M&A Magazine

In any scheme of Mergers or Demergers , the definition of Appointed date and Effective date play a very crucial role. In this article, we try to unveil the various aspects and implications of the same under various laws. Normally appointed date is before effective date. It is sometimes ideal to have both on the same date from commercial angle particularly in the case of demerger. As per Companies Act 2013 Section 232 (6)  – “The scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date” It is clear from the above that Appointed date shall be agreed between the parties and specified in the respective scheme of Amalgamation and the appointed date shall be the effective date for transfer of assets and liabilities of the Transferor company to the Transferee company and such transfer...

After the failure of IDFC Bank-Shriram Group merger over valuation, IDFC Bank has now gone for merger with Capital First , a non-banking finance company. The all-share merger deal was done keeping in mind IDFC’s aim to achieve six million customer base by 2020. If the merger goes through, the share of retail loans in the bank’s book would double from the current 26%. And if IDFC becomes second time lucky with this deal, then it can realize its ambition from becoming a dedicated infrastructure financier to a well-diversified universal bank. While Capital First and IDFC seem relatively closer in size than Shriram Group, it remains to be seen if the deal can cross all the hurdles including regulatory as well as the problems of personality clashes that often bedevil mergers. Synergies in culture and technology will give the deal an edge. The deal makes some sense for IDFC as it can then expand its retail footprint with adding 228 centres of Capital First’s branches. If the merger g...

The Insolvency and Bankruptcy Code 2016 aims at reviving companies that are going for liquidation. If reviving the company is not possible, the code will enable to liquidate the company in a judicial and rational manner so that it serves the interests of all stakeholders and the public at large. That is is because liquidation is not the ultimatum objective of the Code as it leads to sufferings on the part of all the connected parties of the company like employees, suppliers, creditors, customers etc. when the company’s business closes down. Slump sale instead of liquidation Instead of the liquidation leading to closing the business, if entire assets could be sold in the form of slump sale. This will result in the business continuity and ultimately would save the interest of all the connected parties. This concern is already envisaged in the drafting of the language of Regulation 32 of the Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016 as again...

HAL Offshore Ltd (HAL) is an unlisted public company, part of Delhi based MM group and a leading ‘End to End’ solution provider of underwater services and EPC services to the Indian Oil and Gas Industry catering complete need of both offshore and Onshore requirements. The company has two distinct businesses viz., EPC & Vessel Division and Investment Division (consist of investment in real estate, shares and other securities), major clients being ONGC, Oil India and Cairns. Having a Networth of Rs 216.93 crores as on June 30, 2017. Seamec Ltd is a listed public company and a subsidiary of HAL offshore, one of the largest provider of diving support vessel in the Asia Pacific region, has experience in the ongoing subsea inspection, repair, maintenance and light construction required for the efficient and productive support of offshore oil production. The Company has a market cap of Rs 452 crores, shares are listed on BSE and on NSE. Transaction HAL offshore will demerge it...

The Board of Directors of Motilal Oswal Financial Services Ltd ( MOFSL) have approved the  Draft Scheme of Amalgamation for merger of Motilal Oswal Securities Ltd ( MOSL) with MOFSL and have also approved the slump sale of its existing lending business to its wholly owned subsidiary, which is in the process of being incorporated. Motilal Oswal Financial Services Ltd (MOFSL) is non-deposit taking systematically important non-banking financial company registered with the RBI under Section 45-IA of RBI Act, 1934 and engaged in lending and investment related activities. It is a well-diversified financial services company focused on wealth creation for all customers, such as institutional, corporate, HNI and retail. The company's services and product offerings include investment activities, loan against shares, wealth management, retail broking and distribution, institutional broking, asset management, investment banking, private equity and commodity broking. The current market c...

INDIAN METAL & FERRO ALLOYS LIMITED (IMFA) , a pioneer in producing silicon alloys, today focus is on ferrochrome which imparts the non-corrosive property to stainless steel. A significant portion above 80% of output is exported to the Far East (China, Japan & Taiwan). However, domestic consumption to go up sharply as it is ideally positioned to cater demand. The company 40% revenue is from long term contract with POSCO, Nisshin Steel, JSW , etc. The company has mining division to cater to the raw material requirement. The entire output is consumed in-house.  The company also has power division which is a captive power plant. The company is fully integrated with both the captive chrome ore and captive power generation capacity. The company has six furnaces adding up to 187 MVA have been set up at Therubali (Rayagada District) and Choudwar (Cuttack District) in Odisha thus making us the largest merchant producer of ferrochrome in India capable of producing up to 275,00...

The Companies Act 2013 (New Act) , which was substantially made effective from April 1, 2014, has the potential and capability to be a historic milestone for implementing Mergers & Amalgamations (M&A) . So far, the provisions relating to M&A under the New Act are yet to be notified. These are pragmatic reforms for M&A under the New Act, which could make the process easier, faster and cleaner for companies involved in M&A. Some of the highlights include fast track mergers, mergers between Indian Companies and foreign companies and, setting up of National Company Law Tribunal (NCLT) to hear and decide on M&A proposals, cutting down on the probability and scope of objections to M&A’s and easier as well as wider participation of shareholders through postal ballot approval. Chapter XV of the New Act deals with “Compromises, Arrangements, and Amalgamations”, and consolidates the applicable provisions and related issues. The Old Act required M&A to be ...