Amalgamations, mergers were up in last fiscal

During 2003-04, as many as 97 companies informed the bourses that they were in the process of amalgamating or merging their 150 wholly owned subsidiaries and associate companies with the parent.

In the year before, 84 companies had proposed mergers and amalgamation covering 144 subsidiaries.

There are many factors driving India Inc.'s desire to clean up the books of accounts. First, there are companies with sick subsidiaries, and the only way to seek a credible rehabilitation package is to amalgamate the sick subsidiary with parent company.

Then there are companies seeking to consolidate the core business activities of the group firms which will give them the balance sheet size and net worth to mount strategic takeovers of companies in similar business activities.

A third category of companies is where promoters have proposed to merge investment subsidiaries with the parent to streamline the shareholding in other group companies.

Indeed, the major consolidation of businesses through mergers and amalgamation has been taking place in the pharmaceutical sector, followed by the auto ancillaries, steel, entertainment, finance, software and cement sectors.

In the pharma sector Cadila Healthcare amalgamated Banyan Chemicals, and German Remedies amalgamated Zoom Properties. Wockhardt took over the Rs 218 crore sales business of Merind.