RESEARCH REPORT

ON
“ANALYSIS OF MARKETING STRATEGIES FOR
PASSENGER CARS IN INDIA”

Submitted in partial fulfillment of

Master of Business Administration

PROGRAMME: 2009-2011
OF

GAUTAM BUDDHA TECHNICAL UNIVERSITY,

LUCKNOW

SUBMITTED TO: SUBMITTED BY:

MS. ANITA SAXENA ABU SALIM
H.O.D(MBA). 0929170003
MBA IV SEM

DIT SCHOOL OF ENGEENERING

Knowledge park-III
Greater Noida (U.P)

1
 ACKNOWLEDGEMENT

I express my sincere gratitude to my faculty guide for their guidance, continuous

support and cooperation throughout my project, without which the present work would
not have been possible.

Also, I am thankful to my institute DIT SCHOOL OF ENGINEERING, for its

continued guidance and invaluable encouragement.

Signature
(Student)

2
 DECLARATION

I hereby declare that this Research Report entitled “ROLE OF HR IN

MERGERS AND ACQUISITION”, is a work done by me, submitted in
the partial fulfillment of the requirement of MBA of DIT School of
engineering, Greater noida. It is based on secondary data found by me in
various departments, books, magazines and websites & collected by me in
under the guidance of MBA Dept.

SUYASHA SINGH
MBA (2009-2011)
Roll No-0929170052

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 INDEX

S.No. Particulars Page no.

1 Executive Summary 1

2 Mergers and Acquisition 4

3 Importance 8

4 Data and SR 25

5 Profiles and Cases 54

6 Findings 67

7 conclusion 83

8 Annexure 85

9 Bibliography 90

10 References 96

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CHAPTER-1

EXECUTIVE SUMMARY

5
Executive Summary:

People issues can make or break a deal. The priority areas for HR are effective communications,

cultural alignment, and change management plan, securing the top performing team, prioritizing

activities, developing a staff model, and developing a reward strategy for the new organization.

However, the common role for HR mainly revolves around ad hoc advice for senior management,

retention of key talent, and due diligence on compensation and benefit plans of the merging firms. If

not handled well, M&As can lead to failures and wastage of valuable resources. Bungling the

management of a merger can result in losing people, who are a valuable asset. The management team

has to anticipate and prepare for the emotional responses of the employees at the earliest. Some of the

reasons for M&A failures are: cultural incompatibility, non-existent or over-rated synergies,

inability to manage change in the organization. So the report throws a deep insight by the analyzing

the M & A issues in three companies viz. NTPC, Bank Of Baroda & P & G.

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 CHAPTER-2

MERGERS
&
ACQUISITOINS

7
ACQUISITION

Generally speaking, an acquisition involves acquiring ownership in a property (tangible and /or
intangible).In the context of business combination ,an acquisition is ,the purchase by one company, of
controlling interest in the share capital of an existing company. An acquisition may be effected by
either of the following;

 An agreement with the person holding majority interest in the company management,
 Purchase of new shares by private agreement
 Purchase of share in the open market(open offer)
 Acquisition of share capital of a company by means of cash, issuance of share capital, and etc.
 Making a buyout offer to general body of shareholders when a company is acquired by another
company, the acquiring company has two options:
 Merge both the companies into one and operate as single entity
 To operate the taken over company as an independent company, probably with changed
management and changed policies.

The first option is known as merger and the second option is known as takeover.

MERGER

Merger has been defined as an arrangement whereby the assets of two or more companies become
vested in, or under the control of one company, which has, as its shareholders, all or substantially all
the shareholders of the two companies. It may also include fusion of two or more companies into
another.

One of the two existing companies merges its identity into another existing company, or one or more
of existing companies may form a new company and merge their identities into the new company by
transferring their businesses and undertaking including all other assets and liabilities to the new
company. The shareholders of companies whose identities have been merged gets substantial

8
shareholding in the merged company based on the share exchange ratio incorporated in the scheme of
merger as approved by majority of shareholders of both merged and merging companies.

It is thus, one of the various forms of corporate restructuring modes. It is the combination of two or
more companies in which one company survives in its own name and the other cease to exist as a legal
entity. The survival company acquires assets and liabilities of the merged companies. Generally, the
company which survives is the buyer which retains its identity and the seller company is extinguished.
Consolidation is a combination of two or more companies in which all companies cease to exist as
legal entity and a new company is created. In finance literature, thus, merger and consolidation are
technically differentiated .Merger and consolidation are also differentiated in accounting texts wherein
former is called absorption and the latter is called amalgamation. However, as per companies act,1956,
consolidation and merger are both treated as amalgamation.

AMALGAMATION

Amalgamation is an arrangement or reconstruction. It is a legal process by which two or more

companies join together to form a new entity or one or more companies are to be absorbed or blended
with another. as a result ,the amalgamation company loses its existence and its shareholders become
shareholders of the new company or the amalgamated company. In case of amalgamation, a new
company may come into existence or an old company may survive while amalgamating company may
lose its existence.

There may be amalgamation by the transfer of one or more undertakings to a new company or transfer
of one or more undertakings to an existing company. Amalgamation signifies the transfer of all or
some parts of assets and liabilities, of one or more than one existing company to another existing
company or two or more companies to a new company. Incorporation of a new company to effect
amalgamation is permissible. So, a new company may be formed for takeover of old companies.
Amalgamation however doesn’t involve formation of a new company to carry on the business of an
old company.

As per companies Act,1956,legislation that facilitates amalgamation in India, the terms merger and
amalgamation are synonymous and not defined anywhere in the Act.

9
AMALGAMATION IN THE NATURE OF MERGER

Amalgamation in the nature of merger is an organic unification of two or more entities or undertakings
or fusion of one with another. It is defined as an amalgamation which satisfies the following
conditions;

All the assets and liabilities of the transferor company become, after amalgamation, the assets and
liabilities of Transferee Company.
Shareholders holding not less than 90%of the face value of equity shares of transferor company (other
than equity shares already held by Transferee Company therein) becomes equity shareholders of the
transferee company by virtue of amalgamation.
The consideration is received for the amalgamation by those equity shareholders of Transferor
Company who agree to become equity shareholders of Transferee Company by issue of equity shares
in Transferee Company, except that cash may be paid for any fractional shares.
The business of the transferor company is intended to be carried on, after the amalgamation, by the
transferee company.
No adjustment is intended to be made in the book value of he assets and liabilities of the transferor
company when they are incorporated in the financial statements of the transferee company except to
ensure uniformity of accounting policies.

CORPORATE RESTRUCTURING

Restructuring usually involves major organizational change such as shift in corporate strategies to
meet increased competition or changed market conditions. This activity can take place internally in the
form of new investments in plant and machinery (green field investments), research and development
at product and process level, hiving off to non core activities, divestitures, sell offs, demergers, etc. It
can also take place externally through M&A by which a firm may acquire another firm or by forming
joint ventures with other firms.

This restructuring process has resulted in rise in strategies like mergers, acquisitions, takeovers,
collaborations, consolidations, diversification etc.

10
TYPES OF MERGERS

From an economic stand point, different types of mergers can be grouped on the basis of their stage of
economic activity and the degree of relatedness of the firm.

 HORIZONTAL MERGER

It is a merger of two competing firms, which are at the same stage of industrial process. The firms
belong to the same industry, i.e. merger is between business competitors, such as manufacturer of the
same type of products and distributors selling competing products in the same market area. The main
purpose of such merger is to obtain economies of scale in production by eliminating duplication of
facilities and operations, broadening the product line, reducing investment in working capital,
elimination of competition, reduction in advertising costs, increase in market segments and exercise of
better control in the market.

A company manufacturing washing machines and taking over a company manufacturing audio
systems will be horizontal merger as both are companies in the consumer durable market. For example
merger of TOMCO by HLL is a horizontal merger.

 VERTICAL MERGER

A merger between two companies producing different goods or services for one specific finished
product involves the integration of companies having supplementary relationships either in production
or distribution of products or services. In such cases both the companies have different level of
production process either of same product or same line of business. In vertical mergers, the acquiring
and target companies are in the same industry with strong buyer- supplier relationship. The target
company is either a supplier or buyer/costumer of the acquiring company. Vertical merger is generally
undertaken when market of intermediate product is imperfect. It is called backward integration when
company expands backward towards the source of raw material and forward integration when it moves

11
forward in the direction of costumer. For example, RPG groups’ merger with Harrison Malayalam Ltd.
gave it control over rubber, a major tyre input for the other group company- Ceat Ltd. This was
vertical backward integration. The effect of such mergers is generally to improve efficiency through
improving the flow of production and reduction of stockholding and handling costs.

Thus, vertical mergers help to ensure a smooth source of supply or an outlet of product and services.

 CONGENERIC MERGER

In this merger the acquirer and target companies are related through basic technologies, production
processes, or markets. The acquired company represents an extension of product line, market
participants or technologies of the acquiring companies. These merger represent an outward movement
by the acquiring company from its current set of business to adjoining business. The acquiring
company derives benefits by exploitation of strategic resources and from entry into a related market
having higher return than it enjoyed earlier. The potential benefit from these mergers is high because
these transactions offer opportunities to diversify around a common core of strategic resources.

 CONGLOMERATE MERGER

These merger involve firms engaged in unrelated type of business activities, i.e. the business of two
companies are not related to each other horizontally (in the sense of producing the same or competing
products),nor vertically(in the sense of standing towards each other in the relationship of buyer and
supplier).In a pure conglomerate, there are no important common factors between the companies in
production ,marketing, research and development and technology. Conglomerate mergers are
unification of different kinds of businesses under one flagship company. The purpose of merger
remains utilization of financial resources, enlarged debt capacity and also synergy of managerial
functions. It does not have direct impact on acquisition of monopoly power and is thus favoured
throughout the world as a means of diversification.

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 CHAPTER-3
IMPORTANCE OF
M&A

13
M&A: TRENDS IN INDIA

The present business environment has altered radically with the changes in economic policies and
introduction of new institutional mechanism. It is now characterized by globalization, opening up of
the economy, world-wide competition, expanding markets, fast changing technologies, never ending
need for finance and necessity for diversification. The Indian corporate world, while benefiting from
decontrol and deregulation has begun to feel the effect o these changes. To meet the challenges of
global economy and to face the increased global competition, Indian companies are changing their
strategic focus and re-orienting their operations through restructuring processes to achieve the
efficiencies required to survive and integrate into global economy. This restructuring process is
leading to an unprecedented rise in the business strategies like mergers, acquisitions and strategic
alliances. Mergers and acquisitions are accepted as effective routes to enhance corporate efficiency
and shareholder wealth.

Despite being tied up within the shackles of tight regulatory system wherein prior government
approval for M&A was required in the pre liberalized regime, mergers and acquisitions were not
uncommon in the decade of 80s. During 1980-89, 80 amalgamations and 52 takeovers were approved
by the government .The table below gives the distribution of amalgamations and takeovers during
1980-89 under the MRTP Act, 1969.

NUMBER OF AMALGAMATIONS AND TAKEOVERS DURING 1980-89 UNDER MRTP ACT.

YEAR NUMBER OF AMALGAMATIONS NUMBER OF TAKEOVERS

1980 12 2

1981 7 1

1982 7 1

1983 14 1

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 1984 9 3

1985 13 4

1986 6 10

1987 1 5

1988 5 13

1989 8 12

TOTAL 80 52

Source:Ranjit kumar Mandal,1995

Thus during the last decade, India witnessed substantial rise in M&A activity in the industrial and
financial sectors of the economy. Indian industries underwent structural changes in the post-
liberalization period.

Market for corporate control exploded with M7A being accepted as vital means of corporate
restructuring and redirecting capital towards efficient managements. This resulted in the merger wave
in India especially since the second half of 1990’s shown in the following figure

Also it was found that during 1988-92 there have been 121 takeovers and mergers and in addition 37
takeovers bids were found unsuccessful. However, most of the mergers centered on takeover of sick
units because of staggering industrial sickness and fiscal and other incentives offered to revive the
financial health of such sick industrial undertakings. Mergers between two profit –making companies
which occurred simply for economic reasons were not common. Most of the mergers were largely
those of sick companies with healthy ones within the same group. Shinde (1995) observed that “M&A
were not new to Indian situation. There have been several cases of merger and acquisitions in the past,
but there intensity was low due to several legal restrictions of the controlled regime. Section 72A of
Income Tax Act, 1961, was introduced to encourage merger of sick units with healthy units. But M&A
activity remained subdued till the comprehensive liberalization process started during 1990s

15
During the last few years, India has witnessed substantial rise in Merger and acquisition (M&A)
activity in industrial and financial sectors of the economy. The merger scenario has undergone rapid
transformation in the post structural reforms era. While many firms seriously examined their
portfolios, the stronger and dominant firms restructured their industries resulting in an increase in the
degree of concentration. This resulted in what was called the first merger wave in India which tended
to show that companies wanted to avoid stiff competition. Thus, economic reforms and growing
competition accelerate the pace of M&A. During 1988-1992, there were about 121 takeovers and
mergers. In 1991, the first year of economic reform, corporate India announced 71 M&A plans. By
1994, the number swelled to 324 and by 1995, it was 412 approximately. M&A activity has matured
and continued to grow each year as given in the table and as shown in the figure.

M&A Announcements in India: 1988-1998

YEAR NUMBER OF M&A PERCENT CHANGE
1988 15 ----
1989 18 20.0
1990 5 38.9
1991 71 184.0
1992 135 90.1
1993 88 113.3
1994 363 26.0
1995 430 18.5
1996 541 25.8
1997 636 17.6
1998 730 14.8
Source:IIM Calcutta, Data Base on M&A
Since mid nineties, the concept of M&A has caught fire. Courts have also favoured mergers, as is
evident from the following remarks of supreme Court of India in the Hindustan Lever Ltd(HLL)
TOMCO merger case.

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 “In this era of hyper competitive capitalism and technological change, industrialists have realized
that mergers /acquisitions are perhaps the best route to reach a size comparable to global companies
so as to effectively compete with them. The harsh reality of globalization has dawned that companies
which cannot compete globally must sell out as an inevitable alternative”
The economic attraction of mergers in the form of low valuation of companies and average price
earning ratios are compulsions of attaining sizeable scale of operations is also forcing the second wave
of mergers. This merger boom is being driven by new developments taking place in the economy,
favouring the frenzy of restructuring in the corporate India. The post- liberalization forces provoking
the M&A game, namely, expansion, consolidation, destruction of competition and quick market entry
in case of buyers and diversification in case of sellers are still in place. But theses new factors are not
only giving the old game a new dimension but are also throwing up new routes for affecting takeovers.
The motto these days seem to be “benefit from consolidation”.

With the increasing competition and the economy moving towards globalization, the corporate
restructuring activities are expected to occur at a much larger scale than at any time in the past and are
expected to play an important role in achieving competitive edge for India in international market.

17
M&A WAVE IN INDIA

Source:Sushil Khanna, “Financial Reforms and Industrial Sectors in India”,Article 9,Economic

and Political Weekly, November 1999,pp.3233.

However, out of total mergers and acquisitions which have taken place in India, during the last decade
(especially between 1991-97) more than 50% of mergers and 74% of acquisitions were horizontal.
About 16% of mergers and 41% of acquisitions were vertical and the rest were all conglomerate in
nature. This suggested that firms tried to consolidate in only few areas as is shown below in the table.

DISTRIBUTION OF M&A IN INDIA BY VARIOUS CATEGORIES

TYPE (1991-97) MERGERS %AGE OF TOTAL ACQUISITIONS %AGE OF TOTAL

HORIZONTAL 134 53.20 107 73.8

VERTICAL BACKGROUND 31 12.3 3 2.1

VERTICAL FORWARD 8 3.2 2 1.4

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 CONGLOMERATE RELATED 26 10.3 11 7.5

CONGLOMERATE UNRELATED 53 21.3 22 15.2

TOTAL 252 100% 145 100%

Source: Rakesh Basant (2000)

At a disaggregate level-M&As have spread across various industry groups. Overall, firms in
beverages, financial and other services, chemicals, drugs and pharmaceuticals, electrical machinery
and electronic sectors have had relatively higher involvement in M&A activity possibly because
fragmentation in many of these industries was previously very high.

M&A has thus been, for a decade now, principal tool for corporate restructuring and there has been
sharp increase in both, the number and size of M&A transactions in post -reform India.

M&A TREND: INTERNATIONAL SCENARIO

Weston (1953) has identified three merger waves while studying U.S. business behaviour and
environment after these waves.

The first wave occurred during the turn of the century (1898-1903) when companies such as U.S. Steel
and Standard Oil were created by acquiring firms within an industry. During this period market gave
way to partial monopoly. Corporate laws were relaxed and effective mergers took place.

The second wave coincided with the bull market of 1920’s (1926-1929) when firms embarked upon
acquisitions as a way of expanding new markets and increasing market share. Stigler (19500 described
the second wave as being “mergers for oligopoly” in contrast with the first as “mergers for monopoly”
wave.

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The third merger wave (1940-47) occurred when firms such as Gulf and Western focused on acquiring
firms in other lines of business with the intention of diversifying and forming conglomerates. This
period saw the disappearance of 2500 firms and growth of 8 largest steel corporations in US

Fourth wave of mergers occurred in mid 80s, when firms were acquired primarily for restructuring the
assets and recapitalization.

In 1980s -1990s, companies in US responded to similar set of environmental factors by opting for
restructuring due to macro –level trends of globalization of markets, deregulation of financial and real
estate sectors and increasing credit of takeover bids.

According to World Investment Report 2000(UN 2000), M&A world wide have grown over past two
decades (1980-99) at an average annual rate of 42% and reached $2.3 trillion in 1999 in relation to
GDP. Total M&A in the world were hardly 0.3 % in 1980 rose to 2 % in 1990 and further 8% in 1999.

The trends have, however, reversed recently in 2000. Number of deals in US slipped from 12,300 to
10,800. Banking business activity also fell by 20%.

Mergers and Acquisitions: The Strategic Role of

Human Resource Management

Mergers and acquisitions are a common feature of the global business landscape. There has been a
marked increase in merger activity since the 1990s. The main drivers of such deals are the changing
market conditions which require businesses to regroup their activities and deregulation which lead to
consolidation. Furthermore, mergers take place for various reasons. Some of these reasons are:
entering new markets, developing new products and services, and achieving economies of scale.

Several studies conducted across the globe aimed at analyzing the true benefits of such strategies
reveal that more than 50% of mergers and acquisitions (M&As) are financial failures. Some studies
put this figure at 60-70%. These failures are due to financial, market, and HR-related reasons. In the
aftermath of these failures, critics, management writers, consultants, and analysts put the blame on

20
inadequate assessment of the human costs of M&As. HR has a crucial role to play in steering the
M&A strategy in the right direction. The involvement of HR from the pre-merger stage itself can help
in avoiding substantial human costs related to the merger and also maintain the momentum at the right
pace.

The US has witnessed a lot of M&A activity during the 1990s. Europe and Asia are currently very
active in this area. While the experiences in different regions vary, there are some common aspects of
managing M&As, which need close attention. The involvement of HR through all the different phases
of the M&A is one such.

The merging entities give a great deal of importance to financial matters and the outcomes; HR issues
are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the
desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR
issues in mergers and acquisitions have been the major reason for these failures.

The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the
pre-merger phase and the post merger phase. Literature provides ample evidence of difference in
between the human resource activities in the two stages: the pre-acquisition and post acquisition
period. Due diligence is important in the first phase while integration issues take the front seat in the
later. The pre acquisition period involves an assessment of the cultural and organizational differences,
which will include the organizational cultures, role of leaders in the organization, life cycle of the
organization, and the management styles. The mergers often prove to be traumatic for the employees
of acquired firms; the impact can range from anger to depression. The usual impact is high turnover,
decrease in the morale, motivation, productivity leading to merger failure. The other issues in the
M&A activity are the changes in the HR policies, downsizing, layoffs, survivor syndromes, stress on
the workers, information system issues etc. The human resource system issues that become important
in M&A activity are human resource planning, compensation selection and turnover, performance
appraisal system, employee development and employee relations.

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Section I: HR Challenges

The report, "The Role of Human Capital in M&A", prepared by Towers Perrin, London, UK,
asserts that the management challenges of M&As are immense and require the involvement of senior
management, HR, and, at times, external expertise. People issues can make or break a deal. The
priority areas for HR are effective communications, cultural alignment, and change management plan,
securing the top performing team, prioritizing activities, developing a staff model, and developing a
reward strategy for the new organization. However, the common role for HR mainly revolves around
ad hoc advice for senior management, retention of key talent, and due diligence on compensation and
benefit plans of the merging firms. If not handled well, M&As can lead to failures and wastage of
valuable resources. Bungling the management of a merger can result in losing people, who are a
valuable asset. The management team has to anticipate and prepare for the emotional responses of the
employees at the earliest. Some of the reasons for M&A failures are: cultural incompatibility, non-
existent or over-rated synergies, inability to manage change in the new organization, and clash of
management styles/egos. The report also provides a regional outlook for the US, Europe, and Asia. In
particular, the report mentions that European M&A transactions have been surprisingly successful.
Moreover, transactions that place HR considerations centrally have a higher success rate than deals
that neglect HR.

"Why do Mergers fail? What Can be Done to Improve Their Chances of Success?" by Rita
Salamé of Key Strategy Limited, UK, points out that 60-80% of mergers are financial failures due to
financial, market and HR factors. The lack of direct involvement of HR is one of the key reasons for
M&A failure. A failed merger also results in loss of key talent and loss of customers. For instance,
47% of senior managers leave the acquired firm in the first year and 50-75% of them plan to quit
within the first three years. Moreover, there is a 50% drop in productivity in the first 6-8 months of
integration. The steps to be considered for a successful merger include extensive and regular

22
communication, effective planning, retention of key people, management of cultural differences,
training and development, and formation of post-merger integration teams. The paper includes
examples relating to the merger experiences of Daimler-Chrysler, Exxon-Mobil, Alcoa-Reynolds,
NationsBank-Bank of America, etc.

"The Human Side of M&A: How CEOs Leverage the Most Important Asset in Deal Making", a
book authored by Dennis C Carey and Dayton Ogden has been summarized by Sourabh Bhattacharya
of The ICFAI Institute for Management Teachers, Hyderabad, India. Every individual is different and
this adds to the complexity of managing people during a change process. Issues which address need
pertain to the inadequate assessment of the human capital of companies, identifying key members of
management and bestowing special attention on them. It is of the utmost importance to clearly
communicate with all employees about the merger and its implications for the employees. Employees
are often hit by waves of anxiety and need to be supported during the changeover. At the senior
management level, it is vital to evaluate management teams before, during, and after a merger.
Ensuring the right blend of directors on the board also plays a key role in ensuring M&A success. The
other more specific issues relating to HR include: defining specifications for key roles and
responsibilities, designing adequate compensation and benefit strategies, and managing conflicts
among managers.

"Mergers, Acquisitions and People", written by Philip van Elsdingen of Hewitt Associates BV,
Amsterdam, The Netherlands, presents the people management challenges faced by organizations
during mergers or acquisitions based on a survey of 90 European multinational companies. The report
has projected that M&A activity was expected to increase in the next 2-3 years. To cope with the
increase in M&A activity, there is a need for aligning HR strategy with the companies' objective to
merge/acquire. The HR challenges of a merger/acquisition revolve around the retention of leadership
and key talent, organizational restructuring, alignment of compensation and benefit plans, ensuring a
cultural fit (cultural integration can take two years), determining the effects on the current leadership
model and adapting the model. Successful companies also include provision of due diligence training,
start the integration process earlier, and focus more on employee communication. The report includes
the examples of Philips Medical Systems and GE to show the direct and strategic impact of HR on
corporate and transaction objectives.

23
"Human Resource Management Challenge in International Mergers and Acquisitions: An
Overview", written by Amit Pande, a doctoral student at Indian Institute of Management, Ahmedabad,
India, describes the challenges of national cultures and cross-cultural differences on the effectiveness
of cross-border M&As and the design of appropriate HR policies. A note has been made of the
increased activity in the area of acquisitions by Indian firms during the last five years. The firms span
a number of different sectors including manufacturing, telecommunications, software,
pharmaceuticals, etc. The paper includes conceptual notes on national culture and types of merger
integrations. The issues involved in cross-border mergers are discussed. These include dissimilarity of
cultures, difficulties pertaining to interpersonal relationships, trust, superiority syndrome, etc. There is
a need for HR to take care of national cultural differences and regional information, while designing
HR policies or when facilitating the integration by conducting a cultural assessment and cross-cultural
training. The paper also provides a perspective on merger and acquisition issues in India through
examples of Glaxo and Wellcome in India and a few other companies.

"The Biggest Risk of All", written by Thomas Kell and Max Landsberg both of whom are associated
with Heidrick & Struggles, posits that leadership capability of top teams is the crucial determinant of
M&A success or failure, considering competitive pressures, high expectations from shareholders, and
the scale and complexity of M&As. A structured assessment of leadership skills is vital and this form
of assessment may require the involvement of external expertise. This exercise of assessment serves
multiple goals. It helps to confirm the competence of key executives, gauge the degree of alignment
with the intended strategy, identify dysfunctional elements in prospective teams, and capacity to
absorb new philosophies or cultures. The paper also warns against certain common mistakes made
while selecting the leadership team. These include using simplistic rules of thumb to assign senior
positions and going by gut feelings. The examples of Volvo Group/Renault Trucks, Bank of
America/Fleet Boston, and Carlton/Granada are included to explain the benefits of conducting an
appropriate leadership assessment to meet the needs of a merger or acquisition.

"Employment Effects of Mergers and Acquisitions in Commerce", prepared by International

Labour Organization, highlights the general aspects of mergers and acquisitions. M&As are a global
phenomenon and are more prevalent in mature markets and developed countries. They are normally
aimed at achieving economies of scale, but have mixed effects on existing jobs and employment in
general. The employment effects include job cuts, relocation, additional commuting time, unstable

24
employment, employability issues, etc. There is a need to proactively develop plans to ensure optimum
working and employment conditions by building worker and business flexibility, ensuring good work-
family balance, and reskilling to improve employability. The article also stresses on the importance of
social dialogue for successful integration and actualizing the merger objectives.

Section II: Perspectives on Effective Management

"HR Issues, Activities and Responsibilities in Mergers and Acquisitions", written by Randall S
Schuler and Susan E Jackson both of whom are associated with Rutgers University, NJ, USA, calls
attention to the need for adopting a systematic and well-considered strategy for effective management
of human resources during the course of a merger. The authors attest to the fact that there has been a
substantial increase in the number of M&As across the globe since the 1990s and cite the names of
several global companies in this regard. The paper presents a 3-stage model of M&As that identifies
numerous HR issues and activities during the three stages and also includes several examples to
explain the application. These three stages are: pre-combination, combination, and solidification and
assessment of the new entity. During the pre-combination stage, it is important to identify reasons for
the merger, form an M&A team, conduct cultural assessment, assess senior leadership skills, formulate
a plan to manage the process, and set practices for learning and knowledge transfer. During the
combination stage, it is important to focus on strategies pertaining to retention, motivation, change
management, communicating to stakeholders, deciding on HR policies, and creating a new culture and
structure. Finally, while solidifying and assessing the new entity, HR has to pay attention to cementing
leadership and staffing, assessing new culture, and addressing concerns of stakeholders.

"Managing HRM Risk in a Merger", written by Jane Bryson of Victoria University of Wellington,
New Zealand, takes the stance that incompatible employment relations policy can impact merger
performance. It focuses on the industrial relations (IR) aspect of M&As and says that less emphasis
given to IR aspects in M&A literature, leads to a "black hole" approach to employment relations. The
paper suggests giving high importance to HRM & IR with emphasis on job security, procedural
fairness, and communication. IR issues such as industrial disputes, litigation, and strike activity can
lead to high financial costs. The paper describes a New Zealand bank merger case: Westpac and Trust
Bank. This case demonstrates how IR issues can be avoided by placing a high priority on
communication, organizing regular meetings between important stakeholders, and dealing with

25
personal grievances. In this particular case, both the organizations had an established relationship with
Finsec (the financial sector union) prior to the merger, which helped in overcoming inter-union issues.

"The Perfect Blend", written by Christopher Cornell, a writer with workindex.com, discusses the
challenges of blending organizations by considering corporate cultures, organization structures,
decentralized versus centralized operations, specialized versus generalized HR services, etc. It points
out that special attention has to be paid to managers who resist change, acceptance of virtual teams, the
neglected areas of HR, honouring commitments to employees that had not come through HR,
downsizing, rebuilding credibility, meeting the needs of different types of employees (e.g.,
teleworkers), and ensuring employee satisfaction levels. It includes a number of examples of mergers
where HR was involved early in the process: Hewlett-Packard and Compaq Computer Corp,
Ameritrade Holding Corp-Datek Online Brokerage Services, MAPICS-Frontstep Inc., etc.

"Role of Communication for M&A Effectiveness", written by Sandy Hutchison of Mercer,

Australia, elaborates the vital role of communication (both internal and external) in securing
organizational stability and employee and customer retention during M&A. Normally, communication
is given low priority as it is not legally required, is time consuming for senior leaders, and involves
disconcerting messages. However, timely and appropriate communication helps build trust and
acceptance, keeps employees focused, mitigates damage caused by the rumour mill, and relieves
anxiety. Appropriate care must be taken to provide answers to employees' questions about the
transition. Apart from presenting the highlights of a merger communication case study, the article also
suggests approaches to handle the communication effectively.

"The Art of the Deal", prepared by Hewitt Associates, focuses on salient aspects of M&A training
for M&A teams. Considering that a vast majority of mergers and acquisitions fail, M&A training can
play a vital role in improving mental preparedness to handle the complex aspects involved. The three
prime goals which can lay the foundation for effective M&A training are: establishing and
standardizing the M&A process to suit the organization's unique needs, equipping team members with
the knowledge they need for the job, and leveraging existing knowledge and creating unity of purpose.
M&A training can be of two kinds. The first focusing only on the HR-related aspects and the second
meant for cross-functional merger integration teams. M&A training is vital for frequent acquirers,
organizations with future plans to acquire, and organizations for whom M&A is part of the growth

26
strategy. Some of the challenges of M&A training include preparing for M&A integration and training
for global mergers.

27
"The CLO's Role in Mergers and Acquisitions", written by David Austin of Contextware, Inc., VA,
USA, identifies critical success factors of M&As and outlines the strategic role that the Chief Learning
Officer can play to make the M&A successful. He/she has an important role to play in establishing
effective corporate communication practices, creating functional teams, serving as a catalyst for
change, identifying and training managers to serve as champions of change, and orienting employees
towards the new corporate culture. He also has to take care to document job responsibilities and
corporate knowledge, as also capture and disseminate knowledge. Moreover, CLOs can play a vital
role in anticipating pitfalls and planning meticulously for M&A transactions.

"Can Two HRMS Merge as a Firm Does?", written by Tom Starner, a Philadelphia-based freelance
writer, points out that merging organizations have also to deal with the question as to which human
resource management system (HRMS) will be adopted in the merged organization. Although there
will be a tendency to adopt the acquiring firm's HRMS, this aspect needs to be considered carefully
and only the most appropriate system should be adopted. The consideration of a common HRMS to
suit the needs of a merged entity presents a tremendous opportunity to save costs. Several features can
be considered in line with the merged entity's current needs, as also its future plans. The article also
cites several examples of corporate experiences of merging their HRMS as a result of mergers. These
examples pertain to Citicorp, Grupo Financiero Banamex-Accival, Ford, and Hertz.

"Resolving Retention and Cultural Issues in Acquisitions and Divestitures", written by Steve
Rimmer, Barbara Kraft, Charles Wheeler, and Joy Gramolini (all of whom are associated with
PricewaterhouseCoopers), deals with the question of whom to retain and whom to let go in the course
of an acquisition. The factors to be considered for taking such decisions include assessing relative
criticality, the period for retention, and employees' post-retention period status. Further, the article
describes the features of a retention program. Apart from the retention issues, the article also describes
how to identify and resolve cultural differences. In particular, it focuses on four factors for identifying,
aligning, and changing corporate cultures—defining the desired behaviours, deploying role models,
providing meaningful incentives, communicating clearly and consistently.

"Merging Compensation Strategies", written by Sumati Reddy of the ICFAI University, Hyderabad,
India, focuses on the vital aspects to consider while integrating the compensation strategies of the

28
merged entities. There are two choices: integrating disparate programs into a more befitting program
and discarding original plans and creating a program from the scratch. Merging the compensation
strategies of the two organizations is a complex and difficult process as the magnitude of differences
can be quite large, involving a lot of administrative complexities. Moreover, this issue is also linked
with employee retention, morale and productivity. Effective management of a merger or acquisition
implies involving HR from the pre-merger stage itself, understanding the rationale for the deal,
reviewing the target company's compensation policy, comparing organizational philosophy, educating
financial executives about risks and costs, mapping job descriptions, and designing an appropriate
transition plan. Overall, it is important to realize that a merger or acquisition affords a valuable
opportunity for companies to review their existing systems and design new systems that are more
comprehensive and serve the needs of the new entity.

Earlier research by the consulting firm found that most of the M&As that took place between 1995 and
2000—when HR was rarely involved in the early stages of the M&A process and people issues were
frequently cited as key obstacles to merger success—failed to meet key business and financial
objectives. Almost half of the deals surveyed failed in the eyes of shareholders, based on comparing
total shareholder returns (stock price appreciation plus dividends) during the three-month period prior
to the deal to returns during the three years after the deal.

Thus, it’s good news for HR—and businesses—that the latest Towers Perrin report found that nearly
two-thirds of HR executives surveyed are now involved in M&A due diligence, and three-quarters
expect to be highly involved in this phase in future deals. Companies, then, appear to be learning from
past mistakes. Researchers also found that nearly 80 percent of M&As completed in the last few years
have substantially met key strategic objectives.

“Five years ago, HR was saying, ‘People issues are important, but we’re not getting to help,’ ” says
Giampietro. “Now they are.”

‘The Soft Stuff Is The Hardest Stuff’

The toughest problem companies face in the M&A process continues to be merging two cultures,
according to the Towers Perrin study. Giampietro stresses that HR needs to make a “meaningful
assessment” of each company’s culture. However, “you don’t [assess] culture as a separate thing,” he

29
says. Culture permeates everything, so you need to be aware of it and integrate it into the M&A
process, Giampietro says.

“Culture is a five-to-10-year, very delicate change,” agrees Susan Bowick, who retired in 2004 as
executive vice president of HR and workforce development at Hewlett-Packard (HP). “The soft stuff is
the hardest stuff.”

When company cultures merge, both sides may find that they don’t even share a common
understanding of business parlance. As a result, HR should begin looking for language differences
right from the pre-deal stage as a way of anticipating cultural differences.

“It’s critical to get people speaking the same language,” says Bowick, who led HR through HP’s
merger with Compaq Computer Corp. in 2001. (See “Orchestrating a Mega-Merger”.) “For instance,
we discovered that people at both companies were using the term ‘customer solution,’ but it meant
different things to each of them. HR was the first to identify the disconnects and get them on the
table,” she says.

Human resource professionals can help smooth the transition:

 Facilitate transition teams. Transition teams are used to study and recommend options for
combining the two companies in a merger. To discourage decision-making based on personal agendas
or politics, human resource professionals who facilitate transition teams should work with team
leaders to run effective meetings. This will give all team members an opportunity to contribute their
viewpoints.
 Educate managers and employees. To minimize stress and uncertainty in the organization during
the merger process, develop and deliver educational seminars to help employees and managers
manage stress, low morale and productivity issues in work groups. These seminars should focus on
specific issues affecting employees rather than on change management in general.

 Develop newly formed teams. After the merger is implemented, problems may arise as new
teams are formed. These teams may experience interpersonal conflict, unclear roles and
responsibilities and confusing procedures as leaders move ahead on operational tasks. Create a process

30
to develop newly formed teams. Review this process with managers and supervisors, and offer to help
launch new teams by providing consultation.

 Reinforce the new culture. When two companies with vastly different cultures merge, help
management preserve the best aspects of the old company and carry them into the new company. Find
out what cultural characteristics and values senior executives want to preserve from their respective
companies, what they don't want to keep and what new characteristics they want to introduce in the
new organization. Make a list and ask each level of management for feedback. Provide management
with a development tool. Survey all levels of management about three months after the merger, to
assess progress toward the new culture and provide feedback to managers.

HR professionals can play an active role in the change process by offering interventions that will help
ensure a successful merger.

HR Best Practices in Mergers & Acquisitions

Pre-deal: The number one recommendation was identifying the people-related issues and planning for
due diligence. Second was assessing people and working out the organizational/cultural fit. And the
third recommendation was educating the deal team on the HR implications of a deal.

Due diligence: During this stage, estimate the people-related transactional costs, the people-related
ongoing costs and the people-related savings. Identify and assess all cultural issues.

Integration planning: There were six major recommendations: develop employee communication
strategies; design key talent retention programs; plan and lead integration efforts; develop a new
strategy for the new entity; help the organization cope with change; and define an organizational
blueprint and staffing plan.

Implementation: During this phase, HR professionals should focus on managing ongoing change and
employee communications; advising management on dealing with people issues; aligning total
rewards and other HR policies; monitoring the process of organizational and people-related integration
activities; and ensuring the capture of synergies via incentives.

31
 CHAPTER –4
RESEARCH METHODOLOGY

32
4.1 PRIMARY OBJECTIVE

“To find out the role of HR in Mergers and acquisitions in various stages”.

4.2 RESEARCH DESIGN

Methodology Used Qualitative research

Data Source Secondary

Sampling Unit 33333 3

4.4 SCOPE OF STUDY:

The scope of the project includes a sample of 3 companies. The study was based on already done
mergers or acquisitions by those companies, to know the role of HR in them. All the results were
analyzed accordingly.

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4.5 LIMITATIONS:

 Observations of a particular case cannot be universally applied to all instances universaly.

 For the sake of convenience the sample size taken is very small so as to be a true representative of
the entire population.

 Many factors like predetermined company strategy, hierarchy etc. make a company’s framework
pretty different from others thus, there are many assumptions inherent in the nature of the case itself.

 Parameters taken for the observation might be insufficient to represent all the issues.

 Many important aspects might not have been revealed by the officials to avoid leakage of sensitive
information.

34
 CHAPTER –5
5.1 DATA
5.1.2 SECONDARY SOURCES

35
5.1 DATA
The secondary data was collected:

5.1.2 SECONDARY SOURCES

Includes data from various sources like internet, books, journals, etc.

36
 CHAPTER –6
PROFILES AND CASES

37
CASES:

Shaw's Supermarkets acquired Star Markets

It's about the people.

In June 1999, Shaw's Supermarkets acquired Star Markets for roughly $500 million. Shaw's at that
time had 126 stores and about $3 billion in volume; Star had 54 stores and $1 billion in sales. That
acquisition was Shaw's largest to date, growing revenue by roughly 50 percent and increasing its
workforce from 20,000 to 32,000. It took eight months from signing the agreement to Federal Trade
Commission approval. To bless the deal, the FIC required that 10 stores be divested. Shaw's
anticipates achieving roughly $50 million in synergies, with about $10 million in the first year.

Completion of the acquisition and integration--operationally and culturally--of the two companies
have required human resources to play a major role. The work is still going on: Although most of the
integration plan has been implemented, the human side of the integration continues to evolve.

The key HR initiatives have included

* Development of preliminary organizational designs and identification of the top three levels of
management

* Assessment of critical players and deployment of appropriate resources in the new company

* Retention of key people and separation of redundant staff

* Development of a total rewards strategy for the combined companies

* Communications strategy development and implementation

* Integration of payroll benefits and HR-IS

38
* An ability to do all of the above with speed.

We followed a carefully designed integration plan, with the HR element at the heart of much of it. The
integration is proceeding on schedule and, by and large, the factors affecting the people have been
executed successfully. The critical learning throughout the process has been that it's all about people.

The upheaval associated with any merger or acquisition is a prime opportunity for HR to demonstrate
its knowledge and skill in the management of human capital. HR is an intrinsic part of the integration
team in an m&a because of its ability to evaluate the compatibility of corporate cultures and different
options for combining enterprises. HR must also be the trusted source of information for employees
about what the m&a means for them.

The guiding principles:

* Take definitive action and make decisions quickly--the secret for holding onto good people.

* Be candid with employees, and treat them with respect. Let them know that the combined entity will
be a more valuable organization.

* Whenever possible, use ownership of the company as represented by stock options and stock grants
to get everyone pulling in the same direction.

* Be honest about the people decisions that must be made.

* Treat those leaving with the same respect and attention as those staying.

Rather than take a risk-averse, wait-and-see attitude that can lead quickly to irrelevance, HR
executives should be integral to all phases of due diligence, to easing the transition, and to focusing
employees on the creation of shareholder value as soon as possible. Taking a wait-and-see attitude will
lead to an irrelevant role for HR. Instead, the role must be orchestrated so that its value becomes
integral to the deal.

According to Mergerstat, there were more than 7,700 deals in 1998 involving U.S. companies valued
at $1.2 trillion. Worldwide transactions totaled more than $2.4 trillion in nearly 23,000 deals. Of those,

39
96 percent were friendly, 85 percent were to gala competitive advantage, and 88 percent were
companies in similar businesses. Though the final numbers aren't in yet for 1999, the pace can be
expected to have increased.

Many companies report that their mergers are successful but admit the end results aren't as successful
as they could have been. Recent studies place the success rate of merged companies at 30 to 60
percent, depending on what criteria you measure. No matter how flawless a deal seems on paper, the
results are often disappointing. Most merged organizations lose 1 to 10 percent of their market value in
the first year after the merger.

There's a lot to learn about managing the transition period, optimizing short-term performance,
keeping the highest percent of talent, and integrating processes and systems. Companies that don't
address those issues may suffer a loss of profitability, top talent, and confidence in leadership
decisions.

Although a multitude of factors can contribute to a disappointing merger or acquisition, success

depends ultimately on the effective use of people. A recent report from the Bureau of Business
Research shows that organizational and cultural problems are more likely to derail a merger than are
financial factors. Only 28 percent of companies said they did a good job of assessing the culture of
their merging organizations before the deal, only 26 percent said they had put the right people in the
right roles during the merger, and a scant 15 percent said they had successfully communicated the
vision and goals after the union.

From the due-diligence stage through the identification and appraisal of people to the management of
culture issues and communication, people issues impact every step along the way. Such issues are
essential and integral to the process and must not be treated as an afterthought. It's unrealistic to
assume that one business can absorb another without being altered. When two companies merge, one
may change more than the other, but both will change.

Looking at just one key issue, leadership, it's essential to evaluate the strengths and weaknesses of the
players, individually and collectively, to ensure that the management talent required to define the
future of the new company is there to steer the chosen course.

40
Integration planning

Without a clear plan and timetable, a merger or acquisition can fail. The plan should be broken down
by function: What needs to be done? Who's going to do it? When will it be complete?

The integration effort must be led by a full-time dedicated team. There should be an integration project
manager free from any routine responsibilities, whose sole job is to manage the overall plan. The
integration manager needs a special set of competencies (including project management), broad
experience in the parent business, and specific functional expertise relevant to the new business. He or
she should be willing to make tough decisions quickly, handle conflict, and work well across functions
and management levels. Skill as a communicator is essential.

Fill your integration team with flexible, creative, and enthusiastic people. Take them completely away
from their usual jobs so they can devote themselves to the team effort. Pick the best people, not just
the available people. Integration leadership should be invested in the continued development of the
new organization and be in for the long haul.

The primary roles of HR during this phase are to

* Develop strategies for retaining key people

* Examine compensation and benefit programs

* Identify barriers to a merged culture

* Create and execute a comprehensive plan for communicating with the new organization.

All of the change-management expertise in the group should be called upon to address employees'
anxieties about the merger.

41
Communication

The need to communicate, communicate, communicate extends well into the latter stages of the
integration but must begin with the first announcements. Often, communication efforts are fragmented
with different messages and information flowing to investors, employees, managers, and customers.
Messages to all stakeholders must be well planned and consistent. There can never be enough
repetition. The message must be heard again and again to be fully understood.

Two-way communication always helps comprehension. All avenues should be used: written, one-on-
one meetings, and small- and large-group meetings. People need a chance to probe, discuss, ask
questions, and arrive at a personal level of understanding that they can't get from a piece of paper.

The overriding question is, "How does this affect me?" Speed in communication goes along with
speed in the total integration. Don't leave people waiting for the other shoe to drop. Talks to them even
if you don’t have all of the information, rather than let the grapevine fill the communication void.
Reduce anxiety by being upfront and honest.

Accessibility to managers, officers, and directors is critical to satisfying employees' hunger for
information. During our acquisition, we developed an excellent tool, Rumor Buster, which was
produced and distributed weekly to counteract rumors. Sometimes, it's enough to clarify the message
or give more details; other times, it requires a 360-degree turnaround explanation for people to finally
get the right information. Senior managers must remember that while they may have been involved in
the acquisition for months, employees have only begun to acclimate themselves to the new situation.
The information they're receiving is new to them.

The goal of communications should be not only to inform, but also to engage employees' hearts and
minds. By presenting a clear vision of the future and gaining commitment to it, the new company
begins to build the loyalty that's crucial to survival.

In the seven-step process we used (see page 63), we were careful to avoid statements that could be
dismissed immediately as propaganda--such as, "We're not going to change anything." "We respect

42
your autonomy." And "We want to get to know everyone. Don't worry, there's plenty of opportunity
for each of you."

Statements like those are remembered, and nothing hurts the solidarity of the new company more than
communication that is later contradicted.

The synergies

There are two kinds of synergies that companies seek through a merger or acquisition: growth and
economies of scale.

Growth. The role of HR is to identify key human assets in the target company, set up retention
arrangements to keep critical talent, and create development plans for people to prepare them to
achieve the anticipated corporate growth. Other issues needing attention to maximize the growth
synergy are reward and recognition programs, team development, and integration of benefit and
compensation programs--ensuring they are competitive to attract and retain desirable employees.

When mergers are contemplated, synergy and value often depend on the effective transfer of
knowledge. As knowledge becomes an increasingly important corporate asset, it's critical to capture
the best practices of each company for maximum return. It starts with the relatively easy task of
identifying the people and processes needed to keep the business operating as usual. It moves to
training on systems, specific job skills, and procedures. Ultimately, it involves capturing the tacit
knowledge and informal networks that enable an organization to get things done.

Economies of scale. That's often a euphemism for firing people. But to achieve synergies, there must
be an analysis of what the end-game organization will look like and which positions are truly needed.
Once that's clear, assessments must be done to determine who stays and who goes. Redundancies must
be eliminated. Not only do job skills need to be determined, but also personality and motivational
factors must be considered. The fit of a person with the new team and new culture can greatly affect
his or her likelihood of success.

Individual job and career objectives must be discussed, and employees must be informed of their
options for the future. The cost of severance packages and outplacement services should be factored

43
into the equation. Even issues such as where to house the newly acquired employees become sensitive
and costly. It's essential to have a well-documented and impartial approach to such issues in order to
avoid the appearance of favoritism.

Because people are anxious to know their futures as soon as possible at the start of the integration
process, we created a definitive plan with specific dates and a promise that each person would be
spoken to within week 1 and everyone would know their alternatives for the future within 30 days.

Retaining key talent

There is no one way to retain people during a merger or acquisition. You can make offers to certain
people and if they accept and want to stay, that's fine, If they don't, that may also be fine. But when
you're talking about key people, the story changes. By the way, "key people" doesn’t always mean a
top executive. Executives may be key in some respects, but there may be other employees who are
more important to the workings of the enterprise. If you lose them, you can end up spending a lot of
money and still be unsuccessful. Whether they're technology specialists, marketing people, or top
management, you must make certain they'll stay.

The next question: How long do you need them? Some talent may be needed only during the transition
period, after which their responsibilities can be handed off. Others may be needed for much longer.
Each person must be considered, and a plan must be put together for that person. The kind of
agreement that's drawn up and how far it goes to keep key talent will differ from organization to
organization. But it's best not to give away too much or keep someone who will never adapt to the new
structure, simply because he or she is talented or highly thought of. You may have to let people go as a
tradeoff against disruptive attitudes or constant conflict. The appropriate fit of any one person in the
new culture can be as critical to success as talent.

A frequently used retention tool is the bonus. Unless you plan to give one to everyone, you run the risk
of having some disenchanted employees feel undervalued. But for the people who are eligible, a bonus
can make them feel special and entice them to stay for the period covered by the payout. You need to
be clear up front regarding how far the program extends and what levels of payout there will be. That
shouldn't be kept secret and must be perceived as fair and equitable, or it will generate negativity.

44
The new structure of the merged companies may be different, and certain jobs may not exist or be
available because incumbents are staying, but there is wisdom in keeping the talent in the top 10
percent of the population, even if their current jobs no longer exist. Find a place for them, and retrain
them if necessary. Talented people tend to welcome the challenges of a new role, and they enjoy
career growth and added responsibility.

Buyer's remorse

Once the thrill of the deal is over and the reality sinks in, the mood may change from exhilaration to
remorse as the workload grows and problems arise. People can be confused and fatigued. The
direction might be unclear, people will be working harder and longer, and new people may need more
time than anticipated to get up to speed. Acknowledging that and prioritizing the problems make the
situation more manageable. People need permission to voice their feelings. Once out in the open, their
emotions can be dealt with more easily.

Mergers and acquisitions don't follow a carefully laid-out linear progression. As much as we might
desire a logical, well-ordered approach, when two groups combine, the process takes on a life of its
own. Initial plans and assumptions have to be adjusted, and focus can be lost as critical and immediate
problems rear their ugly heads. Executives are often pulled away to deal with the next business issue,
reducing their visibility and giving the impression they're no longer concerned about the merger.

The good news is that people can tolerate a degree of uncertainty in their responsibilities if they
believe the business direction is clear and the chances of long-term success are good.

The structure of every integration is as unique as the deal. We can certainly benefit from what came
before and should document the process so that the next deal runs more smoothly than the last.
Success is more likely if you follow a flexible, well-designed integration plan to combine the two
entities, adapt to issues as they come along, and make the right decisions with reasonable speed.

Ruth N. Bramson is senior vice president of human resources, Shaw's Supermarkets; ruth.

45
Before she moved on to HR models, Ruth Bramson's first job was as a model and makeup artist for
Estee Lauder Cosmetics. She also established the first daycare voucher program for a retail
organization.

46
The Ten Lessons of Integration

1 Integrate fast. Realize synergies and efficiencies sooner rather than later.

2 Dedicate the necessary resources.

3 Make tough decisions about organizations and people quickly.

4 Restructure and re-recruit top talent.

5 Set clear, short-term objectives; celebrate successes as you achieve them.

6 Communicate strategically; be open and forthright.

7 Allow the acquired company to conduct business. After all, that's why you acquired it.

8 Manage the culture integration carefully.

9 Focus on what each event means to individuals.

10 Keep your sense of humor.

Seven-Step Communication

1 Develop macro messages.

2 Conduct analysis of key audiences.

3 Produce micro or issue-specific messages.

4 Select media mix.

5 Produce strategy timeline.

6 Implement strategy.

47
7 Measure the effectiveness of communication strategy.

COMPANY PROFILES:

NTPC: THE COMPANY

NTPC Limited is the largest thermal power generating

company of India. A public sector company, it was
incorporated in the year 1975 to accelerate power
development in the country as a wholly owned
company of the Government of India. At present,
Government of India holds 89.5% of the total equity shares of the company and the balance 10.5% is
held by FIIs, Domestic Banks, Public and others. Within a span of 31 years, NTPC has emerged as a
truly national power company, with power generating facilities in all the major regions of the country.
(Based on 1998 data, carried out by Datamonitor UK), NTPC is the 6th largest in terms of thermal
power generation and the second most efficient in terms of capacity utilizations amongst the thermal
utilities in the world.

NTPC’s core business is engineering, construction

and operation of power generating plants. It also
provides consultancy in the area of power plant
constructions and power generation to companies in India and abroad. As on date the installed
capacity of NTPC is 26,404 MW through its 14 coal based (21,395 MW), 7 gas based (3,955 MW)
and 4 Joint Venture Projects (1,054 MW). NTPC acquired 50% equity of the SAIL Power Supply
Corporation Ltd. (SPSCL). This JV company operates the captive power plants of Durgapur (120
MW), Rourkela (120 MW) and Bhilai (74 MW). NTPC also has 28.33% stake in Ratnagiri Gas &
Power Private Limited (RGPPL) a joint venture company between NTPC, GAIL, Indian Financial

48
Institutions and Maharashtra SEB Holding Co. Ltd. The present capacity of RGPPL is 740MW.
NTPC’s share on 31 Mar 2006 in the total installed capacity of the country was 19.51% and it
contributed 27.68% of the total power generation of the country during 2005-06.

NTPC has set new benchmarks for the power industry both in the area of power plant construction and
operations. It is providing power at the cheapest average tariff in the country. With its experience and
expertise in the power sector, NTPC is extending consultancy services to various organizations in the
power business. NTPC is committed to the environment, generating power at minimal environmental
cost and preserving the ecology in the vicinity of the plants. NTPC has undertaken massive
afforestation in the vicinity of its plants. Plantations have increased forest area and reduced barren
land. The massive afforestation by NTPC in and around its Ramagundam Power station (2600 MW)
has contributed reducing the temperature in the areas by about 3°c. NTPC has also taken proactive
steps for ash utilization. In 1991, it set up Ash Utilization Division to manage efficient use of the ash
produced at its coal stations. This quality of ash produced is ideal for use in cement, concrete, cellular
concrete, building material. A "Centre for Power Efficiency and Environment Protection (CENPEEP)"
has been established in NTPC with the assistance of United States Agency for International
Development. (USAID). Cenpeep is efficiency oriented, eco-friendly and eco-nurturing initiative - a
symbol of NTPC's concern towards environmental protection and continued commitment to
sustainable power development in India.

As a responsible corporate citizen, NTPC is making constant efforts to improve the socio-economic
status of the people affected by the projects. Through its Rehabilitation and Resettlement programmes,
the company endeavors to improve the overall socio-economic status of Project Affected Persons.

NTPC was among the first Public Sector Enterprises to enter into a Memorandum of Understanding
(MOU) with the Government in 1987-88. NTPC has been Placed under the 'Excellent category' (the
best category) every year since the MOU system became operative.
Recognizing its excellent performance and vast potential, Government of the India has identified
NTPC as one of the jewels of Public Sector ‘Navratnas’- a potential global giant. Inspired by its
glorious past and vibrant present, NTPC is well on its way to realize it’s vision of being “A world
class integrated power major, powering India’s growth, with increasing global presence”.

49
50
NEW BUSINES DEVELOPMENT

NTPC, with a rich experience of engineering, constructing and

operating over 26,000 MW of thermal generating capacity, is the
largest and one of the most efficient power companies in India,
having operations that match the global standards.

NTPC has identified Joint Ventures, strategic alliances as well as

acquisitions and diversifications as viable and desired options for its business development.

NTPC looks for opportunity to create such joint ventures and strategic alliances, in the entire value
chain of the power business. NTPC as a partner endows the Joint Venture Alliances with a winning
edge. Acquisitions and Diversifications in the areas related to the core business not only ensure growth
but also add to the robustness of the company. Diversification is carried out either directly or through
subsidiaries/JVs.

ACQUISITION

Business development through Acquisition serves both NTPC's own commercial interest as well as the
interest of the Indian economy

Taking over being a part of the acquisition process, is also an opportunity for NTPC to add to its
power generation capacity through minimal investment and very low gestation period. NTPC has, over
the years, acquired the following three power stations belonging to other utilities/SEBs and has turned
around each of them using its corporate abilities.

51
 POWER STATIONS TAKEN OVER YEAR ORIGINAL OWNER

FEROZE GANDHI UNCHAHAR THERMAL POWER

1991 Vidyut Utpadan Nigam of Uttar Pradesh
STATION

TALCHER THERMAL POWER STATION 1995 State Electricity Board

TANDA THERMAL POWER STATION 2000 State Electricity Board

705MW Badarpur Thermal Power Station 2006 Central Electricity Authority

DIVERSIFICATION

To broad-base the business and also to ensure growth, diversification in the areas related to NTPC's
core business of power generation such as Hydro power, Distribution, Trading, Coal mining, LNG etc.
have been identified as priority areas.

A. NUCLEAR POWER GENERATION

In line with its Corporate Plan, NTPC exploring forays into the field of Nuclear Power Generation.
NTPC is now planning to set up Nuclear Power Projects of about 2000MW by the year 2017.

B. VERTICAL (BACKWARD) INTEGRATION - COAL MINING AND LNG BUSINESS:

COALMINING:
The policy changes in coal sector provide an opportunity to NTPC to enter captive coal mining
business. Production is expected by 2007 in one coal block already allotted in 2004 (Pakri Barwadih in
the state of Jharkhand). Six more blocks (~40MTPA) have been allotted to NTPC, including two in JV
with CIL.

52
TAKEOVER OF TANDA PLANT BY NTPC

The basic objective behind the decision to take over Tanda was the commercial consideration of the
plant on part of NTPC as the way to get back its dues from UPSEB, which otherwise was difficult or
so to say impossible for the UPSEB to return.
Noticeable feature here in this take over was that, at that time the various unions and employees all
over UP were highly agitated and furious due to the reforms which were going on with the help of
World Bank to Delink generation, transmission and distribution. So, strike was going on throughout,
even the NTPC people entered the plant with the help of Military to avoid any disturbances and
moreover the resistance to hand over the Plant to NTPC.

PRE TAKEOVER :

Before that takeover of the Tanda plant by NTPC, it has taken over three more plants.

1. Badarpur in 1978, during which only the management of that plant was taken
over and the whole of the plant was taken over in 2006.
2. Unchahar plant (UPSEB), which was taken over in 1992.
3. Talcher plant (OSEB), which was taken over in 1995.

This entire takeover helped the 4 th takeover easy for NTPC, as they were able to overcome the
difficulties that were faced by these takeovers. Previously the company did not pay much attention on
the Human Resource aspect regarding the takeover and the HR was involved only at the later stages.
But during the takeover of the Tanda plant the HR was involved from the beginning as a result they
overcame the problems that NTPC had faced during the previous takeovers.

53
INTEGRATION

The situation was that, there were about 1200 employees at the time of takeover out of which over 421
were to be retained. The strength of the UPSEB employees remained the same for nearly 3 years after
the take over. The salaries of those workers were paid by NTPC.Out of the total 1200 employees, 400
were the supervisors and executives who were not to be absorbed by NTPC.Out of the remaining 800
workers, 421 were to be absorbed by NTPC and the remaining were to remain with UPSEB and
redeployed etc. NTPC resisted the pressure to add more numbers to this 421 figure.

Thus, it can be said that for the period of 3 months the management had on his hands two distinct
groups.

 The first group consisted of those being absorbed

 The second group was of those who were not getting absorbed.
 The larger number was that of those being repatriated to UPSEB.The willing workers generally
belonged to the first group and the unwilling workers (not necessarily all) generally belonged to the
second.

NTPC has this rule of having 1 employee for every 1 MW of power, including executive and non
executive. NTPC did not need many employees to manage the plant after the takeover and as a result
adopted a policy of taking the older employees of the plant because they will be retiring early. They
did not need workmen to run the company as the machines in NTPC are all automatic.

To avoid resistance NTPC planned to give people freedom of choice. So, the people were given
freedom to decide as to whoever wanted to come were free to come. Once they came and worked in
and with NTPC they were so content and happy that they did not want to leave the company and the
rest of the people also wanted to come to join NTPC but it was not possible then.

54
Strategies to avoid resistance in handover:

 Informing the authorities and fulfillment of all laws.

 Deal was confidential and nobody initially was informed regarding the deal to avoid resistance and
undesirable elements which might I have intervened.
 Core Team of around 15 people was formed which studied the case minutely and comprised of
people from Power stations including people from all functional areas.

IMPLEMENTATION

Once there was a strike in the plant of Faridabad .The executives from the NTPC Delhi branch were
sent there for the continuation of the work and to everybody’s surprise it was possible for just 4
executives to run the plant for 3 days , till the continuation of the strike.

After the takeover was done, the main focus or the content of concern was the employees of the Tanda
Plant who have come to join NTPC.

As it is the UPSEB employees were very fearful regarding the culture and the environment of NTPC.
In order to make them feel comfortable some HR interventions were used by the HR department of the
company.

Communication was paid very much importance .Communication was considered as very important
both for the employees and the village around. The villagers were also explained as to why was this
take over necessary and how will it be beneficial to the villagers. The gain to the state was also made
clear. The benefits of the takeover were published in the newspapers and pamphlets were distributed
stating the takeover and its benefits.

The executives of NTPC personally addressed the employees.

55
So, communication was paid much importance and for the first 7 days, only communication was done
to a great extent in order to solve the issues and to motivate the UPSEB employees.

People like suppliers and the contractors were directly met by the executives .

When the takeover was done, then the UPSEB employees went on strike and all the plants were shut
down in UPSEB.UPSEB used obsolete and old dated machine which were not used by the
NTPC.NTPC used to use 600-1000MW machines. When the plants were shut down in UPSEB, then
the NTPC employees did not have any drawing of the machine that were being used there and neither
had they operated the machines before. It was a challenge for the NTPC engineers to operate the
machine. Nobody from SEB was ready to help them operate the machine.

They were in the state of mind that NTPC employees would not be able to operate the machines and
the sat and watched what the employees can do.

It was great surprise to the UPSEB employees to see that the engineers from the NTPC were working
on the machines as they were not used to see white collared people to work on the machines. They
thought them to be the ‘BABUS’ and it was a great shock to them when they saw the engineers
working.

It was a great shock to them to see the engineers successfully working on the machine. They were
never used to see the engineers themselves working on the machine. They were quite happy to see the
cooperative nature of the NTPC employees.

The strategies adopted to overcome People issues

 Clear communication channels were established.

All the queries and the apprehensions of the employees were addressed and sorted
out in the induction programme, which was arranged to brief the employees regarding NTPC and
solve their Problems especially related to say “JOB FEAR” and “FEAR OF UNKNOWN”. The

56
UPSEB employees were made to feel comfortable by attending to their each query so that their doubts
were clarified and dealt directly by the management rather than misguided by anyone. The NTPC team
was briefed properly as to how to handle the situation and the queries of the new employees. The
NTPC executives were sensitized against the ‘we and they’ syndrome

 HR interventions
The HR interventions were devised, and were introduced and were communicated in such a manner so
that it reflected non-discrimination, transparency and integrity of NTPC and its personnel. For
example constant touch with employees, counsel them regularly and not act as big brother and deal
them with empathy.
 Synergy
Conveying a feeling that if the plant improves, they will also improve and will be at a better end and
tried to show that these employees know plant better ,as majority of the employee were elderly people
who were working there since long, to develop synergy.

The HR Interventions which were implemented:

1. Orientation programme
Conducting three days structured orientation programme for workers being absorbed. Orientation
Programmes was titled ‘Positive NTPC Work Culture’. The main purpose of the orientation
programme was to make the employees well versed with the climate and the culture of NTPC. The
content of the programme laid stress on the structure and functioning of NTPC. The stress was also
given to the core values of NTPC and the mission and the vision of the company. It was made very
clear during the time of the orientation the company’s goal and the individual goal in NTPC is the
same. Everybody there work for the upliftment of the company.
Awareness about the safety and environment was also communicated. The communication was made
very easy and transparent. The employees were encouraged to solve their problems and the
rumors were sorted out too.

As the part of a deliberate strategy, no executive of NTPC was initially transferred to Tanda. They
feared that there would be comparison between the employees of the two organizations regarding the
pay and the perks.

57
2. Appreciative Enquiry
Recognizing and appreciating the strong points of the UPSEB employees. This motivated the
employees and will help them in feeling comfortable within NTPC. And reduced the fear that they felt
previously for the NTPC. Recognizing the strength of the UPSEB employees was vitally important to
restore their self confidence.
3. Teamwork
Teamwork was imbibed as a part of NTPC culture and makes them feel like a family and support each
other.
4. Training Programme
7 days training programme was arranged for the employees to give them behavioral training for which
the consultant was hired, who was instructed to use Hindi as a language for instructions.

5. Quality of work life (QWL)

To increase employee commitment and employee engagement QWL was one of major areas of
concern. So various activities were undertaken like renovation of existing Hospital, opening of schools
for employee wards, welfare clubs and the most important is building up of Township for employees,
moreover as a part of corporate social responsibility the company showed concern towards
environment also, so to avoid pollution and to maintain balance and equilibrium in environment
afforestation was done in collaboration with forest authorities and horticulture was also done.

6. Handling Resistance and teaching Multiskilling

This was used was to inculcate the culture of NTPC in the UPSEB employees. NTPC tried to do this
in the batches of 20 by telling them the Vision, Values, Objectives of the company. The pay and the
perks offered to the employees were also made clear to the UPSEB employees. Each part of the
Resistance Pyramid was properly handled and each and every employee was given due importance.

Not
Able

Not willing

58
RESISTANCE PYRAMID  Not knowing
Not Knowing: These people are ignorant about the results and the reason for the takeover. The mass
consisted of this category. Most of the workers and all were ignorant regarding as to why was the
takeover important and why was it being done. So the NTPC employees made it very clear to the
UPSEB employees by communicating to them and telling them the relevance and the need of takeover
and what all benefits would they be getting. It is very important to convince this category of people as
they form the majority.

Not Able: They understood the importance of the takeover and the reason for the takeover but they
were not ready for the takeover as they feared that they were not capable enough to run the high tech.
machines that were being used with the NTPC. They needed the relevant skill. So on the job training
sessions were held for such employees who were not able to perform.

Not Willing: The third and the most tough category of people to deal with are those who are well
aware about everything and are also able to perform but who are not willing to perform.

Motivation is the tool for them. When the engineers from NTPC went and worked on the obsolete
machines of the UPSEB plant, then it acted as an motivational factor for this category of employees
and they were shocked to see the white collared people, who they called as ‘babus’ in their offices
were actually working like them.

Optimum time was taken by NTPC to manage the change that was brought about due to the takeover
and every stage of the takeover (pre takeover, integration and the post takeover) was given due
importance.

59
7. Change in organization design

BEFORE THE TAKEOVER

G.M

CHIEF
CHIEF ENGINEER
ENGINEEER

FINANCE OPERATIONS
HR DIVISION
DIVISION DIVISION
IT DIVISION

AFTER THE TAKEOVER

60
 GM

QUALITY AND
HR HEAD FINANCE HEAD MAINTENANCE
HEAD

OFFICER OFFICER OFFICER

MAJOR CHALLENGES

1) There were inherent fears and apprehensions in the mind of UPSEB employees. There was a fear
for change. The employees of UPSEB were unwilling to change their mental make to the change
circumstances and wanted continuation of board times.

2) There was also fear of future under NTPC management .The UPSEB employees believed that they
will be retrenched from the service after the company is taken over by NTPC.

3) There were apprehensions about pay and perks as the UPSEB employees were not aware of the
NTPC pay scale .They were fearful that they will be losing the emoluments and the benefits that they
were getting when they were not the part of NTPC.The pay system of NTPC was not at all clear to the
UPSEB employees.

4) The UPSEB employees also lacked some technicalities. They lacked knowledge of latest
technologies and computer knowledge. This worried them. They feared that they would lose their jobs
because of this. They also feared because they did not have knowledge of English.

61
5) There was no proper Human Resource department and proper training was also not imparted to the
employees. The HR functions within a circle were handled by secretarial staff (popularly known as
babus).

SOME SPECIAL TAKEOVER ISSUES:

1. Continuous and Visible Improvement: There should be continual improvement in plant

performance as it aids in raising the morale of the employees. Such improvement whether in the plant
or surroundings must be visible, to be most effective. At Tanda the visible effects were in the plant
performance, working environment, cleanliness in the plant and colony, development of parks,
conduct of cultural activities, schools, hospitals etc. With this structure of life he quality of life also
improved.

2. Quantity v/s Quality: Initially at Tanda the strategy of achieving quantity over quality was
followed. Many visible changes, though of lesser quality are far superior to a limited number of high
quality ones. Quantity of success is more visible than the quality. When the plant becomes operational,
quality comes into play in order to enhance the performance parameter.

3. Make the Plant Operational First: In such takeovers, the primary focus should be first to make
the plant operational. When the satisfactory level has been achieved, other areas can start getting
added attention.

4. Risk Taking ability: the executives in key positions during takeovers should poses risk taking
abilities. This involves taking decisions in conditions of uncertainties or where new ground has to be
broken. This ability involves taking fast decisions with available information rather than weighing all
pros and cons and delaying a decision waiting for additional inputs /information. This ability in
executives is strengthened by support from the top in as much certain failure is acceptable. Clearly, the
very decision making ability of executives improves when working in takeover plants.

62
5. Open Door Policy: The head of the project and the departmental heads followed an open door
policy and were accessible to all the employees. Their expertise, help and advice was available to the
employees at Tanda. This policy was not a run off the mill policy. It was deliberate in as much as the
plant gradually stabilized, the degree of ‘open door’ was reduced. Thus, the management felt that the
genuine need for accessibility is in the very nascent stage of takeover.

6. Transparency and Non Discrimination: Each HR intervention was devised, introduced and
communicated in such a manner that it reflected non-discrimination, transparency and integrity of
NTPC and its personnel. Such HR interventions are essential when the NTPC culture and the culture
of the absorbed employees co-exist for time after the takeover.

7. Redressal of Grievances: Redressal of grievance is always a matter of deep concern to the

management. This concern is accentuated when persons from different cultures are involved. Tanda
management made all efforts for speedy redressal of grievances.

8. Simplification of Procedures: Procedures were simplified and modified like credited of salary in
bank directly, issues of leave/ medical books etc. which had a favorable impact on the UPSEB
employees. These procedures are taken for granted within the NTPC, being a part of its established
system. For the UPSEB employees it was something novel. Such system should be introduced at the
beginning, as it was done in Tanda.

9. Introduction of computers: There were no computers at Tanda prior to the Takeover .Introduction
of computers at Tanda brought a major visual change .The employees who were initially reluctant and
feared for their job became willing converts to the computer age.

10. Non Copy Book Style: The nature of work at initial stage of takeover does not always lend itself
to the routine rule book style of functioning. At this point there must be a relaxation of rules with
broad guidelines in place to manage the unexpected and the uncertain. This mode of functioning will
result in a speedier turnaround as was evident at Tanda.

63
Evaluation:

 At the time of takeover of the Tanda plant it took 421 employees and today only 280 are left and
the rest have been retired. so, NTPC managed to keep less employees with not much resistance from
the side of the Tanda employees as they were given full opportunity.

 Tanda Thermal Power station was taken over by NTPC on the 15 Jan 2000.The PLF of the power
station improved from 14.9% at the time of the takeover to 86.39% for the year 2005-06.Its now one
of the best plants of NTPC.

SWOT ANALYSIS OF THE TAKE OVER:

STRENGTH WEAWEAKNESS

Prudent Operation
Management
Dedicated team
OOO OPPORTUNITY THR THREAT

64
Set off the outstanding bills Low moral of the workforce
Big assets acquired No training undergone
Capacity addition Unskilled workforce
By regulators, saying that the value of the
assets are not valued correctly

65
BANK OF BARODA

Bank of Baroda (BSE: 532134) is a bank in India established on July 20, 1908 in the princely state of
Baroda, in Gujarat. The bank, along with 13 other major commercial banks of India, was nationalisd
on 19th July, 1969, by the Government of India.

Bank of Baroda has total assets of about Rs.1133bn (end-Mar 2006), a network of over 2800 branches
and offices, and about 700 ATMs. Bank of Baroda offers a wide range of banking products and
financial services to corporate and retail customers through a variety of delivery channels and through
its specialised subsidiaries and affiliates in the areas of investment banking, credit cards and asset
management. Bank Of Baroda is the fifth largest bank in India with business crossing Rs. 1.78 lakh
crores.

LOGO

The new logo is a unique representation of a universal symbol. It comprises dual ‘B’ letterforms that
hold the rays of the rising sun. It is called the Baroda Sun.

The sun is an excellent representation of what the bank stands for. It is the single most powerful source
of light and energy – its far reaching rays dispel darkness to illuminate everything they touch. Bank of
Baroda seeks to be the source that will help all the stakeholders realize their goals. To the customers, it
seeks to be a one-stop, reliable partner who will help them address different financial needs. To
employees, it offers rewarding careers and to investors and business partners, maximum return on their
investment.

The single-colour, compelling vermillion palette has been carefully chosen, for its distinctiveness as it
stands for hope and energy.

The bank is characterized by diversity. The network of branches spans geographical and cultural
boundaries and rural-urban divides. The customers come from a wide spectrum of industries and

66
backgrounds. The Baroda Sun is a fitting face for brand because it is a universal symbol of dynamism
and optimism – it is meaningful for their many audiences and easily decoded by all.

INTRODUCTION
On 19th June 2002 amalgamation of Banaras State Bank Ltd (BSB) with Bank of Baroda (BOB) took
place as per the notification No:S.No.15/2/2000-BOA by the Central Government.

Banaras State Bank Ltd. Having its head office at Varanasi, UP was a private sector bank ‘A’ class
bank, which was undergoing losses and was on the verge of liquidation due to ‘low capital adequacy
ratio’ and ‘high advances that went bad’. So RBI made an application under the banking regulation
act, 1949 to the Central Government, which placed Banaras State Bank ltd under moratorium effective
from 22nd January 2002.

MORATORIUM

In a moratorium, government imposes a freeze on the bank's liabilities so that bank is not able to grant
any loan or advances, incur any liability, make any investment or disburse any amount.
RBI has clarified that during the moratorium it will consider various options to protect depositors and
their money. It has also given an assurance that any requirement of cash at the branches of the bank for
making permitted payments will be met in full by the RBI.

During moratorium on withdrawal of money by depositors, shareholders generally had been the
loosers.

Following is the list of similar moratoriums on weak banks, which finally resulted in their merger with
major public sector banks:

1. Nedungadi Bank in 2002, which was later, merged with Punjab National Bank.
2. Banaras State Bank in UP in 2000. To protect the interest of depositors, the bank was
merged with Bank of Baroda (BOB).

67
 3. In 1993, the government had imposed a moratorium on the depositors of New Bank of
India. The bank was later merged with PNB.

4. United commercial Bank in early 1990s was later merged with United Bank of India.
5. In the early 1990s, Lakshmi Commercial Bank also faced the moratorium and was merged with
Canara Bank.

6. Early 1990s, Karur Central Bank in Kerala was merged with Bank of India.
7. Hindustan commercial Bank faced the moratorium in 1988 and was merged with PNB.
8. Bank of Thanjavur in Tamil Nadu in the late 1980s was later merged with Indian Bank.
9. In 1980s, Bank of Cochin in Kerala was put under moratorium before merging it with State Bank of
India.
10. In 1969, Indo commercial Bank was merged with PNB.

MAJOR CHALLENGES

a. The Banaras State Bank Ltd was over staffed and majority of them were of higher age group. So,
after the merger, the biggest challenge that BOB faced was the deployment all the employees. This
became a challenge as BOB had to deal with the resistance to relocate on the part of BSB employees.

b. Being a Pvt Sector bank, BSB, had different deposit schemes as compared to a public sector bank
i.e BOB.
c. BSB had a number of branches and of them whole of the Eastern UP branch used to work
manually and only the Southern India branches were fully computerized. The onus lied with BOB for
100% automation of all the branches and training the employees for the same.

d. To face the resistance this occurred due to the change in the salary package. Moreover they were
not able to enjoy the benefits initially which the BOB employees are eligible for.

68
e. There were inherent fears and apprehensions in the mind of BSB employees. There was a fear for
change. The employees of BSB were unwilling to change their mental make to the change
circumstances.

f. There was also fear of future under BOB management .The BSB employees believed that they will
be retrenched from the service after the amalgamation.

g. The BSB employees also lacked some technicalities. They lacked knowledge of latest technologies
and computer knowledge. This worried them. They feared that they would lose their jobs because of
this.

PRE MERGER

BSB had no issues regarding the takeover because as such it was already on the verge of liquidation
and the better part of the story lies in the fact the BOB is a big player in the market. Therefore they
would be no personnel or financial issues regarding the same and whatever issues existed in the case
were of menial importance as the Apex financial body already finalized the deal.

DUE DILIGENCE:

Due diligence is a very important aspect and plays a pivotal role in determining the success or failure
of a merger.

BOB formulated 6 key questions for effective human resources due diligence. The questions
formulated by them were as follows:

1. How to analyze the human resources in the target acquisition quickly…before the merger?

2. Does the target organization have the human resources to support the products, technology,
markets?

69
3. How to retain the key individuals after the merger?

4. Can we integrate the acquisition quickly and smoothly enough to minimize uncertainties among
employees and demonstrate value to customers?

5. Do we have the information we need to make staffing and organizational decisions quickly to
minimize uncertainty and rumors?
6. Are we likely to lose key competencies within 10 years through retirements?

These key questions helped BOB to avoid the various surprises and the uncertainties that they would
have faced had they not done the required due diligence.

As told by Mr. S.Tripathi, Sr. Mgr. HR, BOB C.P. branch, that there were only 1250 employees
working in BSB at the time of merger and the total turnover was less that 1000cr.

Moreover the authorities noticed that hardly a few branches of Eastern UP of BSB were automated
and only it was the Southern UP region which was fully computerized.

It was a matter of concern that the schemes followed by the two companies were completely different
and that may have impacted the existing customers of BSB

As BSB was a private sector bank so there was a slight difference in the structure of the two banks and
due diligence helped BOB to know the structure of BSB and merge accordingly.

Key assets of any organization are its employees so and in BSB most of the employees were in the age
group 40 or more, for whom relocation was a bit difficult. So BOB had to strike a balance between its
requirements and their comfort level.

70
INTEGRATION

In the moratorium period BOB started to arrange various programmes for the BSB employees to make
the merger smooth.
 Orientation program was arranged.
 The employees were sent to the training centers across India where they were given training by
experts.
 Deployment of the employees was done on the basis of age, skills and the positions held by
them respectively.
 Customer meetings were called at different branches under the supervision of various zonal
heads. As told by Mr. Naveen Chadda(former BSB employee), Officer Administration, BOB C.P.
branch, that the customers were allowed to encash only 5000 rupees from their deposits that too only
once during the moratorium period. Moreover later on also they were given 85.15% of their money
back and the rest i.e. 14.85 % was deducted to compensate for the losses that BSB had gone through
during its operating period.

It was 19th June 2002 that the amalgamation of BSB with BOB as per the Central Government
notification took place after the moratorium period of 6 months ,as told by Mr. S.Tripathi.

The amalgamation governed the rights and obligation of the employees of the transferor bank
(BSB).The transferee bank had ascertained the intention of the employees of the transferor bank to
become the employees of the transferee bank.

As per the “rights and obligation” of the employees of the transferor bank ,the transferee bank had
to ,on the expiry of the period not longer that 3 years from the date on which the scheme was
sanctioned , pay or grant to the employees of the transferor bank whose services are continued in the
transferee bank, the same remuneration and the same terms and conditions of the services as are
applicable to the employees of corresponding rank and status of the transferee bank subject to the
qualifications and experience of the employees of the transferor bank being the same or as equivalent
to those of such other employees of the transferee bank.

71
IMPLEMENTATION:

It was a big challenge for BOB to merge with a private sector organization, having a strength of 1250
employees in addition to their own then existed employee strength of 45000.

BSB had 110 branches when it merged with BOB, as told by Mr. Naveen Chadda(former BSB
employee), so to save the cost of operation, various branches of BOB and BSB in a common area were
also merged together , which resulted I the reduction of the BSB branches to 45.

To carry out the deployment of the BSB employees smoothly, the age experience were taken care of
and it was avoided to relocate the people of higher age group.

A strategy was adopted to make BSB employees well acquainted with the culture and functioning of
BOB, a few of them were sent to BOB branches for the same.

A detailed plan for the 100 % automation of all the branches of BSB was made and executed.

When the employees of BSB realized that they were to be merged with BOB, and may be relocated,
the pay structure might change; they developed a feeling of job insecurity. Apart from all these
personal tensions the employees had a pressure from the customers regarding apprehensions going
within them.

So, all this led to a one day strike and even the employees were approaching media and also
approached Mr.Yashwant Sinha, then Finance Minister.

To take care of all this motivational training was arranged for the employees .It was for one day for
other branches except for Eastern U.P branches, where it was for ten days.

A new policy document was made which was circulating to all the employees.

72
EVALUATION

 Change in the organizational structure

 Rise in perks.
 No retrenchment
 Initially they were resistant towards the change and then later on realized that it’s a boon to
merge with a BOB as it offered quality of work life in a sense they enjoy all the benefits of a
public sector banking sector.

73
PROCTER AND GAMBLE CO. (P&G)

Procter & Gamble Co.(P&G) is an American global corporation based in Cincinnati, Ohio that
manufactures a wide range of consumer goods.

Three billion times a day, P&G brands touch the lives of people around the world. Our corporate
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The P&G community consists of over 135,000 employees working in over 80 countries worldwide.
What began as a small, family-operated soap and Candle Company now provides products and
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Our company has one of the largest and strongest portfolios of trusted brands, including Pampers,
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Olay.

Gillette: A Centenarian Global Leader

Founded in 1901 as a producer of safety razors and blades, Gillette has become a global company and
a world market leader in various product categories. Today, Gillette operates 32 manufacturing
facilities in 15 countries and employs more than 30,000 people. The company’s core businesses are
grooming, personal care, and oral care products and batteries. Globally renowned brands such as
Braun, Duracell, and Oral-B belong to the Gillette group. In 2005 Gillette merged with Procter &
Gamble, forming one of the world’s largest consumer goods companies.

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GLOBAL GILLETTE

Global Gillette is a business unit of Procter & Gamble. It is the successor of The Gillette Company,
which was founded by King Camp Gillette in 1901 as a safety razor manufacturer. It was based in
Boston, Massachusetts.

On October 1, 2005, The Gillette Company finalized its purchase by Procter & Gamble. As a result of
this merger, the Gillette Company no longer exists. Its last day of market trading - symbol G on the
New York Stock Exchange - was September 30, 2005. The merger created the world's largest personal
care and household products company.

Before the merger, Gillette had grown to become a leading global supplier of products under a variety
of brands. In addition to Gillette, the company marketed under Braun, Duracell and Oral-B, among
others.

THE "DREAM DEAL”

CINCINNATI, AND BOSTON, Jan. 28, 2005,The Procter & Gamble Company announced it has
signed a deal to acquire 100% of The Gillette Company, founded in 1901 and headquartered in
Boston.The transaction is valued at approximately $57 billion (USD) making it the largest acquisition
in P&G history.

"Gillette and P&G have similar cultures and complementary core strengths in branding, innovation,
scale and go-to-market capabilities, making it a terrific fit. Said A.G. Lafley, chairman, president and
chief executive of Procter & Gamble.

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PRE DEAL

As got to know from Ms. Gombu, it was the decision of the CEO of Gillette that the two companies
(P&G and Gillette) be merged to create a history.

As it is well known fact that both the companies i.e P&G and Gillette were well established and profit
making companies, so it came as a shock to all the people when the merger of the two companies were
announced.

It was the decision of the CEO of both the companies to marry, to make the resultant company a very
big brand, the greatest consumer products company in the world.

According to the deal, P&G will be paying 0.975 for each share of Gillette, valuing the acquisition at a
20% premium to shareholders of Gillette

A core team was made to carry out a smooth integration which consisted of the employees from
various functional areas. The core team was formed based on the experience and the expertise of the
people.

DUE DILIGENCE

Due diligence is the first step that any company should take prior to any type of change. It is very
important and on the due diligence depends the success of the change. If the due diligence is carried on
in a correct manner and thoroughly, then the chance of success of the change increases.

As told by Ms.Ognmu gombu, a proper due diligence formed the part of the merger. A thorough due
diligence was done before any step was taken for the merger of the two companies.

A cross functional team was formed with all the experts in different fields and due diligence of all the
departments was carried out.

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A proper due diligence helped the companies to go about with a smooth merger taking into account all
the problems that can come into their way.

INTEGRATION

This is the third stage in every Merger and Acquisition. Now that the due diligence of the companies is
over, it is the time to prepare for the merger, to prepare the companies for the new entity.

As told earlier a core team was formed, which comprised of all the personnel of different departments.
From the employees of Gillette the procedure of ‘selecting the people’ was done. The able and the
capable employees if the company whom P &G wanted to keep as the employee was selected.

During this period ,some of the employees of P&G left the job, not convinced with he idea of
merger .So the gaps needed to be filled by the company .The employees were selected to fill these
gaps on the basis of the past experience and the expertise they were holding to fill the boxes.

There were some employees who were not ready to join the merged company; they were given a
package from the company at the time when they were leaving.

All the employees of Gillette were not needed by the company. Some of them needed to be retrenched.
So, for them there was a special package that was offered by the company.

During due diligence it was revealed that P&G did not have any sales force while Gillette had a full
fledged working sales force. So, during the integration time, all of the Gillette’s sale force had to leave
the job. This was the difference in the structure that both the companies faced.

As told by Mr.siddharth Yadav, Associate Manager (HR) Gillette India Ltd., there was no issue
regarding the pay package as it was decided that because it is a global deal so, the package would
remain the same as it was previously paid .So the package was never an issue.

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IMPLEMENTATION

All the fieldwork has been done and now it is the time for implementation of the merger.

The CEO’s of both the companies wanted to reveal the news of merger to their employees on 28 th of
January but somehow, through media the news leaked on the evening of 27 th of January. It created a
sense of shock and fear in the minds of the employees. But, it was not of any loss to the company
because anyways they were planning to reveal the news of the merger the next morning.

So the process of communication was all set before hand. The next day the CEO came and cleared all
the matter. It was a surprise for the employees but all the issues that cropped were handled directly by
the CEO and that led to an open communication which further resulted in smooth implementation of
the integration process.

There was no hostility involved in the merger and so no strikes were there. The employees were
convinced by the top management and all the employees were happy with the merger.

The employees, who were not able to be retained by the company due to some structural changes,
were given a package at the time they were leaving the organization so that they do not have any
negative feeling with them against the company.

The strategies adopted to overcome People issues

 Open communication was established.

All the issues were handled directly by the CEO of the companies. Both the CEOs visited both the
companies to communicate to the employees. Open communication was encouraged .the employees
were welcomed to approach directly to the top management for the queries regarding any issue.

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 HR interventions
There was not much interventions used in the company. The culture of both the companies was
same .So there were no cultural interventions that were used by the company. There were employees
in Gillette who worked as a sales force executives. P&G did not have a sales force. As a result, all
those people who worked as the sales force for Gillette had to be retrenched .

a. A job Fair was organized for all those employees who all had to be retrenched by the company.On
the expense of the company they were given employment and some of them got even higher pay
package than they were getting previously. As told by the existing employee of P&G, atleast 90% of
the employees who were to be umemployed by P&G got a new offer in their hands even before they
had left the company. This was the intervention that was used by P&G-Gillette at the time of
implementation of the merger. It boosted the moral of the employees and they went having good
memories about the company.

b. Class room training was also provided to the existing employees from Gillette who had to join the
merged company and all those also who were to leave the company. During the training period they
were taught to make attractive CVs and to answer interviews. It was a 1 day training session that was
organized by the company for the employees.

c. There was a change in the organization structure as P&G did not have separate work force and
Gillette had one. So job fares were held for them and they were given separate packages at the time
when they were leaving the company.

MAJOR CHALLENGES

1) The major challenge that P&G- Gillette faced was to retain the morale of the people of the merged
company. They need to be motivated so that they do not have any negative feeling for any of the
company members and that further do not affect the productivity of the company.

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2) They faced a challenge to organize a job fair for the employees who were not to be retained by the
company.

3) They were not to retain every employee of the company. So, they had to choose from the existing
lot whom to keep and who not to keep .To select a right fit for the position was a challenge for the
company.

4) The news of the merger was to be communicated by the CEO of the companies but due to some
mishappening, the mews got leaked the previous evening. So, it was very challenging for the
management to handle the situation so that it does not create havoc among the employees.

Gillette to sue over Galvin merger probe

Boston Business Journal - April 21, 2005

Gillette Co. said Thursday morning it is going to court to halt Secretary of the Commonwealth
William F. Galvin's probe of the company's planned sale to Cincinnati-based Procter & Gamble Co.

Gillette (NYSE: G), in documents filed in Suffolk Superior Court, asked a judge to block a April
subpoena issued by Galvin. Gillette also asked the court to rule that Galvin lacked jurisdiction to
review the company's sale.

Gillette, in a statement, said Galvin did not have the he authority "to pursue his highly publicized
inquiry of the company's proposed merger with Procter & Gamble." Gillette's sale to Procter &
Gamble (NYSE: PG) for $57 billion was announced Jan. 27.

The Boston-based shaving-products manufacturer also said it has voluntarily cooperated with Galvin,
"producing documents in response to four prior information requests and had been trying to work with
the secretary to reach an agreement on appropriate terms to provide further documents."

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 CHAPTER 7

Current M&A B/T TO ORGANIZATION

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 Tata M&A Corus

“Tata buys corus for $ 12.1 billion, the inside story of India’s biggest- ever
overseas Acquisition”
TATA STEEL won the battle for the take over of corus, agreeing to pay a final price of
$12.1 billion (Rs. 53,469 Crore) after eight hrs. of tense bidding against the brazilian
steel major CSN. The acquisition, the biggest- ever by an Indian Company overseas,
made Tata - corus the 5th largest steel manufacturer in the world.
The Darama began with Arun Gandhi, the Tata Group’s mergers and Acquisition head,
Kaushik Chartterjee, Tata Steel’s Vice- president, finance and Sandeep Biswas, Tata
steel’s Marketing head, arriving in the London office of the group’s UK lowers, Herbert
Smith.
Corus Chairman Jim Leng and chief Executive Philippe varin in were stationed at the
offices of their law firm, Slaugster and May, carefully flowing the proceeding
----------------------------------------------------------------------------------------------------------
Tata winning bid 608pence / Share
Rival CSN gave up at 603 pence per Share
----------------------------------------------------------------------------------------------------------
Corus of Approval
 Govt. will be ready to help Tata’s if they have any request to complete the
transaction
-P. Chidambaram,

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 (Finance Minister)
 Entire steel Industry should be proud of Ratan Tata. – Ram Vilas Paswan
(Steel Minister)

Air India, Indian Air Lines Merge to gain muscle

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“ The Govt. is aiming to create a mega carrier with the precision and reliability of
Lufthansa and inflight service of Singapore Air lines”.

CHAPTER 8
FINDINGS AND ANALYSIS

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The merging entities give a great deal of importance to financial matters and the outcomes; HR issues
are the most neglected ones. Ironically studies show that most of the mergers fail to bring out the
desired outcomes due to people related issues. The uncertainty brought out by poorly managed HR
issues in mergers and acquisitions have been the major reason for these failures.

The human resource issues in the mergers and acquisitions (M&A) can be classified in two phases the
pre-merger phase and the post merger phase.
The three cases studied reveal quite a bit about the success or failure of mergers and acquisitions, and
from these we can pinpoint specific reasons why a merger or acquisition might fail or succeed and
how it should be managed in order to make it a successful deal.

It should be noted that these findings are by no means exhaustive, nor should the substitute for a full-
blown study of the causes of success or failure in mergers and acquisition. Rather, they are meant to
paint a broad picture of the variety of issues that companies generally face, and serve as a leaping
point from which we can dive into recommendations for companies considering a merger or
acquisition.

On the basis of the observation, findings reveal that the following HR dimensions play a very critical
role in any radical change and if any of these dimensions are not taken care of properly by the HR can
lead to failure of the organization when it goes for any coalition activity.

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PRE-MERGER

NTPC:

Being known for its HR department and the initiatives, which the department takes for giving Quality
of work life to its employees, NTPC took all HR aspects very well into consideration to avoid all those
problems which they faced in earlier plant takeovers.

Due Diligence which is the base for any deal to succeed was carry out very sincerely while keeping
not only the financial aspects but also HR issues into consideration.

On a higher, more strategic level, HR due diligence dealt with issues related to corporate culture, talent
retention, training and development integration, employee communication strategies, compensation
issues in transition, stay pay, Quality of work life, workforce composition, past change management
initiatives, and finally the interface of technology and people issues.

For dealing with PEOPLE following initiatives were taken:

MANPOWER
ACQUISITION
STRATEGY

PEOPLE CHANGE
TRAINING INITIATIVES MANAGEMENT

COMMUNICATI
ON
STRATEGY

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BANK OF BARODA: The issues that needed to be addressed during the pre implementation stage
were mainly concerning issues like
 Overstaffing
 Demographic factors
 Disparities occurring due to varied working styles
 Compensation packages disparities
So the ROLE OF HR was pretty challenging though it could not do anything about it as the deal was
done on the specific guidelines as laid by RBI. So HR personnel formulated an excellent questionnaire
and the agendas discussed and successfully managed included
 Retention to avoid havoc and dissent amongst the employees
 Change management issues so as to target the merger and the deal in the minds so that when it
actually takes place the delivery is pretty smooth
 Striking an accurate trade –off between the working styles of both the companies so that none of
the employees feel the pressure of the change. In other words deriving a so called COMMON

MINIMUM PROGRAM

PROCTAR & GAMBLE CO. LTD

Both the companies being brands in their own respective fields had the added pressure of keeping up
to their existing rapport in their fields. So THE ROLE OF HR

 Formulation of a team of experts belonging to various departments and having a varied range of
experience so that all issues could be dealt with.

 The main function of this team was to INDULGE IN ICE BREAKING SESSIONS so as to put into
effect the concept of “DELIVERING CHANGE WITH EASE”.

 Meetings interviews and management games were some of the techniques that were made use of to
make people accustomed to the new environment.

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INTEGRATION STAGE:

THE ROLE OF HR during this stage is of utmost importance because this the time when actually the
deal which was thought of in the minds of the strategic heads , materializes.

NTPC:

Here the role of HR mainly focused on the following parameters:

 Compliance with the specified and predetermined laws so that no loopholes are left.

 Ensuring that the confidentiality of the information is maintained and there is no leakage of any
sorts so as to avoid any mental stampede
 Formulation of a core team which consisted of approximately 15 members belonging to cross
functional departments from across plant boundaries.
 Proper use of HR interventions
 Communication is the backbone in all such coalitions so keeping a clear cut communication
pattern in mind so as to answer questions like who reports to whom ,when, what & how?
 Issues that needed to be answered included
1. Continuous and Visible Improvement
2. Quantity v/s Quality
3. Risk Taking ability
4. Transparency and Non Discrimination
5. Simplification of Procedures
BANK OF BARODA:
Here the role of HR mainly focused on the following parameters:
 Chalking out specific training programs based on the demographic segmentation to address
specific needs.
 Orientation programs were properly arranged and the the HR team ensured that they were properly
followed.
 Ensuring that the amalgamation laws and rights were properly addressed.
 Arranging various ice breaking sessions so as to reduce the cultural shock.

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 Dealing properly with the customers who were confused about their plight amidst all the chaos.
 Dealing with the day long strike which added to the tensions.

PROCTAR & GAMBLE CO. LTD

The role of HR here revolved around:
 A core team was formed, which comprised of all the personnel of different departments.
 Bifurcation of employees and dividing them into various strata depending upon their ability and
competency.
 Gap analysis so as to deal with issues that popped up because some of the key personnel left their
duties at P&G, confused about their future.
 Dealing consciously with the Retention, Training, Compensation issues so as to avoid any further
losses.

POST- MERGER STAGE

NTPC:

“After the party gets over its time to pick up the left overs”

Here the role of HR is very significant because after two entities have been added to each other its
very important to gel them into one so that whatever the overlapping boundaries are evacuated. Some
initiatives taken by HR here include
 Managing well the change in organization design
 Developing Quality Of Work life groups
 Holding Appreciative Enquiry sessions.
 Designing Training Programs, etc.

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BANK OF BARODA:

Here the HR initiatives were as under:

 Dealing with issues related to change in organizational size & structure
 Making the climate friendly & conducive for easy enablement of Retrenchmnets strategies
 Putting into place an effective Grievance Management system,etc.

PROCTAR & GAMBLE CO. LTD:

Some HR initiatives are as under:
 Organization of Job Fairs to provide equally good employment to the retrenched employees
 Development of an open ended communication system to deal with grievance of any sort.
 Organizing training programs to deal with any sort of disparities.

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CHAPTER 9
CONCLUSION

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 CONCLUSION

M&A activity is expected to remain on an uptrend with cross-border deals continuing to maintain their
momentum. Significant deal activities are expected in auto ancillaries, domestic retail, real estate,
hospitality, oil and gas and the financial services segments, says Mr Sanjeev Krishan, Executive
Director (Transactions Group), PricewaterhouseCoopers.

"Also, private equity and venture capital investments in India are expected to rise even further with
greater options of sectors available for investment, booming stock markets and growing domestic
demand," he says.

The year 2006 has been significant in mergers and acquisitions for India, both in terms of volume and
value. The total value of 1,164 deals that India witnessed in 2006 has shot up to $ 35.6 billion against
$ 21.6 billion from 1,011 deals in 2005. In fact, India ranks 4th in the entire Asia-Pacific region which
is just after China as far as M&A activities are concerned.

Key drivers

According to Mr Krishan, the highpoint of M&A deals in 2006 was the bigger contribution coming
from private equity players and the sharp rise in the size of overseas deals. Key drivers fuelling M&A
activities during this year were entry by new players into markets, establishment of leadership
positions by existing players, extension of domain knowledge by acquisition of know-how, much
awaited focus on infrastructure and the potential to enter in the fast-liberalising Indian market.

Continuing with the growing trend of cross-border transaction, 2006 has seen a significant increase in
the number of outbound deals. Four years of sustained growth has boosted the profitability and
strengthened the financial position of Indian companies. It is not just the blue chip companies that
have chosen to diversify abroad, a number of middle-rung companies have also started making their
forays overseas.

A host of external factors, such as aligning of interest rates with global rates, lowering of import
barriers, and easy access to international funding, domestic funding through public issues in the
domestic stock market, have also spurred the international foray by Indian companies.

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High growth sectors such as pharmaceutical, IT and auto ancillaries are poised at an inflection point
and growing competitive pressure has been a driving force behind the overseas acquisition in these
sectors. The pharmaceutical sector, in particular, has witnessed an unprecedented rise in cross-border
deals, primarily in the generics space with European Union being a preferred market.

Acquiring global companies

Another trend one can see in respect of Indian companies is acquisition of global companies that are
much larger than them in size. For instance, Tata Coffee's acquisition of the US-based Eight O'Clock,
which is around 2.5 times the size of the former. Similarly, Subex Systems' recent acquisition of Azure
Systems (UK), a company larger than itself (Azure has a turnover of $ 31million against Subex's
revenues of $26 million).

This reflects a big change in the mindset of Indian companies that has come about as a result of greater
exposure and increased competitiveness. As companies have successfully faced the challenges of
competing on foreign turf, they have matured and grown in self-confidence.

PE investments surge

With entry of players such as Blackstone, 3i, Temasek, private equity investments have been rising
steadily in India. For private equity firms, IT and ITeS and telecom continue to be the most favoured
industry followed by manufacturing industry. However, other sectors such as real estate travel &
tourism, hospitality and financial services are gradually gaining importance, Mr Krishan says.

A trend that has been seen lately is to buy into companies planning maiden offers. Funds have been
seen entering companies just before an IPO. With private equity players looking at opportunities to
cash out swiftly, pre-IPO buy-ins represent a win-win situation for both the funds and the companies.

PE firms, which have been seeing returns from investments in developed markets dwindle, are betting
on emerging economies such as India for big returns. Mr Krishnan emphasizes that in India, PE and
VC players are now looking for promising companies in industries ranging from technology to textiles
to retail and seek to give them a boost, doing everything from injecting more capital for expansion to
holding the hand of management and providing strategic guidance.

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 RECOMMENDATIONS:

Based on the findings and discussion, we can make three broad recommendations to managers who are
managing mergers and acquisitions, or considering a merger or acquisition.

Communicate. Recognize the link between culture and communication, and use open communications
to minimize the impact of cultural clashes. Communicate with all stakeholders about the changes,
including board members, consultants, and staff, and be especially transparent with those stakeholders
whose work lives will be upset the most by the change (ie., employees of the company being
acquired). Transparency helps minimize fear, uncertainty, and doubt.

Strategy and Finance. Also recognize the link between strategy and finance, and understand that no
matter how good a strategy for acquisition or cultural integration, if a company does not have good
financial health, the merger is at risk. Conversely, make sure that your strategy for a mergers or
acquisition is sound.

Planning. The key to cultural integration, effective communication, sound strategy, and responsible
finance, is planning. So begin the planning process well ahead of time, and plan for every possible
variable. Create separate plans for existing employees and new employees.

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ANNEXURES
 BIBLIOGRPHY
 References

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USEFUL REFERENCES:

 Ministry of manpower,” The role of HR in Mergers and Acquisitions”,Case study

series 1/2003.
 Amit Pande ,Sandeep K Krishnan,” Knotted forever…”,Paper ,IIMA fellow
Programme in management
 Cairnes, Margot “Surviving Super Mergers”, Human Resources, Asia Pacific,
October 2001
 Gaplin and Henron, The Complete Guide to Mergers and Acquisitions(1999)
 Powell, Mark “Managing the Asian M&A wave”, Economic Bulletin, Singapore,
January 2002
 Rubis, Leon “Merger Mania Means Much Work for HR”, editorial director of
SHIRM
 Schmidt, Jeffery Making Mergers Work, The Society for Human Resource
Management, October 2001
 Sidel, Robin “Volatile U.S. Markets Cool Desire for Mergers” The Asian Wall
Street Journal. January 6, 2002 p.S6
 “After the Deal”, The Economist, January 1999
 “Mergers and Acquisitions”, Andersen Website, May 2001
 “Mergers and acquisitions down 53%:KPMG”, Bloomberg, The Business Times,
December 11, 2001
 “Success of M&As Depends on Early HR Involvement,” M&A Asia, December
2000

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REFERENCES

 http://en.wikipedia.org/wiki/Procter_&_Gamble
 http://knowledge.wharton.upenn.edu/article.cfm?
articleid=1135&specialid=30&CFID=4776753&CFTOKEN=17176287

 http://www.bizjournals.com/boston/stories/2005/04/18/daily46.html?t=printable
 http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/01-
28-2005/0002909473&EDATE

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