Background: Eximius Centre organized the captioned Seminar at Bangalore. The objectives of the seminar were to help the companies in understanding the importance of debt reduction and containment, financial and renegotiation strategies, crisis management, business valuation, accounting strategies and educate them on tax implications of mergers and business re-structuring.
Faculty: The programme was addressed by Mr. S. Ramanujam, Senior Corporate Vice President, Group Taxation, United Breweries Ltd, Mr. S. Krishnaswamy, Chartered Accountant, S. Krishnaswamy & Co., Mr. Rajendra Rao, Rajendra Rao & Associates, Chartered Accountants and Mr. K. R. Shekar, Director - Taxation, Deloitte Haskins and Sells, Bangalore.
Target Sectors: The seminar targeted cement, steel, pharmaceutical, textile and IT sectors.
Summary of Discussions: Mr. S. Ramanujam made a presentation on corporate takeovers and stated that they are sometime friendly and sometime unfriendly. It was informed that takeovers arise when a company's inherent strength is not reflected in the balance sheet and when existing management controls only negligible percentage of voting power. Various steps in a takeover bid, as explained by Mr. Ramanujam, include planning the takeover, collection of information and due diligence, approaching the board, preliminary announcement, procedures to offer, the rejoinder/acceptance or non-acceptance, the negotiations and the final takeover.
Mr. Krishnaswamy, in his presentation, informed the participants about the valuation of technology companies in the ICE (IT, Communications and Entertainment) sector. It was informed that the parameters of valuations are different in these sectors as compared to the traditional sectors. His presentation included the issue of valuation of new economy firms with a model cash flow statement.
Mr. Rajendra Rao focused his presentation on mergers and acquisitions from the accounting angle. It was informed that shareholders holding not less than 90 percent of the face value of the equity shares of the transferor company (other than the equity shares already held therein, immediately before the amalgamation, by the transferee company or its subsidiaries or their nominees) become equity shareholders of the transferee company by virtue of the amalgamation.
Mr. K. R. Shekar spoke on the tax related issues resulting from mergers / de-mergers. In the case of a de-merger, all the property of the undertaking, immediately before the de-merger, becomes the property of the resulting company. All the liabilities related to the undertaking immediately before the de-merger becomes the liabilities of de-merged company. Mr. Shekar explained the tax related issues with the help of four case studies.
The workshop gave an opportunity for the participants to clarify firm-level queries on the mergers and acquisition related issues.