Idea prior to the merger and after the merger. For carrying out v the comparison the financial ratios like Profitability, Liquidity and Leverage will be used. For achieving the objective stated above and gaining a deep insight firstly a comprehensive review of the past papers has been done. The literature review helps in giving the research direction and understanding the problem in a better way. The study conducted helped in understanding the reason behind the merger of these two telecom giants and impact that it has on performance of the two companies. For carrying out this study secondary data was taken from moneycontrol.com, capitaline.com and screener.com. Hypothesis was proposed and after conducting paired t test conclusions were drawn.