M&A Critique August 2019

We are sure that all our readers, have read and analysed the budget presented by our FM Ms. Niramala Sitharaman with the headline being efforts to make India, from its current US$2.7 Trillion to US$5 Trillion economy in the next 5 years. The FM listed a few steps which, in her opinion should help in this direction, FDIs relaxations in some sectors, infusion of capital in PSU banks, attracting private investment and continuing disinvestment of PSUs across sectors. To double the economy, not only supply but consumption should also increase in a manner to support that cause. However, tinkering with capital gain and tax on FPIs and surcharge on super rich along with no capital formation, India is slipping to 7th in world economy from 4th largest which does not augur well for the economy.

Efforts of ISRO, a space agency the world is envious of, has given us yet another moment to be proud of our nation and the institute itself with a successful launch of Chandrayan-2, a 4-tonne rocket, India’s second lunar mission.

VSAT technology is being used mainly to communicate for remote locations and for standalone environment in India. But it has a large potential for new services, currently restricted due to regulations, around mobility – Maritime Communication, Aero in-flight connectivity and Surface transport communication services. Hughes and Bharti Airtel have been the top 2 players in providing this services for many years. Reliance Jio’s entry in the telecom sector has intensified the competition amongst the players and thus Bharti Airtel announced merger by way of slump sale of it VSAT Undertaking with Hughes. The cover article looks at the structuring and the possible challenges to get approval for them to become market leader with ~63% market share.

Yatra is one of India’s leading online travel company which is getting acquired by EBIX, a US-headquartered company and Indian-origin Robin Raina as its current CEO. The company is on a buying spree (other acquisitions ItzCash, Centrum, Via to name a few) trying to consolidate it all the current services and, on its way, to become the biggest online travel company with includes all the travel services ItzCash, Centrum, Via to name a few. This acquisition will make Ebix a challenger to MakeMytrip-GoIbibo conglomerate.

Promoters/Founders of the company which are technologically driven often lose their place and/or authority on the board due to dilution of their shareholding when going for equity-based fundraising. This potentially hampers the operations of the company. Taking this into consideration, SEBI has come up with a framework for differential voting rights, a concept which was first introduce quite some time back. Our legal article, looks at the details of the framework and its implications especially to startups.

Murli Industries operations were closed in the FY 15-16 as it was not able to repay its debts. The company apart from having cement manufacturing plants with capacity of 3 million tonnes also has manufacturing units for paper and solvent extraction. CoC of Murli industries entered the company into Insolvency in April 2017 approved resolution plan by Dalmia Cements in June 2019. They will be getting Rs. 402 crores out of the total claims of Rs. 3171.26 crores. In this article we look at some major takeaways which gives more clarity on the role and approvals allowed by the adjudicating authority.

Alongwith Regular Features…….