The liberalised economic policies have exposed Indian industry
to several challenges. In response to this, the Indian economy has
witnessed a sharp increase in mergers and acquisitions. An attempt has
been made in this paper to analyse the significance of such mergers and
its characteristics. The study suggests that acceleration of the merger
movement in the early 1990s is accompanied by the dominance of
mergers between firms belonging to same business group or house with
similar product lines. So it is argued that though the merger movement
in the early 1990s might have contributed to an increase in product or
asset concentration measured on a firm-wise basis, it could not have
contributed to an increase in concentration as measured by relative shares
of business groups. But, there are signs that mergers between unrelated
firms, though numerically less significant, have been gaining ground.
This is especially true of mergers involving foreign-owned firms. The
participation of foreign-controlled firms in the merger process has
increased significantly since 1992-93. However it is evident that mergers
contributed significantly to asset-growth in only one fifth of the sample
firms studied. Most of these firms mobilised a large share of resources
through capital markets, to finance their expansion during 1989-90 to
1994-95. Therefore the study argues that the merger wave in the early
1990s was more a means of internal restructuring rather than an
instrument to further product market or asset share.
JEL Classification : D43, G34, L41
Key Words: mergers and acquisitions; horizontal merger, vertical
merger, conglomeration, private corporate sector, Indi