|






  


 
 




i
 
 
 
 | 
‡ Session ± 1 & 2

‡ Concepts of Corporate Restructuring - Definition, Main Forms

of Corporate Restructuring ± Merger, Consolidation,
Acquisition, Divestiture, Demerger, Carve-out, Joint Venture,
Reduction of Capital, Buy-back, Delisting, Growth strategy
and M & A.

‡ i




  & 

 



 

page 1
`





`



 

  
 

 
 


 

 


 






 
 

 
  

 
 



 
  


 
 

 
 
 

  
 

 
 
  
page-2
 
`





 
Gncreased Competition
Advent of a new and more efficient technology
Emergence of new markets
Emergence of new classes of consumers
Demographic changes
Business cycles
Wise organizations undertake changes to increase their cutting
edge over the competitors and enhance their leadership
position.¶
page-3
 `






G
 
 
 


 
 


  






u Ñata Motors launched Sumo and later, Gndica- leading to an expansion of its
business portfolio. However, these products were launched from Ñata Motor¶s
own manufacturing capacity in through an organic route. Hence, it would not
qualify as µcorporate restructuring¶
u Ñata Motors¶ acquisition of Jaguar Land Rover from Ford, through Jaguar Land
Rover Limited is µcorporate restructuring¶
u Grasim¶s acquisition of Larsen & Ñoubro¶s (L&Ñ cement division through
UltraÑech Cement Limited is an example of µcorporate restructuring¶

`
 

 
   

 

 
  
  

u Gn the case of Grasim and L&Ñ, the demerger of L&Ѷs cement business into
UltraÑech Cement Limited was reduction of its business portfolio and thus,
amounted to µcorporate restructuring¶ of L&Ñ.

‡
‡ page-4
‡
 `





GG  
 

 
  
 




 
 
 


u Capital structure refers to debt equity ratio, i.e. the proportion of debt and
equity in the total capital of a company.

u Ñhis capital structure is never static and changes almost daily.

u Within a targeted or planned range if the debt/equity ratio fluctuates, such

changes in the capital structure do not amount to µcapital restructuring¶.

u Borrowing of a significant amount of term loan or an issue of five year

non-convertible debenture do not qualify to be called µcorporate
restructuring¶ .

u An initial public issue, or a follow-on public issue or buy-back of equity

shares would permanently alter the capital structure of a company, and
thus, would amount to µcorporate restructuring¶.
page-5
 `





 
 

  
 
 




a Merger of two or more companies belonging to different promoters

b Demerger of a company into two or more with control of the
resulting company passing on to other promoters
c Acquisition of a company
d Sell-off of a company or its substantial assets
e Delisting of a company

u ›ll these would qualify to be called exercises in µcorporate

restructuring¶.
page-6
 Ñ 



   
 


 

  



G G



 


 


u Gts various examples are:

± Gncorporation of a limited company
± Conversion of a proprietary concern into a company
± Conversion of a partnership firm into a company
± Conversion of a private company into a public company

GG `


 
 






u Ñhe command structure of an organization or its hierarchy simply

means the reporting relationships among the employees,
managers, top management and their various functions.
± Functional organization
± Divisional organization
± Matrix organization
i

 Ñ 



   
 

Ñ
 

  



u With businesses having become more complex along with the
acceptance of newer concepts of organization building such as
tutorship, mentorship, etc., the hierarchies have stopped strictly falling
into one of the three types mentioned in the earlier slide.
u Any migration of an organization from functional to divisional or to
matrix type or to any new or hybrid type or vice-versa would not be a
case of µ corporate restructuring¶.

GGG `
 


u Ñhis is also called µreengineering¶. Reengineering, properly, is the
fundamental rethinking and redesign of business processes to achieve
dramatic improvement in critical, contemporary measures of
performance, such as cost, quality, service and speed.¶
u Gt refers to the radical redesigning of business processes and not to the
ownership and control or to the capital structure of the organization.
u Reengineering is also outside the ambit of µcorporate restructuring¶.
page-8
 Ñ 



   
 


 

  




 


u G  

 
 
 
 
  
  


   




 




 
 



  
 
 
u      
 







 

 




u ›

 

 





   
 

 


 

  
 








 


 !"